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TRUSTSMEMORYAID
TRUSTSMEMORYAID
CHARACTERISTICS OF TRUST
1. It is a relationship;
2. It is a relationship of fiduciary character;
3. It is a relationship with respect to property, not one involving merely personal
duties;
4. It involves the existence of equitable duties, imposed upon the holder of the
title of the property to deal with it for the benefit of another;
5. It arises as a result of a manifestation of intention to create the relationship.
CO-OWNERSHIP AS A TRUST
A co-ownership is a form of a trust, with each co-owner being a trustee for
each of the others.
PARTIES TO A TRUST
1. Trustor or the person who creates or established the trust;
2. Trustee or the person who takes and holds the legal tile to the trust property,
for the benefit of another, with certain powers and subject to certain duties;
3. Beneficiary or cestui que trust or the person has an equitable interest in the
property and enjoys the benefit of the administration of the trust by the
trustee
CLASSIFICATION OF TRUST
From the viewpoint of whether it becomes effective after the death of the trustor or
during his life:
1. Testamentary trust
2. Trust inter vivos (sometimes called “living trusts”)
From the viewpoint of the creative force bringing it into existence:
1. Express trust – which can come into existence only by the manifestation of
an intention to create it by the one having legal and equitable dominion over
the property made subject to it;
2. Implied trust – which comes into existence either through implication of an
intention to create a trust as a matter of law or through the imposition of the
trust irrespective of and even contrary to any such intention; it may either be:
a. A resulting trust – which arises where a person makes or causes to
be made a disposition of property under circumstances which raise
an inference that he does not intend that the person taking or holding
the property should have the beneficial interest in the property; is
founded on the presumed intention of the parties; OR
b. A constructive trust – which is imposed where a person holding title to
property is subject to an equitable duty to convey it to another on the
ground that he would be unjustly enriched if he were permitted to
retain it; the duty to convey the property arises because it was
acquired through fraud, duress, undue influence, mistake, or through
breach of a fiduciary duty, or through the wrongful disposition of
another’s property.
EXPRESS TRUSTS
REQUISITES
There must be:
1. A competent trustor and trustee,
2. An ascertainable trust res, and
3. Sufficiently certain beneficiaries
Therefore:
1. The requirement that the express trust be written is only for enforceability,
not for validity between the parties; hence, Article 1443 may, by analogy, be
included under the Statute of Frauds;
2. By implication, for a trust over personal property, and oral agreement is valid
and enforceable between the parties;
3. Regarding third persons, the trust must be in public instrument registered in
the Registry of Property if it concerns real property.
CREATION
1. By conveyance to the trustee by an act inter vivos or mortis causa
2. By admission of the trustee that he holds the property only as a trustee
There must be a clear intent to create a trust. Thus, no particular or technical
words are required.
CAPACITY
1. The trustor must be capacitated to convey property
2. The trustee must be capacitated to hold property and to enter into contract
3. The beneficiary must be capacitated to receive gratuitously from the trustor
TERMINATION
1. Mutual agreement of all the parties
2. Expiration of the term
3. Fulfillment of the resolutory condition
4. Rescission or annulment
5. Physical loss or legal impossibility of the subject matter of the trust
6. Order of the court
7. Merger
8. Accomplishment of the purpose of the trust
EFFECT OF LACHES
Cestui que trust is entitled to rely upon the fidelity of the trustee. Laches
applies from the trustee openly denies or repudiates the trust and the beneficiary is
notified thereof, or is otherwise plainly put on guard against the trustee. On the
other hand, when it does not appear when the trustee repudiated existence of the
fiduciary relation, the same shall be taken to have been made only upon the filing of
his answer to the complaint.
IMPLIED TRUST
CONCEPT
Implied trusts are those which, without being expressed, are deducible from the
nature of the transactions as matter of intent, or which are super induced on the
transaction by operation of law, is matters of equity, independently of the particular
intention of the parties. The doctrine of implied trusts is founded upon equity. As
such, trust can never result from acts violative of the law.
KINDS
1. Resulting trust – a trust whish is raised or created by the act or construction of
law, or in its more restricted sense, it is raised by implication of law and
presumed always to have been contemplated by the parties, the intention as to
which is to be found in the nature of their transaction, but not expressed in the
deed or instrument of conveyance.
Examples are those found in Articles 1448 to 1455 of the NCC
2. Constructive trust – a trust raised by construction of law; in a more restricted
sense and as contra-distinguished from a resulting trust, it is a trust not created
by words, expressly or impliedly evincing a direct intention to create a trust by
the construction of equity in order to satisfy the demands of justice; it does not
arise by agreement or intention but by operation of law
EFFECT OF LACHES
Implied trust may be barred not only by prescription but also by laches.
Laches constitutes a defense to a suit to declare and enforce an implied trust, and
for the purpose of the rule, express repudiation is not required, unless the trustee
fraudulently and successfully conceals the facts giving rise to the trust.
Inasmuch as the trustee in an implied trust does not recognize any trust and
has no intent to hold for the beneficiary, the latter is not justified in delaying the
action to recover his property. It is his fault if he delays. The doctrine of laches,
however, is less strictly applied between near relatives than when the parties are
strangers to each other.
EXCEPTIONS
1. No trust is implied if the person to whom the legal estate is conveyed is a
legitimate or illegitimate child of the payor. The reason is there is a
presumption that a gift or donation was intended in favor of the child.
2. When an actual contrary intention is proved.
Articles 1448, 1449, 1451 and 1453 are resulting trusts.
Articles 1450, 1454, 1455 and 1456 are constructive trusts.
Article 1455
The general rule is that where trust money cannot be applied either
immediately or within a short time to the purpose of the trust, it is the duty of the
trustee to make the fund productive to the beneficiary by investment of it in
some proper security. But trustees must not make investment of funds in their
own names but always indicate that they are made in trust capacities.
This article applies to any trustee, guardian, or other person holding a
fiduciary relationship.
Article 1456
The mistake referred to in this article is a mistake made by a third
person, not that made by a party to the contract. For if made by a party, no trust
is created. Similarly, the fraud referred to is extra-contractual.