The Supreme Court has affirmed that actions for reconveyance based on implied trust prescribe in ten years from the issuance of the title. This ruling clarifies the importance of timely action in property disputes involving trust agreements. The Court emphasized that the prescriptive period begins from the date of title issuance, not from when the amended complaint was filed. This case highlights the necessity for vigilance and diligence in pursuing legal claims to protect property rights, providing a crucial reminder to parties involved in real estate transactions.

Simulated Sales and Broken Promises: Can Heirs Reclaim Trust Property?

This case revolves around a dispute over a property initially owned by Cristeta Feria, who executed a deed of absolute sale in favor of her nephew, Joel Descallar. The sale was allegedly simulated, with Cristeta trusting Joel’s promise to return the property upon demand or transfer it to her heirs. Despite the sale, Cristeta continued to act as the beneficial owner, paying bills, taxes, and leasing the property. When Joel reneged on his promise, Cristeta’s siblings, Belen and Augustus Feria, filed a complaint for reconveyance, leading to a legal battle involving issues of implied trust, prescription, and default.

The central legal question is whether the heirs of Cristeta Feria could successfully claim the property based on the premise of an implied trust, despite the passage of time and the formal transfer of title to Joel Descallar. The Court addressed several critical issues, including the jurisdiction of the Regional Trial Court (RTC), the propriety of declaring the defendants in default, and the sufficiency of the evidence presented to prove the implied trust. The petitioners, Evangeline Descallar and her children, argued that the RTC lacked jurisdiction, that they were improperly declared in default, and that the evidence was insufficient to support the claim of reconveyance.

Jurisdiction is the power and authority of a court to hear, try, and decide a case brought before it for resolution. The Supreme Court reiterated that jurisdiction over the subject matter is conferred by law and determined by the allegations in the complaint. In this case, the respondents alleged that the property value was not less than P500,000.00, which was sufficient to establish the RTC’s jurisdiction. The Court also addressed the petitioners’ argument that the failure to present the tax declaration deprived the RTC of jurisdiction. The Court emphasized that it is an established doctrine that jurisdiction is determined by the allegations in the complaint, not necessarily by the evidence presented.

Moreover, the Court addressed the issue of estoppel, noting that while the issue of jurisdiction can generally be raised at any stage of the proceedings, a party may be estopped from doing so if the objection is not timely raised, especially after actively participating in the trial. This principle aims to prevent parties from belatedly challenging jurisdiction after benefiting from the judicial process. In this case, the petitioners raised the issue of lack of jurisdiction only in their petition before the Supreme Court, years after the complaint was filed and after actively participating in the proceedings. The Court found that the petitioners were estopped from raising this issue due to their delay.

The Court then turned to the issue of prescription, noting that the action for reconveyance was based on an implied trust. Implied trusts are those which, without being expressed, are deducible from the nature of the transaction as matters of intent or which are superinduced on the transaction by operation of law as matters of equity. An action for reconveyance based on implied trust prescribes in ten years, which period is reckoned from the date of the issuance of the original certificate of title or Transfer Certificate of Title (TCT). The TCT was issued in the names of Spouses Descallar on January 25, 1996, and the Complaint was filed on March 29, 2004, within the 10-year period.

The petitioners argued that the counting of the prescriptive period should commence from the filing of the Amended Complaint on December 15, 2008. The Court rejected this argument, emphasizing that prescription aims to protect the diligent, not those who sleep on their rights. It also noted that the facts did not indicate prolonged inaction on the part of Belen and Augustus, negating any claim of laches. Furthermore, Article 1456 of the Civil Code is instructive, stating:

“If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes.”

The Court also upheld the RTC’s declaration of default against the petitioners. The records showed that the RTC had given the petitioners numerous opportunities to file their answer, which they repeatedly failed to do. Despite multiple extensions and orders, the petitioners did not file their answer until after the respondents filed a motion to declare them in default. Even after the Court of Appeals directed them to file an answer within ten days of receiving the Amended Complaint, the petitioners instead filed a motion to dismiss, insisting that their previously filed answer should suffice. The Court agreed with the CA that the petitioners’ answer did not become part of the records due to its belated filing and the RTC’s denial of its admission.

The petitioners invoked Section 3 of Rule 11 of the Rules of Court, arguing that their answer to the original complaint should be considered as their answer to the Amended Complaint since no new answer was filed. This rule states:

“When the plaintiff files an amended complaint… [a]n answer earlier filed may serve as the answer to the amended complaint if no new answer is filed.”

However, the Court clarified that this rule applies only if the earlier answer was properly admitted and formed part of the records. In this case, the RTC had already denied the admission of the petitioners’ answer due to their failure to file it on time, leading to the initial declaration of default. As a result, the petitioners’ answer could not be considered as their response to the Amended Complaint. The consequences of being declared in default are significant, as the defaulting party loses the right to participate in the trial, present evidence, and cross-examine witnesses.

The Court also addressed the sufficiency of the evidence presented by the respondents to prove their case for reconveyance. While the Court of Appeals found Belen Feria Guevara’s testimony to be hearsay, it nonetheless upheld the RTC’s decision based on other documentary evidence and testimonies. This evidence included Cristeta’s notarized letter to the Register of Deeds, letters from Cristeta to her tenants, letters from the tenants recognizing Cristeta’s ownership, receipts issued by Cristeta after the purported deed of sale, and the testimonies of Tayag and Dalumpines. The Court reiterated its role in reviewing errors of law and not re-evaluating factual findings, especially when both the RTC and CA have concurred in their findings.

The Court acknowledged that a judgment by default does not imply a waiver of all rights, but the plaintiffs are still required to present evidence to support their allegations. In this case, the respondents presented sufficient evidence to establish the implied trust and their right to reconveyance. The Supreme Court has consistently held that an accion reivindicatoria or reivindicatory action is an action for recovery of ownership. The elements are straightforward:

The key elements are:

1. The plaintiffs’ ownership of the land.
2. The defendants’ illegal dispossession.

The Court emphasized the importance of adhering to procedural rules, noting that while exceptions may be made in compelling circumstances, every plea for liberal construction must be accompanied by a valid explanation for non-compliance. In this case, the petitioners’ repeated failures to comply with procedural rules and their belated attempts to raise jurisdictional issues were not justified. The ruling underscores the judiciary’s commitment to upholding the integrity of legal processes and ensuring fairness to all parties involved. The Court saw no reason to depart from the uniform findings of the lower courts, which were supported by the evidence on record.

FAQs

What was the key issue in this case?	The key issue was whether the heirs of Cristeta Feria could successfully claim a property based on an implied trust, despite the formal transfer of title to Joel Descallar. The court examined issues such as prescription, jurisdiction, and sufficiency of evidence.
What is an implied trust?	An implied trust is a trust created by law based on the presumed intention of the parties or to prevent unjust enrichment. In this case, the implied trust arose from the simulated sale and Joel’s promise to return the property.
When does the prescriptive period for reconveyance based on implied trust begin?	The prescriptive period begins from the date of the issuance of the original certificate of title or Transfer Certificate of Title (TCT). This period is ten years.
What happens when a defendant is declared in default?	A defendant in default loses the right to participate in the trial, present evidence, and cross-examine witnesses. However, they retain the right to appeal the judgment on certain grounds.
Can a party raise the issue of jurisdiction at any stage of the proceedings?	While generally true, a party may be estopped from questioning jurisdiction if the objection is not timely raised, especially after actively participating in the trial. This is to prevent parties from belatedly challenging jurisdiction after benefiting from the judicial process.
What evidence did the respondents present to prove the implied trust?	The respondents presented Cristeta’s notarized letter, letters from Cristeta to her tenants, letters from tenants recognizing Cristeta’s ownership, receipts issued by Cristeta, and testimonies of witnesses. While the CA deemed Belen’s testimony as hearsay, the other documentary evidence was considered.
What is the significance of Section 3, Rule 11 of the Rules of Court in this case?	Section 3, Rule 11 allows a previously filed answer to serve as the answer to an amended complaint if no new answer is filed. However, this applies only if the earlier answer was properly admitted and formed part of the records.
What is an accion reivindicatoria?	An accion reivindicatoria is an action for recovery of ownership. To succeed, the plaintiff must prove ownership of the land and the defendant’s illegal dispossession.
What is the role of the Supreme Court in reviewing decisions of the Court of Appeals?	The Supreme Court’s role is limited to reviewing errors of law allegedly committed by the Court of Appeals. It does not generally re-evaluate factual findings, especially when the RTC and CA have concurred.

This case underscores the importance of acting promptly to protect property rights and adhering to procedural rules in legal proceedings. The decision serves as a reminder that implied trusts must be enforced within the prescribed period and that failure to comply with court orders can have significant consequences. The Supreme Court’s ruling reinforces the principles of equity and diligence in property disputes.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Evangeline C. Descallar, et al. vs. Heirs of Belen A. Feria Guevara, et al., G.R. No. 243874, October 06, 2021