BUS ORG – TRUST page 1

TRUST beneficiary is the person for whose benefit

the trust has been created.
Q: How do you define trust and what are its
characteristics? Q: The general premise is that agency is
A: It is a fiduciary relationship between one essentially a trust relationship. How will you
person having an equitable ownership in distinguish a trust relationship from an
property and another owning the legal title agency?
to such property, the equitable ownership of
the former entitling him to the performance Agency Trust
of certain duties and the exercise of certain Fiduciary in nature Fiduciary in nature
powers by the latter for the benefit of the Essentially revocable Essentially
former. obligatory in its
terms and period
Q: Assume that you have a child and you can only be
want to open a bank account on his behalf rescinded based on
(of the minor child), you go to the bank, so breach of trust.
in that scenario, who is the trustee, trustor Agent possesses Trustee takes legal
and beneficiary? property under or naked title to the
A: Trustee – Bank agency for and in the subject matter of the
Trustor – Father name of the owner. trust.
Beneficiary – Minor Agent must act upon Trustee acts on his
instructions of the own business
Based on that example, the trustor is the owner. discretion.
parent, the trustee is the bank who holds Agent enters into Trustee enters into
the property in behalf of the minor child and contract in the name contracts in his own
the beneficiary is the minor child. of the principal. name.
Agent cannot be Trustee is liable
Q: What are the characteristics of the trust sued. directly and maybe
relationship? sued in his trust
A: capacity.
1. It is a relationship.
2. It is a relationship which is fiduciary in
character. Q: What is the basis of a trust relationship?
3. It is with respect to property not one A: It is based on equity.
involving merely personal duties.
4. It involves the existence of equitable Equity applies to both express and implied
duties imposed upon the holder of the title trust.
to the property to deal with it for the benefit
of another. Q: In a trust relationship, there are 3 parties,
5. It arises as a result of the manifestation of you have the trustor, trustee and
intention to create the relationship. beneficiary. My question is can a minor be a
trustor?
Q: How many parties are there in a trust
relationship? Is it necessary for a trustor to have legal
Who is a trustor, trustee, beneficiary? capacity?
A: Based on Art. 1440, a trustor is a person Based tayo doon sa example, mag open ka
who establishes a trust. A trustee is one in ng bank deposit in behalf of a minor child.
whom confidence is reposed as regards Now, you are the trustor, the bank is the
property for the benefit of another person. A

trustee, the minor child is the beneficiary.
Can a minor be a trustor?
So you mean to say that a trustor should
possess a legal capacity?
Can a trustee be a minor?
Can a juridical person be a trustee? YES!
Can a juridical person be constituted as a
beneficiary?
Take note that a juridical person can be a
beneficiary because if you are a beneficiary
what is important in a trust relationship is
your capacity to receive gratuitously the
property from the trustor.
So the general premise now is that a trustor
and a trustee should have the legal
capacity. Why?
Is a trust relationship a contractual
obligation between the parties?
Take note if it is implied trust it is created by
operation of law because the basis is equity.
In your opinion is a trust relationship a
contractual obligation or does it give rise to
contractual obligations between the trustor
and the trustee?
- It gives rise to a contractual
obligation and because of that
capacity is required because unless
the parties are incapacitated their
acts cannot legally bind the others. It
gives rise to a contractual
obligations between the trustor and
the trustee that is why legal capacity
of the trustor and the trustee is
necessary.
Q: Can a trustor become at the same time a
trustee?
A: So a trustor can become at the same
time a trustee.
Q: How about a beneficiary, can a
beneficiary at the same time be the trustee?
A: Yes, a beneficiary can at the same time
be a trustee.
Q: How do you define express trust?
BUS ORG – TRUST page 2
A: Express trust is one created by the
intention of the trustor or of the parties.
If it is an implied trust, it is merely deductible
from the nature of the transaction.
Q: What is a resulting trust?
Q: How about a constructive trust?
Q: How do you distinguish a resulting trust
from a constructive trust?
Q: What is the proof required to establish an
express trust?
A: if it is an express trust involving
immovable property, they should be in
writing. It cannot be proved by parol or oral
evidence. If it is movable property, then
parol evidence may be used.
Q: As a review of your evidence, what is
parol evidence?
A: So in other words if it is under the parol
evidence rule, if you have a contract, you
cannot make use of extraneouse evidence
to change or modify the terms of the
contract. That is why bawalang oral
evidence.
Q: So how do you establish an express trust
under art. 1444?
A: under art. 1444, it is based on the
intention of the parties.
The leading case there is Vda. De Ezconde
v. CA 253 SCRA 66, here the SC held that
express trusts sometimes referred to as
direct trusts are intentionally created by the
direct and positive acts of the trustor, by
some writing, deed or will or oral declaration
unless required by a statutory provision
such as statute of frauds, a writing is not
required.
Explain art. 1445.
Article 1445. No trust shall fail because the
trustee appointed declines the designation,
unless the contrary should appear in the
instrument constituting the trust.

Q: Why should the trust not fail if the trustee
declines?
A: The court will now to appoint another
trustee.
Q: Apart from that, what is the intention of
the law?
A: you cannot expect the trustee to accept
the trust. Apart from that because the law
expects the intention of the trustor to create
the trust relationship. That is why it is clear
in art 1445 that No trust shall fail because
the trustee appointed declines the
designation. Pls take note of that.
Q: What happens if no beneficiary can be
found? Here in art. 1445, the trustee
declines his appointment, now what if there
is no beneficiary in the said trust
relationship?
A: the trust relationship should fail. So if
there is no beneficiary, then the trust
relationship must necessary fail.
In one case, Cabanas v. Pilapil 58 SCRA
95, the SC stated that as between the
mother and the uncle, the mother is
preferred to be trustee of the insurance
policy in the absence of any showing that
she is incompetent. Pls take note of this
case.
Explain art. 1446.
Article 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.
Q: Why is it important for the beneficiary to
accept?
A: because it is essential for the perfection
of the contract. Take note that the
acceptance by the beneficiary is akin to a
contract of donation. Dba in a donation,
kelanganiacceptngdonee.but as to the
mode of acceptance, is form necessary? So
we can accept the said trust or the benefits
of the trust orally. Pwede oral.
BUS ORG – TRUST page 3
Q: What is the exception to the rule based
on art. 1446?
A: his acceptance is presumed if he
imposes no onerous condition, meaning, it
is purely gratuitous.
Q: We are talking about express trusts, so
what are the grounds for extinguishing
express trusts?
A:
(1) By the destruction of the object of
the trust;
*take note that there must be total
destruction of the object of the trust.
(2) Revocation by the trustor;
(3) Achievement of the objective
provided for in the trust instrument;
(4) The confusion or merger of the
beneficial title and legal title in the
same person;
(5) Breach of trust; and
(6) Death of the trustee
Q: How about prescription, is that a mode of
acquiring ownership?
A: as a general rule, prescription is not a
mode of acquiring ownership because the
possession of the trustee is not adverse
unless there is repudiation. So from the time
that it is repudiated, saka pa magtakboyung
period of prescription.
Q: How many years if it is express trust?
A: prescription is 30 years because it is
possession in bad faith. So the general
premise is that if it is express trust, you
cannot acquire it by prescription because
the possession of the trustee is not adverse.
Under the law, the possession of the trustee
is the possession of the beneficiary. It
cannot serve as title to the prescription.
Q: When is there repudiation?
A: take note there is repudiation if the
following elements concur:
1. The trustee performs equivocal acts
amounting to the ouster of the
beneficiary;
2. Such positive acts of repudiation
have been known to the beneficiary;
 BUS ORG – TRUST page 4

3. The evidence is thereon is clear and

conclusive. Please read art. 1447.

Q: So the general premise is that, if there is

repudiation, magtakboang period of
prescription, now what should the
beneficiary do?
A: you should file an action to recover
possession of property within 10 years from
the time the repudiation is communicated to
the beneficiary. Otherwise magiging barred
nayung right mo to recover.

Q: How about implied trusts, can

prescription set in as a mode of ownership?
A: it also applies to implied trusts. It should
also be filed within 10 years from the time
the right of action accrues provided that the
beneficiary is not in possession of the
property.

Q: So what is the basis of this 10-year

period if it is implied trust?
A: the basis is art. 1144 par. 2 of NCC or
action based on an obligation created by
law.

Q: Why is it necessary that in order for this

action to prosper, the beneficiary must not
be in possession of the property?
A: because if the beneficiary is in
possession of the property, then the
possession is not adverse and the action to
be filed in court is one for quieting of title.

Q: How about constructive trust, within how

many years to recover the property?
A: 10 years reckoned from the time the date
of registration of the instrument is
conveyance is made because registration of
the said deed or conveyance operates as a
constructive notice to the whole world.

Q: What is again an implied trust? What is

the basis of an implied trust?
A: it is solely based on equity.

Q: Now we are talking about implied trust,

can that be converted into an implied trust?
A: if the trustee recognizes the right of the
owner over the property.