TREASURER OF THE PHILIPPINES v. COURT OF APPEALS and SPS.

JOCSON

G.R. No. L-42805

August 31, 1987

Topic: Recoverability/demandability from the Assurance Fund (under Sec. 101 of Act No. 496)

Facts of the Case: In 1965, a certain Lawaan Lopez (man) offered to sell a parcel of land to the Sps, Jocson (herein
respondents) located in Quezon City, claiming the same as his property. They have agreed to a price of ₱75.00 per
square meter. However, the sale was deferred with Lopez claiming that his certificate of title was burned in his house
in Divisoria, and that he would be filing a petition for a duplicated certificate of title before the CFI of Quezon City.
Without any opposition, the duplicate certificate of title was issued to Lawaan Lopez. Subsequently, the parcel of land
was sold to the respondents for ₱98,700.00 and the corresponding certificate of title was issued to them and the
certificate of title of Lopez was canceled. Shortly after, another Lawaan Lopez (woman) claimed to be the owner of
the parcel of land. She then filed a petition before the CFI of Quezon City to declare the sale to respondents as null and
void alleging that it has been made by an impostor. After trial, the deed of sale between the respondents and the
impostor was canceled, and the parcel of land was transferred in favor of the true Lawaan Lopez. The case was further
appealed by Lopez for damages

Aggrieved, Sps. Jocson filed a complaint for damages against the impostor Lawaan Lopez and the Treasurer of the
Philippines as custodian of the Assurance Fund. The lower court(s) held that the Assurance Fund is subsidiarily liable
(for ₱138,264.00) in case the judgment could not be enforced against the other defendant who could not be located.
Hence, this petition of the Treasurer.

Issue: W/N the Assurance Fund could be held subsidiarily liable

Held + Ratio: No. The Assurance Fund cannot be held subsidiarily liable and that the Sps. Jocson are not
entitled to recover from the same. The Court ruled (citing Noblejas, Land Titles and Deeds) that under Sec. 101 of
Act No. 496, “[R]ecovery from the Assurance Fund could be demanded by:

1) Any person who sustains loss or damage under the following conditions:

a) that there was no negligence on his part; and

b) that the loss or damage was sustained through any omission, mistake, or misfeasance of the clerk of court,
or the register of deeds, his deputy or clerk, in the performance of their respective duties under the provisions
of the land Registration Act; or

2) Any person who has been deprived of any land or any interest therein under the following conditions:

a) that there was no negligence on his part;

Case Digest by: Antonio Dominic G. Salvador

 b) that he was deprived as a consequence of the bringing of his land or interest therein under the provisions
of the Property Registration Decree; or by the registration by any other persons as owner of such land; or by
mistake, omission or misdescription in any certificate or owner's duplicate, or in any entry or memorandum in
the register or other official book, or by any cancellation; and

c) that he is barred or in any way precluded from bringing an action for the recovery of such land or interest
therein, or claim upon the same.”

In the case at bar, the Sps. Jocson do not belong to any of the two classes mentioned above. In the first instance, there
was no omission, mistake, or malfeasance of the clerk of court or the register of deeds in the performance of their
duties. In the second, because of the invalid sale by the impostor Lopez, respondents acquired no land or any interest
therein. With the trial court declaring the sale null and void ab inition, it had no legal effect whatsoever at any point in
time.

Respondents’ argument that they were the owners of the land from the time of transfer of title up to its cancellation is
misplaced. Here, the true Lawaan Lopez had her title all the time and was valid and subsisting despite the issuance of
another title in the name of respondents. Further, respondents failed to exercise due diligence in verifying the
credentials of the impostor, most especially when the latter claimed that his title was lost due to the fire (together with
other suspicious circumstances). It is a condition, in order to bring an action for damages before the Assurance Fund,
that the person is either the registered owner and holder of certificates of title or innocent purchaser in good faith and
for value. However, in this case, respondents were neither. Therefore, they are not entitled to recover from the Fund.

Note: The applicable law was Act No. 496, before the revision of P.D. 1529;

Note: The Court ruled that the recourse of respondents was to file for civil action for recovery and damages, and/or
prosecute the impostor under the Revised Penal Code assuming the latter can be located and arrested.

Case Digest by: Antonio Dominic G. Salvador