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GAYONDATO v TREASURER ROSARIO GAYONDATO, plaintiff-appellant, vs. THE TREASURER OF THE

PHILIPPINE ISLANDS, ET AL., defendants-appellant.

G.R. No. L-24597 August 25, 1926

FACTS:

Three parcels of land (subject lots) were inherited by Domingo Gayondato from his mother. Domingo
then married Adela Gasataya (Adela) and they had one child, Rosario Gayondato (Gayondato). Domingo
died in 1902 and six years latasdasdasdasdasdasdasdasdasdadasdaer, Adela married Domingo Cuachon.
The subject lots were included in a cadastral case where Domingo appeared on behalf of Adela and
Rosario, who was then fifteen years old. Despite Domingos claims that the subject lots were owned by
both Adela and Rosario, Court of First Instance erroneously decreed the registration of the aforesaid lots
in the name of Adela Gasataya alone. Subsequently Adela, with the consent of her husband, mortgaged
the property to the National Bank and in the year 1920, sold it to the Francisco Rodriguez (Francisco),
the latter assuming the liability for the mortgage and for certain other debts. Rosario filed a complaint
against Adela, Domingo, Francisco, and Insular Treasurer to recover damages for the erroneous
registration of the subject lots in the name of Adela. Trial court ruled in favor of Rosario ordering Adela
and Domingo to solidarily indemnify Rosario, but absolving Insular Treasurer and Francisco.

ISSUE

WON Insular Treasurer should be held secondarily liable

RULING As the plaintiff-appellant was a minor at the time of the registration of the land and
consequently no negligence can be imputed to her, in the absence of special circumstances to the
contrary, the assurance fund is secondarily liable for the damages suffered by her through the wrongful
registration.

HELD

The Attorney-General in his brief for the Insular Treasurer raises the point that Domingo and Adela prior
to the registration must be considered to have held the property in trust and for the benefit of Rosario;
thus, the relation of trustee and cestui que trust was created making this case fall under Section 106 of
the Land Registration Act, which provides that "the assurance fund shall not be liable to pay for any loss
or damage or deprivation occasioned by a breach of trust, whether express, implied, or constructive, by
any registered owner who is a trustee, or by the improper exercise of any sale in mortgageforeclosure
proceedings." The use of the word "trust" in this sense is not technically accurate. As Perry says, such
trusts "are not trusts at all in the strict and proper signification of the word "trust"; but as courts are
agreed in administering the same remedy in a certain class of frauds as are administered in fraudulent
breaches of trusts, and as courts and the profession have concurred in calling such frauds constructive
trusts, there can be no misapprehension in continuing the same phraseology, while a change might lead
to confusion and misunderstanding." If this is the kind of constructive trust referred to in Section 106, it
must be conceded that Rosario cannot recover damages from the assurance fund. But that such is not
the case, becomes quite apparent upon an examination of sections 101 and 102, of the same Act, in
which the right of recovery from the assurance fund in cases of registration through fraud or wrongful
acts is expressly recognized, then it clearly shows that the term trust as used in section 106 must be
taken in its technical and more restricted sense. Indeed, if it were to be regarded in its broadest sense,
the assurance fund would, under the conditions here prevailing, be of little or no value