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TRUST
PRELIMINARIES Alluring trust relationship based only on the meeting of the minds and the trustee does
not even begin to assume fiduciary duties towards the beneficiary until and unless the
The provisions on trust are based on American law and jurisprudence. title to the res is transferred to him. In order for the trustee to begin his duty as a trustee,
he is able to transact matters concerning the property.
PURPOSE OF TRUST is to hold in possession a property for the benefit of
another person. CHARACTERISTICS OF A TRUST

As long as it is not in conflict the NCC, the Code of Commerce, the Rules of Morales vs. CA (274 S 282):
Court and special laws, the LAW ON TRUST will prevail (1442). 1. It is a relationship.
2. It is a relationship of a fiduciary character. Because there has to be trust and
ESSENCE OF TRUST is equity whether it be express or implied trust. confidence especially on the part of the trustee because the trustor has to have
trust and confidence that the trustee will perform his duties for the benefit of the
22 SCRA 231 – there can be no trust, whether express or implied, that can be beneficiary. He will therefore not act for himself and take possession fully of the
held valid and enforceable when it is contrary to law, morals, and public policy. property ousting the beneficiary of the property.
3. It is a relationship with respect to property not one merely involving personal
In other courts, the application of trust principles on given transactions duties. Movable or immovable property are the subject of a trust.
covering proprietary provisions are mandated not by specific reference to 4. It involves the existence of equitable duties imposed upon the holder of the title
statutory provisions of the law, but by seeking equitable solutions to render to the property to deal with it for the benefit of another.
justice to the parties involved or affected by the transaction. Application of the 5. It arises as a result of a manifestation of intention to create the relationship. It is
law on trust will be more of a common sense application. Because what you essential to consider the intention of the trustor. You have to determine if indeed
have to determine is, “is the act of the trustee in violation NCC, the Code of the trustor really had the intention to put a property which he owns in a trust
Commerce, the Rules of Court and special laws”. If it is in violation, there can relationship for the benefit of either of himself or a third person. Article 1444
be no trust. You have also to see if the acts of the trustee will cause injustice to states that no particular words are needed for the creation of an express trust.
another person, when he holds in possession a property which should belong However, it is important that trust is really intended in order to say that there was
to another person. really a trust that was created.

Trust is really to further social justice and equity among the parties involve. PARTIES TO A TRUST

WHAT IS TRUST? 1. TRUSTOR – the person who intentionally creates or establishes a trust. He
transfers legal ownership of the property or asset to a person for the benefit of the
TRUST is a fiduciary relationship concerning property which obliges the 3rd person who owns equitable title. A trustor can be both a trustee and a
person holding it to deal with the property for the benefit of another person, beneficiary.
and the person holding such property in lieu of his equitable title is allowed
to exercise certain powers belonging to the owner of the legal title. 2. TRUSTEE – a person in whom confidence is reposed as regards the property
placed in trust. He holds the legal title in trust for the benefit of another. It may be
The right to beneficial use and enjoyment of the property, the legal title of a natural person or a juridical person. He has certain duties relating to the res or
which is vested in another. the trust property with respect to the person for whose benefit the trust was
created. He is allowed to enter into transaction regarding the property in trust. A
Therefore, in a trust, a trustor (one who owns the property) will give the legal trustee can never be a beneficiary at the same time (here, you are mixing both the
title to another person, trustee, and this trustee will hold the property for the equitable title and the naked title) – it will already extinguish the trust.
benefit of another person (beneficiary) who holds equitable title.
3. BENEFICIARY (cestique trust) – the person for whose benefit the trust is created.
Tolentino: the legal relationship between one person having an equitable He has equitable title or interest in the property. He may either be a juridical or a
ownership in property and another person owning a legal title to such natural person. He may also be several persons composed of several
property, equitable ownership of the former entitling him to the performance beneficiaries. It is important that he must be named or identified or in existence
of certain duties and exercises certain powers over it. at the time of the creation. He must already be determined by the time the trust
relationship will be terminated. Future children are allowed to be beneficiaries.
NATURE OF TRUST He may specify the beneficiaries as a class of persons who are readily identified
(Example: hold this in trust for 3rdyear Section C of the School of Law).
1. It does not create a separate juridical entity. The trustee will not have a
separate personality – he does not own totally the property; he will only NATURE OF OWNERSHIP IN TRUST
hold such property for and in behalf of a third person (beneficiary) who has
equitable title and who will eventually own that property. Trust is an instance of duplicate ownership where properties owned by persons at the
same time.
2. It divorces the naked title of the trustee from the rest of the trustee’s
estate. A trustee cannot join such property he holds in trust to the rest of his One of the owners has legal title with the obligation to use said ownership for the
estate or properties. benefit of another who has equitable title.

3. It is anchored on splitting or intention to split the naked title and the The nature of the ownership of a trustee is that he does not have any right of enjoyment
beneficial title. of the trust property. Therefore, his ownership is merely a matter of form rather than
substance and it is nominal rather than real.
ESSENCE OF TRUST o In the case of Advent Capital and Finance Corporation vs. Alcantara (664 S 224),
SC stated that trustee is a person to whom the property of someone else is
The fiduciary relationship or the enforcement of equity principles is built upon fictitiously attributed by the law to the extent that the rights and powers thus
property relations. vested shall be used by him in behalf of the owner.
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o While he has legal title, he is not really the owner of such property. He holds Example: Suppose the trustor will inherit a property which will be given to
it for the benefit of another. another and hold it for the benefit of the trustor’s children – since this is a mere
expectancy, there will be no trust. The trustor must at least be able to enter into a
The nature of the ownership of the beneficiary is that since he has equitable title, transaction with the property.
his interest on the property may be transferred. He may sell or dispose his interest 3. There must be a sufficiently certain beneficiaries. They have to be identified.
which a trustee has no right to do. It may also be touched by creditors of the They must be capacitated to receive gratuitously from the trustor.
beneficiary. He may also receive income from the assets of the trusts. For
Example, the property is being rented out. CHARACTERISTICS:

CLASSIFICATION OF TRUST 1. It is nominate and principal. But it is governed by equity principles.


2. It is unilateral and gratuitous. It is only the trustee assumes obligations to hold
I. AS TO EFFECTIVITY it in trust for the benefit of the beneficiary – everything happens with the trustee
a. Testamentary trust – one which is to take effect upon the trustor’s because the trustor merely gives the trustee such property. Once a trust relation
death. This is usually included in the will of the trustor and does not has been created, the trustee has the obligation to take possession of the property,
have a separate trust deed. to manage and administer such property for the benefit of the beneficiary. It is
b. Inter Vivos trust – one which is established effective during the gratuitous because it is supported with the consideration of liberality. Thus, trust
owner’s lifetime. Once created, legal title passes to the trustee with the relationship imposes no burden upon the beneficiary; he merely receives such
duty to administer the property for the benefit of the beneficiary. The property.
grantor executes a “trust deed,’’ and once the trust is created, legal 3. It is a preparatory contract. It is a medium established by the trustor to allow
title to the trust property passes to the named trustee with duty to full authority and discretion on the part of the trustee to enter into various
administer the property for the benefit of the beneficiary. juridical acts to earn income or to achieve other goals for the benefit of the
II. REVOCABILITY beneficiary. The trustee is given the discretion to manage and administer the
a. Revocable - one which can be revoked or cancelled by the trustor or property.
another individual given the power. 4. It constitutes fiduciary duties on the trustee. He must act for the interest of the
b. Irrevocable - one which may not be terminated during the specified beneficiary and he must be loyal to the beneficiary.
term of the trust. 5. Acquisitive prescription is unavailing to the trustee. A trustee will not invoke
III. CREATION the statute of limitation or prescription against the beneficiary.
a. Express - one which can come into existence only by the execution of (1) trustee does not take possession of the res despite the number of years that
an intention to create it by the trustor or the parties. Though there is he is in possession of the property,
no particular form required to create a trust, the intention of the (2) the beneficiary, once the trust is still in existence, has the right to run after
trustor is to enter into a trust relationship. that property in trust,
b. Implied - one which comes into being by operation of law. It is further (3) the trustee cannot set up the defense that there is already prescription on
classified into: the part of the beneficiary to take possession and ownership over the property.
i. Resulting trust - one in which the intention to create a trust is
implied or presumed in law. RULES ON ENFORCEABILITY:
ii. Constructive trust (trust ex maleficio/trust ex delicto/de son
tort) - one imposed by law irrespective of, and even contrary to, 1. It must be clearly shown to have been intended (A1444).
any such intention for the purpose of promoting justice,
frustrating fraud, or preventing unjust enrichment. Though there is no particular form required, the intention must be shown. An
express trust will never be presumed to exist. The party who claims the right
EXPRESS TRUST under a trust arrangement must prove the existence thereof. He must prove it by
clear, satisfactory and convincing evidence that trust is really the intention of the
Essentially contractual in character because it can only be constituted through trustor. An express trust cannot be proven by parole evidence.
contractual intention on the part of the trustor to dispose of his property by
dividing his full ownership between the trustee and the beneficiary. (Parole Evidence Rule – when no evidence may be introduce that would seek
to modify the terms of a written agreement). Especially if the subject of the trust
Generally requires the full acceptance of the naked title and fiduciary obligations is an immovable property, it must be contained in writing.
on the part of the trustee and the concomitant obligations that go with it.
When it is contained in writing, parole evidence cannot be used to prove that there
Under Art. 1441, it is created by intention of the trustor or the parties. It is created was an express trust because the best evidence to prove that there is an express
by the direct and positive act of the trustor by some writing, deed, will or oral trust is the writing that the trustor executed for the benefit of the beneficiary.
declaration showing an intention to create a trust.
2. There must be conveyance of the res to the trustee.
Under Art. 1444, there is no particular words that is needed in order for the
express trust to be created. It is important that it is clearly intended by the direct There must be a definite property that will be transferred to the trustee to create
and positive acts of the trustor that he is entering into a trust relations. an obligation on the part of the trustee to manage such property. If a trust
relationship is created before the delivery of the title over the trust, there will be
ELEMENTS: no valid contract of trust – at the time the contract is created, the property must,
(Mindanao Development Authority vs. CA, 113 S 429, & Canezo vs. Lotas, 538 S 242) at the same time, be delivered to the trustee.
1. There must be a competent trustor and trustee. The trustor must be
capacitated to convey property. The trustee must be capacitated to hold If there was promise to create trust relationship but no property is given – at most,
property and to enter into contracts. what is created is a contract of do ut facias (the trustor has contractually bound
2. There must be an ascertainable trust res. There must be a property which himself to deliver and to transfer title over the trust property to the trustee, and
is actually in existence and which the trustor has transferrable interest or the trustee has bound himself to accept delivery and manage the property to be
title. It cannot be a mere expectancy without right or interest or a mere delivered for the interest of the beneficiary).
interest in the performance of the contract.

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3. Express trust over immovables must be in writing. o One designated or appointed as trustee may decline the
responsibility and thereby be free from any legal or equitable duty or
Art. 1443 states that “No express trusts concerning an immovable or any liability in the matter.
interest therein may be proved by parol evidence”. Unless a contrary intention appears in the instrument constituting the
trust (Art. 1145.), declination or refusal or disqualification of a trustee
In Penalber v. Ramos, the requirement in 1443 is only for purposes of does not operate to defeat or void the trust; nor does it operate to vest
proving that there is an express trust. However, if there is no writing, the legal as well as equitable title in the beneficiary.
express trust is still considered as valid. If you do not comply with 1443 and o Renunciation of a trust after its acceptance can only be by
express trust is entered into with respect to an immovable property but resignation or retirement with court approval or at least, with
as long as it will still be proven that it is the intention of the trustor, it will be agreement of beneficiaries and on satisfaction of all legal liabilities
considered as trust. growing out of the acceptance of the trust.
A contract to renounce, for a pecuniary consideration, the right to act
If the property is on movable, then parol evidence may be given to prove as a trustee has generally been recognized to be against public policy.
the existence of an express trust. When a person administering property in the character of trustee
inconsistently assumes to be holding in his own right, this operates as
To affect 3rd persons, an express trust must be embodied in a public renunciation of the trust and the beneficiaries in the property are
document and must be registered in the registry of deeds to inform the public entitled to maintain an action to declare their right and remove the
that the property is being kept for the benefit of the trustee. unfaithful trustee.

DIFFERENT KINDS OF EXPRESS TRUST: OBLIGATIONS OF THE TRUSTEE:

A. Inter Vivos Trust 1. He must carry out the trust using the diligence of the good father of the
B. Testamentary Trust family.
C. Charitable Trust – one designed for the benefit of a segment of a public or
the public in general. One created for charitable, educational, religious or In any act that he will perform in the exercise of his duties, he should not be
scientific purpose. negligent. He must be loyal to the affairs and the interest of the beneficiary.
D. Publicly regulated trust – the state provides the vehicle by which He cannot appropriate for himself any opportunity that should pertain to
institutions are allowed to administer large fund for the benefit of the the beneficiary. He has the duty to account to the beneficiary the affairs of
public. GSIS, SSS, and PAG-IBIG. the trust. He cannot convert the use the property, income, fruits and
E.g. Retirement Benefits. proceeds for his benefit.
E. Accumulation Trust – one that will accumulate income to be reinvested
by the trustee in the trust for the period of time specified. 2. He is prohibited from donating the trust property.
F. Spendthrift Trust – one established when the beneficiary need to be He is not the owner of the property; therefore, he cannot dispose such
protected, because of his inexperience or immaturity from his imprudent property to another person even through donation.
spending habits or simply because the beneficiary is spendthrift.
Income will be paid to the beneficiary only when actually necessary. Under 3. He cannot use funds of the trust to acquire property for himself.
some circumstances, the trustee will pay directly the creditor for
obligations of the beneficiary. When he entered into transaction regarding the trust property, this
G. Sprinkling Trust – one that gives the trustee the right to determine the property earns income. Such income he will hold will be kept in trust for the
income beneficiaries who should receive income each year and the amount beneficiary. If he claimed the property for himself, what will be created is a
thereof. Income that is not distributed in any given year is added to the constructive implied trust (Art. 1455).
corpus, as in an accumulation trust. It is a discretionary trust if it gives the
trustee the discretion to pay or not to pay the income or principal. 4. If he is also appointed as an administrator of the estate of a trustor, under
rule 98 of the rules of court, the his duties shall include the following:
RIGHTS AND OBLIGATIONS OF THE PARTIES a. To file a bond with the court. It will answer for whatever damages
that the trust property will be liable to.
A. Trustor is the one who disposes the full ownership of the designated trust b. To make and return to court an inventory of all real and personal
property. estate he holds in trust which comes to his possession and
knowledge.
He must have legal capacity to convey the property as compared to implied c. He can manage and dispose of the estate and discharge this trust in
trust where capacity is not required. He must have an intention of disposing relation thereto according to the law and the will of the testator.
his property to a trust relationship. The intent is controlling. d. He must render an account at least once a year until his trust is
fulfilled.
B. Trustee must have legal capacity to accept the trust. He may always e. Upon expiration, he must settle his account in court and deliver all
decline especially if he will have obligations that have to be performed. estate remaining in his hands.

In Article 1445, No trust shall fail because the trustee appointed declines 5. He does not assume generally personal liability of the trust. The
the designation, unless the contrary should appear in the instrument payment for damages will come from the trust fund. However, if the trustee
constituting the trust. acted with fraud or gross negligence, the trustee becomes personally liable
o In the case of an express trust, acceptance of trust by a trustee for his own separate properties.
is necessary to charge him with the office of the trustee and the
administration of the trust and to vest the legal title in him. 6. He is entitled to a reasonable compensation. Especially in an express
However, his acceptance of the trust is not necessary to its trust, he can account reasonable compensation. In constructive implied
existence and validity, since if he declines the trust, the courts trust, there is no compensation because there is no intention to form trust
will appoint a trustee to fill the office that he declines. relation in the latter.

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May a trustee sue and be sued? May be proved and enforced by parole evidence. However, it still must measure up to
In order that a trustee may sue or be sued alone, it is essential that his trust be the rule that a trust must be proven by clear, satisfactory and convincing evidence.
express, that is, a trust created by the direct and positive acts of the parties, by some
writing, deed, or will or by proceedings in court. No fiduciary relationship will exist between the trustee and the beneficiary. An
express trust and a resulting trust, however, since there is still an intent to create trust,
C. Beneficiary fiduciary relationship is created between the trustee and the beneficiary.
Except when it is subject to laches, defenses of prescription or previous clear
Under Article 1446, Acceptance by the beneficiary is necessary. repudiation by the trustee. A constructive trust, no repudiation is needed and is subject
Nevertheless, if the trust imposes no onerous condition upon the beneficiary, of prescription.
his acceptance shall be presumed, if there is no proof to the contrary.
o Acceptance of or assent to the trust by the beneficiary is essential RESULTING TRUST
to the creation and validity of a trust.
o The trust being beneficial to the beneficiary, his acceptance is In Ramos vs. Ramos (supra), it is broadly defined as a trust which is raised or created by
presumed if there is no proof to the contrary. However, if the trust the act or construction of law. In its more restricted sense, it is a trust raised by
imposes some onerous condition, acceptance must be shown. implication of law and presumed always to have been contemplated by the parties, the
Such acceptance may be express or implied. intention as to which is to be found in the nature of their transaction, but not expressed
in the deed or instrument of conveyance.
Beneficiary need not have legal capacity. Even a minor can be a beneficiary.
Art. 1448
HOW AN EXPRESS TRUST IS TERMINATED 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
1. When there is destruction of the property. The destruction of the corpus interest of the property.
will automatically extinguish trust.  The person in his name the property is registered is considered as the
2. Revocation by the trustor. GR: Express Trust is irrevocable. EXC: Reserved trustee while the person who paid shall be the beneficiary.
Power to revoke in the deed of trust.  It is based on the implied intention of the trustor-beneficiary and the
3. Achievement of the objective or the happening of the condition. acceptance of the obligation of the trustee who is fully aware that the
4. Expiration of the term of the period fixed. E.g. the subject of the trust must property is registered in his name for which he never paid the price.
be given to the person upon reaching the age of majority.
5. By mutual agreement of the parties. In Morales vs. CA, it is also called purchase money resulting trust.
6. Death or legal incapacity of the trustee. Unless otherwise expressly
stipulated in the trust instrument, death, insanity, insolvency or civil If the title is named in the name of a child, it will not be considered that a resulting
interdiction of the trustee does not terminate the trust (Art. 1445). Court trust was created because it was considered as a gift that is given to a child. The
can appoint new trustee to take over the duties of the deceased, insane, child can either be a legitimate or an illegitimate child. It is a disputable
insolvent, or civilly interdicted trustee. presumption – it can be shown that parent had placed the property bought by
7. By order of the court. When all of the properties of the deceased has been them in the name of the child to impose an obligation on the part of the child to
disposed in case the trustee is the administrator of the properties of the administer the same for the benefit of the parent especially if the child reaches the
deceased, the court can order the extinguishment of the trust. age of majority.
8. By Merger or Confusion of the legal title and beneficial title with the same
person. When the trustee became the beneficiary. The EXCEPTION to the establishment of an implied resulting trust are the
following (Morales vs. CA:
IMPLIED TRUST 1. Person to whom the title is conveyed is a child, legitimate or illegitimate, of
the one paying the price of the sale.
In Ramos vs. Ramos (61 S 284), Implied trust is defined and characterized as 2. Actual contrary intention which was proven. E.g. when one who paid the
those which, without being express, are deducible from the nature of the purchase price did so as a loan or as an advance in whose name the
transaction as matters of intent, or which are superinduced on the transaction by property is transferred (it shall be called a constructive trust).
operation of law, as matters of equity, independently of the particular intention 3. When the purchase price is made in violation of an existing statute,
of the parties. including morals and public order, etc.
While there might be no express intent on the part of the trustor to create
a trust, it would be inferred from the nature of transaction they entered into Art. 1449
as well as the acts that the person will perform which will show that there There is also an implied trust when a donation is made to a person but it appears
has been a trust that was created. that although the legal estate is transmitted to the donee, he nevertheless is either
to have no beneficial interest or only a part thereof.
Founded on equity. There will be injustice that would result if the title will prevail  The donor became the beneficiary under an implied trust agreement.
over the equitable right of the beneficiary.
Similar to a fideicommissary substitution – the testator designates a person as
It is not created for proprietary but imposed by law or inferred from the conduct an heir charging him to deliver to another person the whole or part of the
of the parties. property.

The intention to create trust is presumed by law or from the nature of the Art. 1451
transaction. 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
In CONSTRUCTIVE IMPLIED TRUST, no such intention at all can be drawn from benefit of the true owner.
the nature of the transaction. The purpose, however, is to achieve equity  Where a person who has acquired land by inheritance causes the legal title
demanded by the state. It is to avoid unjust enrichment, damages, etc. to be placed in the name of another, a resulting trust is presumed in law in
favor of the true owner, the heir.

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Does not apply if the real property is unregistered land and no title has been  Example: A buys a land in his own name from B with money borrowed from
issued in the name of the co-owners but only possession and enjoyment of or paid by C. There is no trust here. The relation between A and C is that of
real property (jurisprudence). debtor and creditor.
 If the property is conveyed to C to secure the amount advanced, an implied
Art. 1452 trust is created by operation of law. C becomes the trustee and A, the
If two or more persons agree to purchase property and by common consent the beneficiary. But it is only after A reimburses C of the purchase price that the
legal title is taken in the name of one of them for the benefit of all, a trust is created former can compel conveyance of the purchased property from the latter.
by force of law in favor of the others in pro-portion to the interest of each.
 Co-ownership will arise. The beneficiary is empowered to redeem the property and compel conveyance to him
once it has been paid.
Resulting trust will be created when despite co-ownership, they placed the title  Beneficiary is the one who bought the money and the trustee is the one who
in the name of one owner. lent the money.

A trust arises by implication of law in favor of the others in proportion to the Similar to an equitable mortgage arrangement. However, in an equitable mortgage,
interest of each. the property is still left with the borrower but under art. 1450, the property is taken by
the lender.
Art. 1453:
When property is conveyed to a person in reliance upon his declared intention to An agreement between the parties whereby the property purchased shall be
hold it for, or transfer it to another or the grantor, there is an implied trust in favor considered sold to the trustee in case the beneficiary fails to reimburse him is
of the person whose benefit is contemplated. tantamount to a pactum commissorium, which is expressly prohibited by Article 2088
of the Civil Code for in such case there would be automatic appropriation of the property
The trust established by virtue of this article is based on the promise or by the trustee in the event of failure of the beneficiary to pay the loan.
representation of the grantee to hold the property conveyed for, or transfer it to
another or the grantor. Art. 1454
If an absolute conveyance of property is made in order to secure the performance of an
The grantee is ESTOPPED from asserting ownership in himself by denying his obligation of the grantor toward the grantee, a trust by virtue of law is established. If the
representation as against the person for whose benefit the implied trust is fulfillment of the obligation is offered by the grantor when it becomes due, he may
created. demand the reconveyance of the property to him

CONSTRUCTIVE TRUST Provides for a situation when absolute conveyance of property is effect as a means to
secure the performance of an obligation of the grantor to the grantee.
In a case, constructive trust is characterized as one imposed by law, and there
neither promise nor fiduciary relations. If fulfillment of the obligation is offered by the grantor when it becomes due, he may
The so-called trustee does not recognize any trust, and has no demand reconveyance of the property to him similar to Art. 1450.
intention to hold the property for the beneficiary.
Art. 1455
It is constructive trust because by the acts of the person, he should not own that When any trustee, guardian or other person holding a fiduciary relationship uses trust
property or hold the property. He has no right over the property because such funds for the purchase of property and causes the conveyance to be made to him or to
right belongs to another person. It is not created by any words, either expressly a third person, a trust is established by operation of law in favor of the person to whom
or impliedly, evincing a direct intention to create a trust but by the construction the funds belong.
of equity in order to satisfy the demands of justice and prevent unjust
enrichment. Gives a situation when trust fund is used to purchase a property which is registered in
the trustee’s name.
It does not arise by agreement or intention but by operation of law against one  A trustee has no right to use property/funds of the trust for his benefit.
who, by fraud, duress, or abuse of confidence obtains or holds the legal right to
property which he ought not, in equity and good conscience, to hold. Art. 1456
If property is acquired through mistake or fraud, the person obtaining it is, by force of
Example: Over Insurance by Double Insurance – he is only allowed to receive the law, considered a trustee of an implied trust for the benefit of the person from whom
value of the property; if he was able to receive more than the value of the the property comes.
property, he must hold it in trust for the insurance companies.  The beneficiary is the person from whom the property comes from.

PNB vs. CA: Example: In a public auction, in order to settle the properties of a widow were sold. If all
Constructive trustee is not considered for all purposes as a trustee. of their property is sold in a public auction, half of the property is the conjugal property,
 He does not have the duty of management and all those it belongs to the heirs. If one buys such property, there will be a constructive trust.
fiduciary obligations ordinarily demanded from the trustee. Therefore, the half portion which belongs to the heirs, he must hold in trust.
 His only obligation is to surrender the property to the person
who should rightly own that property. If it is by fraud, the trustee registered it in his name not showing that that property is
being held in trust for a beneficiary, the trustee has the obligation to return it to the
There is neither a promise nor any fiduciary relation to speak of and the so- beneficiary.
called trustee neither accepts any trust nor intends holding the property for PRESCRIPTION OF TRUST
the beneficiary. A. Express trust

Art. 1450 General Rule: not susceptible to acquisitive prescription.


If the price of a sale of property is loaned or paid by one person for the benefit of Therefore, an action for reconveyance filed by a beneficiary against a trustee will not
another and the conveyance is made to the lender or payor to secure the payment prescribe as long the property stands in the name trustee as long as the trustee is still
of the debt, a trust arises by operation of law in favor of the person to whom the holding that property for and in behalf of the beneficiary, there will be no prescription.
money is loaned or for whom it is paid.
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Exceptions: (Cortes et al. v. Oliva, 33 Phil. 480)
1. He has performed unequivocal acts of repudiation amounting to an
ouster of the cestui que trust;
2. That such positive acts of repudiation have been made known to the
cestui que trust; and
3. That the evidence thereon should be clear and conclusive.
 There shall now be prescription. The period shall be 10 years from
the repudiation by the trustee.

B. Implied Trust

Ramos vs. Ramos (61 S 284), the rules of prescription and laches with respect to
implied trust were laid down. The following are the rules:

1. The rule of imprescriptibility of the action to recover property held in trust


may possibly apply to resulting trusts as long as the trustee has not
repudiated the trust.
2. The rule of imprescriptibility was misapplied to constructive trusts. With
respect to constructive trust, prescriptibility of action is settled. The
prescription period is 10 years from the time the right of action accrues –
either on the registration of the title or from the actual discovery of the
fraud.
3. Prescription may supervene an implied trust.
4. Whether trust is resulting or constructive, its enforcement may be barred
by laches.

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