RULE 98

whom the trust estate shall vest in like manner as if he had

been originally appointed by such court.

Trustees
Section 1. Where trustee appointed. A trustee necessary to
carry into effect the provisions of a will on written
instrument shall be appointed by the Court of First Instance in
which the will was allowed, if it be a will allowed in the
Philippines, otherwise by the Court of First Instance of the
province in which the property, or some portion thereof,
affected by the trust is situated.
Section 2. Appointment and powers of trustees under will.
Executor of former trustee need not administer trust. If a
testator has omitted in his will to appoint a trustee in the
Philippines, and if such appointment is necessary to carry into
effect the provisions of the will, the proper Court of First
Instance may, after notice to all persons interested, appoint a
trustee who shall have the same rights, powers, and duties, and
in whom the estate shall vest, as if he had been appointed by
the testator. No person succeeding to a trust as executor or
administrator of a former trustee shall be required to accept
such trust.
Section 3. Appointment and powers of new trustee under written
instrument. When a trustee under a written instrument
declines, resigns, dies or removed before the objects of the
trust are accomplished, and no adequate provision is made in
such instrument for supplying the vacancy, the proper Court of
First Instance may, after due notice to all persons interested,
appoint a new trustee to act alone or jointly with the others,
as the case may be. Such new trustee shall have and exercise
the same powers, right, and duties as if he had been originally
appointed, and the trust estate shall vest in him in like
manner as it had vested or would have vested, in the trustee in
whose place he is substituted and the court may order such
conveyance to be made by the former trustee or his
representatives, or by the other remaining trustees, as may be
necessary or proper to vest the trust estate in the new
trustee, either or jointly with the others.
Section 4. Proceedings where trustee appointed abroad. When
land in the Philippines is held in trust for persons resident
here by a trustee who derives his authority from without the
Philippines, such trustee shall, on petition filed in the Court
of First Instance of the province where the land is situated,
and after due notice to all persons interested, be ordered to
apply to the court for appointment as trustee; and upon his
neglect or refusal to comply with such order, the court shall
declare such trust vacant, and shall appoint a new trustee in

Section 5. Trustee must file bond. Before entering on the

duties of his trust, a trustee shall file with the clerk of the
court having jurisdiction of the trust a bond in the amount
fixed by the judge of said court, payable to the Government of
the Philippines and sufficient and available for the protection
of any party in interest, and a trustee who neglects to file
such bond shall be considered to have declined or resigned the
trust; but the court may until further order exempt a trustee
under a will from giving a bond when the testator has directed
or requested such exemption and may so exempt any trustee when
all persons beneficially interested in the trust, being of full
age, request the exemption. Such exemption may be cancelled by
the court at any time and the trustee required to forthwith
file a bond.
Section 6. Conditions included in bond. The following
conditions shall be deemed to be part of the bond whether
written therein or not;
(a) That the trustee will make and return to the
court, at such time as it may order, a true
inventory of all the real and personal estate
belonging to him as trustee, which at the time of
the making of such inventory shall have come to
his possession or knowledge;
(b) That he will manage and dispose of all such
estate, and faithfully discharge his trust in
relation thereto, according to law and the will of
the testator or the provisions of the instrument
or order under which he is appointed;
(c) That he will render upon oath at least once a
year until his trust is fulfilled, unless he is
excused therefrom in any year by the court, a true
account of the property in his hands and the
management and disposition thereof, and will
render such other accounts as the court may order;
(d) That at the expiration of his
settle his account in court and
deliver all the estate remaining in
due from him on such settlement, to
persons entitled to thereto.

trust he will
pay over and
his hands, or
the person or

But when the trustee is appointed as a successor to a prior

trustee, the court may dispense with the making and return of

an inventory, if one has already been filed, and in such case

the condition of the bond shall be deemed to be altered
accordingly.
Section 7. Appraisal. Compensation of trustee. When an
inventory is required to be returned by a trustee, the estate
and effects belonging to the trust shall be appraised and the
court may order one or more inheritance tax appraisers to
assist in the appraisement. The compensation of the trustee
shall be fixed by the court, if it be not determined in the
instrument creating the trust.
Section 8. Removal or resignation of trustee. The proper
Court of First Instance may, upon petition of the parties
beneficially interested and after due notice to the trustee and
hearing, remove a trustee if such removal appears essential in
the interest of the petitioner. The court may also, after due
notice to all persons interested, remove a trustee who is
insane or otherwise incapable of discharging his trust or
evidently unsuitable therefor. A trustee, whether appointed by
the court or under a written instrument, may resign his trust
if it appears to the court proper to allow such resignation.
Section 9. Proceedings for sale or encumbrance of trust estate.
When the sale or encumbrance of any real or personal estate
held in trust is necessary or expedient, the court having
jurisdiction of the trust may, on petition and after due notice
and hearing, order such sale or encumbrance to be made, and the
re-investment and application of the proceeds thereof in such
manner as will best effect the objects of the trust. The
petition, notice, hearing, order of sale or encumbrance, and
record of proceedings, shall conform as nearly as may be to the
provisions concerning the sale or imcumbrance by guardians of
the property of minors or other wards.
Art. 1440. A person who establishes a trust is called the
trustor; one in whom confidence is reposed as regards property
for the benefit of another person is known as the trustee; and
the person for whose benefit the trust has been created is
referred to as the beneficiary.
Art. 1441. Trusts are either express or implied. Express trusts
are created by the intention of the trustor or of the parties.
Implied trusts come into being by operation of law.

Art. 1442. The principles of the general law of trusts, insofar

as they are not in conflict with this Code, the Code of
Commerce, the Rules of Court and special laws are hereby
adopted.

CHAPTER 2
EXPRESS TRUSTS
Art. 1443. No express trusts concerning an immovable or any
interest therein may be proved by parol evidence.
Art. 1444. No particular words are required for the creation of
an express trust, it being sufficient that a trust is clearly
intended.
Art. 1445. No trust shall fail because the trustee appointed
declines the designation, unless the contrary should appear in
the instrument constituting the trust.
Art. 1446. Acceptance by the beneficiary is necessary.
Nevertheless, if the trust imposes no onerous condition upon
the beneficiary, his acceptance shall be presumed, if there is
no
proof
to
the
contrary.

CHAPTER 3
IMPLIED TRUSTS
Art. 1447. The enumeration of the following cases of implied
trust does not exclude others established by the general law of
trust, but the limitation laid down in Article 1442 shall be
applicable.
Art. 1448. There is an implied trust when property is sold, and
the legal estate is granted to one party but the price is paid
by another for the purpose of having the beneficial interest of
the property. The former is the trustee, while the latter is
the beneficiary. However, if the person to whom the title is
conveyed is a child, legitimate or illegitimate, of the one
paying the price of the sale, no trust is implied by law, it
being disputably presumed that there is a gift in favor of the
child.

Art. 1449. There is also an implied trust when a donation is

made to a person but it appears that although the legal estate
is transmitted to the donee, he nevertheless is either to have
no beneficial interest or only a part thereof.
Art. 1450. If the price of a sale of property is loaned or paid
by one person for the benefit of another and the conveyance is
made to the lender or payor to secure the payment of the debt,
a trust arises by operation of law in favor of the person to
whom the money is loaned or for whom its is paid. The latter
may redeem the property and compel a conveyance thereof to him.
Art. 1451. When land passes by succession to any person and he
causes the legal title to be put in the name of another, a
trust is established by implication of law for the benefit of
the true owner.
Art. 1452. If two or more persons agree to purchase property
and by common consent the legal title is taken in the name of
one of them for the benefit of all, a trust is created by force
of law in favor of the others in proportion to the interest of
each.
Art. 1453. When property is conveyed to a person in reliance
upon his declared intention to hold it for, or transfer it to

another or the grantor, there is an implied trust in favor of

the person whose benefit is contemplated.
Art. 1454. If an absolute conveyance of property is made in
order to secure the performance of an obligation of the grantor
toward the grantee, a trust by virtue of law is established. If
the fulfillment of the obligation is offered by the grantor
when it becomes due, he may demand the reconveyance of the
property to him.
Art. 1455. When any trustee, guardian or other person holding a
fiduciary relationship uses trust funds for the purchase of
property and causes the conveyance to be made to him or to a
third person, a trust is established by operation of law in
favor of the person to whom the funds belong.
Art. 1456. 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.
Art. 1457. An implied trust may be proved by oral evidence.