G.R. No. L-42805 August 31, 1987
THE TREASURER OF THE PHILIPPINES, petitioner, vs. THE COURT OF APPEALS and SPOUSES EDUARDO OCSON and NORA E. OCSON, respondents.

FACTS

In 1965, an impostor representing himself as Lawaan Lopez offered to sell a parcel of land in Quezon City to the spouses Ocson. The impostor had previously secured a court order for the issuance of a duplicate certificate of title after falsely claiming the original was burned. Relying on this title, the Ocsons paid the full purchase price, and a transfer certificate of title was subsequently issued in their names. Two years later, the real Lawaan Lopez, a woman, surfaced and successfully petitioned the court to annul the deed of sale and all related titles, thereby restoring ownership to her. The Court of Appeals found no collusion between the Ocsons and the impostor.
Following the annulment, the Ocsons filed a complaint for damages against the impostor and, subsidiarily, against the Assurance Fund managed by the Treasurer of the Philippines. Both the trial court and the Court of Appeals ruled in favor of the Ocsons, holding the Assurance Fund subsidiarily liable for the amount they paid, as the impostor could not be located.

ISSUE

Whether the Assurance Fund is subsidiarily liable to indemnify the Ocsons for the loss they sustained from the fraudulent sale.

RULING

No. The Supreme Court reversed the decision of the Court of Appeals and dismissed the complaint against the Assurance Fund. The applicable law was Section 101 of Act No. 496 (the Land Registration Act). Recovery from the Assurance Fund is allowed only under two specific conditions: first, for loss due to omission or mistake by the register of deeds or court personnel; or second, when a person is wrongfully deprived of any land or interest therein without negligence and is barred from recovering it.
The Court held the Ocsons did not fall under either category. The first situation was inapplicable as the loss did not stem from any official error but from the fraud of a private impostor. Crucially, the second situation also did not apply because the Ocsons were never deprived of “any land or any interest therein.” Since the impostor had no valid title to convey, the sale was void and transferred no ownership or interest to the Ocsons. Their loss was purely monetary—the purchase price paid—which is not covered by the Assurance Fund. Furthermore, the Court found the Ocsons failed to exercise the necessary diligence in verifying the vendor’s identity. The government is not an insurer against private fraud. Their recourse lies against the impostor, not the public fund.