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TRUST

Classification of Trust (1441)


a. Express Trust – created by the parties or by intention of the parties.
b. Implied Trust – created by operation of law
i. Resulting trust – there is an intent to create trust but not expressed in the deed or
instrument of conveyance`
ii. Constructive trust – no intention to create a trust but trust is nevertheless created by
law to prevent unjust enrichment or oppression.

Element of an Express trust


1. A competent trustor and trustee
2. An ascertainable trust res
3. Sufficiently certain beneficiaries

Termination of express trust


1. Expiration of the period fixed
2. Accomplishment of purpose
3. Mutual agreement of beneficiaries
4. Exercise of power to terminate
5. Merger
6. Dissolution by the court if continuation will defeat the purpose of trust

Evidence to prove an express trust (1443)


1. Burden of proof – on the party alleging its existence
2. A writing is necessary to prove trust concerning immovable property or any interest therein. The
writing is required not for validity but for purposes of proof.
3. General rule – express trust cannot be proved by parol evidence.
When waived?
1. Failure to interpose a timely objection against the presentation of oral
evidence
2. By cross examining the adverse party and his witnesses along the prohibited
lines.
4. To affect third person, trust concerning an immovable or any interest therein must be
embodied in a public instrument and registered in the Registry of Property.
5. An express trust over personal property or any interest therein, whether real or personal may
be proved by oral evidence.

Prescription of action for reconveyance


1. 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 trust and resulting implied trust.
2. An action for reconveyance to enforce an implied trust in one’s favor prescribes in 10 years
starting from the moment the law creates the trust.
3. In an implied trust, if a person claiming to be the owner thereof is in actual possession of the
property the right to seek reconveyance does not prescribe.
Examples of resulting trust
1. Art. 1448. Sale to a party but price paid by another.
A resulting trust arises in favor of a person from whom a consideration comes for
conveyance of property to another.
2. 1449. When donation was made to the donee but beneficial interest is vested in another.
3. 1451. When legal title to a land was inherited by the heir and the heir himself causes the
registration of his legal title under the name of another person
4. 1452. When property is purchased by two or more persons and by common consent the legal
title is placed in the name of one of the co-owners for the benefit of all.
5. 1453. When property is conveyed to a person who promise to hold it or transfer it to another.

Examples of constructive trust


1. A 1450. When the price of a sale of property was loaned and paid by the lender for the benefit
of the borrower but conveyance was made to the lender to secure the payment of the debt.
2. 1454. When absolute conveyance of the property is made to a person to secure the
performance of the grantor’s obligation.
3. 1455. When property is purchased by the trustee, guardian or other person holding fiduciary
relationship using the trust funds and causes the conveyance to be made to him or third person.
4. 1456. When property is acquired through mistake or fraud.