JOSE MA. T. GARCIA, petitioner, vs. COURT OF APPEALS, SPS. LUISITO & MA.

LUISA MAGPAYO AND PHILIPPINE BANK OF

COMMUNICATIONS, respondents.
FACTS:
Atty. Pedro Garcia, in whose name the TCT No. S-31269 that covers a parcel of land, the Lot 17, located at Bel Air II
Village, Makati, was registered, sold together with his wife’s consent, Remedios, the said land to their daughter, Ma. Luisa and
her husband, Luisito Magpayo. The Magpayos then mortgaged the land to the Philippine Bank of Communications (PBCom) to
secure a loan, which according to them, was worth Php 564,000.00., but according to PBCom, it was worth Php 1,200,000.00.
Thereafter, a title was issued in the name of Magpayos. The Deed of Real Estate Mortgage was registered at the Makati Register
of Deeds and was annotated on Magpayos’ title. However, the Magpayos failed to pay their loan which resulted to extrajudicial
foreclosure of the mortgage and PBCom, being the highest bidder, bought the land. The Spouses even failed to redeem the same
and because of which, the TCT over the land was issued in favor of PBCom. On October 4, 1985, the Magpayos filed a complaint
before the RTC of Makati for the annulment of extrajudicial foreclosure of mortgage, public auction sale and the PBCom’s title,
but it was dismissed due to failure to prosecute. 11 days after, or on October 15, 1985, PBCom filed before the same RTC a
petition for issuance of writ of possession over the land which was then granted. Ma. Luisa’s brother, Jose Ma., refused to honor
the said writ and even filed a motion for Intervention but it was denied. Jose Ma. filed against PBCom, the Magpayos and the RTC
Sheriff for the recovery of realty and damages. He contended that he inherited the land, being one of the heirs of his mother,
Remedios, and PBCom acquired no right on the land. PBCom argued that the same land is not among the properties owned by
his mother that was listed in the Inventory of Real Estate which was involved in another case. The Magpayos claimed that the
title to the land was transferred to them by Remedios for the former to enable them to borrow from PBCom.
The motion for summary judgment was first denied by the RTC but it was later on issued. The RTC, in ordering the
summary judgment, declared that the mortgage executed in favor of PBCom was null and void. The reason was that the Sps.
Magpayo were not yet the owners of the property when they executed the mortgage which was evidenced by a new Torrens title
as it was issued only to them on March 9, 1981. Also, they cannot acquire the property by the virtue of Deed of Sale because the
property was in the possession of Jose Ma., and that Atty. Garcia was not the one who was in possession of the same, hence, he
could not deliver the property by merely executing a document. On appeal made by PBCom, the CA reversed the ruling of RTC.
The CA ruled that Jose Ma. only entered into possession of the property upon his mother’s demise, which was on October 31,
1980, and that the execution of the Deed of Sale between Atty. Garcia and Sps. Magpayo took place on August 1, 1980. Therefore,
the Spouses were free to exercise their ownership including the right to mortgage the land since Jose Ma. was not in possession
of the property when the Deed was executed. It was further ruled that the Torrens system does not vest ownership but was
merely to confirm and register the title over the land on which one owns.
ISSUE:
Whether or not the RTC can properly distinguish ownership from the possession of the subject property that is involved
in the case at bar.
RULING:
No. It is belied by one of the pages of PBCom’s appellate’s brief, when it stated therein that the RTC opined erroneously
that the Sps. Magpayo could not have acquired the property by merely executing the Deed of Sale because the subject property
was in possession of Jose Ma. The RTC could not distinguish ownership from possession because they are two entirely different
legal concepts. Ownership exists when a thing is completely subjected to one’s will in a manner not prohibited by law and
consistent with the rights of others, and it includes right to dispose of the thing through sale. In this case, Atty. Garcia and
Remedios exercised their right to dispose of the thing that they owned when they sold the property to Sps. Magpayo. Possession,
on the other hand, is the holding of a thing or enjoyment of right. It means to actually and physically occupy a thing even without
a right. When Jose Ma. occupied the property, it was not under a concept of an owner because his stay was merely tolerated by
his parents. It has been ruled that an owner’s act of allowing another to occupy his house, rent-free does not create a permanent
right of possession in favor of latter. Hence, it is of no moment that Jose Ma. was in possession of the property when the sale to
Sps. Magpayo, in 1981, was made, as such act of him was not a hindrance to a valid transfer of ownership. This Court also upheld
the CA ruling regarding the mortgage to PBCom by Sps. Magpayo as valid because the latter were already the owners at the time
they mortgaged the subject property, although the TCT over the property was issued to the former after the mortgage contract
was executed. To reiterate, registration does not confer ownership since it is merely an evidence of the ownership over a
particular property.