G.R. No. L-47569. April 14, 1941.
CORAZON VELOSO DE TORRES, petitioner, vs. THE TREASURER OF THE PHILIPPINES and ANTONIO FRANCO, respondents.

FACTS

In the Manapla cadastre, Occidental Negros, Anselmo Lagarto was issued Original Certificate of Title No. 254 for Lot No. 46 on August 2, 1926, based on his homestead application. Vicente Franco had initially claimed the lot but renounced his claim in open court. However, on October 10, 1930, Vicente Franco filed a motion with the Court of First Instance of Occidental Negros, without notice to Lagarto, alleging a clerical error and praying that the lot be declared his property. The lower court granted this petition on July 10, 1931, declaring Vicente Franco the owner. Consequently, Original Certificate of Title No. 30095 was issued in his name on October 5, 1931. Vicente Franco later sold the lot to his grandson, Antonio Franco, who obtained Transfer Certificate of Title No. 14311 on March 19, 1932. Antonio Franco mortgaged the lot to Visayan Surety and Insurance Corporation for P4,000 on July 9, 1932.
On July 27, 1932, the Attorney-General petitioned the Supreme Court for certiorari to annul the proceedings leading to the issuance of Original Certificate of Title No. 30095 to Vicente Franco. A notice of lis pendens was registered on the same date. On November 10, 1932, the Supreme Court declared the lower court’s decree awarding the lot to Vicente Franco null and void ab initio and ordered the cancellation of his title and Antonio Franco’s transfer certificate.
On July 13, 1934, Visayan Surety & Insurance Corporation assigned its credits, mortgage, and chose in action against Antonio Franco and the Insular Treasurer to Corazon Veloso de Torres (petitioner). Antonio Franco filed a complaint against the Insular Treasurer and Vicente Franco’s estate, seeking indemnity from the assurance fund. The petitioner intervened, praying for payment from Antonio Franco. The lower court absolved the Treasurer and ordered Antonio Franco to pay the petitioner P4,000 with interest. The Court of Appeals affirmed this decision on May 31, 1940. The petitioner now appeals via certiorari.

ISSUE

Whether the petitioner, Corazon Veloso de Torres, is entitled to indemnity from the assurance fund managed by the Treasurer of the Philippines for losses arising from the annulment of the titles to Lot No. 46.

RULING

No, the petitioner is not entitled to indemnity from the assurance fund. The Supreme Court affirmed the decision of the Court of Appeals, dismissing the petition.
The Court held that Vicente Franco’s title to Lot No. 46 was declared null and void ab initio by the Supreme Court in a prior decision (G.R. No. 37825). Since Vicente Franco had renounced his claim in the cadastral proceedings, he acquired no vested interest in the lot and could transfer nothing to Antonio Franco or subsequent holders. To claim from the assurance fund, a claimant must have been deprived of an actually vested interest.
Furthermore, recovery from the assurance fund requires that the claimant be a purchaser in good faith. The petitioner acquired the mortgage rights from Visayan Surety & Insurance Corporation on July 13, 1934, after a notice of lis pendens had been registered on July 27, 1932, which served as constructive notice that the title was under litigation. By purchasing with knowledge of the lis pendens, the petitioner cannot be considered a purchaser in good faith.
The Court also upheld the Court of Appeals’ finding that the register of deeds was not negligent in issuing the certificates of title to Vicente Franco and Antonio Franco. Thus, the petitioner failed to establish a valid claim against the assurance fund. The judgment was affirmed, with costs against the petitioner.