TRUST
benefit of a third party, who owns the equitable title;
ARTICLE 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 benefi-
ciary.
Concept of trust.
A trust is the fiduciary relationship between one person
having an equitable ownership in property and another
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 (see 54 Am. Jur. 21.) for the
benefit of the former.
It is a legal arrangement whereby a person transfers his
legal title to property to another to be administered by
the latter for the benefit of a third party. It is a right of
property held by one party for the benefit of another.
.Trust distinguished from other relations.
What distinguishes a trust from other legal relations is
the separation of the legal title and the equitable
ownership of the subject property between two
or more people.
Bailment bailee has possession of the property but
no legal title.
Donation. transfer of property
Contract is a legal obligation, which obligation may or
may not be fiduciary in character.
Debt creditor has merely a personal claim against the
debtor.
Persons involved in the creation of an express
trust.
(1) The trustor (creator/settlor/grantor) or the person
who intentionally creates or establishes the trust. He
transfers legal ownership of property to a person for the
(2) The trustee or the person who takes and holds the
legal title to the property in trust solely for the benefit of
another, with certain powers and subject to certain
duties; and
(3) The beneficiary or cestui que trust or the person who
has the equitable title or interest in the property and
enjoys the benefit of the administration of the trust by
the trustee. (see 65 C.J. 232; 54 Am. Jur. 99, 114.) He
may be a natural person or a legal entity. The trust may
provide for more than one beneficiary.
Trustor as trustee or beneficiary.
Trustor could be the trustee or beneficiary. He could not
be a trustee and beneficiary at the same time.
In such case, both the legal and equitable titles to the
trust property would be merged in the trustee and he
would hold the property free of any trust.
Trust property.
(1) The subject-matter of a trust may be any property of
value real, personal, funds or money, or choses in
action.(see Pacheco vs. Arro, 85 Phil. 505 [1950]; Salao
vs. Salao, 70 SCRA 65 [1976].). The property so held is
referred to as the trust property or trust res.
Corpus and principal are names also used for the
trust property.
(2) The trust res must consist of property actually in
existence in which the trustor has a transferable interest
or title although it may, as a rule, be any kind of
transferable property either realty or personalty
including undivided, future, or contingent interest
therein. But a trust res cannot be a mere expectancy
without right or interest or a mere interest in the
performance of a contract although such interest is in
the nature of a property right
Nature of ownership of trustee and beneficiary.
(1) Ownership by two persons at the same time. The
trust property is owned by two persons at the same
time, the relation between the two owners being such
that one of them with legal title under an obligation to
use his ownership for the benefit of the other. The
former is called the trustee, and his ownership (1)
Ownership by two persons at the same time. The
trust property is owned by two persons at the same
time, the relation between the two owners being such
that one of them with legal title under an obligation to
use his ownership for the benefit of the other. The
former is called the trustee, and his ownership
(1) Ownership by two persons at the same time. The
trust property is owned by two persons at the same
time, the relation between the two owners being such
that one of them with legal title under an obligation to
use his ownership for the benefit of the other. The
former is called the trustee, and his ownership
3 Trustee, not mere agent. In legal theory, however,
the trustee is not a mere agent but an owner. He
is a person to whom the property of someone else is
fictitiously attributed by the law, to the extent that the
rights and powers thus vested in a nominal owner shall
be used by him on behalf of the real owner.
4) Transfer of equitable title. The interests of the
beneficiary in the trust can, in general, be
reached by his creditors, and he can sell or
otherwise dispose of them. The beneficiary can
transfer only the interests he holds the equitable title.
(5) Rights of beneficiary. Depending on the terms of
the trust instrument, the beneficiary may receive the
income from the assets of the trust, the assets
themselves, or both.
Character of offi ce of trustee.
(1) As principal
The trustee is not an agent of the trust estate or of the
cestui que trust, but he acts for himself in the
administration of the trust estate, although subject to
the terms of the trust and the law of trusts. He cannot
act as an agent of the trust estate for the reason that it
lacks juristic personality.
In other words, a trust and an agency are
distinguishable on the basis of the non-
representative role of the trustee and the
representative role of the agent.
(2) As agent.
By some statutes, it is provided that a trustee is a
general agent for the trust property and that his acts
within the scope of his authority bind the trust estate to
the same extent as the acts of an agent bind his
principal.
Necessity of existence of beneficiary.
Is it necessary that a beneficiary be identified at
the creation of a trust?
No. The cestui que trust is not necessary to be identified
in its creation and this is especially so in regard to
charitable trust. The trustor can simply specify as the
beneficiaries a class of persons who are readily
identifiable.
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.
Classification of trusts.
By Creation
1. Express One which came into existence only
by the execution of an intention to create a trust
by the parties.
2. Implied one which comes into being by
operation of law:
a. Resulting one in which the intention to
create a trust is implied or presumed in law.
b. Constructive one imposed by law
irrespective of, and even contrary to, any
 such intention for the purpose of promoting
justice, frustrating fraud or preventing
unjust enrichment
trust intentional in fact - express trust;
intentional in law - resulting trust;
imposed irrespective of intention - constructive trust.
Effectivity
1. Testamentary to take effect upon the trustors
death.
2. Inter vivos effective during the owners life.
Revocability
1. Revocable can be revoked by the trustor.
2. Irrevocable may not be terminated during the
specified term of the trust.
Whether a trust is revocable or irrevocable depends on
the wordings or language used in the creation of the
trust. It will be presumed revocable unless the creator
has expressed a contrary intention in the trust deed.
Elements of Express Trust
1. A competent trustor and trustee;
2. An ascertainable trust res; and
3. Sufficiently certain beneficiaries.
Consideration, is not required to establish a trust
ART. 1442. The principles of the general law of
rusts, insofar as they are not in confl ict with this
Code, the Code of Commerce, the Rules of Court6
and special laws are hereby adopted.
Termination of express trust (EAME)
(1) Expiration of period fixed.
(2) Accomplishment of purpose.
(3) Mutual agreement of beneficiaries.
(4) Exercise of power to terminate
EXPRESS TRUSTS
ART. 1443. No express trusts concerning an
immovable or any interest therein may be proved
by parol evidence.
(1) Burden of proof. party alleging its existence;
(2) Trust concerns immovable therein - writing
necessary, required not for validity but for purposes of
proof
(3) Failure to object to parol evidence- waivable
To affect third persons, a trust concerning an immovable
or any interest therein must be embodied in a public
instrument and registered in the Registry of Property.
(3) An express trust over personal property or any
interest therein, and an implied trust, whether the
property subject to the trust is real or personal, may be
proved by oral evidence
ART. 1444. No particular words are required for
the creation of an express trust, it being sufficient
that a trust is clearly intended.
Express trusts are those trusts intentionally created by
direct and positive act of the trustor, by some writing,
deed, will, or oral declaration evincing an intention to
create the trust.
They are distinguishable from implied trusts, resulting
and constructive, in that the latter are respectively
founded upon an intention of the parties to a transaction
implied in law, or upon fraud or wrong irrespective of
the intention of the parties concerned.
Terminology used not controlling.
Kinds of express trusts.(special purposes)
(1) Charitable trust or one designed for the benefit of
a segment of the public or of the public in general.
2) Accumulation trust or one that will accumulate
income to be reinvested by the trustee in the trust for
the period of time specified;
3) Spendthrift trust or one established when the
beneficiary need to be protected, because of his
inexperience or immaturity from his imprudent spending
habits or simply because the beneficiary is spendrift.
4) Sprinkling trust or one that gives the trustee the
right to determine the income beneficiaries who should
receive income each year and the amount thereof.
When trustee may sue or be sued alone.
In order that a trustee may sue or be sued alone, it is
essential that his trust be express, that is, a trust
created by the direct and positive acts of the parties, by
some writing, deed, or will or by proceedings in court.
ART. 1445. No trust shall fail because the trustee
appointed declines the designation, unless the
contrary should appear in the instrument
constituting the trust.
Acceptance, declination, or renunciation by the
trustee.
(1) In the case of an express trust, acceptance of trust
by a trustee is necessary to charge him with the office of
the trustee and the administration of the trust and to
vest the legal title in him. However, his acceptance of
the trust is not necessary to its existence and validity,
since if he declines the trust, the courts will appoint a
trustee to fill the office that he declines
(2) One designated or appointed as trustee may decline
the responsibility and thereby be free from any legal or
equitable duty or liability in the matter.
(3) Furthermore, renunciation of a trust after its
acceptance can only be by resignation or retirement with
court approval or at least, with agreement of
beneficiaries and on satisfaction of all legal liabilities
growing out of the acceptance of the trust.
ART. 1446. Acceptance by the beneficiary is
necessary. Nevertheless, if the trust imposes no
onerous condition upon the beneficiary, his
acceptance shall be presumed, if there is no proof
to the contrary.
IMPLIED TRUSTS
ART. 1447. The enumeration of the following
cases of implied trust does not exclude others
established by the general law of trust, but the
limitation laid down in Article 1442 shall be
applicable.
Implied trusts are those which, without being express,
are deducible from the nature of the transaction as
matters of intent, or which are super induced on the
transaction by operation of law, as matters of equity,
independently of the particular intention of the parties
Implied trusts are not created voluntarily, but imposed
by law or inferred from the conduct or dealings of the
parties
Kinds of implied trust.
1) Resulting trust. It is broadly defined as a trust
which is raised or created by the act or construction of
law. In its more restricted sense, it is a trust 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.
(2) Constructive trust. It is also a trust raised by
construction of law or arising by operation by law. In a
more restricted sense, and as contra-distinguished from
a resulting trust, constructive trust is a trust not created
by any words, either expressly or impliedly, evincing a
direct intention to create a trust but by the construction
of equity in order to satisfy the demands of justice and
prevent unjust enrichment.
Distinctions between express trusts and implied
trusts
(1) Creation of trust. Express trusts are created by
the intention of the trustor or parties, while implied
trusts come into being by operation of law.
(2) Proof of trust. An express trust concerning an
immovable or any interest therein cannot be proved by
parol evidence, while an implied trust concerning an
immovable or any interest therein may be proved by oral
evidence
(3) Repudiation of trust. In order that laches or
acquisitive prescription may bar an action to enforce an
express trust, an express repudiation made known to
the beneficiary is required, while laches constitutes a bar
to actions to enforce an implied trust even where there
is no repudiation, unless there is concealment of the fact
giving rise to the trust.

An express trust does not prescribe except when the

trustee repudiates the trust.

Implied trust converted to express trust

An implied trust may be converted to an express trust by

the

recognition by the implied trustee of the right to the

property of the owner.

Acquisition of property through prescription.

The rule that a trustee cannot acquire by prescription

ownership over property entrusted to him until and
unless

he repudiates the trust, applies to express trusts and

resulting implied trusts.