G.R. No. 26183, March 30, 1927
ISABELO DIZON, plaintiff-appellant, vs. ANASTASIO, AGUEDO, VICTOR, CIPRIANO, MARIANO, FELIX, JULIAN, CIRILO, EUGENIA, by the surname LACAP, JADEAR, and THE INSULAR TREASURER, defendants-appellants.

Ponente: STREET, J.

FACTS

Isabelo Dizon and his sister Leoncia Dizon were donees of a parcel of land from their uncle, Pablo Lacap, in 1896. They possessed, cultivated, and paid taxes on the land. In 1915, the Lacap family initiated land registration proceedings under the Torrens system. To save on costs, Dizon agreed, through the Lacaps’ agent Alipio L. Jadear, to include his land in the Lacaps’ application, with the understanding that the Lacaps would later reconvey his portion after registration. Dizon contributed P50 to the survey expenses. The land was registered in the names of the Lacap defendants on February 4, 1920. Two days later, the Lacaps sold the entire tract, including Dizon’s portion, to Eduarda Tan, who later sold it to Jose P. de Rivera Yap. Dizon filed an action for damages against the individual Lacap defendants and the Insular Treasurer, seeking to recover the value of his land and lost produce, and to hold the Insular Treasurer subsidiarily liable under the Torrens system’s assurance fund.

ISSUE

1. Whether the individual Lacap defendants are liable to Dizon for damages.
2. Whether the Insular Treasurer is subsidiarily liable under the Torrens system’s assurance fund (Sections 101 and 102 of Act No. 496).

RULING

1. Yes, the individual Lacap defendants are liable for damages. The Court affirmed the trial court’s judgment holding them jointly and severally liable for P7,302, representing the value of Dizon’s land and improvements. Their act of selling Dizon’s land after registering it in their names constituted a breach of trust and a conversion of the property, giving rise to a personal cause of action for damages. The Court rejected Dizon’s claim for additional annual damages for lost produce, as recovery of the land’s full value precludes further compensation for its fruits.

2. No, the Insular Treasurer is not liable under the assurance fund. The Court upheld the trial court’s dismissal of the complaint against the Insular Treasurer. Dizon’s claim did not arise from any fraud, error, omission, or mistake in the registration process itself, to which he had consented. Instead, it arose from the Lacaps’ subsequent fraudulent sale in breach of trust. Such a personal cause of action is expressly reserved outside the scope of the assurance fund under Section 102 of Act No. 496. The fund is designed to compensate for losses due to the operation of the registration system, not for breaches of personal agreements or trusts occurring after registration.

DISPOSITIVE PORTION:
The judgment of the trial court was affirmed in all respects. The individual Lacap defendants were held jointly and severally liable to Isabelo Dizon for P7,302. The Insular Treasurer was absolved from liability. No costs were awarded.