VIVENCIA ESTRELLADO, ASSISTED BY HER HUSBAND CORNELIO ALCANTARA, PLAINTIFFS AND APPELLEES, VS. PROCESO MARTINEZ, DEFENDANT AND APPELLANT.

The
single legal question at issue in this case may be framed thus: May a
person who is wrongfully deprived of land or of any estate or interest
therein, without negligence on his part, by the registration of another
person as owner of such land, successfully maintain an action for
damages, begun before the action is barred, against the person in whose
favor the decree of registration was issued, where such decree was not
obtained by actual fraud and where a petition for review on the ground
of fraud has been denied?

The pleadings are simple. The
plaintiff is Vivencia Estrellado, a minor, represented by her husband,
Cornelio Alcantara, as guardian ad litem, claiming a one-tenth
interest in the land described in the complaint. The defendant is
Proceso Martinez, the holder of the Torrens title. The complaint
presented by the plaintiff in the Court of First Instance of Tayabas
asked for judgment by way of damages in the amount of two thousand
pesos (P2,000) against the defendant. The answer was in the form of a
general denial. The well reasoned decision handed down by Judge Platon
gave judgment in favor of the plaintiff and against the defendant for
the sum of six hundred pesos (P600) and costs.

The facts are stipulated. They are:

“1.
That on February 18, 1919, the defendant Proceso Martinez filed an
application for the registration in the registry of property of the
land described in paragraph 5 of the complaint, in which application
the herein plaintiff, Vivencia Estrellado, is not named (Rec. No. 428
of this court), the defendant alleging in said application that he is
the only and exclusive owner of the aforesaid land.

“2. That after due notices and publications, the case No. 428 was called for the first time for hearing on October 24, 1919.

“3.
That among the persons to whom a copy in Spanish of the notice given in
the registration case No. 428 was sent by registered mail appears
Eleuterio Estrellado, father of the plaintiff, of San Pablo, Laguna.

“4.
That after the trial held on said day October 24, 1919, with regard to
one lot, as to which there was no opposition, and which is not the
subject-matter of the complaint, the trial was postponed with regard to
the land here in question to January 29, 1920. In the notice of the
trial of the latter date, it does not appear that said Eleuterio
Estrellado, father of the plaintiff, was notified.

“5.
That on October 24, 1919, an order of general default was entered in
the said registration case, except only as against Pioquinto Larua.

“6. That on February 3, 1920, the court rendered its decision ordering
the registration of the land here in question in the name of the
defendant Proceso Martinez, and said decision having become final, an
order was entered on March 22, 1920, for the issuance of the decree,
and the proper decree was issued on April 21, 1920.

“7.
That on July 9, 1920, the herein plaintiff filed in said registration
case No. 428 a motion praying for the review of the decree aforesaid on
the ground that the defendant obtained the registration of the land in
question through fraud, which motion was heard on August 1, 1920.

“8. That then the parties introduced their respective evidence, and
after hearing said parties, the court entered on the same day an order
denying the review prayed for in the motion on the grounds alleged in
said order. A copy of said order is attached hereto and made a part
hereof.

“9. That the aforesaid order has become final, no appeal having been taken therefrom.

“10. That the reasonable value of one-tenth of the land in litigation
and its fruits, which the plaintiff claims in her complaint is P600,
Philippine currency.

“11. The parties finally agree to
make a part of the present agreement the case No. 428, Record No. 15418
of this court, wherein the herein defendant Proceso Martinez is
applicant.

“Upon this agreement the parties respectfully
submit this case to the court for decision without the necessity of
introducing any further evidence.”

The
order referred to in case No. 428 (Proceso Martinez, petitioner, and
Vivencia Estrellado, oppositor), G. L. R. O. No. 15418, as made a part
of the agreed statement of facts, concerns a verified motion presented
by the oppositor within one year after the entry of the decree to have
the same annulled. Judge Imperial therein first states the respective
contentions of the parties, next announces his findings of fact, then
draws his deductions therefrom, and finally concludes by denying the
motion of the petitioner. Among others, there was made the following
peculiarly applicable finding: “It results from the facts above stated,
that Vivencia Estrellado is really the owner of a one-fifth part of
one-half of the land in Bulakin, which pertained to her deceased mother
Saturnina Banayo, that is, one-tenth of the whole lot 1. But it does
not necessarily follow from this that said Vivencia Estrellado is
entitled to ask for the revocation of the decree, as applied for by
her.” Having reached the conclusion just indicated, his Honor fails to
find that the oppositor has supported her petition by proof
demonstrative of actual fraud perpetrated by the petitioner Martinez.
To quote: “After considering carefully all the evidence adduced by both
parties, the court has reached the conclusion that Vivencia Estrellado
has not proven that the applicant acted fraudulently in obtaining the
decree in his favor covering lot 1.” Directly following comes an
indication of possible rights inuring to the oppositor Vivencia
Estrellado which seems to have inspired the present action.

The law is clear. Sections 101 and 102 of the Land Registration Law,
especially the proviso to the last mentioned section, in comparison
with sections 38 and 55 of the law are directly applicable to the facts
and the issue.

The first cited section of the Land
Registration Law provides in part that ” * * * 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, * * * 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.” The next succeeding section after elaborating
on the provisions of section 101, ends with the proviso, ” * * * 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.” Section 38 of the same law, as will later be emphasized,
makes provision for the opening of a decree obtained by fraud. Section
55 contains a proviso much to the same effect.

The pertinent
jurisprudence is known. Two decisions of this court have- considered
situations somewhat akin, although not exactly, identical with that
which confronts us. Reference is made to the cases of Manotoc vs. Choco ([1912], 30 Phil., 628) and Roman Catholic Bishop of Nueva Caceres vs. Municipality of Tabaco ([1924], 46 Phil., 271).

In Manotoc vs. Choco, supra,
it appears that one C presented a petition for the registration of a
certain parcel of land including a strip of land and buildings
belonging to one M. The said parcel with the buildings thereon was
ordered registered in the name of C. Nearly three years later, M
discovered for the first time that a portion of his land had been
included in C’s certificate. Accordingly, M presented a motion in the
Court of Land Registration asking that this land be excluded from C’s
certificate. The motion was denied because it was presented out of
time. Later M commenced an action in the Court of First Instance
against C to recover damages for the loss of his land and buildings.
This court, speaking through Mr. Chief Justice Arellano, held that M
was entitled to recover a sum of money equal in value to said land and
buildings.

Two noteworthy points come to light on a close
examination of the decision. The first point in contradistinction to
the facts at bar is that a motion for review was not denied on the
merits on the ground of fraud. The second point exactly consonant with
the facts before us is that the Chief Justice in writing his opinion
and in rendering judgment makes no express mention of proof of fraud as
a necessary element to the successful termination of an action for
damages for loss of land.

The case of Roman Catholic Bishop of Nueva Caceres vs. Municipality of Tabaco, supra,
was also an action to recover damages for the alleged unlawful
inscription of parcels of land in the name of the defendant. This court
found with the plaintiff leaving it to the trial judge to fix the
amount of indemnification. To follow the lead of the syllabus as
indicative of the views of the court, it was held that when a person
has been deprived of his lands by registration under the Torrens
system, either by fraud or constructive fraud, he may maintain an
action against the parties to such fraud, for a recovery of the damages
suffered through the loss of his property.

In the Tabaco
case, the record discloses that no motion for review because of fraud
was presented within the statutory period, while here, as before
stated, such a motion was presented and denied. The decision in the
Tabaco case in contrast to that in the Choco case lays emphasis on such
terms as “fraud,” “constructive fraud,” and “good faith.” Here,
however, as expressly found by the court, fraud was not proved.

The two cases mentioned are accordingly seen not to be absolutely
controlling. Nevertheless, the basis laid in the pioneer decision in
the Choco case, followed subsequently in the Tabaco case, should not be
departed from in this instance.

The five errors assigned by
the defendant as appellant all go to the question announced in the
beginning of this decision. With the pleadings before us, the facts
agreed upon, the law quoted, the interpretative decisions cited, and
the legal issue stated, we finally reach that point where, by legal
reasoning, the question can be answered and the case decided. A
resolution of the appeal will cause no difficulty if basic principles
are recalled and given application.

The Torrens system must be envisaged in its entirety to be understood. The proceeding for registration is in rem.
It is an assertion of legal title. The prime purpose of registration is
certainty and incontestability in titles to land. In a lesser degree,
the purpose is the facilitation of the proof of titles and the transfer
thereof. Many sections of the Land Registration Law are given up to the
confirmation of these fundamental ideas.

The Torrens system
is careful to guard against the possibility of an owner being
fraudulently deprived of his property. The apparent harshness of the
law is relieved by the insertion in section B8 of a provision,
recognizing the right of any person deprived of land or of any estate
or interest therein by decree of registration obtained by fraud to file
in court a petition for review within one year after entry of the
decree, provided no innocent purchaser for value has acquired an
interest. The same section provides that any person, aggrieved by such
decree in any case, may pursue his remedy by action for damages against
the applicant or any other person for fraud in procuring the decree. As
a result, if a person fails to present opposition to the registration
under the Torrens system of a particular parcel of land in the name of
the petitioner, or to question the validity of such registration within
a year after the entry of the decree, or in certain cases to take
advantage of the equitable remedy provided by section 513 of the Code
of Civil Procedure, he loses forever his right in said land, even
granting that he had any right therein (De los Reyes vs. Paterno [1916], 34 Phil., 420, relied upon by the appellant).

The authors of the Torrens system also 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. As 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. But the assurance fund was not intended to block any
right which a person might have against another for the loss of his
land. Damages were not to be recoverable from the assurance fund when
they could be recovered from the person who caused the loss.

Mr. Niblack in his Analysis of the Torrens System, pp. 235, 236, 312, states:

“Person Registered in Error Liable for Damages.—Where
a person in good faith applies to register certain land which does not
really belong to him, and the registrar, after examination of the
title, issues a certificate to him for it, the title is indefeasible in
him. But while his title may not be impeached or set aside on the
ground of mere error in registering him as the owner, it must not be
supposed that he may keep the land without responding in damages to the
person wrongfully deprived of it. He is liable for the value of it, to
the person ousted of the right of ownership * * *

* * * * * * *

“According
to the scheme of the Torrens system, the indemnity fund is merely
ancillary to the system of registering and transferring titles to real
estate. It is intended to relieve innocent persons from the harshness
of the doctrine that a certificate is conclusive evidence of an
indefeasible title to land, and from any injustice which may arise to
them by operations under the act, making for the conclusiveness of a
certificate, whether such injustice arises from the fraud or error of
some one connected with the registry office, or of some third person
dealing with the land. It is not intended to relieve from the legal
consequences of his act any third person who perpetrates a fraud or
commits an error, and it is not intended to relieve a person, who is
injured by operations under the system, from the burden of prosecuting
the remedies given to him by the general laws or by the act
establishing the system * * *.”

The maxim
of equity, is “Equity will not suffer a wrong to be without a remedy.”
The civil law makes it the duty of the courts to protect the owner of
property who may be deprived of it (Civil Code, art. 349). No one
should be permitted to enrich himself at the expense of another. As the
title to the land may not be assailed, the only possible way to rectify
the situation is by giving compensation to the claimant to be paid by
the holder of the property.

The essential difference between
portions of sections 38 and 55 of the Land Registration Law on the one
hand arid sections 101 and 102 of the same law on the other hand is
this: The first cited sections refer to actual fraud, that is,
intentional deception, downright dishonesty of some sort. The last
cited sections refer either to actual fraud as thus described, or
constructive fraud, that is, legal fraud, unintentional deception,
transactions which equity regards as wrongful and to which it
attributes the same or similar effects as those which follow from
actual fraud. For example, in this instance, applicant Martinez did not
act with the intention to deceive and was not dishonest, but applicant
Martinez did make a mistake of fact to the prejudice of another.

For an action against any person for damages for the wrongful
deprivation of land to prosper, it must be established, first, that the
person is in reality wrongfully deprived of his land by the
registration in the name of another of the land by actual or
constructive fraud; second, that there was no negligence on his part;
third, that he is not barred or in any way precluded from bringing an
action for the recovery of the land or interest therein; and, fourth,
that the action for compensation has not prescribed. Setting opposite
each one of these requisites the facts as they appear in the instant
case, we have as to the first requirement the express finding of Judge
Imperial that the plaintiff is entitled to a one-tenth part of the land
registered in the name of the defendant; as to the second, that the
plaintiff has been diligent in prosecuting her action, this point being
reinforced by her infancy; as to the third, that the plaintiff has made
use of all the remedies provided by the Land Registration Law; and as
to the fourth, that the action for damages sustained is not barred by
the statute of limitations.

In the light of the foregoing
discussion, we are unable to sustain appellant in his assignments of
error and argument. Having particularly in mind the legal issue, we lay
down this rule: A person who is wrongfully deprived of land or of any
estate or interest therein, without negligence on his part, by the
registration in error of another person as owner of such land, may
successfully maintain an action for damages, begun before the action is
barred, against the person in whose favor the decree of registration
was issued, notwithstanding such decree was not obtained by actual
fraud and notwithstanding a petition for review on the ground of fraud
has been denied.

Judgment will be affirmed with the costs of this instance against the appellant.

Avanceña, C. J., Street, Villamor, Ostrand, Johns, Romualdez, and Villa-Real, JJ., concur.