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49 Phil. 244

[ G. R. No. 24597, August 25, 1926 ]




This action is brought to recover  damages in the  sum of P30,000 for  the erroneous  registration in  the name of the defendant  Gasataya  of three parcels of  land situated in the municipality of Isabela,  Province of Occidental Negros, and of which the plaintiff was the owner at the  time of the registration.

There  is practically no dispute as  to the facts.  The three parcels of land were formerly owned by one Domingo Gayondato, who inherited  them from his mother, Ramona Granada, in 1896.   In 1899  Domingo married the defendant Adela Gasataya, with whom he had a child, the herein plaintiff, born in October,  1900.   Upon  the death of Domingo in the  year  1902, Gabino  Gasataya, the father  of Adela, took charge of the three parcels of land in question. In 1908  Adela married the defendant Domingo Cuachon, and  Gabino  Gasataya thereupon turned  over to them the possession of the land.

The three parcels were  included in cadastral case No. 11 of  the Court  of First  Instance of Occidental  Negros as lots Nos. 70, 364 and 375, and when that case came on for hearing in August, 1916, the defendant Domingo Cuachon appeared on behalf of his wife and stepdaughter and  filed claims for  the  aforesaid  lots by way of answers in which he stated that the.lots were the property of "his wife Adela Gasataya and of her daughter, fifteen years  of age."  Notwithstanding this statement, the Court of First Instance erroneously decreed the registration of the aforesaid lots in the name of  Adela  Gasataya alone.   Subsequently Adela, with the consent of her husband, mortgaged the property to the National Bank and finally in the year 1920 sold it to the  defendant Rodriguez for  the  sum  of P13,000, the purchaser, in  addition thereto, assuming the liability for a mortgage of f*8,000 to the  National Bank and  for certain other debts amounting to over P4,000.

The complaint in the present case  was filed on  August 18, 1922, Adela Gasataya, Domingo Cuachon,  Francisco Rodriguez and the  Insular  Treasurer  being made parties defendant.  Upon the  facts above stated the trial  court rendered judgment in  favor of the plaintiff Rosario Gayondato, ordering the defendants  Adela Gasataya and Domingo Cuachon jointly and  severally to indemnify the said plaintiff in the sum of P35,000 and to pay the costs. The Insular Treasurer and  Francisco Rodriguez were absolved from the complaint. From this  judgment  the plaintiff appealed.

The sum  and substance of  the assignments of error  is that the court erred in absolving the Insular Treasurer from the complaint, and in this  we agree with the appellant.  The court below appears to have been under the impression that the liability of the assurance fund is confined to cases where the erroneous registration is due to omission, mistake or  malfeasance on the part of the employees  of the registration court.  That  this view  is erroneous,  is evident from the language of sections 101 and  102 of the Land Registration Act, which  read as follows:
"SEC. 101. Any person who without negligence on his part sustains  loss or damage through any omission, mistake,  or misfeasance of the clerk, or register of deeds,  or of any examiner of titles, or of any deputy or clerk of the register of  deeds in the  performance of  their respective duties under the provisions of this Act, and any person who is  wrongfully  deprived of any land  or  any interest therein, without negligence on his part, through the bringing of the same under the provisions of this Act or by the registration of any  other  person  as owner of such land,  or by any  mistake, omission, or misdescription in  any certificate or owner's  duplicate,  or in any entry or memorandum  in the register  or  other  official book,  or by any cancellation, and who  by the provisions of this Act  is barred or in any way precluded from  bringing an action for the recovery of such land or interest  therein, or claim upon the same, may bring in any court of competent jurisdiction  an action against the  Treasurer of the Philippine Archipelago for the recovery of damages to be paid out of the assurance fund.

"SEC. 102. If such action be for recovery for loss or damage  arising only through any omission,  mistake, or misfeasance of  the- clerk, or of the register of deeds, or of any examiner of titles, or of any deputy or clerk of the register of deeds in the performance of their respective duties under the provisions of this Act, then the Treasurer of the Philippine Archipelago shall be the sole defendant to such action.  But if such action be brought for  loss or damage arising only through the fraud or willful act of some person or persons other than the clerk, the register of deeds, the examiners of titles,  deputies,  and  clerks, or arising jointly through the fraud or wrongful act of such  other person or persons and the omission, mistake, or misfeasance of the clerk, the  register of deeds, the examiners of titles,  deputies, or clerks, then such action shall be brought against both the Treasurer of the Philippine  Archipelago and such person or persons aforesaid.  In all such actions where there are defendants other than the Treasurer of the Philippine Archipelago and  damages shall have been recovered, no final judgment shall be entered against  the Treasurer of the Philippine Archipelago  until execution against the other defendants shall  be returned unsatisfied in whole or in part, and the officer  returning the execution shall certify that the amount still  due  upon the execution cannot be collected except  by application to the assurance fund.  Thereupon the  court having jurisdiction of  the action, being satisfied as to the truth of such return, may, upon proper showing,  order the amount of the execution and costs, or so much thereof as  remains  unpaid, to  be paid by the Treasurer of the Philippine Archipelago out of the assurance fund.  It shall be the duty of the Attorney- General in person or by deputy  to  appear  and defend all such suits with the aid of the  fiscal of the  province  in which  the land lies or the city attorney of the  City of Manila as the case may be: Provided, however, That nothing in this Act shall be construed to deprive  the plaintiff  of any action which he may have against any person for such loss or damage or deprivation of land or of any estate or interest  therein  without  joining  the  Treasurer of the Philippine Archipelago as a defendant therein."
As the plaintiff-appellant was  a minor at the time  of the registration of the land and consequently no negligence can be imputed to her, it is clear from the sections  quoted that in the absence of special circumstances to the contrary the assurance fund  is secondarily liable for  the damages suffered  by her through the wrongful  registration.

But the Attorney-General in his brief for the Insular Treasurer  raises  the  point that Domingo  Cuachon and Adela Gasataya prior to  the registration must be considered to have held  the property in  trust and for the  benefit of the plaintiff; that the relation of trustee and  cestui que trust was thus created; and that the case therefore falls under section 106 of the  Land  Registration Act,  which provides that "the assurance fund shall  not be liable  to pay  for  any loss or damage or deprivation occasioned  by a breach of trust, whether express, implied, or constructive, by any registered owner who  is  a trustee, or by the improper exercise of any sale in mortgage-foreclosure proceedings."

At first  blush the Attorney-General's  contention seems quite plausible.  For  want of  better  terms  the  words "trust" and "trustee"  are frequently used in a broad and popular  sense  so  as  to  embrace a  large variety of relations.  Thus if a person obtains legal title to property by  fraud or concealment, courts  of  equity  will impress upon the title  a so-called  constructive  trust in  favor of the defrauded party.  The  use of the word "trust"  in this sense is not technically  accurate: as  Perry  says, such trusts "are not trusts  at all in the strict  and  proper signification of the word 'trust'; but  as  courts are  agreed  in administering the  same remedy in a certain class of frauds as are administered in fraudulent breaches of trusts, and as courts and the profession have  concurred in calling such frauds constructive trusts, there can be no misapprehension in continuing the  same phraseology, while a change might lead  to confusion  and  misunderstanding." (Perry  on Trusts, 5th ed., sec. 166.)

If this is the kind  of  constructive trust referred  to in section 106, supra, it must  be conceded that the  plaintiff cannot recover damages from the assurance  fund.   But that such is not the case, becomes quite apparent  upon an examination  of sections  101 and  102,  above  quoted, in which the right of recovery from  the  assurance  fund in cases of registration  through fraud  or wrongful  acts is expressly recognized  and which, in  our opinion, clearly show that the term trust as used in section 106  must be taken  in its technical and more  restricted  sense.  Indeed, if it  were to be  regarded  in its broadest sense, the assurance fund  would,  under the conditions here prevailing, be of little or no value.

Bouvier defines  a trust in  its technical sense  as  "a  right of property,  real  or  personal, held by  one party for the benefit of another."  In the  present case we have  this situation : The  plaintiff was  a minor  at the  time of the registration of the land  and had no legal guardian.  It is true that her mother  in  whose name the land was registered was the natural guardian  of her person,  but  that guardianship did not extend to the property of the minor and conferred no  right to the administration of the  same (Palet vs. Aldecoa & Co., 15 Phil., 232;  Ibañez  de  Aldecoa vs. Hongkong & Shanghai Banking Corporation,  30 Phil., 228) and the plaintiff, being a minor and under disability, could not create a technical  trust of any kind.  Applying Bouvier's definition to this  state of facts, it  is clear  that there  was no trust  in  its technical signification.  The mother had no right of property or administration in her daughter's estate and  was nothing  but a mere  trespasser. The language of the New Jersey  Court of Chancery in the case of Henninger vs. Heald (30 Atlantic,  809),  is therefore particularly apposite in the present case,
"In  the case before us the title was acquired by Heald tortiously, or in violation of every well-settled principle of law.  It never was trust property.  Strictly speaking,  he was not a trustee, any more than a trespasser or other wrongdoer.  The wrongdoer  who  becomes possessed of property under such circumstances has been  styled a 'trustee;' but this is for want of a better term, and because he has no  title to property, and really holds it for the true owner.  It might as well be said that, where two persons conspire to possess  themselves of the personal property of another when he brings trover for its recovery, they should be styled 'trustees,' instead of 'tort feasors' and should be  permitted  to claim the benefit of a lien for care or for provender."
From what has been said it follows  that the  judgment absolving  the Insular Treasurer from the complaint must be  reversed.  We also  note  from the  record  that Adela Gasataya  died March 1, 1923, before the  trial of the case and that an administrator of her estate  was appointed.  It was therefore error to render judgment  against her personally.  It may further be noted that the measure of damages  applied by  the court below, i. e. the  full value of the land,  is not strictly accurate.  The property was subject to a  life estate  of one-third in  favor of Adela Gasa-taya  as the widow  of  Domingo Gayondato, the value of which must be deducted from the total  value  of  the fee simple. It may also  be  observed  that  the amount demanded in the complaint is only P30,000 and that the land was sold  to Francisco Rodriguez for but little  more than P25,000.  We are therefore  of the opinion that the damages  awarded should be reduced to  P25,000.

The judgment appealed from is reversed, and it is hereby ordered that the defendants Domingo Cuachon and the estate of  Adela Gasataya jointly and severally  pay to the plaintiff, the sum of P25,000, with interest  at the  rate of 6  per cent per annum from August 18, 1922, the  date of the filing  of the complaint, with the costs.  It is  further ordered that if the execution of this judgment is returned unsatisfied in whole or  in part and the  officer  returning the execution certifies that the amount upon the execution cannot be collected except by application to the assurance fund  and the  court having  jurisdiction  over the action shall be satisfied as to the truth of such return, said court shall order the  amount  of the execution and  costs, or so much thereof as remains unpaid, to be paid by the Treasurer of the  Philippine Archipelago  out  of the assurance fund.  The complaint will stand dismissed  as to Francisco Rodriguez.   No costs will be allowed.  So ordered.

Avanceña, C. J., Street, Villamor, Johns, and Romualdez, JJ., concur.