Compensation from assurance fund after fraudulent sale of land
"Jose made it appear in a deed of sale that I sold my land to him in 2000. He registered the deed in 2002 and a title was issued in his name. Jose mortgaged the property to Fidez and the latter foreclosed the mortgage because of the former’s non-payment of his loan. Fidez emerged as the highest bidder when the land was sold in public auction. I discovered these transactions when I returned to the Philippines in 2016. Someone told me that I cannot recover the property from Fidez because she is an innocent purchaser, so I have to claim against the assurance fund. But the action may have already prescribed because more than six years have elapsed from the registration of the sale to Fidez. Is this correct?
For your information, the remedy of compensation against the assurance fund is found under Section 95 of Presidential Decree (PD) 1529 otherwise known as the “Property Registration Decree,” which states:“A person who, without negligence on his part, sustains loss or damage, or is deprived of land or any estate or interest therein in consequence of the bringing of the land under the operation of the Torrens system of arising after original registration of land, through fraud or in consequence of any error, omission, mistake or misdescription in any certificate of title or in any entry or memorandum in the registration book, and who by the provisions of this Decree is barred or otherwise precluded under the provision of any law from bringing an action for the recovery of such land or the estate or interest therein, may bring an action in any court of competent jurisdiction for the recovery of damages to be paid out of the Assurance Fund.”
The title of Fidez, who is an innocent purchaser for value, is indefeasible so your legal remedy is clearly an action for compensation against the assurance fund. This action may be brought within six (6) years from the time the right to bring such action first occurred (Section 102, Id.).In the case of Spouses Stilianopoulos vs Register of Deeds of Legazpi City and the National Treasurer (GR 224678, July 3, 2018), the Supreme Court, through Associate Justice Estela Perlas-Bernabe, stated:
“In any event, the reckoning of the six (6)-year period from the time a certificate of title was issued in favor of the usurper is incorrect doctrine. At the risk of belaboring the point, the registration of the property in the name of an innocent purchaser for value is integral in every action against the Assurance Fund on the ground of ‘fraudulent registration under the Torrens system after the land’s original registration.’ This is because it is only at that moment when the claimant suffers loss, damage or deprivation of land caused by the operation of the Torrens system of registration, for which the State may be made accountable. To follow the CA’s (Court of Appeals’) ruling based on the obiter dictum in Guaranteed Homes Inc. is to recognize that the right of action against the Assurance Fund arises already at the point when the usurper fraudulently registers his title. By legal attribution, this latter act is a breach of an implied trust, which, however, by express provision of Section 101 of PD 1529, does not render the Assurance Fund liable. Thus, the CA committed reversible error in ruling that the prescriptive period under Section 102 of PD 1529 for filing a claim against the Assurance Fund should be reckoned from the registration of the usurper’s title. On the contrary, the period should be reckoned from the moment the innocent purchaser for value registers his or her title and upon actual knowledge thereof of the original title holder/claimant. In this light, the claim has yet to prescribe. Applying the above cited decision in your situation, you may still file a claim against the assurance fund.”Based on the decision, the period of six years to file the action for compensation against the assurance fund should be reckoned from when the sale to Fidez was registered and upon your actual knowledge of the fraudulent transaction, which was in 2016.We hope that we were able to answer your queries. Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to "
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"Compensation from assurance fund after fraudulent sale of land"
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and updated on 15 September 2021