De Guzman v. National Treasurer
REITERATIONFacts
The Antecedents: Spouses Urlan and Asuncion Milambiling purchased a parcel of land and entrusted the Deed of Sale and Certificate of Title to their friend, Marilyn Belgica, for registration. While the Milambiling spouses were working abroad, Belgica, through impostors posing as the Milambiling spouses, facilitated the sale of the property to Spouses Francisco and Amparo De Guzman. The impostors executed a Deed of Absolute Sale in favor of the De Guzmans, who registered the sale, leading to the cancellation of the Milambiling's title and the issuance of a new title in the De Guzmans' names. Procedural History: The Milambiling spouses filed an action for declaration of nullity of sale and title with damages against the De Guzmans, which was affirmed by the Court of Appeals and subsequently denied by the Supreme Court on petition for review on certiorari. Thereafter, the De Guzman spouses filed an action for damages against the Assurance Fund, impleading the National Treasurer and the Register of Deeds of Marikina City. The Regional Trial Court ruled in favor of the De Guzman spouses, finding the Assurance Fund liable. The National Treasurer and the Register of Deeds appealed to the Court of Appeals, which reversed the RTC's decision. The Petition: The De Guzman spouses, as petitioners, sought the reversal of the Court of Appeals' decision, which held that the Assurance Fund was not liable for their alleged losses.
Issue(s)
Whether the Assurance Fund established under Presidential Decree No. 1529 is liable for the losses sustained by the petitioners (Spouses De Guzman), considering the conditions for recovery and the purpose of the fund. Whether the petitioners (Spouses De Guzman) were negligent in their acquisition of the property, thereby precluding their recovery from the Assurance Fund.
Ruling
The petition is DENIED. The Supreme Court affirmed the decision of the Court of Appeals holding that the Assurance Fund is not liable for the losses sustained by the petitioners.
Ratio Decidendi
On the issue of the Assurance Fund's liability: The Court reiterated the conditions under which recovery from the Assurance Fund is allowed, as provided in Section 95 of Presidential Decree No. 1529 and its precursor, Section 101 of Act No. 496. These conditions require that the person seeking compensation must not have been negligent and that the loss or damage must have arisen from specific causes such as errors, omissions, or malfeasance of court personnel or the Register of Deeds, or from the bringing of land under the Torrens system. The Court found that the petitioners' circumstances did not meet these requirements as they failed to allege their loss was due to omission, mistake, or malfeasance of registry personnel, nor was it a direct consequence of the Torrens system's operation or any error in the registration process itself. The Court emphasized that the Assurance Fund was created to protect innocent persons from the consequences of the Torrens system's conclusiveness, not to insure property owners against the machinations of fraudsters. The government is not an insurer of property against fraud, and the petitioners' recourse should be against the individuals who defrauded them, not the Assurance Fund. On the issue of petitioners' negligence: The Court found that the petitioners were negligent as they failed to ascertain whether the individuals who sold the property to them were indeed the registered owners. The possession of the owner's duplicate copy of the certificate of title by the impostors was not sufficient proof of their ownership. Prudence dictated that the petitioners should have verified the identity of the sellers and their authority to sell the property. This failure to exercise due diligence constitutes negligence, which bars recovery from the Assurance Fund. The loss stemmed from their own failure to exercise due diligence, and they sought to benefit from the Torrens System by registering the property, but they ultimately lost it to the original owners. This loss was not a consequence that the Assurance Fund was designed to cover.
Main Doctrine
The Assurance Fund, established under the Property Registration Decree, is not liable for losses sustained by individuals who were negligent in their transactions or whose loss was not a direct consequence of the operation of the Torrens system or errors/omissions of registry personnel, but rather due to their own failure to exercise due diligence in verifying the identity of sellers and the authenticity of documents.