Garcia vs. Court of Appeals

The execution and registration of a deed of sale by the registered owner operates as symbolic delivery and transfers ownership to the buyer, even if the buyer's title is issued only after the execution of a mortgage over the property. Possession by a third party with merely tolerated stay does not impede the transfer of ownership.

Atty. Pedro V. Garcia and his wife Remedios sold a parcel of land registered in Atty. Garcia's name to their daughter Ma. Luisa Magpayo and her husband Luisito Magpayo. The Magpayos subsequently mortgaged the property to the Philippine Bank of Communications (PBCom). After the Magpayos defaulted, the mortgage was extrajudicially foreclosed, and PBCom purchased the property at auction. Upon expiration of the redemption period, PBCom consolidated its title. Jose Ma. T. Garcia, Remedios's son and Ma. Luisa's brother, who occupied the property, contested the foreclosure and PBCom's title, claiming he inherited the property and that the mortgage was void because the Magpayos were not yet owners when they mortgaged it.

• Registered Ownership and Sale: Atty. Pedro V. Garcia, the registered owner of Lot 17 in Bel Air II Village, Makati, sold the property to his daughter and son-in-law, the Magpayo spouses, with his wife Remedios's consent on August 1, 1980.
• Mortgage and Title Issuance: On March 5, 1981, the Magpayos mortgaged the property to PBCom to secure a loan. On March 9, 1981, Atty. Garcia's title was cancelled, and TCT No. S-108412/545 was issued in the Magpayos' names.
• Foreclosure and Consolidation: The Magpayos defaulted, leading to extrajudicial foreclosure. PBCom bought the property at public auction. The redemption period expired without redemption, and TCT No. 138233 was issued in PBCom's name.
• Prior Litigation: The Magpayos filed a complaint to nullify the foreclosure (Civil Case No. 11891), which was dismissed for failure to prosecute. PBCom filed a petition for a writ of possession (LRC Case No. M-731), which was granted. Garcia's motion to intervene in the possession case was denied.
• Present Action: Garcia filed a suit for recovery of realty and damages, alleging he inherited the property from his mother and that PBCom acquired no right over it. He claimed he was in actual possession of the property at the time of the sale to the Magpayos. PBCom countered that the property was not included in the inventory of Remedios's estate. The Magpayos asserted the property was transferred to them to enable them to borrow from PBCom.

• Petitioner argued that the Court of Appeals resolved the appeal based on issues of ownership and possession not raised in the trial court or in PBCom's appellant's brief.
• Petitioner contended that the Court of Appeals disregarded his admitted facts, particularly his actual physical possession at the time of the sale and the Magpayos' lack of ownership at the time of the mortgage.
• Petitioner maintained that only he, as the original movant, was entitled to a summary judgment.

• Respondent PBCom argued that ownership and possession are distinct legal concepts, and petitioner's possession was that of an intruder in bad faith that could not ripen into ownership.
• PBCom asserted that the Magpayos were owners when they executed the mortgage because the deed of sale was executed and registered prior to the mortgage.
• PBCom contended that the issuance of the Magpayos' title four days after the mortgage was immaterial because registration does not vest ownership but merely confirms it.

• Procedural Issues:
  • Whether the Court of Appeals erred in resolving the appeal based on issues not raised by the appellant.
  • Whether the Court of Appeals erred in rendering summary judgment in favor of the defending party when the claimant made the initial motion for summary judgment.
• Substantive Issues:
  • Whether the Magpayo spouses were the owners of the property at the time they executed the real estate mortgage, notwithstanding that their title was issued four days after the mortgage.
  • Whether petitioner's possession of the property invalidated the sale and subsequent mortgage.

• Procedural: The Court held that PBCom did raise the issues of ownership and possession in its appellant's brief, specifically arguing that the trial court erroneously equated possession with ownership. Regarding summary judgment, the Court ruled that under Rule 34 of the Rules of Court, either the claimant or the defending party may move for summary judgment. Because both parties moved for summary judgment with supporting affidavits and exhibits, the appellate court committed no error in rendering summary judgment in favor of PBCom.
• Substantive: The Court held that the Magpayos were already owners when they mortgaged the property. The execution and registration of the deed of sale by the registered owner operated as formal or symbolic delivery, transferring ownership to the Magpayos. The issuance of the Magpayos' title four days after the mortgage was immaterial because registration under the Torrens system does not vest ownership but merely confirms title already held. Petitioner's possession did not invalidate the sale or mortgage because his stay was merely tolerated by his parents and did not create a permanent and indefeasible right. Furthermore, his claim of ownership as an heir was belied by the property's exclusion from his mother's estate inventory.

• Ownership vs. Possession — Ownership is the right to subject a thing to one's will consistent with the rights of others, while possession is the holding of a thing or enjoyment of a right. Possession may be in the concept of an owner or as a mere holder. Tolerated possession does not create a permanent and indefeasible right in the possessor. The Court applied this to hold that petitioner's tolerated stay did not defeat the registered owner's right to dispose of the property.
• Effect of Registration — Registration under the Torrens system does not confer ownership; it is merely evidence of such ownership over a particular property. The Court applied this to rule that the Magpayos' ownership was not dependent on the issuance of their title four days after the mortgage.
• Symbolic Delivery — The execution of a public instrument (deed of sale) operates as formal or symbolic delivery of the property sold and authorizes the buyer to use the document as proof of ownership. The Court applied this to conclude that the Magpayos acquired ownership upon the execution and registration of the deed of sale, even though petitioner remained in physical possession.

• "We stress again that possession and ownership are distinct legal concepts. Ownership exists when a thing pertaining to one person is completely subjected to his will in a manner not prohibited by law and consistent with the rights of others."
• "Registration does not confer ownership, it is merely evidence of such ownership over a particular property."
• "The deed of sale operates as a formal or symbolic delivery of the property sold and authorizes the buyer to use the document as proof of ownership."

• Municipality of Victorias v. Court of Appeals, 149 SCRA 32 (1987) — Followed for the principle that registration does not vest ownership but merely confirms it.
• Caniza v. Court of Appeals, 268 SCRA 640 (1997) — Followed for the rule that an owner's act of allowing another to occupy a house rent-free does not create a permanent and indefeasible right of possession.
• Manuel R. Dulay Enterprises, Inc. v. Court of Appeals, 225 SCRA 678 (1993) — Followed for the rule that a deed of sale operates as formal or symbolic delivery.
• Manalili v. Cesar, 39 Phil. 134 — Cited by the trial court for the proposition that a vendor not in possession cannot deliver property merely by executing a document; implicitly distinguished by the Supreme Court in favor of the symbolic delivery rule.

• Article 2085, Civil Code — Enumerates the essential requisites of pledge and mortgage, including that the pledgor or mortgagor be the absolute owner of the thing pledged or mortgaged. The Court applied this provision to hold that the Magpayos were absolute owners at the time of the mortgage because the prior sale transferred ownership.
• Article 523, Civil Code — Defines possession as the holding of a thing or the enjoyment of a right.
• Article 524, Civil Code — Classifies possession into possession in the concept of an owner and possession of a holder.
• Rule 34, Sections 1 and 2, Rules of Court — Governs summary judgment for claimants and defending parties. The Court applied this rule to uphold the rendering of summary judgment in favor of PBCom, as both parties had moved for summary judgment.

Davide, Jr., C.J., Kapunan, Pardo and Ynares-Santiago, JJ.