Reviewer Trust

2010-2011 REVIEWER FOR TRUST Trust – is the fiduciary relationship between one person person having having equitab equitable le ownersh ownership ip in propert property y and and anot anothe herr owni owning ng the the lega legall titl title e to such such property,, the equitable ownership of the former  entit entitli ling ng him to the the performance of  certain duties and the exercise of certain of certain power by power  by the latter.

By Creation

1. Express – One which came into exis existen tence ce only only by the the execu executio tion n of an intention to create a trust by the parties.

2. Implied – one which comes ionto being by operation of law: a. Resulting – one in which the intention to create a trust is implied or presumed in law. b. Cons Constr truc ucti tive ve – one impo impose sed d by law law irrespective irrespective of,a nd even contrary to, any such intention for the purpose of  promoting justice, frustrating fraud or  preventing unjust enrichment.

1. Trust Trust impli implies es confi confiden dence ce in a relat relations ionship hip 2. Trus Trustt cannot cannot be esta establ blish ished ed in viola violatio tion n of law. (It is founded in equity, thus it cannot cannot co-exis co-existt with with a violatio violation n of the law) Trust vs. Bailment – bailee has possession of the property but no legal title. Donation – involves transfer of both legal and equitable title (except gift in trust).  A beneficiary beneficiary of a trust can demand performance performance of an obligation without having formally accepted the benefit of the trust in a public document. Contract – is a legal obligation, which obligation may or may not be fiduciary in character. Debt – cred credito itorr has mere merely ly a perso personal nal claim claim against the debtor. Persons involved in the creation of trust 1. Trustor   2. Trustee 3. Beneficiary/ cestui que trust 

Effectivity

1. Testamentary – to take effect upon the trustor’s death. 2. Inter vivos – effective during the owner’s life.

Revocability

1. Revocable – can can be revo revoke ked d by the the trustor. 2. Irrevocable – may may not not be term termin inate ated d during the specified term of the trust. Elements of Express Trust

1.  A competent trustor and trustee;

Subject-matter of Subject-matter of a trust may be any property of  value – real, personal, funds, or money or choses in action. It may includ include e undivid undivided, ed, future future or conting contingent ent interest, but it should not be a mere expectancy. Trustor could be the trustee or  beneficiary. He coul could d not not be a trus truste tee e and and bene benefi ficia ciary ry at the the same time. It is not necessary necessary that the beneficiary be named or iden identi tifi fied ed at the the crea creati tion on of a trus trustt (i.e (i.e.. .. charitable trust).

2. An asc ascer erta taina inabl ble e trust trust res res;; and 3. Suffici Sufficient ently ly certain certain benefi beneficiar ciaries ies.. “Consideration is not required to establish trust” Termination of Express Trust 1. 2. 3. 4.

Expir Expirat ation ion of perio period d fix fixed ed Accom Accompl plis ishm hmen entt of purp purpos ose e Mutual Mutual agreem agreement ent of benefi beneficiar ciaries ies Exerc xercis ise e of power power to term termin inat ate e – the the terms of trust deed may provide who can terminate, it could either by the trustor, trustee or someone else.

Express trust concerning immovable or interest therein therein may not be proved proved by parol parol evidenc evidence e (NCC 1443 ). ).

Classification of Trust

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2010-2011 REVIEWER FOR TRUST It can, however, be waived, by the failure of the opposing party to object when a parol evidence concer concering ing a trust trust of an immova immovable ble or interes interestt therein is being presented in court. Except for immovable or interest therein, express trust can be created by writing, deed, will or oral declaration. No particular words are required or  esse essenti ntial al for the crea creatio tion n of an expr expres ess s trust trust (NCC 1444). 1444). Kinds of Express Trust 1. Char Charit itab able le Tru Trust 2. Accum Accumula ulatio tion n Trust Trust – accu accumu mula late te income income to be reinvested by the trustee in the trust for the period of time specified. 3. Spendth Spendthrift rift Trust – to prot rotect ect the the beneficiary from his imprudent spending habit. 4. Sprinkling trust – give the trustee the right to determine the income beneficiaries who should receive income each year and the amount thereof. In order that a trustee trustee may sue or be sued alone, it is essential that his trust be express, that is a trust created by the direct and positive acts of the part parties ies,, by some some writi writing ng,, deed, deed, or will will or by proceedings in court.

latter is the beneficiary. However, if the person to whom whom the the title title is conv convey eyed ed is a child child,, legitimate legitimate or illegitimat illegitimate, e, 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 althoug although h the legal estate estate is transm transmitte itted d to the donee donee,, he neve nevert rthe hele less ss is eithe eitherr to have 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  anoth another er and and the the convey conveyan ance ce is made made to the lender lender or payor payor to secure the paymen paymentt of the debt, a trust arises by operation of law in favor of  the person to whom the money is loaned or for  whom whom its is paid paid.. The The latte latterr may may redeem redeem the property property and compel compel a conveya conveyance nce thereof 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 impl implic icati ation on of law law for the the benef benefit it of the the true true owner.

Art. 1445. No trust shall fail because the trustee appointed appointed declines declines the designation, unless the cont contra rary ry shou should ld appe appear ar in the the inst instru rume ment nt constituting the trust.

Art. Art. 1452. 1452. If two two or more more pers person ons s agre agree e 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. Art. 1446. 1446. Acce Accepta ptanc nce e by the bene benefi ficia ciary ry is necessary. Nevertheless, if the trust imposes no oner onerous ous cond conditi ition on upon upon the benef benefic iciar iary, y, his acce accepta ptanc nce e shal shalll be pres presum umed ed,, if there there is no proof to the contrary.

Art. Art. 1453. 1453. When When prop proper erty ty is conv convey eyed ed 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.

CHAPTER 3 IMPLIED TRUSTS

Art. 1454. If an absolute absolute conveyance of property property is made in order to secure the performance of an obligation of the grantor toward the grantee, a trus trustt by virt virtue ue of law law is esta establ blis ishe hed. d. If the the fulf fulfil illm lmen entt of the the oblig obligat ation ion is offere offered d by the the grantor when it becomes due, he may demand the reconveyance of the property to him.

Art. Art. 1447. 1447. The enumer enumeratio ation n of the follow following ing cases of implied trust does not exclude others established by the general law of trust, but the limi limitat tation ion laid laid down down in Artic Article le 1442 1442 shal shalll be applicable. here is an impl implie ied d trus trustt when when Art. Art. 1448. 1448. There 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 proper property. ty. The former former is the trustee, trustee, while while the

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.

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2010-2011 REVIEWER FOR TRUST

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 who m the property comes. Art. 1457. An implied trust may be proved by oral evidence. Enumeration of cases of implied trust in Chapter  3 is not exclusive Othe Otherr Case Cases s of Impl Implied ied Trus Trustt not not cite cited d in Chapter 3 1. Regis Registr trati ation on in the the Torre Torrens ns Syst System em of a land in the name of another but actually owned by another person. 2. Regis egistr trat atio ion n of vehic ehicle le plac placed ed in the the name of another, but price thereof is paid by another person. 3. Mortgagee holds in trust for the mortgagor mortgagor the surplus in the proceeds of  the foreclosure sale (excess of what the mortgagor owes from the mortgagee) 4.  Agent who willfully willfully violated the trust reposed in him by the principal when he bought for himself the property which he was supposed to buy for the principal. 5. Trust Trust fund fund doctrin doctrine e in Corpor Corporatio ation n Law. Law. 6. Secu Securi rity ty Depo Deposi sitt unde underr Sect Sectio ions ns 129, 129, 203 and 414 of the insurance code. Distinctions between Express and Implied Trust Express Creation

By direct positive acts of  the parties by some writing or  deed or will or  by words evidencing the intention to create trust

the trustee and such repudiation is made known to the beneficiary.

constructive trust only)

Implied trust can be converted into an Express Trust Necessary Elements for the acquisition of the trustee of the Trust Res 1. He has has perfo perform rmed ed open open and uneq unequiv uivoc ocal al acts acts of repu repudi diat atio ion n amou amount ntin ing g to an ouster of the cestui que trust or the other  co-owners; 2. Such Such posi positi tive ve acts acts of repud repudia iati tion on have have been made known to the cestui que trust of the other co-owners. 3. The The evid eviden ence ce there thereon on shoul should d be clea clear  r  and conclusive or convincing; and 4. The period period fixed fixed by by law law has has pres prescrib cribed. ed. Acts that may be considered as Repudiation 1. Fili Filing ng by a trust trustee ee of an acti action on in cour courtt agai agains nstt the the tru trustor stor to quiet uiet titl title e to propert property, y, or for recover recovery y of owners ownership hip thereof, held in possession by the former; 2. Issu Issuan ance ce of the Cer Certf tfica icate te of Titl Title e and in the lapse of more than 20 years, open and adverse possession as owner; 3. Admi Admini nist star artor tor of the the propert property y causes causes the cancellation of the property in the name of the beneficiaries to his name;

Implied Deductible from the nature of  the transaction or imposed by operation of  law, independently of the particular  intention of the parties.

Proof on Immovables

Cannot be proven by parol Evidence

Can be proven by oral evidence.

Pres Prescr crip ipti tion on

Impr Impres escr crip ipti tibl ble e unless repudiated by

Laches and prescription can set in (for 

For For pres prescr crip iptiv tive e peri period od to appl apply y again against st the the person seeking the reconveyance, he must not be in poss possess ession ion of the the prop proper erty ty.. If he is in possession, then it will not prescribe for he may wait until his possession is disturbed or his title is attac attache hed d befo before re takin taking g steps steps to vindi vindica cate te his his rights. When prescriptive prescriptive period begins begins to run for  action for reconveyance of property 1. Cons Constru truct ctiv ive e Trust Trust – date date of regist registra ratio tion n of the deed or the date of issuance of  said new certificate of title of the property which constitutes constitutes constructive constructive notice to the public. 2. In case of fictitious sale to avoid foreclosure of mortgage, from the date of 

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2010-2011 REVIEWER FOR TRUST reco record rding ing of the the rele releas ase e of mort mortga gage ge (Tongoy vs. CA, 123 SCRA 99) 3. If registration under the Torrens System was secured throu hroug gh fraudulen lent misrepresentation, period is reckoned not from the date of registration registration but from the discovery of fraud by the actual owner. (Ramos vs. IAC, 175 SCRA 70). Person acting in bad faith in securing title over  real real prop proper erty ty is not not enti entitl tled ed for for the the protection of law for the law cannot be used used as shei sheild ldfo forr frau frauds ds (GSI (GSIS S vs. vs. Santiago, 4141 SCRA 563) Continu Continuous ous recogn recognitio ition n of a resultin resulting g trust trust precl preclud udes es any defe defens nse e of presc prescri ript ption ion or  laches. If title of the property is already in the hands of an innoce innocent nt purchas purchaser er for value, value, actual actual owner can no longer ask for the reconveyance of the land. His only remedy is to file for damages. (Bagayos vs. Guilao, 64 Phil 347; Khemani vs. Heirs of Trinidad, 540 SCRA 83)

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