G.R. No. 16869; March 13, 1922
THE HEIRS OF ANTONIO ENRIQUEZ and CIRIACA VILLANUEVA, deceased, plaintiffs-appellants, vs. FRANCISCO ENRIQUEZ and THE TREASURER OF THE PHILIPPINE ISLANDS, defendants-appellees.

FACTS

The plaintiffs, heirs of Antonio Enriquez and Ciriaca Villanueva, filed an action based on sections 101 and 102 of the Land Registration Act (Act No. 496). They alleged that in a 1906 partition of the estate, property No. 42 Calle David was adjudicated to defendant Francisco Enriquez and his wife, but subject to an express condition: Francisco’s undivided half-share was not to be sold, mortgaged, or encumbered while litigation concerning his accounts as administrator and executor was pending, and his share would be answerable for any final judgment against him. In 1907, Francisco and his wife applied for registration of the property, fraudulently stating they were absolute owners without mentioning the mortgage lien in favor of the other heirs. A decree of registration was issued in January 1908, and a Torrens title free of liens was obtained. The property was later sold to a third party. The plaintiffs claimed they were not notified of the registration proceedings due to the fraudulent omission of their lien and only learned of it years later. They sought compensation from the Assurance Fund.

ISSUE

Whether the complaint filed by the plaintiffs states a sufficient cause of action for compensation from the Assurance Fund under the Land Registration Act.

RULING

No. The Supreme Court affirmed the dismissal of the complaint, finding it substantially defective. The complaint failed to allege essential facts required by the Land Registration Act: (1) the market value of the property (as half its value is the maximum recoverable under section 106); (2) the insolvency of Francisco Enriquez (a prerequisite for recovery from the Fund under section 101); (3) whether the plaintiffs’ mortgage right had been registered in the old registry prior to the Torrens title issuance (its non-registration would indicate negligence); and (4) sufficient facts to show the action was filed within the six-year prescriptive period under section 107. The decree of registration was issued in January 1908, but the complaint was filed only in March 1918, more than ten years later, suggesting the action had prescribed. Furthermore, the fraud was not sufficiently alleged, as the plaintiffs were not relieved from the duty to appear diligently in the registration proceedings despite the omission in the application, since publication of notices is presumed complied with.