TRUSTS

ART. 1440-1456 NCC.

By RaniB. Factor
JRU- Law (Camp Crame)
Understanding Trust
1. What is Trust?
Black ’ s Law & Phil . Law
dictionary :
Definition : A TRUST IS A
RIGHT OF PROPERTY , REAL OR PERSONAL ,
HELD BY ONE PARTY FOR THE BENEFIT OF
ANOTHER.
New Civil Code Definition

Art . 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
beneficiary .
NCC approach
Art 1440 of the NCC
Described and defined trust by involving 3
persons or parties:

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 beneficiary .

Art. 1440 NCC, INVOLVES 3 PERSONS OR
PARTIES:
 HOW TRUST CREATED?

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 .

HOW CAN TRUST BE CREATED OR
ESTABLISHED?

EITHER EXPRESS OR IMPLIED Art 1441


A . Express trust are created by
the intention of the trustor or
of the parties

B . Implied trust come into
being by the operation of law .
 may be resulting or
constructive
EXPRESS AND IMPLIED
TRUST DISTINGUISHED
1 . by NCC .
Express trust is created

by the intention of the

trustoror of the
parties , whereas ,
Implied trust as one
that come into being by
the operation of law .
Express & implied trust
distinguished
2 . by Desiderio P . Jurado
 Express trusts are those created by the
direct and positive acts of the parties ,
by writing , or deed , or will or by words
evidencing an intention to create a
trust ., On the other hand implied trusts
are those which without being expressed ,
are deductible frpm the nature of the
transaction by operation of law as
matters of equity , independently of the
particular intention of the parties.
Express & implied trust
distinguished
3. by Supreme Court , in Cuaycong vs .
Cuaycong
 If the intent to
established a trust is clear ,
the trust is express ; If the
intent to established a trust
is to be taken from
circumstances or other
matters indicative of such
intent , then the trust is
Express & implied trust
distinguished
4. by NCC 1443
 No express trusts concerning an
immovable or any interest therein may be
proved by parol evidence ,
 while an existence of an implied trust
may be proved by parol evidence .
Express & implied trust
distinguished
5. by Supreme Court in Fabian vs . Fabian
 Laches and prescription do not
constitute a bar to enforce an express
trust , at least while the trustee does
not openly repudiate the trust , and make
known such repudiation to the
beneficiary , while laches and
prescription may constitute a bar to an
implied trust and no repudiation is
required unless there is concealment of
the facts giving rise to the trust .
Express trust
1. EXPRESS – Created by the intention of the
trustor .
 Art . 1444 NCC .
 a . No particular words are required
 b . Clear intentions is sufficient
 c . Can not be proved by parol
evidence – concerning immovable or any
interest therein . ( art . 1443 )
 d . No Trust shall fail because the
trustee appointed declines the
designation … art . 1445
 e . Acceptance by the beneficiary
is necessary . Art . 1446

Express trust
Art . 1443 . No express trusts concerning
an immovable or any interest therein
may be proved by parol evidence .

Express trust
Art . 1444 . No particular words are
required for the creation of an express
trust , it being sufficient that a trust
is clearly intended .

Express trust
Art . 1445 . No trust shall fail because
the trustee appointed declines the
designation , unless the contrary should
appear in the instrument constituting
the trust .

Express 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 .
 

Governing laws of trust
Art . 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 .

  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 trust
Art . 1448 . There is an implied trust when
property is sold , and the legal estate
is granted to one party but the price
is paid by another for the purpose of
having the beneficial interest of the
property . The former is the trustee ,
while the latter is the beneficiary .
However , if the person to whom the title
is conveyed is a child , legitimate or
illegitimate , of the one paying the
price of the sale , no trust is implied
by law , it being disputably presumed
that there is a gift in favor of the
child .
Sample case of impled
trust
Sometime in 1965 , respondent Dolores
Sandoval bought 2 lots 20 and 21 , in
Dasmarinas village . But because it is the
policy of the subdivision owner to prohibit
the acquisition of 2 lots by a single
individual , she registered lot 20 in the
name of the petitioner Ricardo Huang .
Dolores asked Huang to execute in her favor
an absolute deed of sale in order to
protect her rights as owner of lot 20 to
which Huang conformed . Subsequently , Huang
then , challenging Dolores ownership of the
property . Upon a complaint filed by Dolores
, the trial court decreed that there is an
implied trust created between the parties
to which the Court of Appeals agreed .

Questions?
1. Has an implied trust been created
between the parties?
2 . Has the action to compel the trustee
to convey the property to cestui que
trust prescribed?
Answer ART. 1448
1 . Ricardo Huang became the trustee of
lot 20 and its improvements for the
benefit of Dolores as owner . Tas art .
1448 provides ; there is an implied
trust when the property is sold and the
legal estate is granted to one party
but yje price is paid by another for
the purpose of having beneficial
interest of the property . A resulting
trust arises because of the presumption
that he who pays for a thing intends a
benefit interest therein .
 Implied trust
Art . 1449 . There is also an implied trust
when a donation is made to a person but
it appears that although the legal
estate is transmitted to the donee , he
nevertheless is either to have no
beneficial interest or only a part
thereof .

A donation made to the donee without beneficial
interest.

 Implied trust
Art . 1450 . If the price of a sale of
property is loaned or paid by one
person for the benefit of another and
the conveyance is made to the lender or
payor to secure the payment of the debt ,
a trust arises by operation of law in
favor of the person to whom the money
is loaned or for whom its is paid . The
latter may redeem the property and
compel a conveyance thereof to him .

Exercise
X being unable to pay the purchase price
of a house and lot for his residence
has requested y , and y agreed to lend
him the money on one condition , that
the certificate of title be transferred
to him . In Y ’ s own name for his
protection and as security of the loan .
Later on Y mortgaged the property to
the bank without the knowledge of X .
When the property became due , Y did not
redeem the mortgaged and the property
was advertised for sale . X retained you
as his lawyer . What advice would you
give your client and what legal ground
provided by the code would you assert
to degend his right?
Answer
It is clear that in the instant problem
Art . 1450 is applicable . The law
provides If the price of a sale of
property is loaned or paid by one
person for the benefit of another and
the conveyance is made to the lender or
payor to secure the payment of the debt ,
a trust arises by operation of law in
favor of the person to whom the money
is loaned or for whom its is paid . The
latter may redeem the property and
compel a conveyance thereof to him .
implied
Art . 1451 . When land passes by succession
to any person and he causes the legal
title to be put in the name of another ,
a trust is established by implication
of law for the benefit of the true
owner .

Art. 1451
Implied trust
Art . 1452 . If two or more persons agree
to purchase property and by common
consent the legal title is taken in the
name of one of them for the benefit of
all , a trust is created by force of law
in favor of the others in proportion to
the interest of each .

Implied trust
Art . 1453 . When property is
conveyed to a person in
reliance upon his declared
intention to hold it for , or
transfer it to another or
the grantor , there is an
implied trust in favor of
the person whose benefit is
contemplated .

Implied trust
Art . 1454 . If an absolute conveyance of
property is made in order to secure the
performance of an obligation of the
grantor toward the grantee , a trust by
virtue of law is established . If the
fulfillment of the obligation is
offered by the grantor when it becomes
due , he may demand the reconveyance of
the property to him .

Implied trust
Art . 1455 . When any trustee , guardian or
other person holding a fiduciary
relationship uses trust funds for the
purchase of property and causes the
conveyance to be made to him or to a
third person , a trust is established by
operation of law in favor of the person
to whom the funds belong .

Implied trust
Art . 1456 . If property is
acquired through mistake
or fraud , the person
obtaining it is , by force
of law , considered a
trustee of an implied
trust for the benefit of
the person from whom the
property comes .
Art. 1456
Implied trust
Art . 1457 . An implied
trust may be proved by
oral evidence .

Bank relation to trusts
What is UITF?
1 . Unit Investment Trust Fund
 a . It is a Trusts
products of a trust
company or council .

 b . Governed and Regulated

by Banko Sentral ng Pilipinas
BSP circular 593
 c.
Kinds of products
Peso Funds
Dollar funds
Peso funds



money market fund
 bond fund
 Gs fund
 fixed income fund
 peso balanced fund
 Equity fund

navpu
Being computed by
Net Asset Value per
unit against
benchmark
Trust fund invested to;
Movement is volatile and
risky
Investment life cycle
Relation to art 1440
This falls within the
purview of express
trust , however , it is
more aggressive than
that of the art 1440

 UITF vs. Art 1440
Investor trustor
Risk taker security conscous
Oppurtunist circumventing ownership
No guaranty of returns greater chance
of recovery
not subject to prescriprion Subject to
prescription

End of presentation