TRUSTS o Trustor may establish a trust with himself

Legal relationship between one person having an as the beneficiary

equitable ownership in property
and another owning the legal title to such
property
the equitable ownership of the former entitling
him to the performance of certain duties and the
exercise of certain powers by the latter for the
benefit of the former
Implies confidence in a relation
Founded in equity
o It cannot result from a contract formed for
an illegal purpose
o May not be created for the purpose of
evading a legal prohibition
Concept of Trust
Fiduciary relationship created by agreement or by
law
Trustor of the property has the equitable title
Legal title is vested in another (trustor)
Trustee holds the property for the benefit of
another (beneficiary)
o Could be the trustor or a third person
Trust Property
Subject matter of the trust
Must consist of property actually in existence in
which the trustor has a transferable interest or
title although it may be any kind of transferable
property
Cannot be a mere expectancy without a right or a
mere interest in the performance of a contract
although such interest is in the nature of a
property right
Owned by 2 persons at the same time
o Relation between the two owners being
such that one of them is under an
obligation to use his ownership for the
benefit of another
Trust not void for indefiniteness
o If by its terms the whole property will go
to beneficiaries
Not necessary to the creation of a trust the cestui
que trust be named or be in existence at the time
of its creation

* Trustee is not an agent of the trust estate; he acts for Classification of trusts
himself in the administration of the trust estate, although As to effectivity- from the viewpoint of whether
subject to the terms of the trust and the law of trusts they become effective after the death of the
trustor or during his life
Exception: Trustee regarded as agent of beneficiaries of o Testamentary trusts
the trust for purposes such as imputing to the o Trusts inter vivos
beneficiaries of the trust notice given to the trustee As to creation- from the viewpoint of creative
force bringing them into existence
Persons involved in a trust o Express trust
Trustor Created by intention of the
o One who intentionally creates a trust trustor or of the parties
Trustee Created by the direct and
o Person who holds the legal title to the positive acts of the parties by
trust property some writing, deed, will or by
For the benefit of another words evincing an intention to
With certain powers create a trust
Subject to certain duties Elements
Beneficiary or the cestui que trust Competent trustor and
o Person who has the equitable interest in trustee
the property Ascertainable trust res
o Enjoys benefit of administration by the Sufficient certain
trustee beneficiaries
o May be a natural person or a legal entity o Implied trust
 One which becomes into being
by operation of law
Resulting trust
One which is presumed
by law to exist from the
transaction and facts of
the case
Constructive trust
One imposed by law
irrespective of and even
contrary to the intention
of the parties
Designed to promote
justice, frustrate fraud
and prevent unjust
enrichment
Proof of trust
GR: trust whether express or implied may be
proved by parol or oral evidence
Exception: Express trust over an immovable or
any interest therein
No particular words are required for the creation
of am express trust
No trust shall fail because the trustee appointed
declines the designation, unless the contrary
should appear in the instrument constituting the
trust
Necessity of acceptance for the creation and validity of a
trust relationship
Acceptance of the trustee
o Not necessary to its existence and
validity
Courts will appoint a trustee to fill
the office if he declines
o Trustees acceptance of an express trust
is necessary to charge him with the office
of the trustee and the administration of
the trust and to vest the legal title in him
o Between mother and uncle
Former is preferred to be the
trustee
Acceptance of the beneficiary
o Essential to the creation and validity of a
trust
o Such acceptance presumed if there is no
proof to the contrary and the trust does
not impose any onerous condition
o Even if real property is involved,
acceptance need not be in a public
instrument
Extinguishment of express trust
1. Accomplishment of the purpose of trust
2. Expiration of the agreed term
3. Mutual agreement of all parties
4. Happening of the resolutory condition,
5. Total loss of the object of trust
6. Annulment or rescission of the trust
7. Decision of court declaring the trust terminated
8. Merger of the rights of the trustor and the trustee
9. Prescription
a. Trustee has performed open and
unequivocal acts of repudiation
b. Such positive acts have been known to
the beneficiary
c. Period fixed by law has expired 10 years
from the time repudiation is made known
to the beneficiary
i. Reckoning point is repudiation of
trust
Mere silent possession by the trustee unaccompanied by
acts to ouster a beneficiary not adverse possession
Trust pursuit rule
Equity will pursue property that is wrongfully
converted by the fiduciary or otherwise compel
restitution to the beneficiary
Trust will follow the property through all chargers
in its state and form provided its product is
capable of identification
Implied trust
Deducible from the nature of the transaction as
matters of intention or which are superinduced on
the transaction by operation of law as matters of
equity independently of the particular intention of
the parties
Implied trust may be proved by oral evidence but
must be trustworthy and received by the courts
with extreme caution and should not be made to
rest on loose, equivocal or indefinite declarations
Requisites before period of prescription may start in
regard to an action based on an implied trust
 Trustee has performed unequivocal acts of
repudiation amounting to an ouster of the
beneficiary
Positive acts of repudiation have been made
known to beneficiary
Evidence is clear and positive
4 year prescriptive period applies only if the fraud
does not give rise to an implied trust
An action for reconveyance of a parcel of land
based on an implied trust prescribes in 10 years
o The point of reference being the date of
registration of the deed or the date of
issuance of the certificate of title over the
property
Kinds of implied trusts
Purchase money resulting trust
o When property is sold and the legal
estate is granted to one party but the
price is paid by another party for the
purpose of having the beneficial interest
of the property
o Elements
An actual payment of money,
property or services or an
equivalent, constituting valuable
consideration
Consideration furnished by the
alleged beneficiary of a resulting
trust
o Exceptions
Actual contrary intention Is
proved
Purchas is made in violation of
an existing statute and in evasion
of its express provision
Donations made to a person but the beneficial
interest is vested in another
o Donee is the trustee
o Designated third person is the
beneficiary
Purchase with borrowed funds and the
conveyance is made to lender to secure payment
of debt
Legal title to land inherited by heir placed in the
name of another
Legal title to property purchased taken in one co-
owner
Conveyance under a promise to hold for, or
transfer to another
Absolute conveyance to a person to secure
performance of grantors obligation; Purchase of
property with use of trust funds
Acquisition of property through mistake or fraud