[G.R.

 No. 224678. July 3, 2018.]

SPOUSES JOSE MANUEL and MARIA ESPERANZA

RIDRUEJO STILIANOPOULOS, petitioners, vs. THE REGISTER
OF DEEDS FOR LEGAZPI CITY and THE NATIONAL
TREASURER, respondents.

DECISION

PERLAS-BERNABE, J  : p

Assailed in this petition for review on certiorari 1 are the

Decision 2 dated March 16, 2016 and the Resolution 3 dated May 19, 2016 of
the Court of Appeals (CA) in CA-G.R. CV No. 104207, which partially
reversed and set aside the Decision 4 dated August 19, 2013 and the
Order 5 dated April 30, 2014 of the Regional Trial Court of Legazpi City,
Albay, Branch 2 (RTC) in Civil Case No. 10805, and accordingly, held that the
claim of petitioners Spouses Jose Manuel (Jose Manuel) and Maria
Esperanza Ridruejo Stilianopoulos (collectively; petitioners) against the
Assurance Fund is already barred by prescription.

The Facts

This case stemmed from a Complaint 6 for Declaration of Nullity of

Transfer Certificate of Title (TCT) No. 42486, Annulment of TCT No. 52392
and TCT No. 59654, and Recovery of Possession of Lot No. 1320 with
Damages (subject complaint) filed by petitioners against respondents The
Register of Deeds for Legazpi City (RD-Legazpi) and The National Treasurer
(National Treasurer), as well as Jose Fernando Anduiza (Anduiza), Spouses
Rowena Hua-Amurao (Rowena) and Edwin Amurao (collectively; Spouses
Amurao), and Joseph Funtanares Co, et al. (the Co Group) before the RTC.
Petitioners alleged that they own a 6,425-square meter property known
as Lot No. 1320, as evidenced by TCT No. 13450 7 in the name of Jose
Manuel, who is a resident of Spain and without any administrator of said
property in the Philippines. 8 On October 9, 1995, Anduiza caused the
cancellation of TCT No. 13450 and issuance of TCT No. 42486 9 in his
name. 10
Thereafter, Anduiza mortgaged Lot No. 1320 to Rowena. 11 As a result
of Anduiza's default, Rowena foreclosed the mortgage, and consequently,
caused the cancellation of TCT No. 42486 and issuance of TCT No.
52392 12 in her name on July 19, 2001. 13 On April 15, 2008, Rowena then
sold Lot No. 1320 to the Co Group, resulting in the cancellation of TCT No.
52392 and issuance of TCT No. 59654 14 in the latter's name. 15
According to petitioners, their discovery of the aforesaid transactions
only on January 28, 2008 prompted them to file a complaint for recovery of
title on May 2, 2008. 16 However, such complaint was dismissed for
petitioners' failure to allege the assessed value of Lot No. 1320. Thus, they
filed the subject complaint on March 18, 2009, praying that: (a) TCT Nos.
42486, 52392, and 59654 in the respective names of Anduiza, Rowena, and
the Co Group be annulled; (b) all defendants be held solidarily liable to pay
petitioners damages and attorney's fees; and (c) the RD-Legazpi and the
National Treasurer, through the Assurance Fund, be ordered to pay
petitioners' claims should the defendants be unable to pay the same in whole
or in part. 17 In support of their complaint, petitioners claimed that they were
deprived of the possession and ownership of Lot No. 1320 without negligence
on their part and through fraud, and in consequence of errors, omissions,
mistakes, or misfeasance of officials and employees of RD-Legazpi. 18
In their defense, Spouses Amurao and the Co Group both maintained
that they purchased Lot No. 1320 in good faith and for value, and that
petitioners' cause of action has already prescribed, considering that they only
had ten (10) years from the issuance of TCT No. 42486 in the name of
Anduiza on October 9, 1995 within which to file a complaint for recovery of
possession. 19 For their part, 20 the RD-Legazpi and the National Treasurer
also invoked the defense of prescription, arguing that the right to bring an
action against the Assurance Fund must be brought within six (6) years from
the time the cause of action occurred, or in this case, on October 9, 1995
when Anduiza caused the cancellation of petitioners' TCT over Lot No.
1320. 21 Notably, Anduiza did not file any responsive pleading despite due
notice. 22

The RTC Ruling

In a Decision 23 dated August 19, 2013 the RTC: (a) dismissed the case

against Spouses Amurao and the Co Group as they were shown to be
purchasers in good faith and for value; and (b) found Anduiza guilty of fraud in
causing the cancellation of petitioners' TCT over Lot No. 1320, and thus,
ordered him to pay petitioners the amount of P5,782,500.00 representing the
market value of Lot No. 1320, as well as P10,000.00 as exemplary damages;
and (c) held the National Treasurer, as custodian of the Assurance Fund,
subsidiarily liable to Anduiza's monetary liability should the latter be unable to
fully pay the same. 24
Prefatorily, the RTC characterized the subject complaint filed on March
18, 2009 as one for reconveyance based on an implied trust, which is subject
to extinctive prescription of ten (10) years ordinarily counted from the time of
the repudiation of the trust, i.e., when Anduiza registered TCT No. 42486 in
his name on October 9, 1995. This notwithstanding, the RTC found that
since: (a) petitioners are residing in Spain; (b) they are in possession of the
owner's duplicate copy of TCT No. 13450 registered in their names;
and (c) Anduiza's act of fraudulently cancelling their title was unknown to — if
not effectively concealed from — them, the ten (10)-year prescriptive period
should be reckoned from their actual discovery of the fraud in 2008. 25 As
such, petitioners' complaint for reconveyance — as well as their claim against
the Assurance Fund which has a six (6)-year prescriptive period — has not
prescribed. 26
Anent the merits of the case, the RTC found that Anduiza had indeed
acquired title over Lot No. 1320 in bad faith and through fraud — a fact which
is further highlighted by his failure to refute petitioner's allegations against him
on account of his omission to file a responsive pleading despite due
notice. 27 This notwithstanding, the RTC held that petitioners could no longer
recover Lot No. 1320 from Spouses Amurao and/or the Co Group as the latter
are innocent purchasers for value and in good faith, absent any evidence to
the contrary. As such, it is only proper that Anduiza be made to pay
compensatory damages corresponding to the value of the loss of property, as
well as exemplary damages as stated above. 28
Finally, the RTC found that Anduiza alone could not have perpetrated
the fraud without the active participation of the RD-Legazpi. It then proceeded
to point out that the evidence on record clearly established the irregularities in
the cancellation of petitioners' title and the issuance of Anduiza's title, all of
which cannot be done successfully without the complicity of the RD-Legazpi.
Hence, the Assurance Fund may be held answerable for the monetary awards
in favor of petitioners, should Anduiza be unable to pay the same in whole or
in part. 29
Aggrieved, petitioners moved for reconsideration, 30 while the RD-
Legazpi and the National Treasurer moved for a partial
reconsideration; 31 both of which were denied in an Order 32 dated April 30,
2014. Thus, they filed their respective notices of appeal. 33 However, in an
Order 34 dated June 11, 2014, petitioners' notice of appeal was denied due
course due to their failure to pay the appellate docket and other lawful
fees. 35 Consequently, the Co Group moved for a partial entry of
judgment, 36 which the RTC granted in an Order 37 dated July 22, 2014. As
such, only the appeal of the RD-Legazpi and the National Treasurer
questioning the subsidiary liability of the Assurance Fund was elevated to the
CA. 38

The CA Ruling

In a Decision 39 dated March 16, 2016, the CA reversed and set aside

the RTC's ruling insofar as the National Treasurer's subsidiary liability was
concerned. 40 It held that petitioners only had six (6) years from the time
Anduiza caused the cancellation of TCT No. 13450 on October 9, 1995, or
until October 9, 2001, within which to claim compensation from the Assurance
Fund. Since petitioners only filed their claim on March 18, 2009, their claim
against the Assurance Fund is already barred by prescription. 41
Dissatisfied, petitioners moved for reconsideration, 42 which was,
however, denied in a Resolution 43 dated May 19, 2016; hence, this
petition. 44

The Issue Before the Court

The essential issue for resolution is whether or not the CA correctly

held that petitioners' claim against the Assurance Fund has already been
barred by prescription.

The Court's Ruling

The petition is granted.

I. Nature and Purpose of the Assurance Fund

It is a fundamental principle that "a Torrens certificate of Title is

indefeasible and binding upon the whole world unless it is nullified by a court
of competent jurisdiction x x x in a direct proceeding for cancellation of
title." 45 "The purpose of adopting a Torrens System in our jurisdiction is to
guarantee the integrity of land titles and to protect their indefeasibility once the
claim of ownership is established and recognized. This is to avoid any
possible conflicts of title that may arise by giving the public the right to rely
upon the face of the Torrens title and dispense with the need of inquiring
further as to the ownership of the property." 46
 As a corollary, "every person dealing with registered land may safely
rely on the correctness of the certificate of title issued therefor and the law will
in no way oblige him to go behind the certificate to determine the condition of
the property. When a certificate of title is clean and free from any
encumbrance, potential purchasers have every right to rely on such
certificate. Individuals who rely on a clean certificate of title in making the
decision to purchase the real property are often referred to as 'innocent
purchasers for value' and 'in good faith.'" 47 "Where innocent third
persons, relying on the correctness of the certificate of title thus issued,
acquire rights over the property[,] the court cannot disregard such
rights and order the total cancellation of the certificate. The effect of such
an outright cancellation would be to impair public confidence in the certificate
of title, for everyone dealing with property registered under the Torrens
system would have to inquire in every instance whether the title has been
regularly or irregularly issued." 48
The rationale for the rule on innocent purchasers for value "is the
public's interest in sustaining 'the indefeasibility of a certificate of title, as
evidence of the lawful ownership of the land or of any encumbrance' on
it." 49 Notably, the term "innocent purchaser for value" may also refer to an
innocent mortgagee who had no knowledge of any defects in the title of the
mortgagor of the property, such as in this case.
However, while "public policy and public order demand x x x that titles
over lands under the Torrens system should be given stability for on it greatly
depends the stability of the country's economy[,] x x x [p]ublic policy also
dictates that those unjustly deprived of their rights over real property by
reason of the operation of our registration laws be afforded
remedies." 50 Thus, as early as the 1925 case of Estrellado v. Martinez, 51 it
has been discerned that remedies, such as an action against the Assurance
Fund, are available remedies to the unwitting owner:
The authors of the Torrens system x x x wisely included
provisions intended to safeguard the rights of prejudiced parties
rightfully entitled to an interest in land but shut off from obtaining titles
thereto [because of the indefeasibility of a Torrens title]. [Therefore,]
[a]s suppletory to the registration of titles, pecuniary
compensation by way of damages was provided for in certain
cases for persons who had lost their property. For this purpose,
an assurance fund was created. x x x 52 (Emphasis and
underscoring supplied)
The Assurance Fund is a long-standing feature of our property
registration system which is intended "to relieve innocent persons from the
harshness of the doctrine that a certificate is conclusive evidence of an
indefeasible title to land x x x." 53 Originally, claims against the Assurance
Fund were governed by Section 101 54 of Act No. 496, otherwise known as
the "Land Registration Act." The language of this provision was substantially
carried over to our present "Property Registration Decree," i.e., Presidential
Decree No. (PD) 1529, 55 Section 95 of which reads:
Section 95. Action for compensation from funds. — 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 or 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.
In Register of Deeds of Negros Occidental v. Anglo, Sr. 56 (Anglo, Sr.),
the Court held that "[b]ased solely on Section 95 of Presidential Decree No.
1529, the following conditions must be met: First, the individual must sustain
loss or damage, or the individual is deprived of land or any estate or
interest. Second, the individual must not be negligent. Third, the loss,
damage, or deprivation is the consequence of either (a) fraudulent
registration under the Torrens system after the land's original
registration, or (b) any error, omission, mistake, or misdescription in any
certificate of title or in any entry or memorandum in the registration
book. [And] [f]ourth, the individual must be 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." 57
Anent the first ground (i.e., item [a] of the third condition above), it
should be clarified that loss, damage, or deprivation of land or any estate or
interest therein through fraudulent registration alone is not a valid ground to
recover damages against the Assurance Fund. Section 101 of PD
1529 explicitly provides that "[t]he Assurance Fund shall not be liable for any
loss, damage or deprivation caused or occasioned by a breach of trust,
whether express, implied or constructive or by any mistake in the resurvey
or subdivision of registered land resulting in the expansion of area in the
certificate of title." It is hornbook doctrine that "[w]hen a party uses fraud or
concealment to obtain a certificate of title of property, a constructive trust is
created in favor of the defrauded party." 58 However, as stated in Section 101
of PD 1529, the inability to recover from the defrauding party does not make
the Assurance Fund liable therefor.
 Instead, the loss, damage or deprivation becomes compensable
under the Assurance Fund when the property has been further
registered in the name of an innocent purchaser for value. This is
because in this instance, the loss, damage or deprivation are not actually
caused by any breach of trust but rather, by the operation of the Torrens
system of registration which renders indefeasible the title of the innocent
purchaser for value. To note, it has been held that a mortgagee in good
faith (such as Rowena) stands as an innocent mortgagee for value with
the rights of an innocent purchaser for value. 59
In the 1916 case of Dela Cruz v. Fabie, 60 the Court discussed that it is
necessary for the property to have transferred to a registered innocent
purchaser — not to a mere registered purchaser — before recovery from the
Assurance Fund may prosper, viz.:
The Attorney-General did not err when he wrote in his brief in
the preceding case: "To hold that the principal may recover damages
from the assurance fund on account of such a fraudulent act as that
charged to Vedasto Velazquez in this case would be equivalent to
throwing open the door to fraud, to the great advantage of the
registered landowner and his agent and to the ruin and rapid
disappearance of the assurance fund, and the general funds of the
Insular Treasury would become liable for the claims for indemnity in
cases where none such was due. This course would in time wreck the
Insular Treasury and enrich designing scoundrels." (Brief, p. 16.)
xxx xxx xxx
The simple allegation contained in the complaint that Fabie is
a registered purchaser is not the same as that of his being a registered
innocent purchaser. The fact of the sale and the fact of the registration
are not sufficient to allow the understanding that it was also admitted in
the demurrer that he was an innocent purchaser.
There is no law or doctrine that authorizes such an
interpretation. The plaintiff must set forth in his complaint all the facts
that necessarily conduce toward the result sought by his action. The
action was for the purpose of recovering from the assurance fund
indemnity for the damage suffered by the plaintiff in losing the
ownership of his land as a result of the registration obtained by an
innocent holder for value (purchase). It is a necessary requirement
of the law that the registered property shall have been conveyed
to an innocent holder for value who shall also have registered his
acquisition. Necessarily the complaint must show these facts as they
are required by the law. x x x 61 (Emphasis and underscoring supplied)
Later, in the 1936 case of La Urbana v. Bernardo, 62 the Court qualified
that "it is a condition sine qua non that the person who brings an action for
damages against the assurance fund be the registered owner, and, as to
holders of transfer certificates of title, that they be innocent purchasers
in good faith and for value." 63
In sum, the Court herein holds that an action against the Assurance
Fund on the ground of "fraudulent registration under the Torrens system after
the land's original registration" may be brought only after the claimant's
property is registered in the name of an innocent purchaser for value. This is
because it is only after the registration of the innocent purchaser for value's
title (and not the usurper's title which constitutes a breach of trust) can it be
said that the claimant effectively "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." The registration of the
innocent purchaser for value's title is therefore a condition sine qua non in
order to properly claim against the Assurance Fund.

II. Action for Compensation Against the Assurance Fund; Prescriptive

Period

An action for compensation against the Assurance Fund is a separate

and distinct remedy, apart from review of decree of registration or
reconveyance of title, which can be availed of when there is an unjust
deprivation of property. 64 This is evident from the various provisions of
Chapter VII of PD 1529 which provide for specific parameters that govern the
action.
Among others, Section 95 of PD 1529 cited above states the conditions
to claim against the Assurance Fund. Meanwhile, Section 96 of the same law
states against whom the said action may be filed:
Section 96. Against whom action filed. — If such action is
brought to recover for loss or damage or for deprivation of land or of
any estate or interest therein arising wholly through fraud, negligence,
omission, mistake or misfeasance of the court personnel, Register of
Deeds, his deputy, or other employees of the Registry in the
performance of their respective duties, the action shall be brought
against the Register of Deeds of the province or city where the land is
situated and the National Treasurer as defendants. But if such action
is brought to recover for loss or damage or for deprivation of land
or of any interest therein arising through fraud, negligence,
omission, mistake or misfeasance of person other than court
personnel, the Register of Deeds, his deputy or other employees
of the Registry, such action shall be brought against the Register
of Deeds, the National Treasurer and other person or persons, as
co-defendants. It shall be the duty of the Solicitor General in person
 or by representative to appear and to defend all such suits with the aid
of the fiscal of the province or city where the land lies: Provided,
however, that nothing in this Decree shall be construed to deprive the
plaintiff of any right of action which he may have against any person for
such loss or damage or deprivation without joining the National
Treasurer as party defendant. In every action filed against the
Assurance Fund, the court shall consider the report of the
Commissioner of Land Registration. (Emphases and underscoring
supplied)
As Section 96 of PD 1529 provides, "if [the] action is brought to recover
for loss or damage or for deprivation of land or of any interest therein arising
through fraud, negligence, omission, mistake or misfeasance of person other
than court personnel, the Register of Deeds, his deputy or other employees of
the Registry, such action shall be brought against the Register of Deeds, the
National Treasurer and other person or persons, as co-defendants." The
phrase "other person or persons" would clearly include the usurper who
fraudulently registered the property under his name.
To recover against the Assurance Fund, however, it must appear that
the execution against "such defendants other than the National Treasurer and
the Register of Deeds" is "returned unsatisfied in whole and in part." "[O]nly
then shall the court, upon proper showing, order the amount of the execution
and costs, or so much thereof as remains unpaid, to be paid by the National
Treasurer out of the Assurance Fund." Section 97 of PD 1529 states:
Section 97. Judgment, how satisfied. — If there are defendants
other than the National Treasurer and the Register of Deeds and
judgment is entered for the plaintiff and against the National Treasury,
the Register of Deeds and any of the other defendants, execution
shall first issue against such defendants other than the National
Treasurer and the Register of Deeds. If the execution is returned
unsatisfied in whole or in part, and the officer returning the same
certificates that the amount due cannot be collected from the land
or personal property of such other defendants, only then shall the
court, upon proper showing, order the amount of the execution
and costs, or so much thereof as remains unpaid, to be paid by
the National Treasurer out of the Assurance Fund. In an action
under this Decree, the plaintiff cannot recover as compensation more
than the fair market value of the land at the time he suffered the loss,
damage, or deprivation thereof. (Emphasis supplied)
Based on the afore-cited provision, it is apparent that a prior declaration
of insolvency or inability to recover from the usurper is not actually required
before the claimant may file an action against the Assurance Fund. Whether
or not funds are to be paid out of the Assurance Fund is a matter to be
determined and resolved at the execution stage of the proceedings. Clearly,
this should be the proper treatment of the insolvency requirement, contrary to
the insinuation made in previous cases on the subject. 65
Another important provision in Chapter VII of PD 1529 is Section 102,
which incidentally stands at the center of the present controversy. This
provision sets a six (6)-year prescriptive period "from the time the right to
bring such action first occurred" within which one may proceed to file an
action for compensation against the Assurance Fund, viz.:
Section 102. Limitation of Action. — Any action for
compensation against the Assurance Fund by reason of any loss,
damage or deprivation of land or any interest therein shall be
instituted within a period of six years from the time the right to
bring such action first occurred:
Provided, That the right of action herein provided shall survive to the
legal representative of the person sustaining loss or damage, unless
barred in his lifetime; and Provided, further, That if at the time such
right of action first accrued the person entitled to bring such action was
a minor or insane or imprisoned, or otherwise under legal disability,
such person or anyone claiming from, by or under him may bring the
proper action at any time within two years after such disability has
been removed, notwithstanding the expiration of the original period of
six years first above provided. (Emphasis supplied)
Jurisprudence has yet to interpret the meaning of the phrase "from the
time the right to bring such action first occurred"; hence, the need to clarify the
same.
The general rule is that "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 x x x." 66 However, in cases involving fraud, the
common acceptation is that the period of prescription runs from the discovery
of the fraud. Under the old Code of Civil Procedure, an action for relief on the
ground of fraud prescribes in four years, "but the right of action in such case
shall not be deemed to have accrued until the discovery of the
fraud." 67 Meanwhile, under prevailing case law, "[w]hen an action for
reconveyance is based on fraud, it must be filed within four (4) years from
discovery of the fraud, and such discovery is deemed to have taken place
from the issuance of the original certificate of title. x x x The rule is that the
registration of an instrument in the Office of the RD constitutes constructive
notice to the whole world and therefore the discovery of the fraud is deemed
to have taken place at the time of registration." 68
However, in actions for compensation against the Assurance Fund
grounded on fraud, registration of the innocent purchaser for value's title
should only be considered as a condition sine qua non to file such an action
and not as a form of constructive notice for the purpose of reckoning
prescription. This is because the concept of registration as a form of
constructive notice is essentially premised on the policy of protecting the
innocent purchaser for value's title, which consideration does not, however,
obtain in Assurance Fund cases. As earlier intimated, an action against the
Assurance Fund operates as form of relief in favor of the original property
owner who had been deprived of his land by virtue of the operation of the
Torrens registration system. It does not, in any way, affect the rights of the
innocent purchaser for value who had apparently obtained the property from a
usurper but nonetheless, stands secure because of the indefeasibility of his
Torrens certificate of title. The underlying rationale for the constructive notice
rule — given that it is meant to protect the interest of the innocent purchaser
for value and not the original title holder/claimant — is therefore absent in
Assurance Fund cases. Accordingly, it should not be applied, especially since
its application with respect to reckoning prescription would actually defeat the
Assurance Fund's laudable purpose.
The Assurance Fund was meant as a form of State insurance that
allows recompense to an original title holder who, without any negligence on
his part whatsoever, had been apparently deprived of his land initially by a
usurper. The ordinary remedies against the usurper would have allowed the
original title holder to recover his property. However, if the usurper is able to
transfer the same to an innocent purchaser for value and he is unable to
compensate the original title holder for the loss, then the latter is now left
without proper recourse. As exemplified by this case, original title holders are,
more often than not, innocently unaware of the unscrupulous machinations of
usurpers and later on, the registration of an innocent purchaser for value's
title. If the constructive notice rule on registration were to apply in cases
involving claims against the Assurance Fund, then original title holders — who
remain in possession of their own duplicate certificates of title, as petitioners
in this case — are in danger of losing their final bastion of recompense on the
ground of prescription, despite the lack of any negligence or fault on their part.
Truly, our lawmakers would not have intended such an unfair situation. As
repeatedly stated, the intent of the Assurance Fund is to indemnify the
innocent original title holder for his property loss, which loss is attributable to
not only the acts of a usurper but ultimately the operation of the Torrens
System of registration which, by reasons of public policy, tilts the scales in
favor of innocent purchasers for value.
Thus, as aptly pointed out by Associate Justice Marvic M.V.F. Leonen
during the deliberations on this case, the constructive notice rule on
registration should not be made to apply to title holders who have been
unjustly deprived of their land without their negligence. The actual title holder
cannot be deprived of his or her rights twice — first, by fraudulent registration
of the title in the name of the usurper and second, by operation of the
constructive notice rule upon registration of the title in the name of the
innocent purchaser for value. As such, prescription, for purposes of
determining the right to bring an action against the Assurance Fund,
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. As above-discussed, the registration of the
innocent purchaser for value's title is a prerequisite for a claim against the
Assurance Fund on the ground of fraud to proceed, while actual knowledge of
the registration is tantamount to the discovery of the fraud. More significantly,
this interpretation preserves and actualizes the intent of the law, and provides
some form of justice to innocent original title holders. In Alonzo v.
Intermediate Appellate Court, 69 this Court exhorted that:
[I]n seeking the meaning of the law, the first concern of the judge
should be to discover in its provisions the intent of the lawmaker.
Unquestionably, the law should never be interpreted in such a way as
to cause injustice as this is never within the legislative intent. An
indispensable part of that intent, in fact, for we presume the good
motives of the legislature, is to render justice.
Thus, we interpret and apply the law not independently of but in
consonance with justice. Law and justice are inseparable, and we must
keep them so. x x x 70
In this case, it has been established that petitioners are residents of
Spain and designated no administrator over their property, i.e., Lot No. 1320,
in the Philippines. They remain in possession of the owner's duplicate copy of
TCT No. 13450 in their names, 71 the surrender of which was necessary in
order to effect a valid transfer of title to another person through a voluntary
instrument. 72 As the records show, not only did Anduiza, the usurper, forge a
deed of sale purportedly transferring petitioners' property in his favor, 73 they
were also not required by the RD-Legazpi or through a court order to
surrender possession of their owner's duplicate certificate of title for the
proper entry of a new certificate of title 74 in Anduiza's favor. Neither was the
issuance of TCT No. 42486 in the name of Anduiza recorded/registered in the
Primary Entry Book, nor was a copy of the deed of sale in his favor kept on
file with the RD-Legazpi. 75 Consequently, petitioners were not in any way
negligent as they, in fact, had the right to rely on their owner's duplicate
certificate of title and the concomitant protection afforded thereto by the
Torrens system, unless a better right, i.e., in favor of an innocent purchaser
for value, intervenes. 76 As it turned out, Anduiza mortgaged Lot No. 1320 to
Spouses Amurao, particularly Rowena. As a result of Anduiza's default,
Rowena foreclosed the mortgage, and consequently, caused the cancellation
of TCT No. 42486 and issuance of TCT No. 52392 in her name on July 19,
2001. 77 Spouses Amurao and later, the Co group, in whose favor the subject
lot was sold — by virtue of the final judgment of the RTC — were conclusively
deemed as innocent purchasers for value. Their status as such had therefore
been settled and hence, cannot be revisited, lest this Court deviate from the
long-standing principle of immutability of judgments, which states:
A definitive final judgment, however erroneous, is no longer subject to
change or revision.
A decision that has acquired finality becomes immutable and
unalterable. This quality of immutability precludes the modification of a
final judgment, even if the modification is meant to correct erroneous
conclusions of fact and law. And this postulate holds true whether the
modification is made by the court that rendered it or by the highest
court in the land. The orderly administration of justice requires that, at
the risk of occasional errors, the judgments/resolutions of a court must
reach a point of finality set by the law. The noble purpose is to
write finis to dispute once and for all. This is a fundamental principle in
our justice system, without which there would be no end to litigations.
Utmost respect and adherence to this principle must always be
maintained by those who exercise the power of adjudication. Any act,
which violates such principle, must immediately be struck down.
Indeed, the principle of conclusiveness of prior adjudications is not
confined in its operation to the judgments of what are ordinarily known
as courts, but extends to all bodies upon which judicial powers had
been conferred. 78
In this regard, the RTC held that the Assurance Fund would be
subsidiarily liable to petitioners, should the judgment debt be left unsatisfied
from the land or personal property of Anduiza. If the constructive notice rule
were to be applied, then petitioners' claim against the Assurance Fund filed on
March 18, 2009 would be barred, considering the lapse of more than six (6)
years from the registration of Spouses Amurao's title over the subject lot on
July 19, 2001. However, as earlier explained, the constructive notice rule
holds no application insofar as reckoning the prescriptive period for
Assurance Fund cases. Instead, the six (6)-year prescriptive period under
Section 102 of PD 1529 should be counted from January 28, 2008, or the
date when petitioners discovered the anomalous transactions over their
property, which included the registration of Rowena's title over the same.
Thus, when they filed their complaint on March 18, 2009, petitioners' claim
against the Assurance Fund has not yet prescribed. Accordingly, the CA erred
in ruling otherwise.
To recount, the CA held that prescription under Section 102 of PD
1529 runs from the time of the registration of the title in favor of the person
who caused the fraud, i.e., the usurper. 79 As basis, the CA relied on the case
of Guaranteed Homes, Inc. v. Heirs of Valdez (Guaranteed Homes,
Inc.), 80 wherein the Court made the following statement:
Lastly, respondents' claim against the Assurance Fund also
cannot prosper. Section 101 of P.D. No. 1529 clearly provides that the
Assurance Fund shall not be liable for any loss, damage or deprivation
of any right or interest in land which may have been caused by a
breach of trust, whether express, implied or constructive. Even
assuming arguendo that they are entitled to claim against the
Assurance Fund, the respondents' claim has already prescribed
since any action for compensation against the Assurance Fund
must be brought within a period of six (6) years from the time the
right to bring such action first occurred, which in this case was in
1967. 81 (Emphasis supplied)
After a careful perusal of the Guaranteed Homes, Inc. case in its
entirety, the Court herein discerns that the foregoing pronouncement on
prescription was mere obiter dicta, and hence, non-binding. 82 Actually, the
issue for resolution in that case revolved only around petitioner Guaranteed
Homes, Inc.'s motion to dismiss Pablo Pascua's (respondent's predecessor)
complaint for reconveyance on the ground of failure to state a cause of action.
Ultimately, the Court held that respondent's complaint failed to state a cause
of action for the reasons that: (a) the complaint does not allege any defect in
the TCT assailed therein; (b) the transfer document relied upon
by Guaranteed Homes, Inc. (i.e., the Extrajudicial Settlement of a Sole Heir
and Confirmation of Sales) was registered and had an operative effect;
and (c) respondent cannot make a case for quieting of title since their title was
cancelled, but added, as an aside, that the claim against the Assurance Fund
would be improper "since the Assurance Fund shall not be liable for any loss,
damage or deprivation of any right or interest in land which may have been
caused by a breach of trust, whether express, implied or constructive," and
moreover, "[e]ven assuming arguendo that they are entitled to claim against
the Assurance Fund, the respondents' claim has already prescribed." 83 Thus,
as it was not a pronouncement that was made in relation to the actual issues
involved, the quoted excerpt by the CA from Guaranteed Homes, Inc. is not
binding jurisprudence and hence, would not necessarily apply to this case.
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. 84 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 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.
WHEREFORE, the petition is GRANTED. The Decision dated March
16, 2016 and the Resolution dated May 19, 2016 of the Court of Appeals in
CA-G.R. CV No. 104207 are hereby REVERSED and SET ASIDE. The
Decision dated August 19, 2013 and the Order dated April 30, 2014 of the
Regional Trial Court of Legazpi City, Albay, Branch 2 (RTC), are
hereby REINSTATED in toto. Accordingly, the RTC is hereby DIRECTED to
conduct execution proceedings with reasonable dispatch.
SO ORDERED.
 (Spouses Stilianopoulos v. Register of Deeds for Legazpi City, G.R. No.
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224678, [July 3, 2018])