Express Trusts

1. Essence and Definition of Express Trusts

Express trust one created by the intention of the trustor or of the parties
(Art. 1441)
Those created by direct and positive acts of the parties, by some writing or
deed or will or by words evidencing an intention to create a trust.

Torbela v. Spouses Rosario, G.R. No. 140528, 661 SCRA 633, 07 December
2011
Facts: The issue is over a parcel of land inherited by the Torbela
siblings from their parents.
They executed a deed of absolute quitclaim over the property in favor
of Dr. Rosario. Four days after, a TCT was issued in Dr. Rosarios name
covering the property. Another deed of absolute quitclaim was
subsequently executed twelve days after by Dr. Rosario acknowledging
that he only borrowed the lot from the Torbela siblings and was already
returning the same. This deed was notarized but not immediately
annotated. Dr. Rosario used the land as mortgage for a loan he obtain
through DBP for P70,000.00. He used the proceeds of the loan to build
a 4 storey building which was initially used as a hospital but later
converted into a commercial space. Part was leased to PT&T and the
rest to Rosario s sister who operated the Rose Inn Hotel and
Restaurant. Dr. Rosario fully paid the loan from DBP and the mortgage
was cancelled and ratified by a notary public. However, Dr. Rosario
took another loan from PNB. He later acquired a third loan from Banco
Filipino and bought out the loan from PNB cancelling the mortgage with
PNB. Rosario failed to pay their loan in Banco Filipino and the property
was extrajudicially foreclosed. Meanwhile, back in 1965, the Torbela
siblings sought to register their ownership over the lot and to perfect
their title but couldnt because the title was still with DBP. They showed
as proof the deed of absolute quitclaim presented executed by Rosario
himself. In 1986, they filed a civil case for recovery of ownership and
possession and damages. They tried to redeem the lot from Banco
Filipino but failed. TCT was issued to Banco FIilipino. The Torbelas
claim they have right over the rents of the building through accession
because they are the land owners.
Issue: Whether or not there was an express trust that was established
in this case?

Held: Yes In Tamayo v. Callejo, the Court recognized that a trust may
have a constructive or implied nature in the beginning, but the
registered owner's subsequent express acknowledgement in a public
document of a previous sale of the property to another party, had the
effect of imparting to the aforementioned trust the nature of an
express trust.

Essential Characteristics of Express Trusts

a. Nominate and Principal for having been given particular name and
essentially defined by the Civil Code, and not needing another contract to be valid
and binding
b. Unilateral only the trustee assumes obligations to carry on the trust for
the benefit of the beneficiary
c. Primarily gratuitous supported by the consideration of liberality,
especially when Art. 1446 provides that beneficiarys acceptance is presumed
d. Real an express trusts constitute a real contract, that is, it is not merely
perfected by a mere meeting of minds between the trustor and trustee to constitute
a trust. Indeed, no trust relationship exists, until and unless, the property
constituting the res is conveyed to the trustee.
e. Preparatory not constituted for its own sake in that the trust relationship
is essentially a medium established by the trustor to allow full authority and
discretion on the party of the trustee to enter into various juridical acts on the
corpus to earn income or achieve other goals given for the benefit of the beneficiary
An express trust may create a form of contract pour atrui
f. Fiduciary
a) Essentially Contractual in Nature; Need No Particular Wordings
1444. No particular words are required for the creation of an express trust, it being
sufficient that a trust is clearly intended.
Note: Technical or particular forms of words or phrases are not essential to
the manifestation of an intention to create a trust.
What is important is whether the trustor manifested an intention to create
the kind of relationship which in law is known as trust. (Julio v. Dalandan)
A clear intention to create trust must be shown, and the proof of fiduciary
relationship must be clear and convincing. (Caezo v. Rojas)
Julio v. Dalandan, G.R. No. L-19012, 21 SCRA 543, 30 October 1967.

Facts: Clemente Dalandan, deceased father of defendants Emiliano and

Maria Dalandan, acknowledged that a four-hectare piece of rice land in
Las Pinas, belonging to Victoriana Dalandan, whose only child and heir
is plaintiff Victoria Julio, was posted as security for an obligation which
he, Clemente Dalandan, assumed but, however, failed to fulfill. The
result was that Victorianas said land was foreclosed. Clemente
Dalandan promised to Victoria Julio a farm of about four hectares to
replace the aforesaid foreclosed property. An affidavit was executed by
Clemente which herein petitioner accepted. One of the condition laid
were neither delivery of the land nor the fruits thereof could
immediately be demanded from his children. After the death of
Clemente Dalandan, Victoria Julio requested from defendants,
Clementes legitimate and surviving heirs who succeeded in the
possession of the land thus conveyed, to deliver the same to her, that
defendants insisted that according to the agreement, neither delivery
of the land nor the fruits thereof could immediately be demanded, and
that plaintiff acceded to this contention of defendants and allowed
them to continue to remain in possession thereof that demands have
been made upon defendants to fix the period within which they would
deliver to the herein plaintiff the above-described parcels of land but
defendants have refused and until now still refuse to fix a specific time
within which they would deliver to plaintiff the aforementioned parcels
of land.
Issue: Whether or not there was an express trust?
Held: Yes. For, 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 use of some such words as
trust or trustee essential to the constitution of a trust as we have
held in Lorenzo v. Posadas, 64 Phil. 453, 368. Conversely, the mere fact
that the word trust or trustee was employed would not necessarily
prove an intention to create a trust. What is important is whether the
trustor manifested an intention to create the kind of relationship which
in law is known as a trust. It is important that the trustor should know
that the relationship which intents to create is called a trust, and
whether or not he knows the precise characteristics of the relationship
which is called a trust. Here, that trust is effective as against
defendants and in favor of the beneficiary thereof, plaintiff Victoria
Julio, who accepted it in the document itself.
Caezo v. Rojas, G.R. No. 148788, 538 SCRA 242, 23 November 2007.
Facts: Petitioner Soledad Caezo filed a complaint for the recovery of
real property plus damages with MTC of Naval, Biliran, against her

fathers second wife, respondent Concepcion Rojas. The subject

property is an unregistered land situated at Higatangan, Naval, Biliran.
Caezo attached to the complaint a Joint Affidavit executed by Isidro
Catandijan and Maximina Caezo attesting to her acquisition of the
property. Petitioner alleged that she bought the parcel of land from
Crisogono Limpiado, although the transaction was not reduced into
writing. Thereafter, she immediately took possession of the property.
When she and her husband left for Mindanao, she entrusted the said
land to her father, Crispulo Rojas, who took possession of, and
cultivated, the property. In 1980, she found out that the respondent,
her stepmother, was in possession of the property and was cultivating
the same. She also discovered that the tax declaration over the
property was already in the name of his father Crispulo Rojas.
Issue: Whether or not there exist a trust relationship between the
petitioner and her Father, express or implied?
Held: Although no particular words are required for the creation of an
express trust, a clear intention to create a trust must be shown, and
the proof of fiduciary relationship must be clear and convincing. The
creation of an express trust must be manifested with reasonable
certainty and cannot be inferred from loose and vague declarations or
from ambiguous circumstances susceptible of other interpretations.

PNB v. Aznar, G.R. No. 171805, 649 SCRA 214, 30 May 2011.
Facts: Some stockholders of RISCO contributed a total amount of
P212,720.00 to rehabilitate the company by purchasing three (3)
parcels of land. The Minutes of the Special Meeting of the Board of
Directors of RISCO provided that the contributions constituted a lien or
interest in the lands. The lands were, however, attached and was
bought by the PNB as the lone and highest bidder. Subsequently, titles
were issued in the name of PNB which prompted the said stockholders
to file a complaint for quieting of title. The trial court ruled in favor of
the plaintiffs on the basis that there was an express trust. The decision
was, however, set aside by the Court of Appeals on the ground that the
contributions was a loan secured by a lien rather than an express trust.
Issue: Whether or not there was an express trust?
Held: No. The creation of an express trust must be manifested with
reasonable certainty and cannot be inferred from loose and vague
declarations or from ambiguous circumstances susceptible of other
interpretations. No such reasonable certitude in the creation of an
express trust obtains in the case at bar. In fact, a careful scrutiny of the

plain and ordinary meaning of the terms used in the Minutes does not
offer any indication that the parties thereto intended that Aznar, et al.,
become beneficiaries under an express trust and that RISCO serve as
trustor.

Heirs of Tranquilino Labiste v. Heirs of Jose Labiste, G.R. No. 162033,

587 SCRA 417, 08 May 2009.
Facts: Epifanio is an heir of Jose Labiste, purchased a land. Before the
execution of the deed of conveyance, Epifanio executed an affidavit
affirming that he and his uncle Tranquilino co-owned the lot because
the money came from them both. Later on it was divided and the heirs
of Tranquilino bought half interest. After the World War, the properties
were destroyed and squatters lived on the land. Petitioner learned that
an heir of the respondent filed for reconstitution.
Issue: Whether or not the petitioner's cause of action prescribed?
Held: The court of appeals erred in applying the principle of Laches
because what was involved in this case is an express trust. The
affidavit of Epifanio is in the nature of a trust agreement. The only act
that can be construed as repudiation was when the respondent filed
the petition for reconstitution in 1993 and since petitioners files their
complaint in 1995, their cause has not yet prescribed. However, to
recover half of the property covered by a private document to execute
a public deed of sale.

b) Based on Property Relationship

What distinguishes a trust from other relations is the separation of legal title
and equitable ownership of the property. In a trust relation, legal title is
vested in the fiduciary while equitable ownership is vested in a cestui que
trust (Caezo)
Trust, in its technical sense, is a right of property, real or personal, held by
one party for the benefit of another. (Guy v. CA)
Caezo v. Rojas, G.R. No. 148788, 538 SCRA 242, 23 November 2007
Facts: Soledad Caezo alleged that she bought a parcel of land in 1939
from Crisogono Limpiado. The sale was not reduced in writing. The
subject property was unregistered land situated in Naval, Biliran.
Thereafter, she immediately undertook possession of the property. In
1948, when she and her husband left for Mindanao, she entrusted the
land to her father, Crispulo Rojas. In 1980, Soledad found out that
Concepcion Rojas her stepmother was in the possession of the
property and cultivating the same. She was also discovered that the

tax declaration over the property was already in the name of his father.
MTC rendered decision in favor to Soledad making her the real and
lawful owner of the land. However, RTC Naval, Biliran reversed the
decision on the ground that the action had already prescribed and
acquisitive prescription had set in. On Soledads motion for
reconsideration, the RTC amended its original decision and held that
the action had not yet prescribed considering that the property was
only entrusted to her father. On the Soledads petition for review
before CA, the decision was amended and reversed. CA held that there
was a trust between the petitioner and her father over the property.
Issue: Whether or not there is a express or implied trust between the
petitioner and her father?
Held: There was no trust between her and her father. A trust a legal
relationship between one person having an equitable ownership of the
property and another person owning the legal title to such property,
the equitable ownership of the former entitling him to the performance
of certain duties and the exercise of certain powers by the latter.
In the case at bar, an intention to create a trust cannot be inferred
from the petitioners testimony and the attendant facts and
circumstances. The petitioner testified only to the effect that her
agreement with her father was that she will be given a share in the
produce of the property. This allegation is inadequate to establish the
existence of a trust because profit-sharing per se, does not necessarily
translate to a trust relation. The Supreme Court further held that there
was no express trust between the petitioner and her father. Thus, the
absence of the trust relation, SC conclude that her fathers
uninterrupted possession of the property for 49 years coupled with the
acts of ownership, such as payment of the real estate taxes, ripened
into ownership.
c) Fiduciary

The juridical concept of a trust, which in a broad sense involves, arises from,
or is the result of, a fiduciary relation between the trustee and the cestui que
trust as regards certain property real, personal, funds or money, or choses
in action must not be confused with an action for specific performance. A
trustee cannot invoke the statute of limitations to bar the action and defeat
the rights of the cestuis que trustent. (Pacheco v. Arro)

Pacheco v. Arro, G.R. No. L-48090, 85 Phil. 505, 16 February 1950

Facts: The CLAIMANTS filed answers in a cadastral case, claiming lots as their
property and began to present evidence before a referee. Dr. Mariano Yulo,

who represented the late PREDECESSOR-IN-INTEREST in the cadastral case,

assured and promised that after the change of the street names from Zamora
and Quennon streets to T. Yulo and G. Regalado streets, the PREDECESSORIN-INTEREST would convey and assign the lots to the claimants.
Because of this, the CLAIMANTS withdrew their claims and the cadastral court
confirmed the title to the lost and decreed their registration in the name of
the PREDECESSOR-IN-INTEREST.
The representative of the PREDECESSOR-IN-INTEREST complied with the
promise by executing deeds of donation or assignment to some of the
claimants.
2/3 of this case is in Spanish; Im guessing that the part where the
CLAIMANTS filed a complaint was explained there.
CFI ordered the PREDECESSOR-IN-INTEREST to execute deeds of assigned in
favour of the CLAIMANTS for each and every lot claimed by them. The CA
affirmed.
The SUCCESSORS-IN-INTEREST contend that since a trustee does not have
title to the property which is the subject of the trust, because title to such
property is vested in the cestui que trust, if the PREDECESSOR-IN-INTEREST
of the SUCCESSORS-IN-INTEREST was a trustee, he or his successors-ininterest could not and cannot be compelled in an action for specific
performance to convey or assign the property the subject of the trust
because in an action for specific performance the party to be compelled to
perform is the owner of has title to the property sought to be conveyed or
assigned.
Issue: Whether or not the SUCCESSORS-IN-INTEREST may be compelled in an
action for specific performance to convey or assign the property?
Held: YES. Judgment affirmed.
The juridical concept of a trust, which in a broad sense involves, arises from,
or is the result of, a fiduciary relation between the trustee and the cestui que
trust as regards certain property real, personal, funds or money, or choses
in action must not be confused with an action for specific performance.
When the claim to the lots in the cadastral case was withdrawn by the
CLAIMANTS relying upon the assurance and promise made in open court by
Dr. Mariano Yulo in behalf of the PREDECESSOR-IN-INTEREST, a trust or a
fiduciary relation between them arose, or resulted therefrom, or was created
thereby.

The trustee cannot invoke the statute of limitations to bar the action and
defeat the right of the cestui que trust. If the pretense of counsel for the
SUCCESSORS-IN-INTEREST that the promise above adverted to cannot prevail
over the final decree of the cadastral court holding the PREDECESSOR-ININTEREST of the SUCCESSORS-IN-INTEREST to be the owner of the lots
claimed by the CLAIMANTS were to be sustained and upheld, then actions to
compel a party to assign or convey the undivided share in a parcel of land
registered in his name to his co-owner or co-heir could no longer be brought
and could no longer succeed and prosper.
2. Express Trust must be Proven

An express trust cannot be proven by parol evidence.

A trust must be proven by clear, satisfactory, and convincing evidence. It
cannot rest on vague and uncertain evidence or on loose, equivocal or
indefinite declarations.
Rule: the burden of proving the existence of a trust is on the party asserting
its existence
The presence of the following elements must be proved:
a) a trustor or settler who executes the instrument creating the trust
b) a trustee, who is the person expressly designated to carry out the trust
c) the trust res, constituting of duly identified and definite real properties
d) the cestui que trust , or beneficiaries whose identity must be clear

Rizal Surety & Insurance Co. v. Court of Appeals, G.R. No. 96727, 261
SCRA 69, 28 August 1996
Facts: Reparation Commission sold to Transocean Transport
Corporation the vessel M/V TRANSOCEAN SHIPPER payable in 20
annual installments. The vessel was insured with Rizal Surety &
Insurance Company for $3,500,000.00 under marine hull policy.
Sometime in 1975, the vessel was lost in Mediterranean sea. The
insured filed claims against Rizal Surety for the insurance proceeds. On
Nov. 18, 1975, Transocean and REPACOM requested petitioner
requested petitioner to pay the insurance proceeds. The central bank
authorized Rizal Surety to receive insurance surety. On jan. 3, 1976,
the petitioner informed the private respondents and REPACOM that the
insured proceeds for the loss of the vessel consisting of:
Php2,614,150.00 from local insurance companies and reinsurers. Few
weeks later, Transocean and REPACOM entered into a partial
compromise agreement wherein they agreed to divide and distribute
insurance proceeds in such manner that each would receive as its

initial share thereof that portion not disputed by the other party. On the
final compromise agreement, TRANSOCEAN and REPACOM, whereby
the latter, in consideration of an additional sum of one million pesos
paid to it by Transocean, transferred, conveyed and assigned to the
former all its rights, interests and claims in and to the insurance
proceeds. A demand letter was sent by TRANSOCEAN to Rizal Surety
but neither thereto nor complied therewith. On August 15, 1979,
Transocean filed with RTC a complaint for collection of unearned
interest on the dollar balance of the insurance proceeds. RTC held that
there is a trust relationship existed between petitioner as trustee and
Transocean and REPACOM as beneficiaries.
Issue: Whether or not there is a existence of trust relationship?
Held: Petitioner's argument that it was never a party to the Partial
Compromise Agreement is unavailing, since, upon being furnished a
copy of the same, it undoubtedly became aware if it was not already
aware even prior thereto that the parties to said agreement
considered petitioner as their trustee in respect of said dollar balance;
in short, it is all too evident that petitioner fully grasped the situation
and realized that private respondent and REPACOM were constituting
petitioner their trustee. Yet, petitioner not only did not manifest any
objection thereto, but it instead proceeded to accept its role and
responsibility as such trustee by implementing the compromise
agreement. Equally as significant, petitioner never committed any act
amounting to an unequivocal repudiation of its role as trustee.
Petitioner's desperate attempt to establish a viable defense by way of
its allegation that no fiduciary relationship could have existed because
of the joint insured's adversary positions with respect to the insurance
proceeds deserves scant consideration. The so-called adversary
positions of the parties had no effect on the trust as it never changed
the position of the parties in relation to each other and to the dollar
proceeds, i.e., petitioner held it for private respondent and REPACOM,
which were the real owners of the money.
Note: To affect third persons, a trust concerning an immovable or any interest
therein must be embodied in a public instrument and registered in the
Registry of Property (DE LEON, Partnership, Agency and Trusts, supra at 631).
The intention to create an express trust must first be firmly established.

Goyanko v. UCPB, G.R. No. 179096, 690 SCRA 79, 06 February 2013
Facts: In 1995, Joseph Goyanko, Sr. invested Php2,000,000.00 with
Philippine Asia Lending Investors Inc. (PALII). Goyanko Sr.s legitimate

family and illegitimate family presented conflicting claims for the

release of the investment. Pending the investigation of the claims, the
PALII deposited the proceeds of the investment with UCPB under the
name Phil Asia: In Trust For the heirs of Goyanko Sr. On September 27,
1997, the deposit under the account was Php1,509,318.76. on Dec. 11,
1997, UCPB allowed PALII to withdraw the amount of Php 1,500,000.00
from the account leaving 9,318.76. when UCPB refused the demand to
restore the amount withdrawn, Goyanko, Jr filed a complaint before
RTC. RTC dismissed the complaint where it did not consider the word IN
TRUST FOR HEIRS. RTC concluded that UCPB merely performed its duty
as a depositary bank in allowing PALII to withdraw from the account.
CA held that no express trust was created between the heirs and PALII.
CA noted that the contract of deposit was between PALII in its own
capacity and UCPB. The words ITF HEIRS were insufficient to establish
the existence of trust.
Joseph Goyanco Sr invested 2M to PALII (Lending Company). However,
the Goyanco Sr legitimate and illegitimate families had conflicting
interest to the investment of Goyanco Sr which compel PALII to deposit
the amount of 1.59M to UCPB in trust for the heirs of Goyanco Sr.
.Consequently, PALII widrawn the amount 1.5M leaving the amount of
9k. In this case, Goyanko Jr filed petition to restore the original amount
against the PALII
Issue: Whether or not there is a existence of trust between PALII and
UCPB, in favor of the HIERS when PALII opened the account with
UCPB?
Held: There was none. A trust, either express or implied, is the
fiduciary relationship with respect to property w/c involved equitable
duties imposed upon to the holder of the title to deal with it for the
benefit of another x x x between one person having an equitable
ownership of property and another person owning the legal title to
such property, the equitable ownership of the former entitling him to
the performance of certain duties and the exercise of certain powers
by the latter.Express or direct trusts are created by the direct and
positive acts of the trustor or of the parties. No written words are
required to create an express trust. This is clear from Article 1444 of
the Civil Code, but, the creation of an express trust must be firmly
shown; it cannot be assumed from loose and vague declarations or
circumstances capable of other interpretations. SC held that there was
no express trust created hence there was no trustee and trustor
created. UCPB, as trustee of the account was never under the
equitable duty to deal with or given any power of administration over

it. PALII as the trustor did not have any right to the beneficial
enjoyment of the account.
3. Kinds of Express Trust
A. Express Trust involving Immovable
1443. No express trusts concerning an immovable or any interest therein may be
proved by parol evidence.

The existence of express trusts concerning real property may not be

established by parol evidence; thus, it must be proven by some writing or
deed
However, if the parties to the action, during the trial, make no objection to
the admissibility of the oral evidence to support the contract, there is
deemed to be a waiver
The requirement that express trust over immovable must be in writing should
be added as being governed by the Statute of Frauds (Gamboa v. Gamboa)
B. Contractual/Inter vivos Trust

An inter vivos trusts are expressed trust pursued in the form of donation, and
which therefore become solemn contracts which must comply with the
solemnities mandated by the Law on Donations

C. Testamentary Trust

When an express trust is created under the terms of the last will and
testament of the testator, it is a testamentary trust and is governed by the
Law on Succession
Unless the will conforms with the solemnities and conditions set by law, it will
be void together with the testamentary trust sought to be created therein
A testamentary trust was created by a provision in the will whereby the
testator proposed to create trust for the benefit of a secondary school to be
established in the town of Tayabas, naming as trustee the ayutamiento of the
town or if there be none, then the civil governor of the Province of Tayabas.
(Govt of the Phil. Islands v. Abadilla)
D. Pension or Retirement Trusts

Publicly-regulated trusts would be those where the State provides the vehicle
by which institutions are allowed to administer large funds for the benefit of
the public. Among such funds created under the law would be the pension
and benefits funds administered by the GSIS, the SSS and the Pag-Ibig Fund.
Tax laws provide for incentives to the setting-up of retirement funds for
employees. All such funds are really being administered for the beneficiaries
thereof through the medium of trust.

E. Charitable Trusts

Gamboa v. Gamboa, G.R. No. L-29556, 52 Phil. 503, 22 December 1928

Facts: This action was instituted in the Court of First Instance of the Province
of Pampanga by various plaintiffs of the surname or connection of Gamboa,
for the purpose of enforcing partition of some ten parcels of real property
located in the municipality of Santa Ana, in the province of Pampanga, of
which, it is asserted, the plaintiffs are coowners with the defendants Modesta,
Pedro and Rafael, of the same name. At the same time the plaintiffs seek to
obtain an accounting from Modesta Gamboa of the plaintiffs' shares in the
procedure taken from the land in the past.
To this complaint Modesta Gamboa answered with a general denial,
supplemented by an admission that the single parcel constituting the last
item specified in the complaint and identified as tax No. 6247, is in fact
common property of herself and the plaintiffs who are her coheirs, and
asserting, as to the rest, that she is the owner of the same and has been in
adverse possession thereof for more than ten years. The defendant Rafael
and Pedro Gamboa answered with a formal general denial, but at the trial
they admitted the claim to Modesta Gamboa as owner of the contested
properties.
It is not disupted that all of the properties that are the subject of this action
once belonged to Juan Gamboa and Ana Manago, the parents of the first set
of Gamboa plaintiffs of the three defendants of the same name. There is no
controversy over the further fact that on August 27, 1987, Juan Gamboa and
wife sold all of the properties which are the subject of this action, except the
parcel identified by the tax assessment No. 6247, under contract of sale with
pacto de retro for two years to one Felipe Javier, the vendors, however,
remaining in possession in the character of lessees. The period of redemption
having been effected, and the property consolidated in Javier. But Juan
Gamboa, and after his death, his family, continued in possession as tenants
under Javier.
On June 18, 1910, Javier then sold the properties to Feliciana and Modesta
Gamboa. The proof shows that ever since the property in question was
conveyed by Javier to the Gamboa sisters in 1910, the same has been
continuously in the possession of Modesta, except for the two years 1912 and
1913 when, by some arrangement or other, one of her brothers had charge
as manager. During this period Modesta exercised all the rights of ownership,
accounting of course to Feliciana for the latter's share of the produce during
the term of their ownership.
For the petitioners, this buying of the land was in effect a repurchase by
Feliciana and Modesta of the land in behalf of their ancestors.

Issue: Whether the purchase of the land by the Gamboa sisters was in fact, in
trust only for the Juan Gamboa and in effect, be only co-owners as co-heirs
with the petitioners?
Held: No. This theory of the case, in our opinion, is untenable. The sale of the
property by Javier to the two sisters in 1910 was an unconditional transfer of
title to them, inasmuch as Javier had been undisputed owner of the property
for fully eleven years. Of course if it had really been agreed that the sisters
were purchasing the property in a trust character, that agreement might have
been enforced, but the nature of the title held by the sisters and the
inconclusive character of the proof of trusteeship refute this theory. We
attribute little importance to the form in which the property was assessed for
taxation, in view of the explanation which Modesta gives of the obstructions
which she encountered in straightening that matter out. The situation, as we
see it, is that Modesta Gamboa, during the period in which she has been part
owner of the property and during the later period in which she has held title
in her own name, has been surrounded by kinsfolk who were anxious to
insinuate themselves into a co-ownership of the property, and this litigation
was undoubtedly promoted chiefly by her brother Serapion Gamboa. But it is
noteworthy that at least two brothers have admitted her title.
The trial judge seems to have entertained the idea that the case must turn
upon the character of the possession exercised by Modesta Gamboa during
the period allowed by law for prescription; and he assumed that it was
necessary for her to show adverse possession during that period. This idea is
not of correct application, because Modesta Gamboa, either co-jointly with
her sister Feliciana or exclusively in her own right, has held the legal title
since 1910; and the fact that her brother and sisters may have questioned
her right during the ten years next preceding the institution of this action
does not have the effect of impairing her right.
Clearly, the sisters bought the land as their own and not in trust for their
relatives.

Ty v. Ty, G.R. No. 165696, 553 SCRA 306, 30 April 2008

Facts: Alexander Ty, son of Alejandro Ty and husband of Sylvia Ty, dies
of cancer at the age of 34. Sylvia files petition for the settlement of
Alexanders intestate estate. She also asks court to sell or mortgage
properties in order to pay the estate tax amounting to P4,714,560.02
assessed by the BIR. The properties include a parcel of land in EDSA
Greenhills, a residential land in Wack Wack, and the Meridien condo
unit in Annapolis, Greenhills.

Alejandro Ty opposed the move and filed for recovery of the property
with prayer for preliminary injunction and/or temporary restraining
order. Plaintiff Alejandro claims that he owns the EDSA, Wack Wack and
Meridien condo unit because he paid for them. The property was
supposedly registered in trust for Alexanders brothers and sisters in
case plaintiff dies. Plaintiff also claimed that Alex had no financial
capacity to purchase the disputed property, as the latter was only
dependent on the former.
Sylvia countered that Alexander had purchased the property with his
money. Alexander was financially capable of purchasing it because he
had been managing the family corporations since he was 18 years old
and was also engage in other profitable businesses.
The RTC granted the application for preliminary injunction and decides
in favor of plaintiff regarding the recovery of the property. CA reversed
the RTC stating that the implication created by law under Art. 1448
does not apply if the property was in the name of the purchasers child.
They agreed that plaintiff partly paid for the EDSA property. Plaintiff
appealed.
Issue: Whether or not there was an implied trust under Art. 1448 of the
Civil Code?
Held: No, there was no implied trust created in relation to the EDSA
property. If the person to whom the title is conveyed is the child of the
one paying the price of the sale, no trust is implied by law under Art.
1448, the so-called purchase money resulting trust. The said article
provides an exception: 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 disputable presumed that there
is a gift in favor of the child. The Court also noted that plaintiff failed
to prove that he did not intend a donation.
Regarding the Meridien Condo and Wack Wack property, the court said
that plaintiff failed to prove that purchase money came from him. They
also said that Alexander was capable of purchasing the property as he
had been working for nine years, had a car care business, and was
actively engaged in the business dealings of several family
corporations from which he received emoluments and other benefits.
Hence, no implied trust created because there was no proof that
plaintiff had paid for said properties.

Penalber v. Ramos, G.R. No. 178645, 577 SCRA 509, 30 January 2009

Facts: Penalber is the mother of respondent Leticia and the mother-inlaw of respondent Quirino, husband of Leticia. Respondent Bartex, Inc.,
on the other hand, is a domestic corporation which bought from
respondent spouses Ramos one of the two properties involved in this
case.
Firstly, petitioner alleged in her Complaint that she was the owner of a
parcel of land situated in Ugac Norte, Tuguegarao, Cagayan, registered
in petitioners name. A residential house and a warehouse were
constructed on the said parcel of land which petitioner also claimed to
own. Petitioner averred that in the middle part of 1986, she discovered
that her title to the properties was cancelled and a new one was issued
under the name of the spouses. Allegedly it was because of a fictitious
deed of donation that she executed in favor of the spouses. According
to her, she confronted the spouses Ramos. The spouses being guilty,
offered 1 million in as payment, which petitioner agreed. However,
petitioner suddenly discovered that the said property was sold to
Baxter Inc. despite her warnings and disagreements thereto.
As to her Second cause of action, petitioner claimed that she owned
and operated a hardware store, situated in a building owned by her,
however, the land on which such building is situated was rented out
from Maria Mendoza. Petitioner argues that sometime, she offered the
management of the hardware store to the spouses on the agreement
that, the spouses shall facilitate the purchase of the lot being rented,
which funds shall come from the earnings of the hardware. She also
agreed that title to the property shall be placed in the name of the
spouses in order for them to secure a loan for the expansion of the
hardware. There was no contract or written agreement between
petitioner and the spouses.
Petitioner prays that the title to the said properties be issued in her
favor, being the true owner thereof.
Trial of the case thereafter ensued. The RTC ruled that petitioner, on
her argument that her signature in the deed of donation was forged,
failed to overcome the presumption of its due execution, the deed
being notarized.
As to the second cause of action, the RTC ruled in her favor and
declared that the property and hardware is indeed her own.
On 24 July 2000, respondent spouses Ramos elevated their case to the
Court of Appeals, insofar as the ruling of the RTC on petitioners second

cause of action was concerned. The appeal was docketed as CA-G.R.

CV No. 69731.
On 15 December 2006, the Court of Appeals rendered the assailed
Decision in favor of respondent spouses Ramos.
Issue: (1) whether the existence of a trust agreement between her and
respondent spouses Ramos was clearly established, and (2) whether
such trust agreement was valid and enforceable.
Held: The petition, is denied.
In its technical legal sense, a trust is defined as the right, enforceable
solely in equity, to the beneficial enjoyment of property, the legal title
to which is vested in another, but the word trust is frequently
employed to indicate duties, relations, and responsibilities which are
not strictly technical trusts. A person who establishes a trust is called
the trustor; one in whom confidence is reposed is known as the
trustee; and the person for whose benefit the trust has been created is
referred to as the beneficiary. There is a fiduciary relation between the
trustee and the beneficiary (cestui que trust) as regards certain
property, real, personal, money or choses in action.
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. Express trusts are those which are created
by the direct and positive acts of the parties, by some writing or deed,
or will, or by words either expressly or impliedly evincing an intention
to create a trust. No particular words are required for the creation of an
express trust, it being sufficient that a trust is clearly
intended. However, in accordance with Article 1443 of the Civil Code,
when an express trust concerns an immovable property or any interest
therein, the same may not be proved by parol or oral evidence.
4. Parties to an Express Trust
a) Trustor a person who establishes a trust (Art. 1440)
b) Trustee one in whom confidence is reposed as regards property for the benefit
of another person (Art. 1440)
i. Trustee must have legal capacity to accept the trust
ii. Failure of Trustee to Assume the Position
1445. No trust shall fail because the trustee appointed declines the designation,
unless the contrary should appear in the instrument constituting the trust.

In case of refusal to accept the trust by the trustee, the court will appoint a
trustee
But, if the appointment of the trustee is a material provision, the trustor can
provide that a refusal of the trustee to accept the trust shall result in the
failure or nullification of the same
iii. Obligations of the Trustee (Rule 98 of Rules of Court)
Sec. 1. Where trustee appointed. - A trustee necessary to carry into
effect the provisions of a will or 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.
Sec. 2. Appointment and powers of trustee 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.
Sec. 3. Appointment and powers of new trustee under written
instrument. - When a trustee under a written instrument declines,
resigns, dies, or is 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, rights, 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 alone or jointly with the others.
Sec. 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.
Sec. 6. Conditions included in bond. - The following conditions shall be
deemed to be a 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 of the management and
disposition thereof, and will render such other accounts as the court
may order;
(d) That at the expiration of his trust he will settle his accounts in court
and pay over and deliver all the estate remaining in his hands, or due
from him on such settlement, to the person or persons entitled thereto.
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.
iv. Generally, trustee does not assume personal liability on the trust as to
properties outside the trust estate

When the transaction at hand could have been entered into by a trustee
either as such or in its individual capacity, then it must be clearly indicated
that the liabilities arising there from shall be chargeable to the trust estate,
otherwise they are due from the trustee in his personal capacity (Senguan v.
Phil. Trust Co.)
v. Trustee generally entitled to receive a fair compensation for his services

Under Section 7 of Rule 98 of the Rules of Court, if the compensation of the

trustee is not determined in the instrument creating the trust, his
compensation shall be fixed by the court that appointed him.

c) Beneficiary the person for whose benefit the trust has been created (Art. 1440)

In regard to private trusts, it is not always necessary that the cestui que trust
should be named, or even be in esse at the time the trust is created in his
favor (Abadilla)
Acceptance by beneficiary of gratuitous trust is not subject to the rules for
the formalities of donations

d) The Corpus or the Res

The subject matter of the trust

Tan Senguan & Co. v. Phil. Trust Co., G.R. No. L-38810, 58 Phil. 700, 06
November 1933
Facts: Plaintiff Tan Sen Guan & Co. secured a judgment for a sum of
P21,426 against the Mindoro Sugar Co. of which the Philippine Trust is
the trustee. The plaintiff entered into an agreement with the defendant
Philippine Trust Co. wherein the former assigned, transferred, and sold
to the latter the full amount of said judgment against Mindoro Sugar
Co. together with all its rights thereto and the latter offered
satisfactory consideration thereto. The agreement further stipulated
that upon signing of the agreement, Phil Trust shall pay Tan Sen the
sum of P5000; should the Mindoro Sugar be sold or its ownership be
transferred, an additional P10,000pesos will be paid to Tan Sen upon
perfection of the sale; in case any other creditor of Mindoro Sugar
obtains in the payment of his credit a greater proportion than the price
paid to Tan Sen, the Phil Trust shall pay to the latter whatever sum may
be necessary to be proportioned the claim of the creditor. However, if
the Mindoro Sugar is sold to any person who does not pay anything to
the creditors or pay them equal or less than 70 percent of their claim,
or should the creditors obtain from other sources the payment of their
claim equal to or less than 70 percent, the Phil Trust will only pay to
Tan Sen the additional sum of P10,000 upon the sale or transfer of the
Mindoro Sugar as above stated. The properties of Mindoro Sugar were
later on sold at public auction to the Roman Catholic Archbishop of
Manila and base on the agreement plaintiff Tan Sen brought suit
against defendant Phil Trust for the sum of P10,000.
Issue: Whether or not the defendant is not personally responsible for
the claim of the plaintiff based on the deed of assignment because of

having executed the same in its capacity as trustee of the properties of

the Mindoro Sugar?
Held: There is an implication by the Supreme Court that when a trustee
enters into a contract that gives rise to liability, but there is no clear
indication that he enters into the contract as trustee, then the trustee
would be held individually liable on the liability arising from the
contract: But even if the contract had been authorized by the trust
indenture, the Philippine Trust Company in its individual capacity would
still be responsible for the contract as there was no express stipulation
that the trust estate and not the trustee should be held liable on the
contract in question. In other words, when the transaction at hand
could have been entered into by a trustee either as such or in its
individual capacity, then it must be clearly indicated that the liabilities
arising therefrom shall be chargeable to the trust estate, otherwise
they are due from the trustee in his personal capacity.

Government v. Abadilla, G.R. No. L-21334, 46 Phil. 642, 10 December

1924
Facts: On January 25, 1892, Luis Palad executed a holographic will
granting his wife, Dorothea Lopez, the right of exclusive use and
possession of several parcels of lands in the Province of Tayabas during
her lifetime or until she remarries. The lands shall be donated to the
secondary school in Tayabas upon Dorotheas death or second
marriage. On December 3, 1896, the testator died.
Sometime in 1900, Dorothea married one Calixto Dolendo. On April 20,
1903, the testators collateral heirs brought an action for the partition
of the lands on the ground that Dorothea lost her right over the lands
by reason of her second marriage.
During the pendency of the action, the parties arrived at an agreement
delivering the lands with lot nos. 3464 and 3469 to the Municipality of
Tayabas as trustee while lot no. 3470 was left in the possession of
Dorothea. The testators collateral heirs filed a claim over the lands
contending that the trust instituted in the will was ineffective.
Issue: Whether or not the trust instituted in the will was effective?
Held: Yes. In order that a trust may become effective there must, of
course be a trustee and a cestui que trust. The existence of an
equivalent designated position in the testamentary trust to act as
trustee (i.e., the Civil Governor of Tayabas) complies with the
requirement of a trustee. In regard to private trusts it is not always
necessary the the cestui que trust should be named, or even be in esse

at the time the trust is created in his favor. Thus a devise a father in
trust for accumulation for his children lawfully begotten at the time of
his death has been held to be good although the father had no children
at the time of the vesting of the funds in him as trustee. In charitable
trusts such as the one here under discussion, the rule is still further
relaxed.

Cristobal v. Gomez, G.R. No. L-27014, 50 Phil. 810, 05 October 1927

Facts: Epifanio Gomez owns two parcels of land located in the Jabay,
Municipality of Bacoor, Cavite and a lot located in town of Bacoor,
Cavite. He sold the property with Pacto de Retro to Luis Yangco,
redeemable in five years. The period to redeem expired but Yangco
extended it. Gomez approached Bibiano Banas , a relative, to secure a
loan. The latter only agreed if Gomezs brother Marcelino and sister
Telesfora would also be responsible for the loan.
Marcelino and Telesfora entered into a private partnership in
participation for the purpose of redeeming the property from Yangco.
Epifanio was present when said agreement was discussed and
assented to. The capital consisted of P7000, of which P1500 came from
Marcelino, and P5500 from Telesfora. The agreement provided that the
property redeemed will be placed in the name of Marcelino and
Telesfora, the income, rent, and produce of the property would go to
the two and that the property shall be returned to their brother as soon
as the capital employed have been covered. Epifanio should also
manifest good behavior in the opinion of Marcelino and Telesfora.
Epifanio Gomez dies leaving Paulina Cristobal and their four children.
Meanwhile, Marcelino Gomez continued to possess the property,
improved it, and earned income from it. He acquired exclusive rights
over it when Telesfora conveyed her interest to him. He sold the
property with pacto de retro to Banas, redeemable within five years.
On April 1, 1918, he redeemed the property from Banas.
Paulina and children filed action to recover property from Marcelino.
They claimed that the capital had been covered by the propertys
income, hence, the same should be returned to them. The lower court
granted their petition. Marcelino appealed. Hence the present petition.
Issue: Whether or not there was acceptance by Epifanio of the trust
agreement.
Held: Yes. Acceptance by beneficiary of gratuitous trust is not subject
to the rules for the formalities of donations. Contrary to defendants

claim that the agreement was kept secret from Epifanio, the testimony
of Banas stated that Gomez was present when the arrangement for the
repurchase of the property was discussed. Banas even told Epifanio to
be thankful that the latter was able to recover the property from
Yangco.
Defendants also claim that because Epifanio had not accepted the
donation in a public document, the same is unenforceable. This is
untenable. Epifanio need not accept in accordance with formalities of
donations. The court said that the partnership agreement should be
viewed as an express trust, not as an intended donation.

DBP v. COA, G.R. No. 144516, 422 SCRA 459, 11 February 2004
Facts: The DBP is a government financial institution with an original
charter. The COA is a constitutional body with the mandate to examine
and audit all government instrumentalities and investment of public
funds.
On February 26, 1980, a Trust Indenture was entered into by and
between the DBP and the Board of Trustees of the Gratuity Plan Fund,
vesting in the latter the control and administration of the Fund. The
trustee, subsequently, appointed the DBP Trust Services Department
(DBP-TSD) as the investment manager thru an Investment
Management Agreement, with the end in view of making the income
and principal of the Fund sufficient to meet the liabilities of DBP under
the Gratuity Plan.
In 1983, the Bank established a Special Loan Program availed thru the
facilities of the DBP Provident Fund and funded by placements from the
Gratuity Plan Fund. This Special Loan Program was adopted as part of
the benefit program of the Bank to provide financial assistance to
qualified members to enhance and protect the value of their gratuity
benefits because Philippine retirement laws and the Gratuity Plan do
not allow partial payment of retirement benefits. The program was
suspended in 1986 but was revived in 1991 thru DBP Board Resolution
No. 066 dated January 5, 1991.
Under the Special Loan Program, a prospective retiree is allowed the
option to utilize in the form of a loan a portion of his outstanding equity
in the gratuity fund and to invest it in a profitable investment or
undertaking. The earnings of the investment shall then be applied to
pay for the interest due on the gratuity loan which was initially set at
9% per annum subject to the minimum investment rate resulting from

the updated actuarial study. The excess or balance of the interest

earnings shall then be distributed to the investor-members.
Pursuant to the investment scheme, DBP-TSD paid to the investormembers a total of P11,626,414.25 representing the net earnings of
the investments for the years 1991 and H1992. The payments were
disallowed by the Auditor under Audit Observation Memorandum No.
93-2 dated March 1, 1993, on the ground that the distribution of
income of the Gratuity Plan Fund (GPF) to future retirees of DBP is
irregular and constituted the use of public funds for private purposes
which is specifically proscribed under Section 4 of P.D. 1445.
AOM No. 93-2 did not question the authority of the Bank to set-up the
[Gratuity Plan] Fund and have it invested in the Trust Services
Department of the Bank.[9] Apart from requiring the recipients of the
P11,626,414.25 to refund their dividends, the Auditor recommended
that the DBP record in its books as miscellaneous income the income of
the Gratuity Plan Fund (Fund).The Auditor reasoned that the Fund is
still owned by the Bank, the Board of Trustees is a mere administrator
of the Fund in the same way that the Trust Services Department where
the fund was invested was a mere investor and neither can the
employees, who have still an inchoate interest [i]n the Fund be
considered as rightful owner of the Fund.
In a letter dated 29 July 1996, former DBP Chairman Alfredo C. Antonio
requested then COA Chairman Celso D. Gangan to reconsider AOM No.
93-2. Chairman Antonio alleged that the express trust created for the
benefit of qualified DBP employees under the Trust Agreement[12]
(Agreement) dated 26 February 1980 gave the Fund a separate legal
personality. The Agreement transferred legal title over the Fund to the
Board of Trustees and all earnings of the Fund accrue only to the Fund.
Thus, Chairman Antonio contended that the income of the Fund is not
the income of DBP.
Chairman Antonio also asked COA to lift the disallowance of the
P11,626,414.25 distributed as dividends under the SLP on the ground
that the latter was simply a normal loan transaction. He compared the
SLP to loans granted by other gratuity and retirement funds, like the
GSIS, SSS and DBP Provident Fund.
Issues: Whether or not the income of Gratuity Plan Fund held by the
DBP is in Trust?
Held: A trust is a fiduciary relationship with respect to property which
involves the existence of equitable duties imposed upon the holder of

the title to the property to deal with it for the benefit of another. A trust
is either express or implied. Express trusts are those which the direct
and positive acts of the parties create, by some writing or deed, or will,
or by words evincing an intention to create a trust.
In the present case, the DBP Board of Governors (now Board of
Directors) Resolution No. 794 and the Agreement executed by former
DBP Chairman Rafael Sison and the trustees of the Plan created an
express trust, specifically, an employee's trust. An employee's trust is
a trust maintained by an employer to provide retirement, pension or
other benefits to its employees. It is a separate taxable entity
established for the exclusive benefit of the employees.
Where DBP establishes a pension trust for its officers and employees
and appoints trustees for the fund whereby the trust agreement
transferred legal title over the income and properties of the fund, then
the principal and the income of the fund together constitute the res or
subject matter of the trust. Since the trust agreement established the
fund precisely so that it would eventually be sufficient to pay for the
retirement benefits of DBP officers and employees, then the income
and profits thereof cannot be booked by DBP as its own, and DBP
cannot be directed by COA to treat such income as it own.
5. How Express Trust Terminated
A. Destruction of the Corpus

When the entire trust estate is loss or destroyed, the trust is extinguished
since the underlying proprietary basis no longer exists to warrant any legal
relationship between the trustee and the beneficiary.

B. Revocation by the Trustor

In a revocable express trust, the trustee may simply invoke the revocation or
termination clause found in the deed of trust thereby revoking the trust and
conveying notice thereof to the trustee. Unless there is reserved power to
revoke, the general rule is that an express trust is irrevocable.

C. Achievement of Objective, or Happening of the Condition Provided for in the Trust

Instrument

When the trust instrument provides the objective or the condition upon which
the trust shall be extinguished, say when the trust instrument provides that
full ownership in the trust properties shall be consolidated in the person of
the beneficiary once he reaches the age of majority, the happening of the
condition shall terminate the trust

D. Confusion or Merger of Legal Title and Beneficial Title in the Same Person

When the trustee of an existing trust becomes the beneficiary thereof, or vice
versa, the trust relation is ipso jure extinguished, for it is difficult to see how
a person can owe fiduciary duties to himself.

E. Breach of Trust

When a trustee breaches his duty of loyalty, it would constitute legal basis by
which to terminate the trust
This operates as a renunciation of the trust and the persons interested as
beneficiaries in the property are entitled to maintain an action to declare
their right and remove the unfaithful trustee.
F. Upon the Death of Trustee

Unless otherwise expressly stipulated in the trust instrument, the death, civil
interdiction, insanity or insolvency of the trustee does not necessarily
terminate the trust but a new trustee will be appointed
The reason why a trust does not fail for want of a trustee is that to permit it
to fail for this reason would be contrary to the intention of the trustor in
creating the trust. The trustor is primarily interested in the disposition of the
beneficial interest in the property, and the matter of its administration is a
subsidiary consideration. (Tolentino, at p. 676.)
A trust terminates upon the death of the trustee where the trust is personal
to the trustee in the sense that the trustor intended no other person to
administer it
After Crispulos death, the respondent had no right to retain possession of the
property. At such point, a constructive trust would be created over the
property by operation of law
Where one mistakenly retains property which rightfully belongs to another, a
constructive trust is the proper remedial devise to correct the situation
G. Generally Express Trusts Not Susceptible to Prescription

When there exists an express trust, prescription and laches will run only from
the time the express trust is repudiated
The rule requires a clear repudiation of the trust duly communicated to the
beneficiary
For acquisitive prescription to bar the action of the beneficiary against the
trustee, in an express trust, for the recovery of the property, it must be
shown that:

a) Trustee has performed unequivocal acts of repudiation amounting to

an ouster of the
cestui que trust

b) Such positive acts of repudiation have been made known to the

cestui que trust
c) Evidence thereon is clear and conclusive

Caezo v. Rojas, G.R. No. 148788, 538 SCRA 242, 23 November 2007
Facts: The subject property is an unregistered land with an area of
4,169 square meters situated at Naval, Biliran. In a complaint on 1997,
petitioner Soledad Caezo alleged that she bought such parcel of land
in 1939 from Crisologo Limpiado, although the sale was not reduced
into writing. Thereafter, she immediately took possession of the
property. In 1948, she and her husband left for Mindanao and entrusted
the said land to her father, Crispulo Rojas, who took possession of, and
cultivated the property. In 1980, she found out that the respondent,
Concepcion Rojas, her stepmother, was in possession of the property
and was cultivating the same. She also discovered that the tax
declaration over the property was already in the name of his father.
Respondent asserted that it was her husband who bought the property
from Limpiado, which accounts for the tax declaration being in Crispulo
name. After the hearing, MTC rendered a decision in favor of the
petitioner, making her the real and lawful owner of the land.
Respondent appealed to the RTC of Naval, Biliran, which reversed the
MTC decision on the ground that the action had already prescribed and
acquisitive prescription had set in. However, acting on petitioner
motion for reconsideration, the RTC amended its original decision and
held that the action had not yet prescribed considering that the
petitioner merely entrusted the property to her father. The ten-year
prescriptive period for the recovery of a property held in trust would
commence to run only from the time the trustee repudiates the trust.
The RTC found no evidence on record showing that Crispulo Rojas ever
ousted the petitioner from the property. Petitioner filed a petition for
review with the CA, which reversed the amended decision of the RTC.
The CA held that, assuming that there was a trust between the
petitioner and her father over the property, her right of action to
recover the same would still be barred by prescription since 49 years
had already lapsed since Crispulo adversely possessed the contested
property in 1948.Hence, this petition for review.
Issue: Whether or not the death of Crispulo, Rojas has the right to
retain possession of the property?
Held: NONE. Assuming that such a [trust] relation existed, it
terminated upon Crispulos death in 1978. A trust terminates upon the
death of the trustee where the trust is personal to the trustee in the

sense that the trustor intended no other person to administer it. If

Crispulo was indeed appointed as trustee of the property, it cannot be
said that such appointment was intended to be conveyed to the
respondent or any of Crispulos other heirs. Hence, after Crispulos
death, the respondent had no right to retain possession of the property.
At such point, a constructive trust would be created over the property
by operation of law. Where one mistakenly retains property which
rightfully belongs to another, a constructive trust is the proper
remedial devise to correct the situation.

Torbela v. Spouses Rosario, G.R. No. 140528, 661 SCRA 633, 07

December 2011
Facts: The issue is over a parcel of land inherited by the Torbela
siblings from their parents.
They executed a deed of absolute quitclaim over the property in favor
of Dr. Rosario. Four days after, a TCT was issued in Dr. Rosarios name
covering the property.
Another deed of absolute quitclaim was subsequently executed twelve
days after by Dr. Rosario acknowledging that he only borrowed the lot
from the Torbela siblings and was already returning the same. This
deed was notarized but not immediately annotated.
Dr. Rosario used the land as mortgage for a loan he obtain through DBP
for P70,000.00. He used the proceeds of the loan to build a 4 storey
building which was initially used as a hospital but later converted into a
commercial space. Part was leased to PT&T and the rest to Rosario s
sister who operated the Rose Inn Hotel and Restaurant.
Dr. Rosario fully paid the loan from DBP and the mortgage was
cancelled and ratified by a notary public. However, Dr. Rosario took
another loan from PNB. He later acquired a third loan from Banco
Filipino and bought out the loan from PNB cancelling the mortgage with
PNB. Rosario failed to pay their loan in Banco Filipino and the property
was extrajudicially foreclosed.
Meanwhile, back in 1965, the Torbela siblings sought to register their
ownership over the lot and to perfect their title but couldnt because
the title was still with DBP. They showed as proof the deed of absolute
quitclaim presented executed by Rosario himself. In 1986, they filed a
civil case for recovery of ownership and possession and damages. They
tried to redeem the lot from Banco Filipino but failed. TCT was issued to
Banco FIilipino.

The Torbelas claim they have right over the rents of the building
through accession because they are the land owners.
Issue: Whether or not the cause of action prescribed?
Held: To apply the 10-year prescriptive period, which would bar a
beneficiary's action to recover in an express trust, the repudiation of
the trust must be proven by clear and convincing evidence and made
known to the beneficiary. The express trust disables the trustee from
acquiring for his own benefit the property committed to his
management or custody, at least while he does not openly repudiate
the trust, and makes such repudiation known to the beneficiary or
cestui que trust. For this reason, the old Code of Civil Procedure (Act
190) declared that the rules on adverse possession do not apply to
"continuing and subsisting" (i.e., unrepudiated) trusts. In an express
trust, the delay of the beneficiary is directly attributable to the trustee
who undertakes to hold the property for the former, or who is linked to
the beneficiary by confidential or fiduciary relations. The trustee's
possession is, therefore, not adverse to the beneficiary, until and
unless the latter is made aware that the trust has been repudiated.

Heirs of Tranquilino Labiste v. Heirs of Jose Labiste, G.R. No.

162033, 587 SCRA 417, 08 May 2009
Facts: Epifanio is an heir of Jose Labiste, purchased a land. Before the
execution of the deed of conveyance, Epifanio executed an affidavit
affirming that he and his uncle Tranquilino co-owned the lot because
the money came from them both. Later on it was divided and the heirs
of Tranquilino bought half interest. After the World War, the properties
were destroyed and squatters lived on the land. Petitioner learned that
an heir of the respondent filed for reconstitution.
Issue: Whether or not the Court of Appeals erred in applying the
principles on prescription and the principle of laches because what is
involved in the present case is an express trust?
Held: Yes, the Court of Appeals had erred in the application of the
principles of prescription and the principle of laches because there was
an express trust.
When there exists an express trust, prescription and laches will run
only from the time the express trust is repudiated. The Court has held
that for acquisitive prescription to bar the action of the beneficiary
against the trustee in an express trust for the recovery of the property

held in trust it must be shown that: (a) the trustee has performed
unequivocal acts of repudiation amounting to an ouster of the cestui
que trust; (b) such positive acts of repudiation have been made known
to the cestui que trust; and (c) the evidence thereon is clear and
conclusive. Respondents cannot rely on the fact that the Torrens title
was issued in the name of Epifanio and the other heirs of Jose. It has
been held that a trustee who obtains a Torrens title over the property
held in trust by him for another cannot repudiate the trust by relying
on the registration. The rule requires a clear repudiation of the trust
duly communicated to the beneficiary. The only act that can be
construed as repudiation was when respondents filed the petition for
reconstitution seeking registration only in his name.
The court of appeals erred in applying the principle of Laches because
was is involved in this case is an express trust. The affidavit of Epifanio
is in the nature of a trust agreement. The only act that can be
construed as repudiation was when the respondent filed the petition
for reconstitution in 1993 and since petitioners files their complaint in
1995, their cause has not yet prescribed. However, to recover half of
the property covered by a private document to execute a public deed
of sale.