G.R. No. L-18977 December 27, 1963
FILOMENA CUSTODIO, ET AL., petitioners, vs. FILOMENA CASIANO, ET AL., respondents.

FACTS

The petitioners, children of Alejandra, Gregoria, and Trinidad Custodio, filed an action against the respondents, the widow and children of Ciriaco Custodio. They alleged that their grandfather, Isaac Custodio, purchased a parcel of land from the Caridad Estate of Cavite, Inc. on installment. Upon Isaac’s death in 1927, his rights passed to his children: Ciriaco, Alejandra, Gregoria, and Trinidad. Alejandra paid the remaining balance. The estate manager suggested titling the property in Ciriaco’s name as the only male sibling, to which the sisters agreed. Consequently, Transfer Certificate of Title No. 5800 was issued in 1928 solely in the name of Ciriaco Custodio. The petitioners claimed co-ownership and initiated this suit upon discovering the respondents’ intent to sell the land.
The respondents asserted exclusive ownership based on the Torrens title in Ciriaco’s name. The trial court declared the parties as co-owners and ordered the title’s cancellation. The Court of Appeals reversed, ruling for the respondents as exclusive owners. It held that no trust or co-ownership was proven and that the petitioners’ cause of action, filed 25 years after registration, had prescribed. The petitioners sought review by the Supreme Court.

ISSUE

Whether the petitioners’ action to recover their alleged share in the registered property is barred by prescription or laches.

RULING

The Supreme Court reversed the Court of Appeals and reinstated the trial court’s judgment, declaring the parties as co-owners. The legal logic is that an implied trust existed, preventing the application of prescription. The evidence established that Isaac Custodio was the original purchaser-occupant. His children inherited his rights. The title was placed in Ciriaco’s name merely upon the manager’s suggestion and with his sisters’ consent, with the understanding he would hold it in trust for them. This is corroborated by the sisters’ continuous possession, their custody of the title document until 1951, and acknowledgments of co-ownership by Ciriaco and later his widow. The registration in Ciriaco’s name alone, under these circumstances, created a fiduciary obligation.
Consequently, the right to enforce such an implied trust does not prescribe. The defense of laches also fails. Its requisites—including defendant’s prejudice and plaintiff’s unreasonable delay—are absent. The petitioners acted promptly upon the respondents’ attempt to claim exclusive ownership. The respondents were aware of the trust nature of the holding, and no prejudice arises from enforcing the true agreement among the original co-owners. Therefore, the Torrens title cannot be used to perpetrate a fraud against the rightful co-owners.