G.R. No. 98920 - Ignacio vs. Court of Appeals

On December 24, 1987, petitioner Jesus F. Ignacio purchased a house and lot (624 square meters) located at No. 13 Narra Street, Valle Verde III, Pasig, Metro Manila, from respondents Renato G. Yalung and Marina T. Yalung.
The purchase was made under a pacto de retro contract for the sum of P1,000,000.00, evidenced by a public instrument titled “Deed of Sale Under Pacto de Retro.”
The deed explicitly reserved the vendor’s right to repurchase the property within 90 days for the same price plus 5% interest, thereby constituting a sale with a right of repurchase rather than an outright sale.
The property was initially registered in the name of the respondents under Transfer Certificate of Title (TCT) No. 64873, issued on the same day as the transaction.

On April 19, 1988, petitioner filed a petition for consolidation of ownership with the Regional Trial Court, Branch 151, Pasig, under the land registration case docket No. R-3936.
Respondents submitted a Manifestation in which they admitted to executing the deed but alleged that the intention was to create an equitable mortgage secured by a loan.
Respondents claimed that the interest rate was “unconscionable, excessive and unreasonable” and asserted that despite the sale, they continued to be in actual possession of the property.

On August 9, 1988, the Regional Trial Court (sitting as a land registration court) ruled in favor of the petitioner.
The court determined that the parties intended to effect a sale under pacto de retro, not an equitable mortgage.
It ordered the cancellation of TCT No. 64873 and directed the Register of Deeds to issue a new title in the name of petitioner Jesus F. Ignacio.

Respondents appealed the trial court’s decision, challenging the jurisdiction of the land registration court to resolve the matter.
On March 4, 1991, the Court of Appeals reversed the trial court’s decision, holding that the case was an ordinary civil action rather than one properly filed as a land registration case.
The appellate court dismissed the petition “without prejudice to the filing of another action with the proper court,” thereby reopening the jurisdictional question.

The issue of jurisdiction was compounded by the dual role of the Regional Trial Court, which also functions as a land registration court.
The respondents had not raised the jurisdictional issue at the outset, and thus, by participating actively (filing Manifestation and presenting evidence), they were deemed to have waived any challenge regarding the court’s jurisdiction.
The enactment of P.D. No. 1529 (Property Registration Decree of 1979) further merged the functions of land registration courts with those of courts of general jurisdiction, supporting the trial court’s competence in the matter.

Whether the Regional Trial Court, while acting as a land registration court, had proper jurisdiction to hear the petition for consolidation of ownership based on a pacto de retro sale.
Whether the respondents’ subsequent challenge on jurisdiction, after actively participating in the trial phase, constituted a waiver of their right to question the court’s competence.

Whether the “Deed of Sale Under Pacto de Retro” should be interpreted as an ordinary sale with a right of repurchase or as an equitable mortgage.
Whether the terms (including the fixed low price and reserved repurchase right) and the conduct of the parties support the characterization as a pacto de retro sale rather than a mortgage secured by an equitable arrangement.