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. 1449 IMPLIED TRUSTS 662 TRUSTS Donation to a person but beneficial interest vested in another. An implied trust arises on a donation of property where it appears that although the legal estate is transmitted to the donee, he is to have no beneficial interest or only a part thereof. In such case, a trust results in favor of the person in whom it is intended to vest the beneficial interest in the property donated, with the donee being the trustee.11 EXAMPLE: Property is donated by A to B but only the legal title is transmitted to B, the beneficial ownership of the whole property or a part thereof being vested in C. Here, a trust is established by implication of law with B as the trustee and C, the benefi ciary. ART. 1450. If the price of a sale of property is loaned or paid by one person for the benefi t 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 it is paid. The latter may redeem the property and compel a conveyance thereof to him. Purchase with borrowed funds. (1) Trust in favor of lender. The general rule is that the use of borrowed money in making a purchase does not raise a resulting trust in favor of the lender, even where the money is loaned to enable the borrower to purchase the property in question and the borrower promises, but fails, to execute a mortgage on the property after it is purchased to secure the loan. Nor does the use of money given to one for the purchase of property raise a resulting trust on the property in favor of the donor. (54 Am. Jur. 163.) 11Art. 1061. Every compulsory heir, who succeeds with other compulsory heirs, must bring into the mass of the estate any property or right which he may have received from the decedent, during the lifetime of the latter, by way of donation, or any other gratuitous title, in order that it may be computed in the determination of the legitime of each heir, and in the account of the partition. (1035a) Art. 1450 663 (2) Trust in favor of borrower. When money is borrowed to purchase property, and the conveyance is made, not to the borrower, but to the lender who takes title to the property in his own name in order to secure the loan, a resulting trust in the property, binding the lender or payor (trustee) in favor of the borrower (benefi ciary), arises. In this case, the real purchaser is the borrower. After payment of the amount loaned or paid, he has the right to redeem the property and compel a conveyance thereof to him (Art. 1450; Trinidad vs. Ricafort, 7 Phil. 449 [1907].),

even if there is no mention of the interest of the borrower in the title of the lender. An agreement between the parties whereby the property purchased shall be considered sold to the trustee in case the benefi ciary fails to reimburse him is tantamount to a pactum commissorium, which is expressly prohibited by Article 2088 of the Civil Code12 for in such case there would be automatic appropriation of the property by the trustee in the event of failure of the benefi ciary to pay the loan. (Nakpil vs. Intermediate Appellate Court, 225 SCRA 456 [1993].) EXAMPLE: A buys a land in his own name from B with money borrowed from or paid by C. There is no trust here. The relation between A and C is that of debtor and creditor. If the property is conveyed to C to secure the amount advanced, an implied trust is created by operation of law. C becomes the trustee and A, the benefi ciary. But it is only after A reimburses C of the purchase price that the former can compel conveyance of the purchased property from the latter. 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 benefi t of the true owner. 12Art. 2088. The creditor cannot appropriate the things given by way of pledge or mortgage, or dispose of them. Any stipulation to the contrary is null and void. (1859a) Art. 1451 IMPLIED TRUSTS 664 TRUSTS Legal title to land inherited by heir placed in name of another. Succession is a mode of acquisition by virtue of which the property, rights, and obligations to the extent of the value of the inheritance, of a person are transmitted through his death to another or others either by his will or by operation of law. (Art. 774.) The rights to the succession are transmitted from the moment of the death of the decedent. (Art. 777.) Where a person who has acquired land by inheritance causes the legal title to be placed in the name of another, a resulting trust is presumed in law in favor of the true owner, the heir. (see Custodio vs. Casiano, 9 SCRA 841 [1963].) Here, the heir himself by his voluntary action, causes the registration of his legal title under the name of another person. (Pilapil vs. Heirs of M.R. Briones, 484 SCRA 308 [2006].) Where, through fraudulent representations or by pretending to be the sole heir of the deceased, an heir succeeded in having the original title of a land in the name of the deceased cancelled and a new one issued in his name thereby enabling him to possess the land and get its produce, there is created what is called constructive trust in favor of the defrauded. (Baysa vs. Baysa, [C.A.] 53 O.G. 728, Oct. 2, 1957.) No trust relationship can exist over a property in favor of an heir as benefi ciary where it appears that the deceased predecessor had no title to the property in question. (De la Cruz vs. De la Cruz, 130 SCRA 666 [1984].) 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 benefi t of all, a trust is created by force of law in favor of the others in proportion to the interest of each. Legal title to property purchased taken in one co-owner. Where property is purchased by two or more persons and by common consent the legal title is placed in the name of only one Art. 1452 665 of the co-owners for the benefi t of all, a trust arises by implication of law in favor of the others in proportion to the interest of each. (see Valdez vs. Olorga, 51 SCRA 71 [1973]; Nito vs. Court of Appeals, 225 SCRA 231 [1993].) The property must be capable of private ownership; otherwise, Article 1452 is not applicable, as in the case of a fi shpond of public domain the title to which remains in the Government. (Deluao vs. Casteel, 29 SCRA 350 [1969].) ILLUSTRATIVE CASES: 1. The agreement of the parties is that the property would be bought in the name and for the account of the two of them and the third would be paid a commission as compensation on the sale of the property. Facts: Although the original proposal was for the parties to purchase the property jointly, the same was abandoned and the parties subsequently agreed that A and B would buy the property exclusively in their names and for their own account, to avoid the diffi culties to be encountered in acquiring the property in common. C accepted this proposition with the understanding that the property would be sold as soon as a buyer who can pay P300,000.00 could be found, with the obligation on the part of A and B to pay C 20% of the proceeds after deducting the purchase price thereof. Issue: Is Article 1452 applicable? Held: No, because nothing contained in the agreement would indicate that the property was being purchased for the benefi t of A, B, and C. The recitals in the contract containing the obligation assumed by A and B merely refer to the services rendered by C as broker who negotiated the sale of the property to A and B, and which A and B agreed to compensate. The terms of the contract admit no doubt that the 20% to be paid C is of any amount which may be obtained by the sale of the property after deducting the purchase price therefor, which shall be taken from the liquidated benefi t obtained by the owners out of the sale of said property. Neither is Article 1453 applicable, because there is absolutely nothing in the agreement which even remotely indicates Art. 1452 IMPLIED TRUSTS 666 TRUSTS that the property was conveyed to A and B in reliance upon their declared intention to hold it for, or transfer it to another or the grantor. (Calero vs. Carrion, 107 Phil. 549 [1960].) ________ ________ ________

2. Title to property purchased with funds furnished by members of an association without legal personality was placed in the name of one of them. Facts: A number of Chinese merchants raised a fund by voluntary subscription with which they purchased a valuable tract of land and erected a large building to be used as a sort of club house for the mutual benefi t of the subscribers to the fund. The subscribers organized themselves into an irregular association, which had no regular articles of association and was not registered in any commercial registry or elsewhere. The association not having any existence as a legal entity, it was agreed to have the title to the property placed in the name of A, one of the members of the association. Issue: Has A the right to set up title in himself to the club property as well as to the rents accruing therefrom? Held: No. The evidence clearly discloses not only that the funds with which the property in question was purchased were furnished by the members of the association but that A, in whose name it was registered, received and holds the property as the agent and trustee of the association. In this case, the legal title of A is not questioned and the other members of the association do not seek such cancellation but they maintain that A holds it under an obligation, both express and implied, to deal with it exclusively for the benefi t of the members of the association and subject to their will. (Uy Aloc vs. Cho Jan Ling, 19 Phil. 202 [1911]; see Compania General de Tabacos vs. Topino, 54 Phil. 33 [1929]; Martinez vs. Martinez, 1 Phil. 647 [1902].) 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 benefi t is contemplated. Art. 1453 667 Conveyance under a promise to hold for, or transfer to another. The trust established by virtue of this article is based on the promise or representation of the grantee to hold the property conveyed for, or transfer it to another or the grantor. The grantee is estopped from asserting ownership in himself by denying his representation as against the person for whose benefi t the implied trust is created. The rule in Article 1453 is founded upon equity, particularly where on the faith of the agreement or understanding, the grantee is enabled to gain an advantage in the purchase of the property or where the consideration or part thereof has been furnished by or for another. Thus, it has been held that where property is taken by a person under an agreement to hold it for or convey it to another or to the grantor, or on certain conditions, a trust results for the benefi t of such other or his heirs, which equity will enforce according to the agreement. (89 C.J.S. 960; Heirs of Candelaria vs. Romero, 109 Phil. 500 [1960]; Rosario vs. Court of Appeals, 310 SCRA 464 [1999].) Likewise, a person who, before consolidation of property

in the purchaser under a contract of sale with pacto de retro, agrees with the vendors to buy the property and administer it until all debts constituting an encumbrance thereon shall have been paid after which the property shall be turned back to the original owners, is bound by such agreement; and upon buying the property under these circumstances, such person becomes in effect a trustee and is bound to administer the property in this character. (Martinez vs. Grano, 42 Phil. 35 [1921].) Article 1453 would apply if the person conveying the property did not expressly state that he was establishing the trust. (Cuaycong vs. Cuaycong, 21 SCRA 1192 [1967].)