Abad Santos, Vicente.

Trust: A Fertile Field for Philippine

Jurisprudence, 25 PLJ 520 (1950)

Mr. Vicente Abad Santos emphasized here in his work how

jurisprudence in the Philippines regarding trusts grows richly as
time goes by. He discussed here that trust is one of the greatest
innovation contributed by the English Legal System and that not
much if nothing at all can be traced in Spanish Laws when it comes
to trust but instead a familiar pattern of fidae commissa in Roman
Law can be invoked.

Here, he mentioned how the English and the Americans has widely
utilized the power of trusts despite the enactment of general
statutes of incorporation. Philippines have very well adopted the
use of general law of trusts in deciding and governing trust cases
and issues as long as they are not in conflict with the Civil Code,
Code of Commerce and other related Special laws. Mr. Abad
Santos discussed here exponentially the various situation or
scenario’s that could exist among the three parties in a trust
relationship like one of the several trustees can be the same person
to name a few.

In total, he also shares the same view with scholars of corporation

law and other experts on how trusts greatly outweighs the
corporate form in terms of ease and accessibility.

Trust defined…

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.”

Characteristics of Trust:

a. It is a relationship;
b. It is a relationship of fiduciary character;
c. It is a relationship with respect to property, not one involving
merely personal duties;
 d. It 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; and
e. It arises as a result of a manifestation of intention to create
the relationship.

Have you ever read the legal concept of trust?

In law, trust is a relationship where property is held by one

party for the benefit of another party. A trust is created by the
owner, also called a “settlor”, “trustor” or “grantor” who transfers the
property to a trustee. The trustee holds that property for the trust”s
beneficiaries.

What is a legal title?

According to Morales v. CA, a trust is a legal relationship

between one person having an equitable ownership in 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.

D: It is an equitable interest in property. A trust is a relationship

which finds its roots on common law. And found on Civil Code. The
law on trust originated on common law. In a trust, it says that there
is one person who has an equitable title or sometimes it is called
fiduciary and the other person hold the legal title. These two (2)
come from ownership split in a trust relationship, into equitable
ownership or legal ownership.

What is the difference between the two?

Legal title focuses on the duties of the property while

equitable title refers to the enjoyment of the property. Equitable title
is the benefits the buyer will get to use and enjoy when he or she
becomes the legal owner. Equitable ownership is not “true
ownership.”

D: In a trust, there are ordinarily three (3) people:

 1. The owner – one who has full ownership called the trustor or
sometimes called “settlor.”
 Trustor who holds full ownership which split to
ownership will transfer to two people/person. (1)
Having legal title called trustee, and (2) the one who
has an equitable title is called beneficiary.
 The trustee is allowed to perform the acts of
ownership as long as they are for the benefit of the
beneficiary.

What is the power of the beneficiaries?

D: all the rights of ownership are vested with the trustee except for
one, the beneficiary or the one holding equitable title can ask for
reconveyance. The power to ask for a reconveyance is attached to
your equitable title.

What does reconveyance mean?

Reconveyance is a term used in some states which use deeds of

trust as a mortgage on real property to secure payment of a loan or
other debt. Reconveyance means the transfer of title by the trustee
back to the borrower when the secured debt is fully paid.

D: once the reconveyance is acts for, the beneficiary becomes the

full owner.

Example: Kris Aquino has two (2) children, Bimby and Josh. Bimby
is younger and Josh is special. Now when Kris Aquino dies, who
are her heirs? Her children, one is the real child and the other is a
special child. Who will administer (assuming Kris has no will)? You
will do is to establish a trust fund for Josh who are of legal age but
not in a sound mind.

So, Kris will have to transfer her property to a trust through a

trustee. Who will be the beneficiary? Josh. The purpose of the trust
for you to insure Josh will leave up without Kris is to put up a trust
fund because Josh is special. Meaning Kris will split ownership,
equitable and legal.
The trustee can be a single person or can be two people. If you
were Kris Aquino you will appoint a trustee in odd number such as
bank…

Illustration: Express Trust

Insurance TRUST Investment Bank

Trustee Lawyer Substitute

s
Accountant

Kris Aquino Trust Protector

Josh (Beneficiary)

How will Kris make sure that those three people (Investment Bank,
Lawyer and Accountant) are acting in the interest of Josh?
(Remember: once you transfer the property into a trust you cannot
take it back because the power of reconveyance will leave Kris will
go to that beneficiary.)

Sometimes they appoint someone, a third person (trust protector).

What is the job of a trust protector? To oversee the trustees, he has
very limited powers. However, once his power is exercise he can
remove and appoint a new one.

What types of property will Kris transferred in a trust? It can be

anything, real or personal property…

It is contingent. The trust will exist as long as it is funded. When the

trust fund goes to zero it is extinguish. What will Kris do to fund the
trust? This is where insurance comes in. Fund in partially, when
Kris dies instead of designating Josh as the beneficiary of her
insurance…
Why is a trust at certain times better than a corporation?

A corporation has a limited life, it is subject to heavy state

regulation, you have to file it…Now, a trust can be made to be
perpetual, it can substitute beneficiary and the trust will exist as
long as it is funded.

Bakit mo gagamitin yong trust?

1. You can get around restriction of the civil code.

2. The trust is not subject to the formality of the will.
3. It is a private document.

There are two (2) kinds of trust:

 Implied trust – is something you did not agree upon.

However, when your intention reveals that you had intended
to create a trust that is resulting but a constructive trust on
the other hand, is not really a trust under the contemplation
of law but it is created upon equity to prevent unjust
enrichment…
1. Resulting trust – based on the equitable doctrine that
valuable consideration and not legal title determines the
equitable interest and is presumed to have been
contemplated by the parties.
2. Constructive trust – a trust “raised by construction of law,
or arising by operation of law.”
 The importance of a constructive trust comes from
the talk that sometimes when you do not intend to
take a trust, the law creates one, because it is for
equity’s sake.
 If a person obtains legal title to property by fraud
or concealment, courts of equity will impress upon
the title a so-called constructive trust in favor of
the defrauded party.
 Express trust – this is what you intended (kusang binigay)