ESPERANZA FABIAN, BENITA FABIAN AND DAMASO PAPA Y FABIAN, PLAINTIFFS AND APPELLANTS, VS. SILBINA FABIAN, FELICIANO LANDRITO, TEO-DORA FABIAN AND FRANCISCO DEL MONTE, DEFENDANTS …

Fabian versus Fabian

The Case

This is Esperanza Fabian, Benita Fabian and Damaso Papa against Silbina Fabian, Feliciano Landrito, Teodora Fabian and Francisco del Monte. The plaintiffs are daughters and a grandson of the late Pablo Fabian, and they came to court asking for reconveyance of a parcel of Friar Lands in Muntinlupa, Rizal, which they say the defendants took from the family through a false affidavit of sole heirship. The defendants answer that they bought the land from the Government, hold a certificate of title in their own names, and have possessed it openly since 1929. The case matters because it gathers into one decision three rules every reviewee must know: when a Friar Lands purchaser owns the lot even before full payment, whether laches and prescription can defeat an action to enforce a constructive trust born of fraud, and how acquisitive prescription vests full title in a possessor.

Procedural History

The plaintiffs filed their complaint for reconveyance in the Court of First Instance of Rizal in July 1960. The defendants answered, pleading ownership by purchase from the Government and that the action had already prescribed. On a partial stipulation of facts, the trial court rendered judgment in June 1962, holding that the defendants had acquired a valid and complete title by acquisitive prescription, and dismissed the complaint with costs against the plaintiffs. The plaintiffs moved for reconsideration, and the motion was denied. They then appealed directly to the Supreme Court, which decided the case in January 1968.

Facts

On the first day of January 1909, Pablo Fabian bought lot 164 of the Friar Lands Estate in Muntinlupa, Rizal, with an area of one hectare, forty-two ares and eighty centares, from the Philippine Government, and sale certificate 547 was issued in his name. He paid five annual installments, but he had not paid the purchase price in full when he died on August 2, 1928. He was survived by four daughters: Esperanza, Benita the first, Benita the second, and Silbina.

On October 5, 1928, Silbina Fabian and Teodora Fabian, a niece of the deceased, executed an affidavit stating that the late Pablo Fabian left no other heirs than the declarants, with the right to inherit lot 164. On the strength of that affidavit, sale certificate 547 was assigned to them. On November 14, 1928, the acting Director of Lands, on behalf of the Government, sold lot 164 to Silbina, married to Feliciano Landrito, and to Teodora, married to Francisco del Monte, for 120 pesos. The following year the two spouses took physical possession, cultivated the land, and kept the produce for themselves. They declared the lot in their names for taxation, paid the real estate taxes from 1929 onward, and in 1937 the Register of Deeds issued a transfer certificate of title in their names. In 1945 they subdivided the lot into two equal parts, and separate certificates of title were issued to Silbina and to Teodora.

Only on July 18, 1960, thirty-two years later, did the plaintiffs sue for reconveyance, alleging that the affidavit was a false narration because Silbina knew she was not the only daughter and Teodora knew that, as a mere niece, she could not inherit in the presence of the four surviving daughters. The defendants denied the fraud and invoked prescription.

Issues

• Whether or not Pablo Fabian was the owner of lot 164 at the time of his death, given that he had not yet paid the entire purchase price.
• Whether or not laches may bar an action to enforce a constructive trust.
• Whether or not title to the land vested in the defendants through acquisitive prescription.

Applicable Provisions

Section 15 of the Friar Lands Act, Act Numbered 1120, provides:

While under section 15 of the said Act, title to the land sold is reserved to the Government until the purchaser makes full payment of all the required installments and the interest thereon, this legal reservation refers to the bare, naked title.

This is the provision the Court construes to hold that the purchaser owns the land in equity from the first installment, so that Pablo Fabian was owner at his death.

Section 16 of the same Act provides:

In case a holder of a certificate dies before the giving of the deed and does not leave a widow, then the interest of the holder of the certificate shall descend and deed shall issue to the person who under the laws of the Philippine Islands would have taken had the title been perfected before the death of the holder of the certificate, upon proof of the holders thus entitled of compliance with all the requirements of the certificate.

This is the provision that passed Pablo Fabian's interest to his four daughters, and under which the sale to Teodora and the sale of the daughters' shares were void.

Section 41 of the old Code of Civil Procedure, Act Numbered 190, provides:

Ten years actual adverse possession by any person claiming to be the owner for that time of any land or interest in land, uninterruptedly continued for ten years by occupancy, descent, grants, or otherwise, in whatever way such occupancy may have commenced or continued, shall vest in every actual occupant or possessor of such land a full and complete title.

This is the provision under which the defendants' long, open and continuous possession ripened into full ownership.

Ruling

On the first issue, the Court held that Pablo Fabian was the owner of lot 164 when he died. The reservation of title in the Government under the Friar Lands Act covers only the bare, naked title; the equitable and beneficial title passed to the purchaser the moment he paid the first installment and received his certificate of sale. The Government keeps the title only to protect itself, and exercises none of the rights of an owner. When the purchaser pays in full, his title retroacts, at least in equity, to the time he first occupied the land and paid the first installment. Pablo Fabian having paid five installments and held sale certificate 547, his rights passed upon his death to his four daughters. The assignment and sale to Silbina and Teodora were therefore void as to Teodora's portion and as to the shares that lawfully devolved on the plaintiffs. Where property is acquired through fraud, the person obtaining it becomes a trustee of an implied trust for the benefit of the person from whom the property came.

On the second issue, the Court held that laches may bar an action to enforce a constructive trust. Unlike an express trust, which the trustee must openly repudiate before prescription runs, a constructive trust created by law is subject to laches, and repudiation is not required unless the facts giving rise to the trust were concealed. Here the assignment was made in October 1928 and the transfer in November 1928, yet the plaintiffs came forward only in July 1960, thirty-two big years later. There was no concealment; the stipulation of facts stated that the defendants had possessed the land publicly and continuously under claim of ownership since 1928, cultivating it and appropriating the fruits. The Court also held that the right to enforce the trust had prescribed, applying the rule that an action for reconveyance based on a constructive trust resulting from fraud may be filed only within four years from discovery of the fraud, discovery being deemed to occur when new certificates of title are issued exclusively in the names of those who excluded the true owners, since registration is constructive notice to the whole world.

On the third issue, the Court held that acquisitive prescription had vested absolute title in the defendants under Section 41 of the old Code of Civil Procedure. The possession required must be actual, open, public, continuous, under a claim of title exclusive of any other right, and adverse to all other claimants. The stipulation, though it did not use the word adverse, described possession that could have no other meaning, and the tax declarations, the payment of real estate taxes from 1929, and the separate certificates of title issued in 1945 removed all doubt.

Doctrine

First, under the Friar Lands Act, the reservation of title in the Government pending full payment covers only the bare, naked title; the equitable and beneficial title belongs to the purchaser from the first installment, and upon full payment the title retroacts to the first occupancy and payment. Second, property acquired through fraud makes the holder a trustee of a constructive trust for the benefit of the person from whom it came, but unlike an express trust, an action to enforce a constructive trust may be barred by laches, and repudiation is unnecessary absent concealment. Third, an action for reconveyance based on a constructive trust resulting from fraud prescribes in four years from discovery, and discovery is deemed to occur upon registration of the instrument that excludes the true owners, registration being constructive notice to the whole world. Fourth, ten years of actual, open, public, continuous and adverse possession under a claim of title vests full and complete title in the possessor by acquisitive prescription.

Disposition

The Supreme Court affirmed the judgment of the trial court dismissing the complaint, with no pronouncement as to costs, so the defendants kept the land.

Remember This

Memorize the line that the reservation of title in the Government under the Friar Lands Act refers only to the bare, naked title, the equitable title being in the purchaser from the first installment. Examiners use this case for the four-year prescriptive period on reconveyance grounded on a constructive trust from fraud, counted from registration as constructive notice, and for laches as a bar to enforcing that trust.