G.R. No. L-12039; June 30, 1961
EULOGIO RODRIGUEZ, SR., plaintiff-appellee, vs. SOFRONIO FRANCISCO, ETC., defendant-appellant.

FACTS

Exequiel Ampil was the registered owner of a parcel of land. On March 24, 1924, he sold the land to Maximo Francisco, who took possession and paid the land taxes. However, the Torrens title remained in Ampil’s name. Later, on October 21, 1933, Ampil, indebted to various creditors, executed a “Venta Condicional” (conditional sale) over the same land and other properties in favor of Eulogio Rodriguez, Sr., who guaranteed Ampil’s debts. The deed stipulated that if Ampil failed to pay his debts and Rodriguez paid them instead, the sale would become absolute. This deed was registered on November 15, 1933.
Ampil failed to fully pay his debts, leading Rodriguez to pay the remaining balance. Consequently, Rodriguez filed an affidavit consolidating his ownership. The Register of Deeds cancelled Ampil’s original certificate of title and issued a new transfer certificate of title in Rodriguez’s name in 1937. Rodriguez then sought to recover possession of the land from the heirs of Maximo Francisco, leading to this action.

ISSUE

The primary issues were: (1) whether the “Venta Condicional” contract was a true conditional sale or an equitable mortgage; (2) whether its terms constituted a prohibited pacto comisorio; and (3) whether Maximo Francisco had acquired ownership through prescription.

RULING

The Supreme Court affirmed the lower court’s decision, declaring Rodriguez the rightful owner. The Court ruled that the “Venta Condicional” was a perfected contract of sale subject to a resolutory condition, not an equitable mortgage. The contract effected a conditional transfer of ownership, which became absolute and automatic upon Rodriguez’s payment of Ampil’s debts, fulfilling the agreed condition. This automatic effectuation upon fulfillment distinguished it from a pactum commissorium, which involves a creditor appropriating the mortgaged property upon debtor default without foreclosure, a practice prohibited by law.
Regarding prescription, the Court held that no title to registered land under the Torrens system could be acquired by prescription or adverse possession, pursuant to Section 46 of Act No. 496 (the Land Registration Act). The unregistered 1924 sale to Francisco was ineffective against Rodriguez, a subsequent registered purchaser. The finding that Rodriguez was a purchaser in good faith was a factual determination by the trial court, which was not reviewable as the appeal was taken solely on questions of law. Thus, Rodriguez’s registered title prevailed.