Assurance Fund

A special fund which is created under the Torrens system for the compensation of certain
persons for losses sustained by operations under the system.

The Purpose of Assurance Fund
To compensate persons who suffered losses by erroneous registration due to
mistake, omission, or misfeasance of the Clerk of Court or the Registrar of Deeds
or any of the respective employees with or without the intervention of other
persons.
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 someone
connected with the registry office, or of some third person dealing with the land
(Niblack, The Torrens System, p. 312)

Section 93. Contribution to Assurance Fund. Upon the entry of a certificate of title in the
name of the registered owner, and also upon the original registration on the certificate of title of a
building or other improvements on the land covered by said certificate, as well as upon the entry
of a certificate pursuant to any subsequent transfer of registered land, there shall be paid to the
Register of Deeds one-fourth of one per cent of the assessed value of the real estate on the basis
of the last assessment for taxation purposes, as contribution to the Assurance Fund. Where the
land involved has not yet been assessed for taxation, its value for purposes of this decree shall be
determined by the sworn declaration of two disinterested persons to the effect that the value
fixed by them is to their knowledge, a fair valuation.
Nothing in this section shall in any way preclude the court from increasing the valuation
of the property should it appear during the hearing that the value stated is too small.
Upon entry of certificate in the name of the owner or TCT, of 1% shall be paid to the
Registry of Deeds based on the assessed value of land as a contribution to the assurance
fund
If there is yet no assessment, a sworn declaration of 2 disinterested persons on the value
of the land, subject to the determination by the court, is required.

Section 94. Custody and investment of fund. All money received by the Register of Deeds
under the preceding section shall be paid to the National Treasurer. He shall keep this money in
an Assurance
Fund which may be invested in the manner and form authorized by law, and shall report annually
to the Commissioner of the Budget the condition and income thereof.
The income of the Assurance Fund shall be added to the principal until said fund
amounts to five hundred thousand pesos, in which event the excess income from investments as
well as from the collections of such fund shall be paid into the National Treasury to the account
of the Assurance Fund.
Money shall be in the custody of the National Treasurer who shall invest it until principal
plus interest aggregates to 500,000. The excess shall be paid to the Assurance Fund and
be included in the annual report of Treasurer to Secretary of Budget.

Entitled to Compensation From the Assurance Fund
Those persons who suffer damages due to the harshness of the operation of the Torrens
system of registration are entitled to demand compensation. These persons may be classified
under two (2) groups, pursuant to Secs. 95 and 96 of P.D. 1529 to wit:
1) Any person who sustains loss or damage under the following conditions:
a) That there was no negligence on his part; and
b) That the loss or damage sustained was through any omission, mistake or malfeasance
of the court personnel, or the Registrar of Deeds, his deputy, or other employees of the Registry
in the performance of their respective duties under the provisions of the Land Registration Act,
now, the Property Registration Decree
2) Any person who has been deprived of any land or interest therein under the following
conditions:
a) That there was no negligence on his part;
b) that he was deprived as a consequence of the bringing of his land or interest therein
under the provisions of the Property Registration Decree; or by the registration by any other
person as owner of such land; or by mistake, omission or misdescription in any certificate or
owners duplicate, or in any entry or memorandum in the register or other official book or by any
cancellation;
c) That he 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
Requisites for recovery from the Assurance Fund
1) That a person sustains loss or damage, or is deprived of any estate or interest in land
2) On account of bringing of land under the operations of the Torrens system arising after the
original registration
3) Through fraud, error, omission, mistake, or misdescription in a certificate of title or entry or
memorandum in the registration
4) Without negligence on his part
5) And is barred or precluded from bringing an action for the recovery of such land or estate or
interest therein

Against Whom Action May Be Filed
1) Against the Registrar of Deeds of the province or city where the land is situated and the
National Treasurer as defendants when: such action is brought to recover for loss or damage or
for deprivation of land or any estate or interest therein arising wholly through fraud, negligence,
omission, mistake or misfeasance of the court personnel, Registrar of Deeds, his deputy or other
employees of the registry in the performance of their respective duties (Section 96, P.D. 1529).
2) Against the Registrar of Deeds, the National Treasurer and other persons as co-defendants
when: such action is brought to recover for loss or damage or for deprivation of land or any
interest therein arising through fraud, negligence, mistake or misfeasance of persons other than
court personnel, the Registrar of Deeds, his deputy or other employees of the registry
I f there are defendants other than the National Treasurer and the Registrar of Deeds
1) The execution to satisfy claims shall first issue against the private person
2) When unsatisfied in whole or in part, and the officer returning the same certifies that the
amount due cannot be collected from the land or personal property of such other defendants,
secondarily liable is the National Treasurer who shall pay through the assurance fund;
thereafter Government shall be subrogated to rights of plaintiff to go against other parties
or securities
o The plaintiff must clearly allege the basis of the action and specify the details which
led to his loss, damage or deprivation, as well as the market value of the property
subject of the action
o It shall be the duty of the Solicitor General to appear and to defend all such suits with
the aid of the Fiscal of the province or city where the land lies
o In every action filed against the Assurance Fund, the court shall consider the report of
the Commissioner of Land Registration (Section 96, P.D. 1529)

When to File Action against Assurance Fund
Any action for compensation against the Assurance Fund by reason of any loss,
damage or deprivation of land or any interest therein shall be instituted within 6 years
from the time the right to bring such action first accrued.
If the person entitled to bring such action was a minor or insane or imprisoned, or
otherwise under legal disability, He or anyone claiming from, by or under him may bring
the proper action at any time within 2 years after such disability has been removed,
notwithstanding the expiration of the original period of six years (Sec. 102, P.D. 1529).

Measure of Damages
The maximum amount of damages recoverable as compensation from the
Assurance Fund is an amount not more than the fair market value of the land at the time
he suffered the loss, damage or deprivation thereof (Sec. 97, P.D. 1529). The measure of
damages to which one is entitled will in general be the value of the property of which the
person compensated has been deprived but not more than the actual loss incurred (Hoggs
Australian Torrens System, pp. 859-860). The reason is because the Assurance Fund was
created to insure against loss or damage, not to guarantee profit, let along enormous profit
(Niblack, The Torrens System, p. 312).

Section 100. Register of Deeds as party in interest. When it appears that the Assurance Fund
may be liable for damages that may be incurred due to the unlawful or erroneous issuance of a
certificate of title, the Register of Deeds concerned shall be deemed a proper party in interest
who shall, upon authority of the Commissioner of Land Registration, file the necessary action in
court to annul or amend the title.
The court may order the Register of Deeds to amend or cancel a certificate of title or to
do any other act as may be just and equitable.
In the event the Assurance fund is held liable on account of the unlawful or erroneous
issuance of a certificate of title, the Register of Deeds upon the authority of the LRA
administrator shall file the necessary action to amend or cancel the title or perform any
other act as may be directed by the Court.

Conditions Justifying Payment of Damages From the Assurance Fund
1) That the party claiming to have suffered loss or damage by reason of the operation of the
Torrens System has a title to, right or interest in the property (La Urbana, et al.vs. Bernardo, et
al)
2) That he is in reality wrongfully deprived of his land by registration in the name of another of
the land by actual or constructive fraud (Gayondato vs. Treasurer of the Phils. Is.; Hernandez, et
al. vs. Alcaraz, etal. De la Cruz vs. Fabie,35Phil. 144 [1916])
3) That the remedies provided by law are no longer available; that is, he can no longer exercise
his right to have the decree reviewed on the ground of fraud or that he cannot have the certificate
of the forger transferee cancelled because the latter has already conveyed the property to an
innocent purchaser for value; that he cannot have the property reconveyed to him by the party
causing the loss or damage (Pascual vs. Kingcome Macleod, Court of Appeals)
4) That he is not guilty of negligence or laches ( De la Cruz vs. Fabie,35 Phil. 144 [1916];
Estrellado, et al. vs. Martinez,38 Phil. 256 [1918])
5) That the action has not prescribed ( Heirs of Enriquez and Villanueva vs. Enriquez, 44 Phil.
885 [1922])
6) That the loss is not caused by a breach of trust, whether express, implied or constructive,
committed by any registered owner who is a trustee (Section 101, P.D. 1529)
7) That the loss was not caused by the improper exercise of any sale in mortgage foreclosure
proceedings
8) That the loss was not caused by a mistake in the resurvey or subdivision of registered land
resulting in the expansion of the area in the certificate of title (Sec. 101 of P.D.1529)

Cases Where the Assurance Fund Is Not Liable
1) In case the land may be recovered or reconveyed (Terrible vs. Insular Treasurer, VII Lawyers
Journal, 767)
2) In case the party who caused the loss can pay the damages on the property to the person
deprived thereof (Manotoc vs. Choco,30 Phil. 628)
3) In case the loss is due to the owners negligence (Dela Cruz vs. Fabie, 36 Phil. 144 [1917])
4) In case the loss is caused by a breach of trust whether express, implied or constructive
committed by any registered owner who is a trustee (Severino vs. Severino,44 Phil. 343)
5) When the loss is caused by the improper exercise of any sale in mortgage foreclosure
proceedings
6) In case the action has prescribed (Section 102 of P.D. 1529) (Heirs of Enriquez vs. Enriquez,
44 Phil. 885 [1922])
7) That the loss was caused by a mistake in the resurvey or subdivision of registered land
resulting in the expansion of the area in the certificate of title (Section 101 of P.D.1529)