G.R. No. L-18861, June 30, 1964
DEVELOPMENT BANK OF THE PHILIPPINES, plaintiff-appellant, vs. LAZARO MANGAWANG, ET AL., defendants-appellees.

FACTS

Gavino Amposta acquired two valid original certificates of title for the same parcel of land, Lot No. 1633. The first, OCT No. 100, was issued administratively on November 29, 1920, under a homestead patent. The second, OCT No. 2668, was issued judicially on July 5, 1924, pursuant to a March 8, 1920 cadastral court decision. Amposta subsequently executed two separate sales of the same property to different parties. On November 24, 1941, he sold the land to Santos Camacho, surrendering OCT No. 100, leading to the issuance of TCT No. 5506. This title was later transferred and eventually mortgaged to the Rehabilitation Finance Corporation (now DBP). After foreclosure, DBP acquired TCT No. 6961 on June 29, 1957.
Meanwhile, on June 11, 1947, Amposta sold the same land to the Mangawang brothers, surrendering the cadastral title (OCT No. 2668), leading to the issuance of TCT No. 1098 in their favor on March 17, 1948. The Mangawang brothers took possession. DBP, claiming ownership through its title, filed an action for recovery of possession and damages against them.

ISSUE

Which of the two purchasers, both holding derivative certificates of title from one of the two valid original titles issued to the same vendor, has a superior right of ownership over the disputed property?

RULING

The Supreme Court reversed the lower court and ruled in favor of the Development Bank of the Philippines. The legal logic proceeds from two applicable principles. First, examining the sequence of transactions, Amposta’s initial sale to Santos Camacho in 1941 was valid and conveyed ownership. When he sold the same property to the Mangawang brothers in 1947, he no longer had any ownership rights to convey; that second sale was therefore void. The Mangawang brothers acquired nothing, regardless of the certificate they received.
Second, the case was analyzed under the rules on double sale under Article 1544 of the Civil Code. Between two purchasers in good faith of the same property from a vendor with a defective title, ownership belongs to the one who first registers the sale in the Registry of Property. Here, Santos Camacho registered his purchase and obtained a transfer certificate of title on November 24, 1941. The Mangawang brothers registered their deed and obtained their title only on March 17, 1948. Consequently, priority of registration vested superior right in Camacho’s successors, culminating in DBP’s title. The Court declared DBP the rightful owner, upheld its TCT No. 6961, and ordered the cancellation of the Mangawang brothers’ TCT No. 1098.