TRUSTS
Art. 1440 – A person who establishes a trust is a trustor
- Whom confidence is entrusted is a trustee
- Whose benefit the trust is made is a beneficiary
Art. 1441 – A trust is either express or implied
- Express trusts are created by the intention of the
parties
- Implied trusts are created by the operation of law
Art. 1442 – Principles of General Law of trusts will apply
- As long as not in conflict with the Civil Code, the
Code of Commerce, Rules of Court and Special Laws
Trust Contracts
- A trustee acts in the world as an owner thereof
- A real contract, does not happen without the conveyance of
the property to the
- Between the owner of the property and the trustee
o If there are 3 people involved
 Stipulation pour artui
 Must be accepted by the third
person
 Nobody can be compelled to accept
the gratuity of another
 Assumed to be accepted by the
beneficiary if there no onerous
condition imposed upon the trust
 Trusts does not fall under solemn nature
IMPLIED TRUSTS
Art. 1447 – Enumeration of the following implied trusts does
not exclude others established by the general law of trusts,
but the limitations in 1442 applies
Implied Trusts
- Either Resulting or Constructive Trusts
- Includes other things in similar manner
o Example, 1451 talks about land passed by
succession but it does not only mean land as
applying 1447, other properties may be treated as the
same too
- Look at the nature of the transactions and if the transaction
falls in the enumeration of the law, it will be considered as
an implied trust
o No need to prove intent but only the transaction
- Burden of proof is one in asserting the trust relationship
Resulting trust
- By the transaction, the law presumes that the intention of the
parties is to establish a trust relationship
- 10 years from repudiation made known to the trustee
- Before repudiation, there is no adverse possession
- Constituted when ownership is transferred to a person
- He then begins as trustee
- Acquisitive prescription runs from repudiation
o Communication of repudiation to the beneficiary
clearly stating such intention of the trustee
Steffi Martina Valle
AGENCY NOTE | CLV
 - There is a fiduciary relationship to begin with which adverse
possession does not start until repudiation
Parole Evidence
- Unlike express trusts, implied trusts may be proven by
Parole Evidence
o Admission of the trustee
o Proving the nature of the transaction fits under the
presumption that the law implies
Codal Provisions of Resulting Trusts
Art. 1448 – There is an implied trust when the property sold
and the legal estate is granted to one but the price is paid by
another for the purpose of having the beneficial interest in
the property.
If the property to whom the title is conveyed is a child,
legitimate or illegitimate of the person paying, no trust is
implied by law, it is presumed that there is a gift in favor of
the child
- Only a presumption but once facts fall within the transaction
described, it is treated as a trust relationship
- If the property is from parent to child, presumed as a gift
- Normal to human nature that parents give gifts to their child
- Human nature also dictates that who pays for the property
would want to enjoy it, thus the presumption of an implied
trust relationship
Art. 1449 – An implied trust is also established when a
donation is made to a person but appears that legal estate is
transmitted to the done, he does not have beneficial interest
or only a part thereof
Art. 1451 – When land passes by succession to any person
and he causes the legal title to be put to another, a trust is
established to the
- A person benefitland
inherits of the owner
(also other properties included)
- Puts legal title to the name of another
- Presumption is that a trust by operation of law is established
Art. 1452 – Two or more persons purchase a property
- With common consent, puts it in the name of one
- For the benefit of all
- An implied trust is created by operation of law
- In favor of the others with regards to the proportion
of their individual interest
Art. 1453 – Property is conveyed to a person
- Reliance on his intention to hold it for another or
transfer it to another or the grantor
- Implied trust is established in favor of the person
whom the benefit is contemplated
Codal Provisions for Constructive Trust
Art. 1456 – If property is acquired mistake or fraud, the
person obtaining it by force of law is considered a trustee of
an implied trust for the benefit of the person whom the
property comes
Steffi Martina Valle
AGENCY NOTE | CLV
Constructive Trust
- Arise from the moment ownership is assumed by the person Constructive trust – 10 years from registration of the property in the
through fraud or mistake name of the trustee
o Registered land – upon registration - Registration if the land is registered
o Unregistered land – the moment it is delivered to - If unregistered – 10 years from possession
him Express Trust – no adverse possession as the trustee knows the
o Movables – by delivery property does not belong to him
o Acquisitive prescription runs the moment adverse
possession is with the trustee because ownership is In order for prescription to kick in in Express Trust the following
already adverse must happen:
 Not fiduciary from the start - Unequivocal acts of repudiation
o Does not need to repudiate in a constructive trust - communicated to the beneficiary
For Express and Resulting Trust
- cannot merely rely on the title as the essence of trust is
Art. 1455 – When a trustee, guardian or other person putting their names in the title and the beneficial right is for
holding a fiduciary relationship uses the trust funds to
purchase of property and causes conveyance to be made to
another
him or a third person, a trust is established by operation of
law in favor of whom the trust belongs Prescription does not run (Resulting and Express)
- when the beneficiary is still recognized as such by the trustee
- in a co-ownership and the thing is in the possession of one
- Prescriptive period does not run if the beneficiary is a minor co-owner
Prescription does not run (Constructive)
- beneficiary is recognized
RULES OF PRESCRIPTION OF TRUSTS - beneficiary is a minor
Express Resulting Constructive - beneficiary is a close relative of the trustee
- Does not - Does not - 10 years - beneficiary is in possession (quieting of title)
prescribe prescribe unless from - When the title of the trustee is void
unless repudiation is possession - Property is in the hands of an innocent purchaser
repudiation is communicated of the Time of the constitution of a trust – does not require that the
communicate to the property beneficiary be present or existing at that time
d to the beneficiary
beneficiary

Steffi Martina Valle

AGENCY NOTE | CLV
 - If condition happens requiring the transfer to the beneficiary
but the beneficiary does not exist, the trust fails and is to be
returned to the estate and the heirs
- Trust cannot fail, only means on the constitution of the trust
as even if the trustee says no, property may already be in his
name
o Or the trustor can always find another trustee for a
trust to be established
EXPRESS TRUSTS
Art. 1444 – No particular words are required for the creation
of an express trust. It is sufficient that a trust is intended by
the parties
- Express trusts are established by the intent of the party
- Not deduced from the transaction itself but an express
manifestation
o Name as trustee in the title
Art. 1443 – No express trust concerning an immovable
property or any interest therein may be proved by parole
evidence
- A real contractual agreement with the actual conveyance of
the property
- Being a real contract, not perfected until delivery of the
object
- Proven by an expression of the trustee stating he is to hold
property for another
Express Trusts over immovable property or interest there in cannot
be proven by parole evidence
- Express trust over movable property may be proven by
parole evidence
- An express trust falls under SOF
o Argument of CLV, but it’s already executed and not
executory
- Burden of proof falls with the one asserting the existence of
a trust
o If resulting, once transaction is proven and falls
under the enumeration of the law, the burden shifts
to the one claiming that there is no trust relationship
General Rule: Parole of Evidence is not insufficient to prove an
express trust
Exception: when the trustee himself testifies that he is holding the
property as a trustee for another
- Failure of the purported trustee to object when oral evidence
was submitted to prove the trust agreement
Termination of Express Trust
- Trust fails
o declination of trustee is in the instrument of the
express trust
o Revert back to the estate
- Death of the Trustee
o Due to the personal nature of trusts
o If the heirs retain, it becomes a constructive trust by
operation of law
The beneficiary may demand the delivery of the object at any time
from the trustee. From which the trustee must deliver
Trustee dealing with matters of the trust must state that he is acting
as a trustee in order for the expenses to be obtained from the object
of the trust itself and not his personal assets
Steffi Martina Valle
AGENCY NOTE | CLV