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Stilianopoulos vs. ROD Legazpi GR No. 224678

1. Stilianopoulos filed a case seeking to annul fraudulent titles issued over Lot 1320 and recover damages from those involved, including claiming from the land title assurance fund. 2. The RTC found one defendant guilty of fraud but the CA reversed on the ruling on the assurance fund, holding the claim had prescribed after 6 years. 3. The Supreme Court granted the petition, ruling that for claims against the assurance fund due to fraud, prescription should only begin once an innocent purchaser registers title, not from the initial fraudulent registration, and since this had not yet occurred the claim was not barred.

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451 views

Stilianopoulos vs. ROD Legazpi GR No. 224678

1. Stilianopoulos filed a case seeking to annul fraudulent titles issued over Lot 1320 and recover damages from those involved, including claiming from the land title assurance fund. 2. The RTC found one defendant guilty of fraud but the CA reversed on the ruling on the assurance fund, holding the claim had prescribed after 6 years. 3. The Supreme Court granted the petition, ruling that for claims against the assurance fund due to fraud, prescription should only begin once an innocent purchaser registers title, not from the initial fraudulent registration, and since this had not yet occurred the claim was not barred.

Uploaded by

Faustine Mata
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Stilianopoulos vs.

ROD Legazpi
GR No. 224678

Petition for review of certiorari the decision of the RTC Legazpi held
that the claim of petitioners against the Assurance Fund is already
barred by prescription.

Stemmed from a nullity of TCT, and annulment of the following TCTs


and recovery of possession of Lot 1320 with damages filed by
petitioners against ROD Legazpi.

Petitioner’s claim:
1. They own a property known as Lot 1320 as evidenced by TCT No.
13450 in the name of Jose Manuel, a resident of spain and
without any administrator of said property in the philippines.

2. On oct 9, 1995, Anduiza caused the cancellation fo TCT 13450 and


issuance of 42486 in his name. Thereafter, Anduiza mortgaged lot
1320 to Rowena. As a result, Rowena foreclosed the mortgage
and caused the cancellation of TCT 42486 and issuance of TCT
52392 in her name.

3. Rowena then sold lot 1320 to Co Group, resulting in the


cancellation of TCT 52392 and issuance of 59654 in the latter’s
name.

The discovery of the aforesaid transactions only on Jan 2008, prompted


them to file a complaint for recovery of title on May 2008. The
complaint was dismissed for its failure to allege the assessed value of
Lot 1320. Thus, they filed subject complaint praying that:

1. TCTs under the names of Anduiza, Rowena, and Co group be


annulled;
2. All defendants be held solidarily liable to pay damages and
attorneys fees;
3. ROD Legazpi and NT through the Assurance Fund be ordered to
pay petitioners claims should the defendants be unable to pay the
same.

They claimed that they were deprived of the possession and ownership
of Lot 1320 without negligence on their part through fraud and in
consequence of errors of the ROD Legazpi.

The defendants and the ROD-Legazpi, in their defense, invoked the


defense of purchaser in good faith and defense of prescription
respectively. The latter argued that the right to bring an action against
the Assurance Fund must be within 6 years from the time the cause of
action occurred.

RTC Ruling:
1. Dismissed the case against Co group as they were shown to be
purchasers in good faith and of value;
2. Found Anduiza guilty of fraud in causing the cancellation of
petitioners’ TCT;
3. Held the National treasure subsidiarily liable to Anduiza’s
monetary liability.

RTC characterized the complaint as one for reconveyance based on


implied trust, which is subject to extinctive prescription of 10 years
counted from the time of the repudiation of trust.

It also held that the petitioner could no longer recover the lot from Co
group as they are purchasers in good faith.

Moreover, they emphasized that the record clearly established the


irregularities in the in the cancellation of peritioner’s title and issuance
of Anduiza, all of which cannot be done without the comlplicity of the
ROD Legazpi. Hence the Assurance fund may be held liable should
Anduiza be unable to pay.

CA Ruling:
The CA reversed RTC’s ruling insofar as the National Treasurer’s liabiliyu
was concerned. It held that petitioners had only 6 years form the time
Anduiza caused the cancellation of TCT on Oct 1995 until Oct 2001,
within to claim compensation from the Assurance Fund. Since they only
filed claim on March 2008, it was already barred by prescription.

Issue:
Whether or not the claim against the Assurance Fund has already been
barred by prescription.

Held: Assurance fund is acquired when transferred to an innocent


purchaser for value.
A. Nature of the Assurance Fund
The Torrens System guarantees the integrity of land titles and to
protect their indefeasibility once the claim of ownership is established
and recognized. This is to avoid any conflicts of title that may arise by
giving the public the right to reply upon the face of the Torrens Title.

Innocent purchasers for value and in good faith – individuals who rely
on a clean title in purchasing the real property; Where innocent third
persons, relying on the correctness of the certificate of title issued,
acquire rights over the property, the court cannot disregard such rights
and order its total cancellation. It also refers to an innocent mortgagee
who had no knowledge of any defects in the title of the mortgagor of
the property.

The Assurance fund was intended to relieve innocent persons from the
harshness of the doctrine that a certificate is conclusive evidence of an
indefeasible title to land. It is a compensation by way of damages in
cases for persons who had lost their property.
Sec. 95. Action for compensation from funds – a person who sustains
loss or damage, or deprived of land in consequences of bringing the
land under the operation of the Torrens System.

Conditions:
1. Individual must sustain loss or damaged, or deprived of land
2. Must not be negligent
3. The damage is caused by a) fraudulent registration under the
torrens system after its original registration and b) any error or
mistake in the entry in the registration book.
4. Must be barred from bringing an action for the recovery of such
land.

The Assurance Fund shall not be liable for any loss occasioned by a
breach of trust, whether express or implied or mistake in the resurvey.
Loss becomes compensable when the property has been registered in
the name of an innocent purchaser for value.

La Urbana vs. Bernardo held that persons who bring an action for
damages against assurance funds must be the registered owner and be
innocent purchasers in good faith and for value.

The Court held that action against the Assurance Fund on the ground
of fraudulent registration may be brought only after the claimant’s
property be registered in the name of an innocent purchaser for
value. Only after the registration of innocent purchaser of value can it
be said that claimant effectively sustained loss or damage in
consequence of brining the land under the operation of the Torrens
system.
B. Prescriptive Period
Section 96, PD 1529. Against whom action is filed:
1. If such action is brought to recover for loss of damage or for
deprivation of land through fraud or negligence or mistake of
the court personnel, ROD, it shall be brought against the ROD of
the province and National Treasurer as defendants.
2. If such action is brought to recover for loss of deprivation of land
arising through fraud other than the court personnel, ROD, and
other employees, such action shall be brought against the ROD,
National Treasurer and other persons as co defendant.
In every action filed against the Assurance Fund, court shall consider
the report of the Commissioner of Land Registration.

Section 97. Judgment, how satisfied:


1. Execution shall first issue against defendants other than the
National Treasurer and ROD
2. If returned unsatisfied and same certificates cannot be collected
from the land of other defendants, the court shall order the
amount of execution and costs, to be paid by the National
Treasurer out of the Assurance Fund.
Funds to be paid out of the Assurance Fund is a matter to be
determined and resolved at the execution stage of the proceedings.

Section 102. Limitation of Action:


Within 6 years from the time the right to bring such action first
occurred.

General Rule: a right of action accrues only from the moment the right
to commence the action comes into existence and prescription begins
to run from that time.

Constructive Notice Rule: In cases involving fraud, period of


prescription runs from the discovery of the fraud. The rule is that the
registration of an instrument in the Office of the ROD constitutes
constructive notice to the while world and therefore the discovery of
fraud is deemed to have taken place at the time of registration.

In cases involving claims against the Assurance Fund, then original title
holders, who remain in possession of their duplicate titles, as
petitioners in this case, are in danger of losing their final bastion of
recompense on the ground of prescription, despite lack of negligence
and fault on their part.

The intent of the Assurance Fund is to indemnify the innocent title


holder for his property loss, which loss is caused not only from the acts
of the usurper but ultimately the operations of the Torrens System.

Hence, the constructive notice rule should not be made to apply to title
holders who have been unjustly deprived of their land without their
negligence.

Actual title holder cannot be deprived of their rights:


1. Fraudulent registration of the title in the name of the usurper
2. Operation of the constructive notice rule

Prescription should not be reckoned from the moment innocent


purchaser for value registers his or her title upon actual knowledge of
the original claimant. Registration of the innocent purchaser for value is
a prerequisite for claim against Assurance Fund on the ground of fraud
to proceed, while actual knowledge of the registration is tantamount to
the discovery of fraud.

Petitioners remain in possession of the owners duplicate copy of TCT


13450. They were not in any way negligent.
The prescriptive period against should not be reckoned from the
usurper’s registration of title, rather, the period should be from the
moment the innocent purchaser for value registrers his title upon
actual knowledge thereof of the original title. The claim has yet to
prescribe.

PETITION GRANTED.

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