Report on Trust Article

Report on Trust
Article 1440-1457
Submitted by:
Alcantara,Santiago
Canonizado,Ged
Dizon,Pilar
Encarnacion,Rafael
Glovasa,Imelou
Lincod,Daryl
Rayoso,Sunshine
Serrano,Marianne
Tagala,MarkJoseph
Tayamora,Sherwin
Ysulan,Jenalyn
ReportonTrust(Article14401457) Atty.JosephCerezo
Agency,Trust,Partnership December8,2016
ReportonTrust(Article14401457)
Article1440
ConceptofTrust.
Itisafiduciaryrelationshipbetweenonepersonhavinganequitableownershipin
propertyandanotherowningthelegaltitletosuchproperty,theequitableownership
oftheformerentitlinghimtotheperformanceofcertaindutiesandtheexerciseof
certainpowersbythelatterforthebenefitoftheformer.
CharacteristicsofTrust(Moralesv.CA,G.R.No.117228,June19,1997)
Itisarelationship.
Itisarelationshipoffiduciarycharacter.
tisarelationshipwithrespecttoproperty,notoneinvolvingmerelypersonalduties.
Itinvolvestheexistenceofequitabledutiesimposedupontheholderofthetitletothe
propertytodealwithitforthebenefitofanother.
Itarisesasaresultofamanifestationofintentiontocreatetherelationship.
Partiestoanexpresstrust.
Trustor
Trustee
o Maybeanaturaloralegalentity.
Beneficiary
o Maybeanaturaloralegalentity.
o Itisnotnecessarytothecreationofatrustthatthebeneficiarybenamesor
identifiedorevenbeinexistenceatthetimeofitscreation.
Trustproperty.
Thesubjectmatterofatrustmaybeanypropertyofvaluereal,personal,fundsor
money,orchosesinaction.
Itmustconsistofpropertyactuallyinexistence,inwhichthetrustorhasa
transferableinterestortitle.
Itcannotbeamereexpectancywithoutrightorinterestoramereinterestinthe
performanceofacontractalthoughsuchinterestisinthenatureofapropertyright.
Natureofownershipoftrustee
Thetrustpropertyisownedbytwopersonsatthesametime.
Theownershipoftrusteeisamerematterofformandnominal.
Inlegaltheory,thetrusteeisanowner.
Natureofownershipofbeneficiary.
Thebeneficiarycanonlytransferhisequitabletitletothetrustproperty.
Thebeneficiaryhasnoobligationtothetrust,unlessheisalsoservinginsomeother
capacity.
Characterofofficeoftrustee.
Asaprincipal
2
Asanagent(insomecases)
Asafiduciary
Trustdistinguishedfromotherrelations.
Whatdistinguishesatrustfromotherlegalrelationsistheseparationofthelegaltitle
andtheequitableownershipofthesubjectpropertybetweentwoormorepersons.
Trustv.Bailment
Trustv.Donation
Trustv.Contract
Trustv.Debt
Article1441.Trustsareeitherexpressorimplied.Expresstrustsarecreatedbythe
intentionofthetrustorortheparties.Impliedtrustscomeintobeingbyoperationof
law.
Classificationoftrusts.
1.CreationFromtheviewpointofthecreativeforcebringingthemintoexistence,they
maybeeither:
Expresstrust(Arts.14431446.)oronewhichcancomeintoexistenceonly
bytheexecutionofanintentiontocreateitbythetrustorortheparties;or
Impliedtrust,oronewhichcomesintobeingbyoperationoflaw(Arts.1447
1457;thislattertrustbeingeither:
1. Resultingtrustoroneinwhichtheintentiontocreateatrustisimplied
orpresumedinlaw;or
2. Constructivetrustoroneimposedbylawirrespectiveof,andeven
contraryto,anysuchintentionforthepurposeofpromotingjustice,
frustratingfraud,orpreventingunjustenrichment.Itisotherwise
knowninAmericanlawastrustexmaleficio,trustexdelicto,andde
sontort..
Inotherwords,atrustintentionalinfactisanexpresstrust;oneintentionalinlawisa
resultingtrust;andoneimposedirrespectiveofintentionisaconstructivetrust.
Theclassificationofvoluntaryandinvoluntarytrustsissometimesemployedin
referringtoexpresstrustsandimpliedtrusts.
2.Effectivity.Fromtheviewpointofwhethertheybecomeeffectiveafterthedeatihofthe
trustororduringhislife,theymaybeeither:
Testamentarytrustoronewhichistotakeeffectuponthetrustorsdeath.Itisusually
includedaspartofthewillanddoesnothaveaseparatetrustdeed(Tuazonvs
Caluag,[Unrep.]96Phil981[1995];LorenzovsPosadas,64Phil.353[1937].);or
Tristintervivos(sometimescalledlivingtrust)oroneestablishedeffectiveduring
theownerslife.Thegrantorexecutesatrustdeed,andoncethetrustiscreated,
legaltitletothetrustpropertypassestothenamedtrusteewithdutytoadministerthe
propertyforthebenefitofthebeneficiary.
3
3.Revocability.Fromtheviewpointofwhethertheymayberevokedbythetrustor,they
maybeeither:
Revocabletrustoronewhichcanberevokedorcancelledbythetrustororanother
individualgiventhepower;or
Irrevocabletrustoronewhichmaynotbeterminatedduringthespecifiedtermofthe
trust.
Whetheratrustisrevocableorirrevocabledependsonthewordingsorlanguageused
inthecreationofthetrust.Itwillbepresumedrevocableunlessthecreatorhas
expressedacontraryintentioninthetrustdeed.
Elementsofexpresstrust.
Basically,theseelementsinclude:
1.Acompetenttrustorandtrustee;
2.Anascertainabletrustres;and
3.Sufficientlycertainbeneficiaries
Thetrusteemustalsohavesomepowerofadministrationotherthanameredutyto
performacontractalthoughthecontractisforsomethirdpartybeneficiary.A
declarationoftermsisessentialandthesemustbestatedwithreasonablecertaintyin
orderthatthetrusteemayadminister,andthatthecourt,ifcalleduponsotodo,may
enforcethetrust.(MindanaoDevelopmentAuthorityvs.CourtofAppeals,113
SCRA429[1982].)Sincethetrusteetakestitletopropertyandadministersit,it
followsthathemustbecapableofowningproperty.
Considerationisnotrequiredtoestablishatrust.
Article1442.ThePrinciplesofthegenerallawoftrusts,insofarastheyarenotin
conflictwiththisCodeofCommerce,theRulesofCourtandspeciallawsarehereby
adopted.
Principlesofthegenerallawoftrustsadopted.
ThisprovisionissimilartoArticle1432whichadoptstheprincipleofestoppelasknown
inAmericanjurisprudence.ThisarticleincorporatesalargepartofAmericanlawon
trustsandtherebythePhilippinelegalsystemwillbeamplifiedandwillberenderedmore
suitedtoajustandequitablesolutionofmanyquestions(ReportoftheCode
Commission,p.60;see24Roa,Jr.vs.CourtofAppeals,123SCRA3[1983],under
Art,1456.)
PursuanttoArticle1442,ithasbeenheldthatthequestionofwhethertheproceedsfrom
thesaleofpropertyheldintrustconstituteprofitsornotwithinthepurviewofthe
internalrevenuelawsdependsupontheprovisionsofthelatter,regardlessofthewillof
thetrustor.(Perezvs.Araneta,4SCRA430[1962].)
4
Atrustoraprovisioninthetermsofatrustwouldbeinvalidifitsenforcementisagainst
thelaweventhoughitsperformancedoesnotinvolvethecommissionofacriminalor
tortiousact.Itlikewisemustfollowthatwhatthepartiesarenotallowedtodoexpressly
isonethattheyalsomaynotdoimpliedlyas,forinstance,intheguiseofaresultingtrust.
(HeirsofL.Yapvs.CourtofAppeals,312SCRA603[1999].)
Terminationofexpresstrust
1.Expirationofperiodfixed.Ordinarily,atrustinstrumentstatestheterminationofdateof
thetrustortheevent(e.g.whenthebeneficiaryreachesacertainage)onwhichthetrustor
wishesittoterminate.
2.Accomplishmentofpurpose.Ifthetrustpurpose(e.g.educationofachild)isfulfilled
beforethedate,thetrustwillterminate;otherwise,onthedatespecifiedevenwhenthe
purposehasnotyetbeenfulfilled.Ofcourse,whetherornotadateisexpresslystated,atrust
willterminatewhenitspurposehasbeenfulfilled,orhasbecameunlawfulorimpossible.
3.Mutualagreementofbeneficiaries.Undersomecircumstances,thetrustmayterminate
bymutualagreementofallthebeneficiaries.
4.Exerciseofpowertoterminate.Underthetermsofthetrustdeed,thetrustor,trustee,or
someoneelsemayhavethepowertoterminatethetrust.
Uponterminationofatrust,anybalanceoffundsrevertstothetrustororisdisposedofin
accordancewiththeinstructionscontainedinthetrust.Ifthetrustdoesnotmakeany
provision,theycanbedistributedtothoseentitledtheretounderthelaw.
Article1443.Noexpresstrustsconcerninganimmovableoranyinterestthereinmaybe
provedbyparolevidence.
Rule130
B.DOCUMENTARYEVIDENCE
3.ParolEvidenceRule
Section9.Evidenceofwrittenagreements.Whenthetermsofanagreementhavebeen
reducedtowriting,itisconsideredascontainingallthetermsagreeduponandtherecanbe,
betweenthepartiesandtheirsuccessorsininterest,noevidenceofsuchtermsotherthanthe
contentsofthewrittenagreement.
However,apartymaypresentevidencetomodify,explainoraddtothetermsofwritten
agreementifheputsinissueinhispleading:
(a)Anintrinsicambiguity,mistakeorimperfectioninthewrittenagreement;
5
(b)Thefailureofthewrittenagreementtoexpressthetrueintentandagreementofthe
partiesthereto;
(c)Thevalidityofthewrittenagreement;or
(d)Theexistenceofothertermsagreedtobythepartiesortheirsuccessorsininterestafter
theexecutionofthewrittenagreement.
Theterm"agreement"includeswills.
Article1444.Noparticularwordsarerequiredforthecreationofanexpresstrust,it
beingsufficientthatatrustisclearlyintended.
CivillawexpertTolentinofurtherelucidatedontheexpresstrust:

Noparticularformofwordsorconductisnecessaryforthemanifestationofintentionto
createatrust.Itispossibletocreateatrustwithoutusingthewordtrustortrustee.
Conversely,themerefactthatthesewordsareuseddoesnotnecessarilyindicateanintention
tocreateatrust.Thequestionineachcaseiswhetherthetrustormanifestedanintentionto
createthekindofrelationshipwhichtolawyersisknownastrust.Itisimmaterialwhetheror
notheknowsthattherelationshipwhichheintendstocreateiscalledatrust,andwhetheror
notheknowstheprecisecharacteristicsoftherelationshipwhichiscalledatrust.(Heirsof
MaximoLabanonvs.HeirsofConstancioLabanon,G.R.No.160711,August14,2004)
Article1445.Notrustshallfailbecausethetrusteeappointeddeclinesthedesignation,
unlessthecontraryshouldappearintheinstrumentconstitutingthetrust.
Art.1445governscasesinexpresstrustswherethetrusteedeclinesthetrust.
Recallthatthisarticleispartoftheprovisionsonexpresstrusts,sointhiscase,atrustorhas
expresslydesignatedapersontobethetrusteeofthetrustandthesaiddesignatedperson,
doesnotwantorcannotassumetheresponsibility,andso,declinestoaccept.
Asarule,acceptanceofatrustbythetrusteedesignatedisnecessarytochargehimwith
theofficeofthetrusteeandadministrationofthetrust
However,thedesignatedtrusteesacceptanceofthetrustisnotnecessaryforthevalidity
orexistenceofthetrust.Thisisthegeneralrule.
The trust is still created even though the trustee refuses to be such, unless trustees
acceptanceismadearequisiteforthevalidityofthetrust,intheinstrumentcreatingthe
trust.
IfthedesignatedTrusteedeclinesthetrust,the courtsmayappointatrustee tofillthe

office.
6
TheappointmentofthetrusteeisdonebytheRTC:
(a.)wherethewillwasallowed(ifthetrustiscreatedpursuanttoawill);or
(b.)wherethepropertyorportionthereofaffectedbythetrustissituated(iftrustis
createdbyawritteninstrumentotherthanawill)
Whatisthelegaleffectofdeclination?Therefusalbythetrusteefreeshimfromanylegal
orequitabledutyorliabilityunderthetrust.
The trustee who accepts does not assume personal liability on the trust as to properties
outsidethetrustestate
Afteracceptance bythetrustee, renunciation ofatrustmay onlybeby resignation or

retirementunderthefollowingconditions:
(a.)withcourtapproval;
(b.)withagreementofthebeneficiaries;
(c.)satisfactionofalllegalliabilitiesofthetrusteeinconnectionwiththetrust
ObligationsoftheTrustee
notspecifiedunderthecivilcode,butprovidedunderRule98oftheRevisedRulesofCourt
trusteemustfileabondwiththeappointingcourtbeforeenteringintohisduties.(Sec.5,
R98,RevisedRulesofCourt)
thebondisconditionedonthefollowing(Sec.6,R98,RevisedRulesofCourt):
(a.)Trusteewillmakeatrue inventory ofrealandpersonalpropertiesbelongingto

himastrustee
(b.)Managementanddispositionoftheestateaccordingtolaw;faithfuldischargeof
trust
(c.)Render,underoath,atleastonceayear,trueaccountofhismanagement
(d.)Settlementofaccountsoftrusteeuponexpirationofthetrust
Note:
trusteeisgenerallyentitledtofaircompensation(Sec.7,R98,RevisedRulesofCourt)
ifthecompensationisnotdeterminedbytheinstrumentcreatingthetrust,thecompensation
maybefixedbytheappointingcourt.
7
Article1446.Acceptancebythebeneficiaryisnecessary.Nevertheless,ifthetrust
imposesnoonerousconditionuponthebeneficiary,hisacceptanceshallbepresumed,if
thereisnoprooftothecontrary.
Article1446dealswithacceptanceofthetrustbythebeneficiary
Asageneralrule,acceptanceofthetrustbybeneficiaryisnecessaryforitsvalidity
(recall:thetrustorhimselfmaybethebeneficiaryofthetrust)
WhenAcceptancebyBeneficiaryPresumed:
Ifthetrustimposesnoonerousconditionuponthebeneficiary,acceptancebybeneficiary
ispresumedifthereisnoprooftothecontrary
Ifthetrustimposesanonerouscondition,acceptancecannotbepresumed
Readtogether,Arts.1445and1446thusgiveustwooftherequisitesforthevalidityofa
trust:
(a.)Acceptanceofthetrustbythetrustee;and
(b.)Acceptanceofthetrustbythebeneficiary
HowExpressTrustsTerminated:
(a.)DestructionoftheCorpuslossoftheentiretrustestate(thecorpus/subjectmatteror
bodyofthetrustthepropertyconstitutingthetrust,extinguishesanylegalrelationship
betweentrusteeandbeneficiary
(b.)RevocationbyTrustorinrevocableexpresstrusts,thetrustormaysimplyinvokethe
revocationorterminationclause.(notethatunlessthepowertorevokehasbeenreserved,
generalruleisthatexpresstrustsareirrevocable)
(c.)Happeningofconditionprovidedforextinguishmentor achievementofobjective of
trustwhenthetrustprovidesconditionsoreventsthatwillterminateit,theachievementor
happeningterminatesthetrust
(d.) Merger of Legal and Beneficial Title Trustee of an existing trust becomes the
beneficiarythereoforviceversa.Apersoncannotowefiduciarydutiestohimself.
(e).BreachofTrustbreachofloyaltyconstitutesrenunciationoftrusteeandbeneficiaries
maymaintainanactiontoremovetheunfaithfultrustee
8
(f.) Death of Trustee Unless expressly stipulated, death, insanity, insolvency, or civil
interdictiondoesnotnecessarilyterminatethetrust.Anewtrusteewillbeappointed
Article1447.Theenumerationofthefollowingcasesofimpliedtrustdoesnotexclude
othersestablishedbythegenerallawoftrust,butthelimitationlaiddowninArticle
1442shallbeapplicable.
Articles1448to1456oftheCivilCodeenumerateimpliedtrusts,butthelistaccordingto
Article1447isnotexclusiveofotherswhichmaybeestablishedbythegenerallawontrusts
solongasthelimitationslaiddowninArticle1442areobserved,thatis,theyarenotin
conflictwiththeNewCivilCode,theCodeofCommerce,theRulesofCourtandspecial
laws.(CabacunganvsLaigo,G.R.175073,2011)
Conceptofimpliedtrust
Impliedtrusts,alsocalledtrustsbyoperationoflaw,indirecttrustsand
involuntarytrusts,arisebylegalimplicationbasedonpresumedintentionofthe
parties,oronequitableprinciplesindependentoftheparticularintentionofthe
parties.
Theyarethosewhich,withoutbeingexpress,arededuciblefromthenatureofthe
transactionasmattersofintentor,independentlyoftheparticularintentionofthe
partiesasbeinginferredfromthetransactionbyoperationoflawbasicallybyreason
ofequity.(CabacunganvsLaigo,G.R.175073,2011)
Classificationofimpliedtrusts
1.Constructivetrustatrustwhicharisescontrarytointentionandininvitum,againstone
who,byfraud,actualorconstructive,byduressorabuseofconfidence,bycommissionof
wrong,orbyanyformofunconscionableconduct,artificeorconcealment,orquestionable
means,orwhoinanywayagainstequityandgoodconscience,eitherhasobtainedorholds
thelegalrighttopropertywhichheoughtnot,holdandenjoy;characterizedasfrauddefying
trust.
Itissubstantiallyanappropriateremedyagainstunjustenrichment,thatitshouldbereturned
bythepersonholdingit.(SumaoangvsJudge,RTCBr31,Guimba,NEcija)
IllustratedinArticles1450,1454,1455,1456
2.Resultingtrustsarisefromthenatureofcircumstancesoftheconsiderationinvolvedin
atransactionwherebyonepersonbecomesinvestedwithlegaltitle,butisobligatedinequity
toholdhistitleforthebenefitofanother.
Itisbasedontheequitabledoctrinethatvaluableconsideration,andnotthelegaltitle,is
determinativeofequitabletitleorinterestandisalwayspresumedtohavebeencontemplated
bytheparties.(CabacunganvsLaigo,G.R.175073,2011)
9
IllustratedinArticles1448,1449,1451,1452,1453
Express,impliedtrustscompared
1.Creationoftrust:Expresstrustscreatedbytheintentionofthetrustorandparties;
impliedtrustscomeintobeingbyoperationoflaw.
2.Proofoftrust:Expresstrustsconcerningimmovablepropertycannotbeprovedbyparol
evidence;impliedtrustmaybeprovedbyoralevidence.
3.Repudiationoftrust:Expressrepudiationmadeknowntobeneficiaryrequiredtoenforce
it;impliedtrustneednorepudiation,unlessthereisconcealmentofthefactgivingrisetothe
trust.
4.Existenceoffiduciaryrelations:Trusteeandbeneficiarylinkedbyconfidentialrelation
inexpresstrust;neitherapromisenoranyfiduciaryrelationtospeakofinconstructivetrust.
(DeLeon,9thedition2014)
Article1448.Thereisanimpliedtrustwhenpropertyissold,andthelegalestateisgranted
toonepartybutthepriceispaidbyanotherforthepurposeofhavingthebeneficial
interestoftheproperty.Theformeristhetrustee,whilethelatteristhebeneficiary.
However,ifthepersontowhomthetitleisconveyedisachild,legitimateorillegitimate,of
theonepayingthepriceofthesale,notrustisimpliedbylaw,itbeingdisputablypresumed
thatthereisagiftinfavorofthechild.
PurchaseMoneyResultingTrust(Art.1448)
akindofimpliedresultingtrust
createdinordertoeffectuatewhatthelawpresumestohavebeentheintentionofthe
partiesinthecircumstanceswhenpropertyissold,andthelegalestateisgrantedtoone
partybutthepriceispaidbyanotherpartyforthepurposeofhavingthebeneficial
interestoftheproperty
Requisites:
a. Anactualpaymentofmoney,propertyorservicesoranequivalent,constitutingvaluable
consideration;and
b. Suchconsiderationmustbefurnishedbytheallegedbeneficiaryofaresultingtrust.
Exceptions:
a. WhereApaysthepurchasemoneyandtitleisconveyedbyabsolutedeedtoAschildor
toapersontowhomAstandsinlocoparentisandwhomakesnoexpresspromise,atrust
doesnotresult,thepresumptionbeingthatagiftwasintended;
b. Whereanactualcontraryintentionisproved;and
c. Wherethepurchaseismadeinviolationofanexistingstatuteandinevasionofits
expressprovision,notrustcanresultinfavorofthepartywhoisguiltyoffraud.
10
Art.1449.Thereisalsoanimpliedtrustwhenadonationismadetoapersonbutitappears
thatalthoughthelegalestateistransmittedtothedonee,heneverthelessiseithertohave
nobeneficialinterestoronlyapartthereof.
Art.1450.Ifthepriceofasaleofpropertyisloanedorpaidbyonepersonforthebenefit
ofanotherandtheconveyanceismadetothelenderorpayortosecurethepaymentofthe
debt,atrustarisesbyoperationoflawinfavorofthepersontowhomthemoneyisloaned
orforwhomitsispaid.Thelattermayredeemthepropertyandcompelaconveyance
thereoftohim.
Purchasewithborrowedfunds:
1.TrustinfavorinfavorofLENDER
Gen.Rule:Nortrustinfavorofthelender
2.TrustinfavorinfavorofBorrower
When:
Moneyisborrowedtopurchaseproperty
Conveyanceismadetothelendertosecuretheloan
ThereisanimpliedTrustbyoperationoflaw.
Art.1451.Whenlandpassesbysuccessiontoanypersontoanypersonandhecausesthe
legaltitletobeputinthenameofanother,atrustisestablishedbyimplicationofthelaw
forthebenefitofthetrueowner.
Case:CustodiovCasiano
11
FACTS:Thereareonebrotherandthreesisterswhoagreedthatthetitleofthelandwhichthey
inheritedfromtheirfatherberegisteredinthenameoftheirbrotherCiriacoCustodio.Thethree
sistersaftertheregistrationofthelandtookpossessionoftheland.
After25years,thechildrenofCiriacointendedtoselltheland,thusthechildrenofthethree
sistersinstitutedanactionbeforethecourttoasserttheirrightovertheland.RTCrendered
decisiondeclaringtheplaintiffsandthedefendantsarecoownersoftheland.TheCourtof
AppealsreversedthedecisionoftheRTC.
ISSUE:WhetherornotCiriacoheldthetitleofthelandinatrustcapacity.
HELD:TheCourtdecidedthatCiriacoisonlyatrusteeoftheland.Theappellantsareentitledto
theirproratasharesnotwithstandingthefactthatthecertificateoftheregistrationofthelandis
inhisname.
Art.1452.Iftwoormorepersonsagreetopurchasepropertyandbycommonconsentthe
legaltitleistakeninthenameofoneofthemforthebenefitofall,atrustiscreatedby
forceoflawinfavouroftheothersinproportiontotheinterestofeach.
Case:MiguelOssorioFoundationInc[MJOPFI]v.CourtofAppeals
FACTS:MJOPFIisanonstock,nonprofitcorporationorganizedforthepurposeofholding
titletoandadministeringtheEmployeesTrustFund,establishedforthebenefitoftheemployees
ofVMCemployees.It,alongwithVMCandVFCboughtaMadrigalBusinessParklotand
throughanotarizedMemorandumAgreementagreedthattheyarecoownersofthepropertyand
thattheownershiparestatedasMJOPFI49.59%,VMC32.23%,VFC18.18%andtheyhavea
commonconsentthatthelottheycoownedshallberegisteredinthenameofVMConly.
Whenthelotissold,VMCissubjectedtoawithholdingtaxofP6,125,625outofwhichthe
amountofP3,037,500isshoulderedbyMJOPFIonaccountofits49.59ownershipthereof.
LaterMJOPFIwroteBIR,claimingforarefundoftaxiterroneouslypaidowingtothefactthat
EmployeesTrustitrepresentsisexemptedfromincometax,consequentlyitisexemptedfrom
withholdingtax.ButBIRisnotconvincedanditfailstoactonit.BothCTAandCAdeniesthe
appeals.
ISSUE:WhethertheMJOPFIisestoppedfromclaimingthattheEmployeesTrustFundisthe
beneficialownerof49.59%ofMBPlotandVMCmerelyholds49.59%intrustforEmployees
TrustFund.
IFpetitionerorEmployeesTrustFundisnotestoppedwhethertheyhavesufficientlyestablished
thattheEmployeesTrustisthebeneficialownerof49.59%oftheMBPlotandthusentitledto
taxexemptionforitsshareintheproceedsofthesaleoftheMBPlot.
12
HELD:TheCourtgrantsthepetition.Thelawexpresslyallowsacoowner[firstcoowner]of
aparceloflandtoregisterhisproportionateshareinthenameofhiscoownerinwhosename
theentirelandisregistered.
ThereforetheCourtdecidedthatthepetitionerisentitledtoataxrefundofP3,037,500whichis
erroneouslypaidinthesaleofMBPlot.TheCIRisdirectedtorefundtheMJOPFIastrusteeof
theEmployeesTrustFundintheamountofP3,037,500representingincometaxerroneously
paid
ART.1453.Whenpropertyisconveyedtoapersoninrelianceuponhisdeclaredintention
toholditfor,ortransferittoanotherorthegrantor,thereisanimpliedtrustinfavorof
thepersonwhosebenefitiscontemplated.
TRUSTisbasedonthePROMISEorREPRESENTATIONofthegranteeto:
Holdthepropertyconveyedfor,OR
Transferittoanotherorthegrantor.
TheruleinthisArticleisfoundedupon EQUITY particularlywhereonthe FAITH ofthe

agreementorunderstanding,thegranteeisenabledtogainanadvantageinthepurchaseofthe
property or where the consideration or part thereof has been furnished by or for another.
(RosariovsCourtofApprals,310SCRA464(1999)
Article1453wouldapplyifthepersonconveyingthepropertydidnotexpresslystatethathewas
establishingthetrust.(CuaycongvsCuaycongm21SCRA1192(1976)
ART. 1454. If an absolute conveyance of property is made in order to secure the

performanceofanobligationofthegrantortowardthegrantee,atrustbyvirtueoflawis
established.Ifthegrantoroffersthefulfillmentoftheobligationwhenitbecomesdue,he
maydemandthereconveyanceofthepropertytohim.
Ordinarily,thecreditorwillrequiretheexecutionbythedebtorofamortgage(Art.2124)ora
pledge (Art.2093)as securityforthefulfillmentofthelatters obligation.Inthis case,the
mortgageeorpledgeeDOESNOTbecomesatrustee.
13
BUT if an absolute conveyance of property is made instead in order to guarantee the

performanceofanobligationofthegrantortowardthegrantee,animpliedtrustiscreatedby
operationoflawforthebenefitofthegrantor.
Article1455.Whenanytrustee,guardianorotherpersonholdingafiduciaryrelationship
usestrustfundsforthepurchaseofpropertyandcausestheconveyancetobemadetohim
ortoathirdperson,atrustisestablishedbyoperationoflawinfavorofthepersonto
whomthefundsbelong.
Therulestandsonthemoralobligationtorefrainfromplacingonesselfinpositionswhich
ordinarilyexciteconflictsbetweenselfinterestandintegrity.Itseekstoremovethetemptation
thatmightariseoutofsucharelationtoserveonesselfinterestattheexpenseofonesintegrity
and duty to another, by making it impossible toprofit byyielding to temptation. It applies
universallytoallwhocomewithinitsprinciple.(Severinovs.Severino,44Phil.343)
UseofTrustFunds
Thisisaconstructivetrustbecausethepurposeistopreventunjustenrichment.Atrustee
shouldnotprofitoutofthehandlingofatrustestate.
Rule:Wheremoneyheldupontrustismisappliedbythetrusteeandplacedintoanunauthorized
investmentinpropertyofanynature,theinvestmentthusmade,intheabsenceofabonafide
ownershipbyathirdperson,maybetreatedbythecestuiquetrustasmadeforhisbenefit.
Example
Anagentusinghisprincipalsmoneypurchaseslandinhisownname.Healsoregistersitunder
hisname.Here,hewillbeconsideredonlyatrustee,andtheprincipalisthebeneficiary.The
principalcanbringanactionforconveyanceofthepropertytohimself,solongastherightsof
innocentthirdpersonsarenotadverselyaffected.(Camachovs.Mun.ofBaliwag,28Phil.466)
ReasonsfortheRule
(a) Fiduciaryortrustrelations
(b) Estoppel
(c) Toremovethetemptationtoplaceselfinterestaboveallotherthings,andattheexpense
ofonesintegrityanddutytoanother.(Severinovs.Severino,44Phil.343)
Cases
SingJocovs.Sunyantung,etal.43Phil589
Facts:Atrustedemployeetowhomconfidentialmattersconcerningthepurchaseofahacienda
weredisclosed,offeredandsucceededinbuyingthehaciendainthenameofhiswifeandnotfor
hisemployer,whentheoptiontobuywasgiventotheemployer.
Issue:Cantheemployersuehisemployeefordamages?
Held:Theactoftheemployeeconstitutedabreachofthetrustreposedinhimandhethereby
becomesliableforthedamagescausedtohisemployer.
14
Escobarvs.Locsin74Phil.86
Facts:Theownerofaparceloflandwasilliterateandcouldnotprosecuteherclaimtosuchland
inthecadastralproceedings,sosherequesteddefendanttohelpher.Defendantcommitteda
breachoftrustbyclaimingthelandforhimselfandthelandwasadjudicatedinhisfavor.
Issue:Mayhebeorderedtoconveythelandtotherealowner?
Held:TheCourtheldthatatrustwascreatedbetweenplaintiffanddefendant,anddefendantwas
orderedtoreconveythelandtoplaintiff.
Article1456.Ifpropertyisacquiredthroughmistakeorfraud,thepersonobtainingitis,
byforceoflaw,consideredatrusteeofanimpliedtrustforthebenefitofthepersonfrom
whomthepropertycomes.
ConstructiveTrust
Createdbylawwhereapartyacquiresthroughmistakeorfraudalegaltitletopropertyto
whichanotherhasabetterright.
Infavoroftheaggrievedpartywhoistrulyentitledtoitorhissuccessorsininterest,and
grantstothelattertherighttorecoverhisortheirtitleoverthepropertybywayof
reconveyancewhilethesamehasnotyetpassedtoaninnocentpurchaserforvalue,in
keepingwithprimaryprincipleoflawandequitythatoneshouldnotunjustlyenrich
himselfattheexpenseofanother.(PhilippineNationalBankvs.CourtofAppeals,217
SCRA347)
PhilippineNationalBankvs.CourtofAppeals,217SCRA347
FACTS:MATAisaprivatecorporationengagedinprovidinggoodsandservicestoshipping
companies.Since1966,ithasactedasamanningorcrewingagentforseveralforeignfirms,one
ofwhichisStarKistFoods,Inc.,USA(StarKist).Aspaymentforitsservices,StarKist,through
PNB,paidMATAamountingto$1,400.AntherpaymentwaserroneouslyeffectedbyPNBto
MAtaamountingto$14,000.
ISSUE:WhetherornotbasedonaconstructivetrustunderArticle1456oftheCivilCode,PNB
hasarighttorecoverthesaidamountiterroneouslycreditedtorespondentMata
RULING:Whilepetitionermayindeedopttoavailofanactiontoenforceaconstructivetrustor
thequasicontractofsolutioindebiti,ithasbeendeprivedofachoice,forprescriptionhas
effectivelyblockedquasicontractasanalternative,leavingonlyconstructivetrustasthefeasible
option.
UnderAmericanLaw,acourtofequitydoesnotconsideraconstructivetrusteeforallpurposes
asthoughhewereinrealityatrustee;althoughitwillforcehimtoreturntheproperty,itwillnot
imposeuponhimthenumerousfiduciaryobligationsordinarilydemandedfromatrusteeofan
expresstrust.21Itmustbeborneinmindthatinanexpresstrust,thetrusteehasactivedutiesof
managementwhileinaconstructivetrust,thedutyismerelytosurrendertheproperty.
15
Inthecaseofaconstructivetrust,asinthecaseofquasicontract,arelationshipis"forced"by
operationoflawupontheparties,notbecauseofanyintentionontheirpartbutinorderto
preventunjustenrichment,thusgivingrisetocertainobligationsnotwithinthecontemplationof
theparties.
Whatmustbeallegedinacomplaint?
Allthatmuchbeallegedinthecomplaintaretwo(2)facts:
(a) Thattheplaintiffwastheowneroftheproperty
(b) Thatthedefendanthadillegallydisposedhimofthesame.
NOTE:Thecreationofaconstructivetrustisanappropriateremedyagainstunjust
enrichment.
Article1457.Animpliedtrustmaybeprovedbyoralevidence.
ProofofImpliedTrust
(a) Animpliedtrust,whetherinvolvingrealtyorpersonalty,maybeprovedbyoralevidence
toavoidunjustenrichmentbytheformalholderofpropertyortitle,theveryevilthe
equitabledoctrineofimpliedtrustwasdevisedtoremedy.
(b) AnimpliedtrustcannotbeestablishedcontrarytotherecitalsofaTorrensTitle,upon
vagueandinconclusiveproof.
(c) Thedoctrineofimpliedtrustfindsnoapplicationwheretherearenoprovenfactsto
supportit.
(d) The bare existence of confidential relation between grantor and grantee does not,
standingalone,raisethepresumptionoffraud.
OralEvidenceforTrustMustBeTrustworthy
Salaovs.SalaoL26699,March16,1976
Facts: ThespousesManuelSalaoandValentinaIgnacioofBarrioDampalit,Malabon,Rizal
begotfourchildrennamedPatricio,Alejandra,Juan(Banli)andAmbrosia.ManuelSalaodied.
His eldest son, Patricio, died in 1886 survived by his only child, Valentin Salao. After
Valentinasdeath,herestatewasadministeredbyherdaughterAmbrosia.
ThedocumentaryevidenceprovesthatpriortothedeathofValentinaIgnaciohertwochildren,
JuanY.Salao,Sr.andAmbrosiaSalao,securedaTorrenstitleintheirnamesforafortyseven
hectarefishpond.
ItwasallegedinthesaidcasethatJuanY.Salao,SrandAmbrosiaSalaohadengagedinthe
fishpondbusiness.Wheretheyobtainedthecapitalisnotshowninanydocumentaryevidence.
Accordingtotheplaintiff,ValentinandAlejandrawereincludedinthatjointventure,thatthe
fundsusedweretheearningsofthepropertiessupposedlyinheritedfromManuelSalao,andthat
16
thoseearningswereusedintheacquisitionoftheCalunuranfishpond.Thereisnodocumentary
evidencetosupportthattheory.
TheheirsofValentinarenowclaiming1/3interestonthesaidfishpondandarguedonthetheory
thatthefishpondwasheldintrustforValentinbyJuanandAmbrosia.Thiswascategorically
deniedbytheheirsofJuan.TheyarguedthatJuanandAmbrosiawerethesoleownersofsaid
fishpondasshownintheTorrenstitleissued.
Held:Impliedtrustcomeintobeingbyoperationoflaw.Impliedtrustsarethosewhich,without
beingexpressed,arededuciblefromthenatureofthetransactionasmattersofintent,orwhich
aresuperinducedonthetransactionbyoperationoflawasmatterofequity,independentlyofthe
particularintentionoftheparties.
Intheinstantcase,plaintiffspleadingsandevidencecannotbereliedupontoproveanimplied
trust.Theyfailedtomeasureuptotheyardstickthatatrustmustbeprovenbyclear,satisfactory
andconvincingevidence.Itcannotrestonvagueanduncertainevidenceoronloose,equivocal
orindefinitedeclarations(DeLeonvs.MoloPeckson,116Phil.1267,1273).
Trustandtrustee;establishmentoftrustbyparolevidence;certaintyofproof.Wherea
trustistobeestablishedbyoralproof,thetestimonysupportingitmustbesufficientlystrong
toprovetherightoftheallegedbeneficiarywithasmuchcertaintyasifadocumentproving
thetrustwereshown.Atrustcannotbeestablished,contrarytotherecitalsofaTorrenstitle,
uponvagueandinconclusiveproof.(Syllabus,Suarezvs.Tirambulo,59Phil.303).
Trusts;evidenceneededtoestablishtrustonparoltestimony.Inordertoestablishatrustin
realpropertybyparolevidence,theproofshouldbeasfullyconvincingasiftheactgiving
risetothetrustobligationwereprovenbyanauthenticdocument.Suchatrustcannotbe
establishedupontestimonyconsistinginlargepartofinsecuresurmisesbasedonancient
hearsay.(Syllabus,SantaJuanavs.DelRosario50Phil.110).
Theforegoingrulingsaregoodunderarticle1457oftheCivilCodewhich,asalreadynoted,
allowsanimpliedtrusttobeprovenbyoralevidence.Trustworthyoralevidenceisrequiredto
proveanimpliedtrustbecause,oralevidencecanbeeasilyfabricated.
Ontheotherhand,aTorrenstitleisgenerallyaconclusiveoftheownershipofthelandreferred
totherein.AstrongpresumptionexiststhatTorrenstitleswereregularlyissuedandthattheyare
valid.TherealpurposeoftheTorrenssystemis,toquiettitletoland.
TherewasnoresultingtrustinthiscasebecausethereneverwasanyintentiononthepartofJuan
Y.Salao,Sr.,AmbrosiaSalaoandValentinSalaotocreateanytrust.Therewasnoconstructive
trustbecausetheregistrationofthetwofishpondsinthenamesofJuanandAmbrosiawasnot
vitiatedbyfraudormistake.Thisisnotacasewheretosatisfythedemandsofjusticeitis
necessarytoconsidertheCalunuranfishpondbeingheldintrustbytheheirsofJuanY.Salao,
Sr.fortheheirsofValentinSalao.
17
18

Report on Trust Article

Загружено:

Сведения о документе

Оригинальное название

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

Report on Trust Article

Загружено:

Авторское право:

Доступные форматы

Report on Trust

IfthedesignatedTrusteedeclinesthetrust,the courtsmayappointatrustee tofillthe

Afteracceptance bythetrustee, renunciation ofatrustmay onlybeby resignation or

(a.)Trusteewillmakeatrue inventory ofrealandpersonalpropertiesbelongingto

TheruleinthisArticleisfoundedupon EQUITY particularlywhereonthe FAITH ofthe

ART. 1454. If an absolute conveyance of property is made in order to secure the

BUT if an absolute conveyance of property is made instead in order to guarantee the

Вам также может понравиться