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II.

Trusts

Trust is the 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.
Characteristics of Trust:
o It is a relationship
o Of fiduciary character
o With respect to property, not one involving merely
personal duties
o 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
o It arises as a result of a manifestation of intention to
create the relationship
A trust can be distinguished from other relationships of a
fiduciary character in that the fiduciary in trust has legal title to
the property, while he does not have such title in the other
relationships.
Estate of Cabacungan v. Laigo, G.R. No. 175073, August 15,
2011 - As a supporting document to his application for a nonimmigrant visa to the United States, Roberto Laigo asked his
mother, Margarita Cabacungan, to transfer the tax declarations of
her properties to his name, to which the latter complied. Roberto
was able to go to the United States, and when he returned, he
adopted Pedro and Marilou, and married Estella Balagot. Thereafter,
he sold Margaritas properties to the spouses Campos and two his
two adopted children. In was only during the wake of Roberto that
Margarita found out that the properties had already been sold, so
she filed a complaint for annulment of sales and recovery of
ownership. Margaritas daughter and niece, Luz and Hilaria, testified
in her favor.
Relevant ratio:

Implied trusts are further classified into constructive trusts


and resulting trusts. Constructive trusts, on the one hand,
come about in the main by operation of law, and not by
agreement or intention. They arise not by any word or phrase,
either expressly or impliedly, evincing a direct intention to
create a trust, but one which arises in order to satisfy the
demands of justice They are construed against one who by
actual or constructive fraud, duress, abuse of confidence,
commission of a wrong, or any form of unconscionable
conduct, artifice, concealment of questionable means, or who
in any way against equity and good conscience, has obtained

or hold the legal right to property which he ought not, in


equity and good conscience, hold and enjoy Constructive
trusts are illustrated in Articles 1450, 1454, 1455, and 1456.

It is deducible from the foregoing that the inscription of Robertos name in


the Affidavit of Transfer as Margaritas transferee is not for the purpose of
transferring ownership to him but only to enable him to hold the property
in trust for Margarita. Indeed, in the face of the credible and
straightforward testimony of the two witnesses, Luz and Hilaria, the
probative value of the ownership record forms in the names of respondents,
together with the testimony of their wintess from the municipal assessors
office who authenticated said forms, are utterly minimal to show Robertos
ownership. It suffices to say that respondents did not offer evidence that
would directly refute the statements made by Luz and Hilaria in open court
on the circumstances underlying the 1968 Affidavit of transfer.
As a trustee of a resulting trust, therefore, Roberto, like the trustee of an
express passive trust, is merely a management, control, or disposition of the
property except to make a conveyance when called upon by the cestui que
trust. Hence, the sales he entered into with respondents are a wrongful
conversion of the trust property and a breach of trust.

This scenario is characteristic of a constructive trust imposed


by Article 1456 of the Civil Code, which impresses upon a
person obtaining property through mistake or fraud the status
of an implied trustee for the benefit of the person from whom
the property comes. Petitioner, in laying claim against
respondents who are concededly transferees who professed
having validly derived their ownership from Roberto, is in
effect enforcing against respondents a constructive trust
relation that arose by virtue of the wrongful and fraudulent
transfer to them of the subject properties by Roberto.

It is clear that an action for reconveyance under a


constructive implied trust in accordance with Article 1456
does not prescribe unless and until the land is registered or
the instrument affecting the same is inscribed in accordance
with law, inasmuch as it is what binds the land and operates
constructive notice to the world. In the present case, however,
the lands involved are concededly unregistered lands; hence,
there is no way by which Margarita, during her lifetime, could
be notified of the furtive and fraudulent sales made in 1992 by
Roberto in favor of respondents, except by actual notice from
Pedro himself in August 1995. Hence, it is from that date that
prescription began to toll. The filing of the complaint in
February 1996 is well within the prescriptive period. Finally,
such delay of only 6 months in instituting the present action
hardly suffices to justify a finding of inexcusable delay or to

create an inference that Margarita has allowed her claim to


stale by laches.

Morales v. Court of Appeals, G.R. No. 117228, June 19,


1997 - W/N Petitioners discharged their burden to prove the existence of an
implied trust. NO.
Priscilla's justification for her and her sisters' failure to assert co-ownershpip of the
property based on the theory of implied trust is, to say the least, flimsy. In light of
their assertion that Celso Avelino did not have actual possession of the property
because he "was away from Calbayog continuously for more than 30 years until he
died on October 31, 1987, and the established fact that the tax declarations of the
property were in Celso's name and the latter paid the realty taxes thereon, there
existed no valid and cogent reason why Priscila and her sisters did not do anything
to have their respective shares in the property conveyed to them after the death of
Rosendo Avelino in 1980. Neither is there any evidence that during his lifetime,
Rosendo demanded from Celso that the latter convey the land to the former, which
Rosendo could have done after Juana's death on May 31, 1965. This omission was
mute and eloquent proof of Rosendo's recognition that Celso was the real buyer of
the property in 1948 and the absolute and exclusive owner thereof.
A.

Parties

Art. 1440 A person who establishes a trust is called the trustor;


one in whom confidence is reposed as regards property for the
benefit of another person is known as the trustee; and the person
for whose benefit the trust has been created is referred to as the
beneficiary.
The mayorazgo in Spanish law is essentially a trust.
o It is a successive and perpetual trust, vested with the
prerogative of primogeniture.
o The right to succeed to the property is left upon the
condition that it be preserved perpetually intact in the
family and that it be transmitted in order of succession
to each next first born.
The beneficiary is the cestui que trust.
The liability of a trustee who violates the trust is personal.
Trust is a relationship with respect to property which is held by
the trustee. The property so held is referred to as the trust
property. The trust property taken as a whole is the trust
estate. When it is desirable to differentiate the interest held
by the trustee from the physical thing in which the interest
exists, such as land or chattels, the thing is referred to as the
subject matter of the trust or the res.
It is not always necessary that the cestui que trust should be
names, or even be in existence at the time the trust is created
in his favor.

B.

Kinds

Art. 1441 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
o 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;
such intention may be manifested by words or by
conduct.
Implied Trusts
o A trust by operation of law
o 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.
Adverse possession in such a case requires that concurrence of
the following circumstances:
o That the trustee has performed unequivocal acts of
repudiation amounting to ouster of the cestui que trust.
o That such positive acts of repudiation have been mad
known to the cestui que trust.
o The evidence should be clear and convincing.
Express trusts disable 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. But in constructive trusts, the rule is that
laches/prescription constitutes a bar to actions to enforce the
trust, and no repudiation is required, unless there is a
concealment of the facts giving rise to the trust.
A resulting trust 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. The doctrine of resulting trust is
founded on the presumed intention of the parties.
A constructive trust is imposed where a person holding title to
the property is subject to an equitable duty to covey 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, undue influence
or mistake, or through breach of a fiduciary duty, or through
the wrongful disposition of anothers property.
1.

Express

a)

Proof required

Art. 1443 No express trusts concerning an immovable or any


interest therein may be proved by parol evidence.
Before an express trust will be recognized, there must exist a
competent trustor and trustee, and ascertainable res, and
sufficiently certain beneficiaries.
An express trust is created by the direct and positive acts of the
parties, by some writing or deed or will or by words evidencing
an intention to create a trust. In trusteeship, legal title to
property appears in the name of a trustee, while equitable
title remains with the cestui que trust.
When the express trust concerns an immovable or an interest
therein, a writing is necessary to prove it. The writing is not
required for validity but for purposes of proof. Thus, it falls
under the Statute of Frauds.
When the property subject to the express trust is not real estate
or an interest therein, then it may be proved by any
competent evidence, including parol evidence.
Caezo v. Rojas, G.R. No. 148788, November 23, 2007
Soledad Canezo filed a complaint for the recovery of real property
with the MTC Biliran aginst her father's second wife, Concepcion
Rojas. She alleged that she bought the land in 1939, although the
transaction was not reduced into writing. When she and her
husband left for Mindanao, she entrusted the land to her father,
Crispulo Rojas, who took possession of and cultivated the property.
Later on, she found out that her stepmother was already in
possession of the property and was cultivating the same. The tax
declaration over the property was also already in the name of
Crispulo.
Concepcion alleged that contrary to Soledad's claim, it was Crispulo
who bought the property, and that Soledad even received her share
of the produce of the estate.
MTC decided in favor of Soledad. Despite he objection that a verbal
sale cannot be proven without infringing on the Statute of Frauds,
the MTC gave credence to the testimony of the petitioners' two
witnesses attesting to the fact that Crisogono Limpiado, seller of the
land, sold it to Soledad in 1948. It also held that that the tax
declaration was in Crispulo's name was of no significance because
the government was concerned with tax collection since it was
recovering from the second world war.
RTC: Action had already prescribed. Reversed MTC decision. BUT RTC
reversed its own decision in a motion for reconsideration. The action
had not yet prescribed considering that the petitioner merely

entrusted the property to her father. The 10-year prescriptive period


commences only from the time the trustee repudiates the trust.
CA: Dismissed on ground of laches and prescription. 17 years lapsed
since she discovered that respondent was in adverse possession of
the property before she instituted an action to recover the same.
SC: If there was no trust relation, then the action would have
already prescribed.
A trust is the 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. Trusts are either express or implied.
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
evincing an intention to create a trust. Implied trusts are those
which, without being expressed, are deducible from the nature of
the transaction as matters of intent or, independently, f the
particular intention of the parties, as being superinduced on the
transaction by operation of law basically by reason of equity. An
implied trust may either be a resulting trust or a constructive trust.
In express and resulting trusts, a trustee cannot acquire by
prescription a property entrusted to him unless he repudiates the
trust. The possession of a trustee is not adverse. He does not
acquire by prescription the property held in trust.
Acquisitive prescription may bar the action of the beneficiary
against the trustee in an express trust for the recovery of the
property held in trust where (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.

The burden of proving the existence of a trust is on the


party asserting is existence, and such proof must be clear
and satisfactorily show the existence of the trust and its
elements. The following must be proved:
A truster or settlor who executes the instrument creating
the trust
A trustee, who is the person expressly designated to carry
out the trust
The trust res, consisting of duly identified and definite real
properties
The cestui que trust, or beneficiaries who identity must be

clear.
Petitioner failed to discharge the burden!
WHY? The existence of express trusts concerning real property may
not be established by parol evidence. It must be proven by some
writing or deed. In this case, the only evidence to support the claim
that an express trust existed between the petitioner and her father
was the self-serving testimony of the petitioner. Bare allegations do
not constitute evidence adequate to support a conclusion.
Although no particular words are required for the creation of an
express trust, a clear intention to create a trust must be shown. 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.
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.
In a trust relation, legal title is vested in the fiduciary while equitable
ownership is vested in a cestui que trust. Such is not true in this
case. The petitioner alleged in her complaint that the tax
declaration of the land was transferred to the name of Crispulo
without her consent. Had it been her intention to create a trust and
make Crispulo her trustee, she would not have made an issue out of
this because in a trust agreement, legal title is vested in the trustee.
The trustee would necessarily have the right to transfer the tax
declaration in his name and to pay the taxes on the property.
While implied trusts may be proved by oral evidence, the evidence
must be trustworthy and received by the courts with extreme
caution, and should not be made to rest on loose, equivocal or
indefinite declarations. Trustworthy evidence is required because
oral evidence can easily be fabricated.[36] In order to establish an
implied trust in real property by parol evidence, the proof should be
as fully convincing as if the acts giving rise to the trust obligation
are proven by an authentic document. An implied trust, in fine,
cannot be established upon vague and inconclusive proof.[37] In the
present case, there was no evidence of any transaction between the
petitioner and her father from which it can be inferred that a
resulting trust was intended.
With uninterrupted possession for 49 years, it appears that
the stepmother is already the owner of the property.
Ringor v. Ringor, G.R. No. 147863, August 13, 2004 Petitioners main contention is that the trial and appellate courts

had no basis to conclude that Jacobo constituted an express trust


because respondents did not present any deed, instrument or
document expressly declaring that a trust was constituted.
Petitioners anchor their assertion on the Civil Code, particularly their
interpretation of Articles 1440,[39] 1441,[40] 1443,[41] 1444,[42] 1445,
[43] and 1446,[44] as they point out that in these provisions, for an
express trust over an immovable to exist, four elements must be
present, namely: (1) a trustor or settlor who executes the instrument
creating the trust; (2) a trustee, who is the person expressly
designated to carry out the trust; (3) the trust res, consisting of duly
identified and definite real properties; and (4) the cestui que trust,
or beneficiaries whose identity must be clear. Petitioners aver that
these elements are indispensable for an express trust to exist.
Petitioners then lament that respondents did not present during trial
or even attach to the records of the case, any deed, instrument or
document that Jacobo intended to create a trust. Petitioners, in
their petition, insist that the intent to create a trust must be in
writing; and they claimed that they objected, from the beginning, to
the introduction of any oral testimony to prove the establishment of
an express trust.
Respondents, for their part, argue that Jacobo created an express
trust. Respondents cite the three applications for registration of the
lands referred to the Expedientes 241, 244 and 4449 and the three
Compraventas as documentary proofs that an express trust was
created by Jacobo. According to them, this conclusion can be
gleaned clearly when Jacobo exercised acts of ownership over all the
disputed lands even after the alleged donation and deeds of sale in
favor of Jose, and when Jacobo religiously gave shares of the income
and produce of the disputed lands to the respondents, a practice
Jose continued until three years before his death.
Express trusts, sometimes referred to as direct trusts, are
intentionally created by the direct and positive acts of the settlor or
the trustor by some writing, deed, or will, or oral declaration.[45]
It is created not necessarily by some written words, but by the direct
and positive acts of the parties. No particular words are required, it
being sufficient that a trust wasclearly intended. [46] Unless required
by a statutory provision, such as the Statute of Frauds, a writing is
not a requisite for the creation of a trust.[47]
Such a statute providing that no instruments concerning lands shall
be created or declared unless by written instruments signed by
the party creating the trust, or by his attorney, is not to be
construed as precluding a creation of a trust by oral agreement,
but merely as rendering such a trust unenforceable. [48] Contrary to
the claim of petitioners, oral testimony is allowed to prove that a
trust exists. It is not error for the court to rely on parol evidence,
i.e., the oral testimonies of witnesses Emeteria Ringor, Julio
Monsis and Teofilo Abalos which the appellate court also relied on
to arrive at the conclusion that an express trust exists. What is

crucial is the intention to create a trust. While oftentimes the


intention is manifested by the trustor in express or explicit
language, such intention may be manifested by inference from what
the trustor has said or done, from the nature of the transaction, or
from the circumstances surrounding the creation of the purported
trust.[49] However, an inference of the intention to create a trust,
made from language, conduct or circumstances, must be made with
reasonable certainty.[50] It cannot rest on vague, uncertain or
indefinite declarations. An inference of intention to create a trust,
predicated only on circumstances, can be made only where they
admit of no other interpretation. [51] In the present case, credible
witnesses testified that (1) the lands subject of Expedientes 241
and 4449 were made and transferred in the name of Jose merely for
convenience since Juan predeceased Jacobo; (2) despite the
Compraventas, transferring all the lands in Joses name, Jacobo
continued to perform all the acts of ownership including possession,
use and administration of the lands; (3) Jacobo did not want to
partition the lands because he was still using them; (4) when Jacobo
died, Jose took over the administration of the lands and
conscientiously and unfailingly gave his siblings their share in the
produce of the lands, in recognition of their share as coowners; and
(5) Jose did not repudiate the claim of his siblings and only
explained upon their expression of the desire for partitioning, that it
was not going to be an easy task.
From all these premises and the fact that Jose did not repudiate the
claim of his coheirs, it can be concluded that as far as the lands
covered by Expediente Nos. 241 and 4449 are concerned, when
Jacobo transferred these lands to Jose, in what the lower court said
were simulated or falsified sales, Jacobos intention impressed
upon the titles of Jose a trust in favor of the true partybeneficiaries,
including herein respondents.
b)

Creation

Art. 1444 No particular words are required for the creation of an


express trust, it being sufficient that a trust is clearly intended.
Ringor v. Ringor, G.R. No. 147863, August 13, 2004 (see
above)
Heirs of Labanon v. Heirs of Labanon, G.R. No. 160711,
August 14, 2007 -