In 2015, O, the original registered owner of a 300-square meter property covered by Original Certificate of Title (OCT) No. 0-1234, appointed F as its caretaker. A year after, while O was abroad, F surreptitiously broke open O’s safe and stole the duplicate copy of the said OCT. F then forged a Deed of Absolute Sale and made it appear that O sold the property to him. Consequently, F was able to have OCT No. 0-1234 cancelled and in lieu thereof, a new title, Transfer Certificate of Title (TCT) No. T-4321, was issued in his name.
A few months after, F offered the property for sale to X. After conducting the required due diligence to verify the title of F and finding no occupant in the property during ocular inspection, X signed the contract of sale, and thereupon, fully paid the purchase price. A few days later, X was able to obtain TCT No. T-5678 under his name.
When O discovered F’s fraudulent acts upon his return in 2017, O immediately filed a complaint for reconveyance against F and X, principally pointing out that F merely forged his signature in the Deed of Absolute Sale purportedly made in F’s favor and thus, F could not have validly transferred the title thereof to X. Consequently, he sought the return of the subject property to him.
(a) Will the prayer of O for the return of the subject property prosper? Explain. (3%)
(b) Assuming that O could no longer recover the subject property in view of X’s registration thereof in his name, may a claim against the Assurance Fund pursuant to the provisions of the Property Registration Decree be instituted? Explain. (3%)
Suggested Answer:
(a) No. Answer
Under the jurisprudence, an action for reconveyance seeks the transfer of the title to the rightful and legal owner, or to the party who has a superior right over it, without prejudice to innocent purchasers in good faith. Otherwise stated, an innocent purchaser in good faith is protected from any defect on the previous title and thus reconveyance will not apply . Rule
In the case at bar, X is an innocent purchaser in good faith. The action for reconveyance will not apply to him as he is protected under the law. Apply
Thus, the prayer of O for the return of the subject property will not prosper. Conclusion
(b) No. Answer
Under the Property Registration Decree, an action for compensation from assurance fund applies only to loss or damage in cases involving original registration of land whereby a person, without negligence on his part, is deprived of land or any estate or interest therein as a consequence of the bringing of the land under the operation of the Torrens system. This may be 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. Rule
In the case at bar, the sale to X is already a subsequent registration, not an original registration. The assurance fund does not cover subsequent registration. Apply
Thus, a claim against the Assurance Fund pursuant to the Property Registration Decree may not be instituted. Conclusion
