G.R. No. L-47687; May 9, 1941
ANASTACIO BARRIDO, plaintiff and appellant, vs. MERECIA BARRETO ET AL., defendants and appellees.

FACTS

On August 2, 1924, Francisco Cuenca executed a real estate mortgage in favor of Anastacio Barrido over certain properties, including the land in dispute. This mortgage deed was only registered in the Office of the Register of Deeds of Iloilo on September 21, 1928. On April 20, 1927, Francisco Cuenca sold the same land under a pacto de retro to Vicente Lumampao (husband of appellee Merecia Barreto and father of the other appellees) for P500. This sale was registered on August 20, 1931. On December 12, 1932, Anastacio Barrido filed a complaint against Francisco Cuenca to foreclose the mortgage, obtained a favorable judgment, and, due to Cuenca’s failure to satisfy the judgment, the court ordered the sale at public auction of the mortgaged land. The provincial sheriff sold and adjudicated the land to Barrido as the highest bidder on October 14, 1933. When Barrido, accompanied by police officers, went to take possession of the land, Diosdado and Delfin Lumampao opposed him, claiming ownership. Hence, this case was filed.

ISSUE

Who has a better right over the land: Vicente Lumampao, who purchased it under a public document dated April 20, 1927, or Anastacio Barrido, who acquired it at a public auction conducted by the provincial sheriff on October 14, 1933?

RULING

The Supreme Court ruled in favor of Vicente Lumampao (represented by the appellees). The Court held that an unregistered mortgage of real property produces no legal effect as a mortgage and creates no legal encumbrance on the property. When Vicente Lumampao purchased the land on April 20, 1927, the mortgage in favor of Barrido was not yet registered (it was registered only on September 21, 1928). Therefore, at the time of Lumampao’s purchase, the land was free from any legal encumbrance, as the unregistered mortgage could not affect third persons. Furthermore, a judicial creditor, like Barrido, acquires through an execution sale only the identical right or interest that the judgment debtor (Francisco Cuenca) had in the property sold at auction. Consequently, Barrido, upon acquiring the land at the sheriff’s sale, obtained only the interest that Cuenca had at that time—which was merely the right to repurchase the land he had previously sold to Lumampao under pacto de retro. Since this right of redemption had already expired by the time Barrido filed his foreclosure suit, Barrido acquired no right over the land. Additionally, when the provincial sheriff levied on the land for the auction sale, the deed of sale in favor of Lumampao was already registered, so Barrido could not ignore the equitable right of a vendee a retro. The appealed judgment was affirmed.