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Trust: legal relationship between 1 person having an equitable


ownership in property & another person owning the legal title to such
property, the equitable ownership of the former entitling him to the
performance of certain duties & exercise of certain powers by the latter
Parties
1.
2.
3.

to a Trust Relationship
Trustor: establishes the trust
Trustee: holds the property in trust for the benefit of another
Beneficiary: the person form whose benefit the trust has
been created

Essential Characteristics of Trust


1. based on property/corpus relationship legal title is held by
1, & the equitable/beneficial title is held by another
2. fiduciary trust is sacred & inviolable & the courts should
shield fiduciary relations against every manner of chicanery
3. equity/common-low based a large part of the American law
on trusts is incorporated

How
Created

Formal
-ities

Prescrip
-tion

Other
Notes

EXPRESS TRUSTS
IMPLIED TRUSTS
Created by the intention of
Created by operation of law
the trustor or of the parties
(based on equity)
(need
no
particular
wordings)
Express
trust
over
an
May be proved by parol
immovable or any interest
evidence (whether real or
may not be proved by parol
personal property is involved)
evidence
GR: imprescriptible
An action for reconveyance of
Exception: if the trustee has
registered land based on an
expressly
repudiated
the
implied trust prescribes in 10
trust
years.
Capacity of Parties to an
Examples of Implied Trusts
Express Trust
1. purchase of property where
1. Trustor: must have legal
beneficial title in 1 person,
capacity
to
convey
but price paid by another
property
person (exception: if the
2. Trustee:
must
be
person to whom title is
capacitated to accept the
conveyed is a child, it is
trust
disputably presumed to be a
3. Beneficiary:
must
be
gift)
capacitated
to receive 2. purchase of property where
gratuitously
from
the
title is placed in the name of
trustor
person who loaned the
purchase price
Note:
Acceptance
by 3. 2 or more persons purchase
beneficiary
of
gratuitous
property jointly, but places
trust is not subject to the
title in 1 of them
rules for the formalities of 4. donation of property to a
donations.
donee who shall have no
beneficial title
How Express Trusts are 5. land passes by succession
Ended
but heir places title into
1. Mutual agreement by all
trustee
the parties
6. property conveyed to person
2. expiration of the term
merely as holder thereof
3. fulfilment of resolutory 7. absolute
conveyance
of
condition
property is effected only as a
4. rescission or annulment
means
to
secure
5. loss of subject matter of
performance of obligation of
the trust (physical loss or
the grantor
legal impossibility)
8. when trust fund used to
6. order of the court (as
purchase property w/c is
when the purpose of the
registered in trustees name
trust is being frustrated)
9. when property is acquired
7. merger
through mistake or fraud
8. accomplishment of the
Note: this list of implied trusts
purpose of the trust
is not exclusive

RESULTING TRUST
There is an intent to create
a trust but it is not effective
as an express trust
GR: imprescriptible
Exception: if the trustee has
expressly repudiated the
trust

SIENNA A. FLORES

CONSTRUCTIVE TRUST
No intention to create a trust is
present, but a trust is nevertheless
created by law to prevent unjust
enrichment or oppression
Prescribes in 10 years counted from the
date the trustee set up a title adverse
to that of the beneficiary

CASE DOCTRINES
ESCOBAR VS. LOCSIN
A trust is sacred & inviolable. The courts have therefore
shielded fiduciary relations against every manner of chicanery
or detestable design cloaked by legal technicalities. The
Torrens system was never calculated to foment betrayal in
the performance of a trust.
The action could not be dismissed on the ground that the period
of 1 year for the review of the decree has elapsed, & plaintiff
had not availed herself of this remedy. The complaint did not
seek to review the decree or the reopening of the cadastral
case, but the enforcement of the trust. Hence, Sec. 38 of the
Land Registration Act does not apply.
JULIO VS. DALANDAN
The document itself created an express trust, and given the
fiduciary relation w/c is recognized by the defendants, they
may not invoke the statute of limitations as a bar to plaintiffs
action.
Where an express trust is created, no evidence is necessary for
its recognition, considering that no particular words are
required for the creation of an express trust, it being
sufficient that a trust is clearly intended.
Technical or particular forms of words or phrases are not
essential to the manifestation of intention to create a trust or
to the establishment thereof; nor would the word trust or
trustee be essential to its constitution.
Conversely, the mere fact that the word trust or trustee was
employed wouldnt necessarily prove an intention to create a
trust. What is important is whether the trustor manifested an
intention to create the kind of relationship w/c in law is
known as a trust. It is not important that the trustor should
know that the relationship w/c he intends to create is called a
trust, & w/n he knows the precise characteristics of the
relationship w/c is called a trust.
GERONIMO AND ISIDRO VS. NAVA AND AQUINO
There was a constructive trust created, in the sense that
although appellants had the naked title issued in their names,
& w/c they retained, nevertheless, they were to hold said
property in trust for appellees to redeem, subject to the
payment of the redemption price.
In a constructive trust, prescription may apply only where the
trustee asserts a right adverse tot that of the cestui que
trust, such as, asserting acts of ownership over the property
being held in trust.
An express trust is not subject to prescription.
LORENZO VS. PASADAS
The requirements for a valid testamentary trust are:
o
Sufficient words to raise a trust
o
A definite subject
o
A certain or ascertained object
A trustee, no doubt, is entitled to receive a fair compensation
for his services. But from this it does not follow that the
compensation due him may lawfully be deducted in arriving
at the net value of the estate subject to tax. There is not
statute in the Philippines w/c requires trustees commissions
to be deducted in determining the net value of the estate
subject to inheritance tax.
GAMBOA VS. GAMBOA
A person who has held legal title to land, coupled w/ possession
& beneficial use of the property for more than 10 years, will
not be declared to have been holding such title as trustee for
himself & his brothers & sisters upon doubtful oral proof
tending to show a recognition by such owner of the alleged
rights of his brothers & sisters to share in the produce of the
land.
Possession in fact by 1 who holds the legal title to land must be
qualified as a true legal possession. Such owner & occupant
cannot be required to demonstrate that his possession is, or
has been adverse, as against a mere claimant who has

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neither title nor possession. One who is not in fact in


possession cannot acquire a prescriptive right to land by the
mere assertion of a right therein.
GAYONDATO VS. TREASURER
The words trust and trustee are frequently used in a broad
& popular sense so as to embrace a variety of relations. Thus,
if a person obtains legal title to property by fraud or
concealment, courts of equity will impress upon the title a socalled constructive trust in favor of the defrauded party. Such
trusts are not really trusts at all in the strict & proper
signification of the word trust.
Trust, in its technical sense, has been defined as a right of
property, real or personal, held by 1 party for the benefit of
another. In the case at bar, Rosario was a minor at the time
of the registration of the land & had no legal guardian. It is
true that her mother in whose name the land was registered
was the natural guardian of her person, but her guardianship
didnt extend to the property of the minor & conferred no
right to the administration of the same.
TAN SENGUAN AND CO. VS. PHIL. TRUST CO.
The PTC held the legal title to the properties of the MSC. PTC
was not authorized to manage the affairs of the MSC or to
enter into contracts in its behalf. But even if the contract had
been authorized by the trust indenture, PTC in its individual
capacity would still be responsible for the contract as there
was no express stipulation that the trust estate & not the
trustee should be held liable on the contract in question.
PAL VS. HEALD LUMBER CO.
If a property is insured & the owner received the indemnity
from the insurer, the insurer is deemed subrogated to the
rights of the insured against the wrong doer & if the amount
paid by the insurer does not fully cover the loss, then the
aggrieved party is the one entitled to recover the deficiency.
Evidently, the real party in interest w/ regard to the portion of
the indemnity paid is the insurer & not the insured.
The payment of the indemnity by the insurer to the insured
does not make the latter a trustee of the former as in the
American law. This matter being statutory, the same must be
governed by our own law in this jurisdiction.
Before a person can sue for the benefit of another under a
trusteeship, he must be a trustee of an express trust.
In order that a trustee may sue or be sued alone, it is essential
that his trust should be expressed, that is, a trust created by
the direct & positive acts of the parties, by same writing,
deed, or will, or by proceedings in court. This provision
doesnt apply in cases of implied trust, that is, a trust w/c
may be inferred merely from the acts of the parties or from
other circumstances.
CRISTOBAL VS. GOMEZ
A trust constituted between 2 parties for the benefit of a 3 rd
person isnt subject to the rules on donations of real property.
The beneficiary of a trust may demand performance of the
obligation w/o having formally accepted the benefit of the
trust in a public document, upon mere acquiescence in the
formation of the trust & acceptance under par. 2 of Art. 1256
of the CC.
The fact that 1 of 2 individuals who have constituted themselves
trustees for the purpose indicated conveys his interest in the
trust property to his cotrustee does not relieve the latter from
the obligation to comply w/ the trust.
As against the beneficiary, prescription is not effective in favor
of a person who is acting as trustee of a continuing &
subsisting trust.
CARANTES VS. CA
Action for reconveyance based on implied trust prescribes in 10
years.
Action to annul contract on the ground of fraud prescribes in 4
years.

SIENNA A. FLORES

Discovery of fraud for purposes of prescription must be counted


from date of registration of the instrument w/ the Register of
Deeds in view of the rule of constructive notice.
In constructive trusts, there is neither promise nor fiduciary
relation; the so-called trustee doesnt recognize any trust &
has no intent to hold the property for the beneficiary.
There is a clear repudiation of a trust where one who is an
apparent administrator of property causes the cancellation of
the Title thereto in the name of the apparent beneficiaries &
gets a new certificate of title in his own name.
SALAO VS. SALAO
A trust is the right enforceable solely in equity, to the beneficial
enjoyment of property, the legal title to w/c is vested in
another, but the word trust is frequently employed to
indicate duties, relations, & responsibilities w/c are not
strictly technical trusts.
Implied trusts come into being by operation of law. Implied
trusts are those w/c, w/o being expressed, are deducible
from the nature of the transaction as matters of intent, or
w/c are superinduced on the transaction by operation of law
as matters of equity, independently of the particular intention
of the parties.
No express trusts concerning an immovable or any interest
therein may be proven by parol evidence. An implied trust
may be proven by oral evidence.
Trustworthy oral evidence is required to prove an implied trust
because oral evidences can be easily fabricated.
MUN. OF VICTORIAS VS. CA
Where the land is decreed in the name of a person through
fraud or mistake, such person is by operation of law a trustee
of an implied trust for the benefit of the persons from whom
the property comes. The beneficiary shall have the right to
enforce the trust, notwithstanding the irrevocability of the
Torrens title & the trustee & his successors-in-interest are
bound toe execute the deed of reconveyance.
Land registration is not a mode of acquiring ownership but only
of confirming ownership of the land. The Torrens system was
not established as a means for the acquisition of title to
private land. it is intended merely to confirm & register the
title w/c 1 may already have on the land. Where the applicant
possesses no title or ownership over the parcel of land, he
cannot acquire one under the Torrens system of Registration.
Although an inherently defective Torrens title may not ordinarily
be cancelled even after proof of its defect, the law safeguards
the rightful partys interest in the titled land from fraud &
improper use of technicalities by allowing reconveyance.
The Torrens system was never calculated to foment betrayal in
the performance of a trust.
MARIANO VS. JUDGE DE VEYRA
Co-owners cannot acquire by prescription the share of the other
co-owners, absent a clear repudiation of the co-ownership
duly communicated to the other co-owners. Records in the
assessors office is not the sufficient repudiation required by
law.
Existence of the co-ownership argues against the theory of
implied trust, as a co-owner possess co-owned property not
in behalf of the other co-owners, but in his own behalf.
HEIRS OF EMILIANO CANDELARIA VS. LUCIA ROMERO
Where property is taken by a person under an agreement to
hold it for, or convey it to another or the grantor, a resulting
or implied trust arises in favor of the person for whose benefit
the property was intended. This rule is founded upon EQUITY.
Laches constitutes a bar to actions to enforce a constructive or
implied trust, & repudiation is not required, unless there is
concealment of the facts giving rise to the trust. Continuous
recognition of a resulting trust, however, precludes any
defense of laches in a suit to declare & enforce the trust. The
beneficiary of a resulting trust may, w/o prejudice to his right
to enforce the trust, prefer the trust to persist & demand no
conveyance from the trustee.

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LAUREANO VS. STEVENSON


Under the principles of Torrens system, a person who has taken
no steps to protect his interest at the time of the cadastral
survey is estopped to dispute the title. He has only 1 year
from the issuance of the decree to allege and prove fraud.
Kilayco was merely holding the title of the property in trust for
Laureano. The creditors of Kilayco could acquire no higher or
better right than Kilayco had in the property, which in this
case was nothing.
GONZALES VS. IAC
An action for reconveyance of real property to enforce an
implied trust prescribes in 10 years, the period reckoned from
the issuance of the adverse title to the property w/c operates
as a constructive notice.
For 33 years Lopez et al had literally slept on their rights, they
can no longer dispute the conclusive and incontrovertible
character of Faustos title as they are deemed by their
unreasonable long inaction, to have acquiesced therein.
ADAZA VS. CA
In determining whether delay in seeking to enforce a right
constitutes laches the existence of a confidential relationship
based upon consanguinity is an important circumstance for
consideration. The doctrine of laches is not to be applied
mechanically as between near relatives. The fact that the
parties are brother & sister tends to explain & excuse what
would otherwise appear as long delay. Moreover, continued
recognition of the existence of trust precludes the defense of
laches.
Under the Deed of Waiver executed by Violeta, she
acknowledged that she owned the land in common w/ her
brother Horacio although the certificate of title bore only her
name. This statement is an admission that she held of the
land in trust for Horacio.
ARMAMENTO VS. CENTRAL BANK
It is true that the basic rule is that after the lapse of 1 year, a
decree of registration is no longer open to review or attack,
although its issuance is attended w/ fraud. This does not
mean that the aggrieved party is w/o remedy at law. If the
property has not yet passed to an innocent purchaser for
value, an action for reconveyance is still available.
A constructive trust is a trust not created by any words, either
expressly or impliedly evincing a direct intention to create a
trust, but by the construction of the equity in order to satisfy
the demands of justice. It doesnt rise by agreement or
intention but by operation of law. If a person obtains legal
title to property by fraud or concealment, courts of equity will
impress upon the title a so-called constructive trust in favor
of the defrauded party. A trust is not a trust in the technical
sense.
RAMOS VS. GREGORIA RAMOS
Acquisitive prescription may bar the action of the beneficiary
against the trustee in an express trust for the recovery of the
property held in trust where:
o
The trustee has performed unequivocal acts of
repudiation amounting to an ouster of the cestui
que trust
o
Such positive acts of repudiation have been made
known t the cestui que trust
o
The evidence thereon is clear & conclusive
A trust must be proven by clear, satisfactory & convincing
evidence. It cannot rest on vague & uncertain evidence or on
loose, equivocal & indefinite declarations.
A trustee cannot acquire by prescription the ownership of
property entrusted to him.
An action to compel a trustee to convey property registered in
his name in trust for the benefit of the cestui que trust does
not prescribe.

SIENNA A. FLORES

The defense of prescription cannot be set up in an action to


recover property held by a person in trust for the benefit of
another.
Property held in trust can be recovered by the beneficiary
regardless of the lapse of time.
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.
Lapse of 40 years after partition constitutes laches on the action
to annul it.
VARISTY HILLS VS. NAVARRO
Lapse of 30 years bars action to recover property.
Actions on implied & constructive trusts are extinguished by
laches or prescription of 10 years.
GERONA VS. CARMEN DE GUZMAN
Although as a general rule, an action for partition among coheirs doesnt prescribe, this is true only as long as the
defendants do not hold the property in question under an
adverse title. The statute of limitations operates from the
moment such adverse title is asserted by the possessor of the
property.
When the respondents executed the deed of extra-judicial
settlement stating that they are the sole heirs of the
deceased, & secured new TCT in their own name, they
thereby excluded the petitioners from the estate of the
deceased, & consequently set up a title adverse to them.
CALADIAO VS. VDA DE BLAS
Prescription does not apply to continuing & subsisting trusts,
so that actions against a trustee to recover trust property
held by him are imprescriptible. Actions for reconveyance of
property wrongfully registered are of this category.
Prescription shall not apply to an action by the vendee of real
property in possession thereof to obtain its conveyance & in
the case at bar, the vendee had been in possession of the
property since the sale.
DIAZ VS. GARRICHO & AGRIADO
In express trusts, the delay of the beneficiary is directly
attributable to the trustee who undertakes to hold the
property for the former, or who is linked by fiduciary
relations. The trustees possession is therefore not adverse to
the beneficiary, until & unless the latter is made aware that
the trust has been repudiated.
In constructive trusts, there is neither promise nor fiduciary
relation. The so called trustee doesnt recognized any trust &
has no intent to hold for the beneficiary. Therefore, the latter
is not justified in delaying action to recover his property. It is
his fault if he delays. Hence, he may be estopped by his own
laches. Laches constitutes a bar to actions to enforce the
trusts, & repudiation is not required, unless there is
concealment of the facts giving rise to the trust.

TRUSTS