CHAPTER VII

ASSURANCE FUND

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.

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.

Section 95. Action for compensation from funds. A person who, without negligence on his part,
sustains loss or damage, or is deprived of land or any estate or interest therein in consequence of
the bringing of the land under the operation of the Torrens system of arising after original registration
of land, through fraud or in consequence of any error, omission, mistake or misdescription in any
certificate of title or in any entry or memorandum in the registration book, and who by the provisions
of this Decree is barred or otherwise precluded under the provision of any law from bringing an
action for the recovery of such land or the estate or interest therein, may bring an action in any court
of competent jurisdiction for the recovery of damages to be paid out of the Assurance Fund.

Section 96. Against whom action filed. If such action is brought to recover for loss or damage or for
deprivation of land or of any estate or interest therein arising wholly through fraud, negligence,
omission, mistake or misfeasance of the court personnel, Register of Deeds, his deputy, or other
employees of the Registry in the performance of their respective duties, the action shall be brought
against the Register of Deeds of the province or city where the land is situated and the National
Treasurer as defendants. But if such action is brought to recover for loss or damage or for
deprivation of land or of any interest therein arising through fraud, negligence, omission, mistake or
misfeasance of person other than court personnel, the Register of Deeds, his deputy or other
employees of the Registry, such action shall be brought against the Register of Deeds, the National
Treasurer and other person or persons, as co-defendants. It shall be the duty of the Solicitor General
in person or by representative to appear and to defend all such suits with the aid of the fiscal of the
province or city where the land lies: Provided, however, that nothing in this Decree shall be
construed to deprive the plaintiff of any right of action which he may have against any person for
such loss or damage or deprivation without joining the National Treasurer as party defendant. In
every action filed against the Assurance Fund, the court shall consider the report of the
Commissioner of Land Registration.
Section 97. Judgment, how satisfied. If there are defendants other than the National Treasurer and
the Register of Deeds and judgment is entered for the plaintiff and against the National Treasury, the
Register of Deeds and any of the other defendants, execution shall first issue against such
defendants other than the National and the Register of Deeds. If the execution is returned
unsatisfied in whole or in part, and the officer returning the same certificates that the amount due
cannot be collected from the land or personal property of such other defendants, only then shall the
court, upon proper showing, order the amount of the execution and costs, or so much thereof as
remains unpaid, to be paid by the National treasurer out of the Assurance Fund. In an action under
this Decree, the plaintiff cannot recover as compensation more than the fair market value of the land
at the time he suffered the loss, damage, or deprivation thereof.

Section 98. General Fund when liable. If at any time the Assurance Fund is not sufficient to satisfy
such judgment, the National Treasurer shall make up for the deficiency from any funds available in
the treasury not otherwise appropriated.

Section 99. Subrogation of government to plaintiff's rights. In every case where payment has been
made by the National Treasurer in accordance with the provisions of this Decree, the Government of
the Republic of the Philippines shall be subrogated to the rights of the plaintiff against any other
parties or securities. The National Treasurer shall enforce said rights and the amount recovered
shall be paid to the account of the Assurance Fund.

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.

Section 101. Losses not recoverable. The Assurance Fund shall not be liable for any loss, damage
or deprivation caused or occasioned by a breach of trust, whether express, implied or constructive or
by any mistake in the resurveyed or subdivision of registered land resulting in the expansion of area
in the certificate of title.

Section 102. Limitation of Action. 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 a
period of six years from the time the right to bring such action first occurred: Provided, That the right
of action herein provided shall survive to the legal representative of the person sustaining loss or
damage, unless barred in his lifetime; and Provided, further, That if at the time such right of action
first accrued the person entitled to bring such action was a minor or insane or imprisoned, or
otherwise under legal disability, such person or anyone claiming from, by or under him may bring the
proper action at any time within two years after such disability has been removed, notwithstanding
the expiration of the original period of six years first above provided.