IMPLIED TRUST RESULTING TRUST CONSTRUCTIVE TRUST

Article 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
Article 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
Article 1442. The principles of the general law of trusts, insofar as
they are not in conflict with this Code, the Code of Commerce, the
Rules of Court and special laws are hereby adopted.
Article 1457. An implied trust may be proved by oral evidence.
Deducible from the nature of Superinduced by operation of
transaction by operation of law law as matters of equity to
as matters of equity satisfy demands of justice and
prevent unjust enrichment
Burden of proof is on the Arise against the intention of
purported trustee, that no such one who, by fraud, duress, or
trust relationship was intended. abuse of confidence obtains/
holds legal right to property.
Arts. 1448,1449, 1451, 1452, & Arts. 1450, 1454, 1455 & 1456

1453 The only true constructive trust

The system of implied trusts applies in situations where the property
that ought to be owned and enjoyed by one party has ended up in
the hands of or registered with another party, and equity demands
that the latter ought to reconvey such to the former, or at least
acknowledge formally that he holds it for the benefit of the former.
Implied trusts comes into being by operation of law, either:
- thru implication of an intention to create trust as a matter of law
- Thru the imposition of the trust irrespective of and even contrary
to to any such situation
EXPRESS TRUST IMPLIED TRUST
as per Villanueva Book IS ART.
1456.
Action must be made w/n 10 Must be made w/n 10 years
yea rs f rom kn ow ledge o f from date of registration.
repudiation.
Express Trust v. Resulting Trust
- When the intention of the parties bound by the trust relationship
is found expressed in a deed/instrument, it is an express trust.
- When the same intention is merely verbal or can be proved by
parol evidence, may be considered as resulting trust.

Proceeds from a clear or direct No intention is apparent, but

Constructive Trust v. Solutio Indebiti
contractual intention to dispose merely presumed by law from - The person who makes the payment is the one who commits
of trust property to a trustee for the nature of transaction.
mistake vis-a-vis the recipient who is unaware of such mistake-
the benefit of a beneficiary
Art. 2154 Solutio Indebiti
Creatures of the parties intent Implied intentions of parties - The law does not make any distinction as to who commits
derived from the nature of their mistake as mutual mistake is possible on both the grantor or
transactions. grantee.
- Both have similar purpose
May proved by parol evidence May be proved by (trustworthy)
except if it is an immovable oral evidence whether IMPLIED TRUSTS PARTICULARLY CONSTITUTED BY LAW
property or its interest. (parol immovable or not. (clear,
evidence cannot derogate the satisfactory, and convincing RESULTING TRUST CONSTRUCTIVE TRUST
title of a registered owner.) evidence)
Purchase of property where title Purchase of property where title
Prescription: Action must be Prescription of Resulting Trust: is placed in one person, but the is places in the name of person
made w/n 10 years from Action must be made w/n 10 price is paid by another. (ART. who loaned the purchase price
knowledge of repudiation. y e a r s f ro m k n o w l e dge o f 1448) (Art. 1450)
repudiation.
Prescription of Constructing Donation of property to a donee When absolute conveyance of
Trust: Must be made w/n 10 who shall have no beneficial title property effected as mean to
years from date of registration. (Art. 1449) secure perfor mance of an
obligation (Art. 1454)
Trustee can sue and be sued Trustee cannot sue and be sued
alone. alone. Land Passes by Succession but W h e n t r u s t f u n d u s e d t o
heir places title in the trustee purchase property is registered
(Art. 1451) in trustee’s name (Art. 1455)
TWO TYPES OF IMPLIED TRUST
1. RESULTING TRUST- raised by the implication of law and Two or more persons purchased When property is Acquired
presumed always to have been contemplated by parties, as the property jointly, but place title in through mistake or fraud (Art.
intention from the nature of their transaction, but not expressed one of them (Art. 1452) 1456) The only true constructive
in the deed/instrument. trust as per Villanueva Book
2. CONSTRUCTIVE TRUST-
Property Conveyed to a person
merely as holder thereof (Art.
1453)

PAT Notes for Group Recit Tita Avocado Page 1 of 3

IMPLIED TRUSTS ENUMERATION
1. Purchase of property where title is placed in one person, but
the price is paid by another. (ART. 1448) a.k.a Purchase
Money Resulting Trust
Trustee- person with title of property
Beneficiary- person who paid for it
Basis: One who paid for something usually does so for his own
benefit.
Illustrative Case: Sime Darby Pilipinas Inc. v. Mendoza, where
the club share was bought by the company and placed in the
name of an officer, Mendoza, it was held that the officer’s title is
only limited to usufruct- the enjoyment and use of the club’s
facilities and privileges while employed. A trust arises in favor
of one who pays the purchase price of a property in the name
of another, as the presumption is that he who pays for a thing
intends a beneficial interest for himself. A resulting trust is
presumed as a matter of law.
a. When title is places in the name of a child (minor):
presumed as a gift in favor of the child. (Loco Parentis)
b. When it is the Child that supplies the purchase price:
equity principle of 1448 cannot be applied.
c. When contrary intention is proved: 1448 is n/a
d. When purchase price extended as a LOAN: no implied
trust because of lack of intention party supplying money to
have beneficial interest.
e. When the purchase price is made in violation of an
existing Statute: no implied trust as it is violative of law,
morals, or public policy.
2. Purchase of property where title is placed in the name of
person who loaned the purchase price (Art. 1450)
Trustee: Person who paid
Beneficiary: person for whom money is loaned or paid for
Illustrative Case: Paringit v. Bajit, where a person using his
own funds, buys property on behalf of another, who in the
meantime may not have the funds to purchase it — title to the
property is for the time being placed in the name of the
trustee, the person who pays for it, until he is reimbursed by
the beneficiary, the person for whom the trustee bought the
land.
Illustrative Case: PNB v. CA
a. Akin to an equitable Mortgage Arrangement: title of the
property intended for the borrower is placed in the name of
the lender to secure the payment of the debt.
- When borrower-beneficiary fails to redeem and lender
brings action for collection: p.322
3. When absolute conveyance of property effected as mean to
secure performance of an obligation (Art. 1454)
Trustee: Buyer?
Beneficiary:
Illustrative Case: De Ocampo v. Zaporteza, where a deed of
sale with right of repurchase was really intended to cover a loan
made by the purported seller from the purported buyer. It was
held that buyer only hold the certificate of transfer in trust for
the plaintiff with respect to the portion of lot planted with 1,300
coconut tress, they are therefore bound to execute a deed in
favor of the plaintiffs, transferring to them said portion planted.
4. Two or more persons purchased property jointly, but place
Tita Avocado
title in one of them (Art. 1452)
PAT Notes for Group Recit
Trustee:
Beneficiary:
Illustrative Case: Miguel J. Ossorio Pension Foundation v.
CA, where SC formally recognized that under Art. 1452, the law
expressly allows a co-owner of a parcel of land to register his
proportionate share in the name of his co-owner in whose
name the entire land is registered.— the registered co-owner
serves as a legal trustee of the first co-owner insofar as the
proportionate share of the first co-owner is concerned.
5. Property Conveyed to a person merely as holder thereof
(Art. 1453)
Trustee: Person to whom property is conveyed/holder
Beneficiary: person whose benefit was contemplated
Illustrative Case: Cuaycong v. Cuaycong, where the court
denied the application of Art. 1453 to establish an implied
trust, said article wold apply if the person conveying the
property did not expressly state that he was establishing trust,
unlike the case at bar where he was alleged to have expressed
such intent.
Illustrative Case: Heirs of Emilio Candelaria v. Romero, where
the trust alleged was considered as an implied one. There is a
resulting trust when the property is taken by a person under an
agreement to hold it for, or convey it to another or the grantor.
6. Donation of property to a donee who shall have no
beneficial title (Art. 1449)
Trustee: Donee
Beneficiary: Donor
- Analogous to fideicommissary Substitution- where the testator
designate a person as an heir charing him to deliver to another
person the whole or part of the inheritance. Not equivalent to
English Trust.
Illustrative Case: Adaza v. CA, where the father donated a
piece of land in the name of the daughter but with verbal
notice that the other half would be held by her for the benefit
of a younger brother, coupled with a deed of waiver later on
executed by daughter that she held the land for common
benefit of her brother, it was held that the arrangement created
an implied trust in favor of her brother.
7. Land Passes by Succession but heir places title in the trustee
(Art. 1451)
Trustee:
Beneficiary: True Owner
- Should be read to cover the situation when the property
inherited is registered in another’s name as full owner rather
than as trustee, for in the latter case, that would clearly be an
express trust.
- A clear lack of purpose why the heir caused the legal title to
be put in another person’s name.
Illustrative Case:
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8. When trust fund used to purchase property is registered in Case:Diaz v. Gorricho and Aguado, recognized that Art. 1456
trustee’s name (Art. 1455) of NCC merely expresses a rule already recognized by our
Trustee: courts first enunciated in Gayondato.
Beneficiary: Person to whom the funds belong Case: Pasiño v. Heirs of Benedicto Pedrano, paid lip service
- Operative provision governing the duty of loyalty of the to the principle embodied in Art. 1456 that if property is
agent to the principal and the trustee to the beneficiary acquired thru mistake or fraud, the person obtaining it is, by
applicable to both express and implied trust. force of law, considered a trustee of an implied trust for the
- Trustee is bound to handle the affairs of the trust and to benefit of the person whom the property comes.
apply all the properties in the trust estate for the sole benefit
of the beneficiary. Lopez. CA
Illustrative Case: Sing Joco v. Sunyantung, where a trusted or
confidential employee of the company directly employed fraud
to induce the company to forfeit its option to purchase a
valuable large tract of land, and therefore caused his wife to
purchase the same. It was held that from a statutory point of
view only a recovery of damages against the employee was
allowed. The case at bar maybe regarded as an equitable trust
by virtue of which the things thus acquired by an employee is
deemed to have been acquired not for his own benefit or that
of any other person but for his principal, and held in trust for
the latter.

CONSTRUCTIVE TRUSTS
9. When property is Acquired through mistake or fraud (Art.
1456)
Trustee: Person with registered title
Beneficiary: offended/ defrauded party
a. Applications under the Old Civil Code
Illustrative Case: Gayondato v. Insular Treasurer, where a
mother and her minor daughter inherited a large tract of land,
and had it applied for cadastral survey, but title was mistakenly
issued only in the name of the mother. It was held that courts of
equity will impress upon the title, a condition which is generally
in a borad sense termed “constructive trust”, in favor of the
defrauded party, but that the use of the word trust in this sense
is not technically accurate and is not the kind of trust. (Old Civil
Code)
NCC: in spite of the proceedings under the Torrens System of
Registration being in rem, and the title issued considered
imprescriptible and indefeasible, the Torren’s System does not
prevent the cestui que trust under an implied trust to sue for
the recovery of the land in the action for reconveyance,
whenever property is acquired thru mistake or fraud.

Illustrative Case: Escobar v. Locsin, where the designated

agent, taking advantage of the illiteracy of the principal,
claimed for himself the property which he was designated to
claim for the latter, and managed to have it registered in his
own name and became part of his estate when he died. The
court held that the estate was in equity bound to execute the
deed of conveyance of the lot to cestui que trust. A trust—
such that was created between the plaintiff and Domingo
Sumangil— is sacred and inviolable. Thus, courts have
therefore shielded fiduciary relations against every manner of
chicanery or detestable design cloaked by legal technicalities.
The Torrens System was never calculated to foment betrayal in
the performance of a trust.
b. Applications under the New Civil Code

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