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Trust: legal relationship between 1 person having an equitable CASE DOCTRINES

ownership in property & another person owning the legal title to such
property, the equitable ownership of the former entitling him to the ESCOBAR VS. LOCSIN
performance of certain duties & exercise of certain powers by the latter  A trust is sacred & inviolable. The courts have therefore
shielded fiduciary relations against every manner of chicanery
Parties to a Trust Relationship or detestable design cloaked by legal technicalities. The
1. Trustor: establishes the trust Torrens system was never calculated to foment betrayal in
2. Trustee: holds the property in trust for the benefit of another the performance of a trust.
3. Beneficiary: the person form whose benefit the trust has  The action could not be dismissed on the ground that the
been created period of 1 year for the review of the decree has elapsed, &
plaintiff had not availed herself of this remedy. The complaint
Essential Characteristics of Trust did not seek to review the decree or the reopening of the
1. based on property/corpus relationship – legal title is held by cadastral case, but the enforcement of the trust. Hence, Sec.
1, & the equitable/beneficial title is held by another 38 of the Land Registration Act does not apply.
2. fiduciary – trust is sacred & inviolable & the courts should
shield fiduciary relations against every manner of chicanery JULIO VS. DALANDAN
3. equity/common-low based – a large part of the American law  The document itself created an express trust, and given the
on trusts is incorporated fiduciary relation w/c is recognized by the defendants, they
may not invoke the statute of limitations as a bar to plaintiff’s
EXPRESS TRUSTS IMPLIED TRUSTS action.
Created by the intention of Created by operation of law  Where an express trust is created, no evidence is necessary
How the trustor or of the parties (based on equity)
for its recognition, considering that no particular words are
Created (need no particular
required for the creation of an express trust, it being
wordings)
sufficient that a trust is clearly intended.
Express trust over an May be proved by parol
Formal immovable or any interest evidence (whether real or  Technical or particular forms of words or phrases are not
-ities may not be proved by parol personal property is involved) essential to the manifestation of intention to create a trust or
evidence to the establishment thereof; nor would the word “trust” or
GR: imprescriptible An action for reconveyance of “trustee” be essential to its constitution.
Prescrip Exception: if the trustee has registered land based on an  Conversely, the mere fact that the word “trust” or “trustee”
-tion expressly repudiated the implied trust prescribes in 10 was employed wouldn’t necessarily prove an intention to
trust years. create a trust. What is important is whether the trustor
Capacity of Parties to an Examples of Implied Trusts manifested an intention to create the kind of relationship w/c
Express Trust 1. purchase of property where in law is known as a trust. It is not important that the trustor
1. Trustor: must have legal beneficial title in 1 person, should know that the relationship w/c he intends to create is
capacity to convey but price paid by another called a trust, & w/n he knows the precise characteristics of
property person (exception: if the the relationship w/c is called a trust.
2. Trustee: must be person to whom title is
capacitated to accept the conveyed is a child, it is GERONIMO AND ISIDRO VS. NAVA AND AQUINO
trust disputably presumed to be a
 There was a constructive trust created, in the sense that
3. Beneficiary: must be gift)
although appellants had the naked title issued in their names,
capacitated to receive 2. purchase of property where
gratuitously from the title is placed in the name of & w/c they retained, nevertheless, they were to hold said
trustor person who loaned the property in trust for appellees to redeem, subject to the
purchase price payment of the redemption price.
Note: Acceptance by 3. 2 or more persons purchase  In a constructive trust, prescription may apply only where the
beneficiary of gratuitous property jointly, but places trustee asserts a right adverse tot that of the cestui que
trust is not subject to the title in 1 of them trust, such as, asserting acts of ownership over the property
Other rules for the formalities of 4. donation of property to a being held in trust.
Notes donations. donee who shall have no  An express trust is not subject to prescription.
beneficial title
How Express Trusts are 5. land passes by succession LORENZO VS. PASADAS
Ended but heir places title into  The requirements for a valid testamentary trust are:
1. Mutual agreement by all trustee o Sufficient words to raise a trust
the parties 6. property conveyed to person
o A definite subject
2. expiration of the term merely as holder thereof
o A certain or ascertained object
3. fulfilment of resolutory 7. absolute conveyance of
condition property is effected only as  A trustee, no doubt, is entitled to receive a fair compensation
4. rescission or annulment a means to secure for his services. But from this it does not follow that the
5. loss of subject matter of performance of obligation of compensation due him may lawfully be deducted in arriving
the trust (physical loss or the grantor at the net value of the estate subject to tax. There is not
legal impossibility) 8. when trust fund used to statute in the Philippines w/c requires trustee’s commissions
6. order of the court (as purchase property w/c is to be deducted in determining the net value of the estate
when the purpose of the registered in trustee’s name subject to inheritance tax.
trust is being frustrated) 9. when property is acquired
7. merger through mistake or fraud GAMBOA VS. GAMBOA
8. accomplishment of the Note: this list of implied trusts  A person who has held legal title to land, coupled w/
purpose of the trust is not exclusive possession & beneficial use of the property for more than 10
years, will not be declared to have been holding such title as
RESULTING TRUST CONSTRUCTIVE TRUST trustee for himself & his brothers & sisters upon doubtful oral
There is an intent to create No intention to create a trust is proof tending to show a recognition by such owner of the
a trust but it is not effective present, but a trust is nevertheless alleged rights of his brothers & sisters to share in the produce
as an express trust created by law to prevent unjust of the land.
enrichment or oppression  Possession in fact by 1 who holds the legal title to land must
GR: imprescriptible Prescribes in 10 years counted from the be qualified as a true legal possession. Such owner &
Exception: if the trustee has date the trustee set up a title adverse occupant cannot be required to demonstrate that his
expressly repudiated the to that of the beneficiary possession is, or has been adverse, as against a mere
trust claimant who has neither title nor possession. One who is not

SIENNA A. FLORES TRUSTS


in fact in possession cannot acquire a prescriptive right to
land by the mere assertion of a right therein.
GAYONDATO VS. TREASURER
 The words “trust” and “trustee” are frequently used in a
broad & popular sense so as to embrace a variety of
relations. Thus, 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. Such “trusts” are not really trusts at all in the strict &
proper signification of the word “trust.”
 Trust, in its technical sense, has been defined as “a right of
property, real or personal, held by 1 party for the benefit of
another.” In the case at bar, Rosario was a minor at the time
of the registration of the land & had no legal guardian. It is
true that her mother in whose name the land was registered
was the natural guardian of her person, but her guardianship
didn’t extend to the property of the minor & conferred no
right to the administration of the same.
TAN SENGUAN AND CO. VS. PHIL. TRUST CO.
 The PTC held the legal title to the properties of the MSC. PTC
was not authorized to manage the affairs of the MSC or to
enter into contracts in its behalf. But even if the contract had
been authorized by the trust indenture, PTC in its individual
capacity would still be responsible for the contract as there
was no express stipulation that the trust estate & not the
trustee should be held liable on the contract in question.
PAL VS. HEALD LUMBER CO.
 If a property is insured & the owner received the indemnity
from the insurer, the insurer is deemed subrogated to the
rights of the insured against the wrong doer & if the amount
paid by the insurer does not fully cover the loss, then the
aggrieved party is the one entitled to recover the deficiency.
Evidently, the real party in interest w/ regard to the portion
of the indemnity paid is the insurer & not the insured.
 The payment of the indemnity by the insurer to the insured
does not make the latter a trustee of the former as in the
American law. This matter being statutory, the same must be
governed by our own law in this jurisdiction.
 Before a person can sue for the benefit of another under a
trusteeship, he must be a trustee of an express trust.
 In order that a trustee may sue or be sued alone, it is
essential that his trust should be expressed, that is, a trust
created by the direct & positive acts of the parties, by same
writing, deed, or will, or by proceedings in court. This
provision doesn’t apply in cases of implied trust, that is, a
trust w/c may be inferred merely from the acts of the parties
or from other circumstances.
CRISTOBAL VS. GOMEZ
 A trust constituted between 2 parties for the benefit of a 3 rd
person isn’t subject to the rules on donations of real property.
The beneficiary of a trust may demand performance of the
obligation w/o having formally accepted the benefit of the
trust in a public document, upon mere acquiescence in the
formation of the trust & acceptance under par. 2 of Art. 1256
of the CC.
 The fact that 1 of 2 individuals who have constituted
themselves trustees for the purpose indicated conveys his
interest in the trust property to his cotrustee does not relieve
the latter from the obligation to comply w/ the trust.
 As against the beneficiary, prescription is not effective in
favor of a person who is acting as trustee of a continuing &
subsisting trust.
CARANTES VS. CA
 Action for reconveyance based on implied trust prescribes in
10 years.
 Action to annul contract on the ground of fraud prescribes in
4 years.
 Discovery of fraud for purposes of prescription must be
counted from date of registration of the instrument w/ the
Register of Deeds in view of the rule of constructive notice.
SIENNA A. FLORES
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 In constructive trusts, there is neither promise nor fiduciary
relation; the so-called trustee doesn’t recognize any trust &
has no intent to hold the property for the beneficiary.
 There is a clear repudiation of a trust where one who is an
apparent administrator of property causes the cancellation of
the Title thereto in the name of the apparent beneficiaries &
gets a new certificate of title in his own name.
SALAO VS. SALAO
 A trust is the right enforceable solely in equity, to the
beneficial enjoyment of property, the legal title to w/c is
vested in another, but the word “trust” is frequently
employed to indicate duties, relations, & responsibilities w/c
are not strictly technical trusts.
 Implied trusts come into being by operation of law. Implied
trusts are those w/c, w/o being expressed, are deducible
from the nature of the transaction as matters of intent, or
w/c are superinduced on the transaction by operation of law
as matters of equity, independently of the particular intention
of the parties.
 No express trusts concerning an immovable or any interest
therein may be proven by parol evidence. An implied trust
may be proven by oral evidence.
 Trustworthy oral evidence is required to prove an implied
trust because oral evidences can be easily fabricated.
MUN. OF VICTORIAS VS. CA
 Where the land is decreed in the name of a person through
fraud or mistake, such person is by operation of law a trustee
of an implied trust for the benefit of the persons from whom
the property comes. The beneficiary shall have the right to
enforce the trust, notwithstanding the irrevocability of the
Torrens title & the trustee & his successors-in-interest are
bound toe execute the deed of reconveyance.
 Land registration is not a mode of acquiring ownership but
only of confirming ownership of the land. The Torrens system
was not established as a means for the acquisition of title to
private land. it is intended merely to confirm & register the
title w/c 1 may already have on the land. Where the applicant
possesses no title or ownership over the parcel of land, he
cannot acquire one under the Torrens system of Registration.
 Although an inherently defective Torrens title may not
ordinarily be cancelled even after proof of its defect, the law
safeguards the rightful party’s interest in the titled land from
fraud & improper use of technicalities by allowing
reconveyance.
 The Torrens system was never calculated to foment betrayal
in the performance of a trust.
MARIANO VS. JUDGE DE VEYRA
 Co-owners cannot acquire by prescription the share of the
other co-owners, absent a clear repudiation of the co-
ownership duly communicated to the other co-owners.
Records in the assessors office is not the sufficient
repudiation required by law.
 Existence of the co-ownership argues against the theory of
implied trust, as a co-owner possess co-owned property not
in behalf of the other co-owners, but in his own behalf.
HEIRS OF EMILIANO CANDELARIA VS. LUCIA ROMERO
 Where property is taken by a person under an agreement to
hold it for, or convey it to another or the grantor, a resulting
or implied trust arises in favor of the person for whose benefit
the property was intended. This rule is founded upon EQUITY.
 Laches constitutes a bar to actions to enforce a constructive
or implied trust, & repudiation is not required, unless there is
concealment of the facts giving rise to the trust. Continuous
recognition of a resulting trust, however, precludes any
defense of laches in a suit to declare & enforce the trust. The
beneficiary of a resulting trust may, w/o prejudice to his right
to enforce the trust, prefer the trust to persist & demand no
conveyance from the trustee.
LAUREANO VS. STEVENSON
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 Under the principles of Torrens system, a person who has
taken no steps to protect his interest at the time of the
cadastral survey is estopped to dispute the title. He has only
1 year from the issuance of the decree to allege and prove
fraud.
 Kilayco was merely holding the title of the property in trust
for Laureano. The creditors of Kilayco could acquire no higher
or better right than Kilayco had in the property, which in this
case was nothing.
GONZALES VS. IAC
 An action for reconveyance of real property to enforce an
implied trust prescribes in 10 years, the period reckoned from
the issuance of the adverse title to the property w/c operates
as a constructive notice.
 For 33 years Lopez et al had literally slept on their rights,
they can no longer dispute the conclusive and
incontrovertible character of Fausto’s title as they are
deemed by their unreasonable long inaction, to have
acquiesced therein.
ADAZA VS. CA
 In determining whether delay in seeking to enforce a right
constitutes laches the existence of a confidential relationship
based upon consanguinity is an important circumstance for
consideration. The doctrine of laches is not to be applied
mechanically as between near relatives. The fact that the
parties are brother & sister tends to explain & excuse what
would otherwise appear as long delay. Moreover, continued
recognition of the existence of trust precludes the defense of
laches.
 Under the Deed of Waiver executed by Violeta, she
acknowledged that she owned the land in common w/ her
brother Horacio although the certificate of title bore only her
name. This statement is an admission that she held of the
land in trust for Horacio.
ARMAMENTO VS. CENTRAL BANK
 It is true that the basic rule is that after the lapse of 1 year, a
decree of registration is no longer open to review or attack,
although its issuance is attended w/ fraud. This does not
mean that the aggrieved party is w/o remedy at law. If the
property has not yet passed to an innocent purchaser for
value, an action for reconveyance is still available.
 A 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 the equity in order
to satisfy the demands of justice. It doesn’t rise by
agreement or intention but by operation of law. 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. A trust is not a trust in
the technical sense.
RAMOS VS. GREGORIA RAMOS
 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:
o The trustee has performed unequivocal acts of
repudiation amounting to an ouster of the cestui
que trust
o Such positive acts of repudiation have been made
known t the cestui que trust
o The evidence thereon is clear & conclusive
 A trust must be proven by clear, satisfactory & convincing
evidence. It cannot rest on vague & uncertain evidence or on
loose, equivocal & indefinite declarations.
 A trustee cannot acquire by prescription the ownership of
property entrusted to him.
 An action to compel a trustee to convey property registered
in his name in trust for the benefit of the cestui que trust
does not prescribe.
 The defense of prescription cannot be set up in an action to
recover property held by a person in trust for the benefit of
another.
SIENNA A. FLORES
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 Property held in trust can be recovered by the beneficiary
regardless of the lapse of time.
 The rule of imprescriptibility of the action to recover property
held in trust may possibly apply to resulting trusts as long as
the trustee has not repudiated the trust.
 Lapse of 40 years after partition constitutes laches on the
action to annul it.
VARISTY HILLS VS. NAVARRO
 Lapse of 30 years bars action to recover property.
 Actions on implied & constructive trusts are extinguished by
laches or prescription of 10 years.
GERONA VS. CARMEN DE GUZMAN
 Although as a general rule, an action for partition among co-
heirs doesn’t prescribe, this is true only as long as the
defendants do not hold the property in question under an
adverse title. The statute of limitations operates from the
moment such adverse title is asserted by the possessor of the
property.
 When the respondents executed the deed of extra-judicial
settlement stating that they are the sole heirs of the
deceased, & secured new TCT in their own name, they
thereby excluded the petitioners from the estate of the
deceased, & consequently set up a title adverse to them.
CALADIAO VS. VDA DE BLAS
 Prescription does not apply to ”continuing & subsisting
trusts”, so that actions against a trustee to recover trust
property held by him are imprescriptible. Actions for
reconveyance of property wrongfully registered are of this
category.
 Prescription shall not apply to an action by the vendee of real
property in possession thereof to obtain its conveyance & in
the case at bar, the vendee had been in possession of the
property since the sale.
DIAZ VS. GARRICHO & AGRIADO
 In express trusts, the delay of the beneficiary is directly
attributable to the trustee who undertakes to hold the
property for the former, or who is linked by fiduciary
relations. The trustee’s possession is therefore not adverse to
the beneficiary, until & unless the latter is made aware that
the trust has been repudiated.
 In constructive trusts, there is neither promise nor fiduciary
relation. The so called trustee doesn’t recognized any trust &
has no intent to hold for the beneficiary. Therefore, the latter
is not justified in delaying action to recover his property. It is
his fault if he delays. Hence, he may be estopped by his own
laches. Laches constitutes a bar to actions to enforce the
trusts, & repudiation is not required, unless there is
concealment of the facts giving rise to the trust.
TRUSTS