A. Francisco Realty v. Court of Appeals

Summary

A. Francisco Realty sued to recover possession of property from borrower spouses Javillonar after registering an undated deed of sale when they allegedly defaulted on loan interest. The Court of Appeals dismissed the case, ruling it was unlawful detainer beyond RTC jurisdiction and that automatic appropriation clauses constituted void pactum commissorium. The Supreme Court affirmed the dismissal on pactum commissorium grounds but corrected the jurisdiction ruling, holding RTC properly had jurisdiction as the case involved complex ownership and contractual issues beyond simple possession. The automatic property transfer stipulations violated Civil Code Article 2088's prohibition against creditor appropriation of mortgaged property without foreclosure, making the transaction void and requiring cancellation of the improperly issued title.