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Reviewer Trust

Reviewer Trust

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Published by: JoshuaGomez on Aug 13, 2012
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03/05/2015

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2010-2011
REVIEWER FOR TRUST
Trust
– is the fiduciary relationship between oneperson having equitable ownership in propertyand another owning the legal title to suchproperty,, the equitable ownership of the former entitling him to the
performance
of 
certainduties
and the
exercise
of 
certain power 
by thelatter.1.Trust implies confidence in a relationship2.Trust cannot be established in violationof law. (It is founded in equity, thus itcannot co-exist with a violation of thelaw)
Trust vs.Bailment
– bailee has possession of the propertybut no legal title.
Donation
– involves transfer of both legal andequitable title (except gift in trust). A beneficiary of a trust can demand performanceof an obligation without having formally acceptedthe benefit of the trust in a public document.
Contract
– is a legal obligation, which obligationmay or may not be fiduciary in character.
Debt
creditor has merely a personal claimagainst the debtor.
Persons involved in the creation of trust
1.Trusto2.Trustee
3.
Beneficiary/
cestui que trust 
Subject-matter 
of a trust may be any property of value – real, personal, funds, or money or chosesin action.It may include undivided, future or contingentinterest, but it should not be a mere expectancy.Trustor could be the trustee
or 
beneficiary. Hecould not be a trustee and beneficiary at thesame time.It is not necessary that the beneficiary be namedor identified at the creation of a trust (i.e..charitable trust).
Classification of TrustBy Creation
1.
Express
One which came intoexistence only by the execution of anintention to create a trust by the parties.
2.
Implied
– one which comes ionto beingby operation of law:
a.
Resulting
one in which the
intention to create
a trust is impliedor presumed in law.b.Constructive – one imposed by lawirrespective of,a nd even contrary to,any such intention for the purpose of promoting justice, frustrating fraud or preventing unjust enrichment.
Effectivity
1.
Testamentary
– to take effect upon thetrustor’s death.
2.
Inter vivos
– effective during the owner’slife.
Revocability
1.
Revocable
can be revoked by thetrustor.
2.
Irrevocable
may not be terminatedduring the specified term of the trust.
Elements of Express Trust
1.
 A
competent
trustor and trustee;2.An ascertainable trust res; and3.Sufficiently certain beneficiaries.“Consideration is not required to establish trust”
Termination of Express Trust
1.Expiration of period fixed2.Accomplishment of purpose3.Mutual agreement of beneficiaries4.Exercise of power to terminate theterms of trust deed may provide who canterminate, it could either by the trustor,trustee or someone else.Express trust concerning immovable or interesttherein may not be proved by parol evidence(
NCC 1443 
).
ESP Joven | LPU College of Law, Makati1
 
2010-2011
REVIEWER FOR TRUST
It can, however, be waived, by the failure of theopposing party to object when a parol evidenceconcering a trust of an immovable or interesttherein is being presented in court.Except for immovable or interest therein, expresstrust can be created by writing, deed, will or oraldeclaration. No particular words are required or essential for the creation of an express trust(
NCC 1444
).
Kinds of Express Trust1.Charitable Trust
2.
Accumulation Trust
accumulateincome to be reinvested by the trustee inthe trust for the period of time specified.
3.
Spendthrift Trust
to protect thebeneficiary from his imprudent spendinghabit.
4.
Sprinkling trust
– give the trustee theright to determine the incomebeneficiaries who should receive incomeeach year and the amount thereof.In order that a trustee may sue or be sued alone,it is essential that his trust be express, that is atrust created by the direct and positive acts of theparties, by some writing, deed, or will or byproceedings in court.
Art. 1445.
No trust shall fail because the trusteeappointed declines the designation, unless thecontrary should appear in the instrumentconstituting the trust.
Art. 1446.
Acceptance by the beneficiary isnecessary. Nevertheless, if the trust imposes noonerous condition upon the beneficiary, hisacceptance shall be presumed, if there is noproof to the contrary.
CHAPTER 3IMPLIED TRUSTS
 
Art. 1447.
The enumeration of the followingcases of implied trust does not exclude othersestablished by the general law of trust, but thelimitation laid down in Article 1442 shall beapplicable.
Art. 1448.
There is an implied trust whenproperty is sold, and the legal estate is granted toone party but the price is paid by another for thepurpose of having the beneficial interest of theproperty. The former is the trustee, while thelatter is the beneficiary.
However, if the personto whom the title is conveyed is a child,legitimate or illegitimate, of the one payingthe price of the sale, no trust is implied bylaw, it being disputably presumed that there isa gift in favor of the child.Art. 1449.
There is also an implied trust when adonation is made to a person but it appears thatalthough the legal estate is transmitted to thedonee, he nevertheless is either to have nobeneficial interest or only a part thereof.
Art. 1450.
If the price of a sale of property isloaned or paid by one person for the benefit of another and the conveyance is made to thelender or payor to secure the payment of thedebt, 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 theproperty and compel a conveyance thereof tohim.
Art. 1451.
When land passes by succession toany person and he causes the legal title to be putin the name of another, a trust is established byimplication of law for the benefit of the trueowner.
Art. 1452.
If two or more persons agree topurchase property and by common consent thelegal title is taken in the name of one of them for the benefit of all, a trust is created by force of lawin favor of the others in proportion to the interestof each.
Art. 1453.
When property is conveyed to aperson in reliance upon his declared intention tohold it for, or transfer it to another or the grantor,there is an implied trust in favor of the personwhose benefit is contemplated.
Art. 1454.
If an absolute conveyance of propertyis made in order to secure the performance of anobligation of the grantor toward the grantee, atrust by virtue of law is established. If thefulfillment of the obligation is offered by thegrantor when it becomes due, he may demandthe reconveyance of the property to him.
Art. 1455.
When any trustee, guardian or other person holding a fiduciary relationship uses trustfunds for the purchase of property and causesthe conveyance to be made to him or to a thirdperson, a trust is established by operation of lawin favor of the person to whom the funds belong.
ESP Joven | LPU College of Law, Makati2
 
2010-2011
REVIEWER FOR TRUST
Art. 1456.
If property is acquired through mistakeor 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. 1457.
An implied trustmay be proved by oral evidence.Enumeration of cases of implied trust in Chapter 3 is not exclusive
Other Cases of Implied Trust not cited inChapter 3
1.Registration in the Torrens System of aland in the name of another but actuallyowned by another person.2.Registration of vehicle placed in thename of another, but price thereof is paidby another person.3.Mortgagee holds in trust for themortgagor the surplus in the proceeds of the foreclosure sale (excess of what themortgagor owes from the mortgagee)
4.
 Agent who willfully violated the trustreposed in him by the principal when hebought for himself the property which hewas supposed to buy for the principal.5.Trust fund doctrine in Corporation Law.6.Security Deposit under Sections 129,203 and 414 of the insurance code.
Distinctions between Expressand Implied TrustExpress Implied
CreationBy directpositive acts of the parties bysome writing or deed or will or by wordsevidencing theintention tocreate trustDeductible fromthe nature of the transactionor imposed byoperation of law,independentlyof the particular intention of theparties.Proof onImmovablesCannot beproven by parolEvidenceCan be provenby oralevidence.PrescriptionImprescriptibleunlessrepudiated byLaches andprescription canset in (for the trustee andsuchrepudiation ismade known tothe beneficiary.constructivetrust only)Implied trust can be converted into an ExpressTrust
Necessary Elements for the acquisition of thetrustee of the Trust Res
1.He has performed open and unequivocalacts of repudiation amounting to anouster of the cestui que trust or the other co-owners;2.Such positive acts of repudiation havebeen made known to the cestui que trustof the other co-owners.3.The evidence thereon should be cleaand conclusive or convincing; and4.The period fixed by law has prescribed.
Acts that may be considered as Repudiation
1.Filing by a trustee of an action in courtagainst the trustor to quiet title toproperty, or for recovery of ownershipthereof, held in possession by the former;2.Issuance of the Certficate of Title and inthe lapse of more than 20 years, openand adverse possession as owner;3.Administartor of the property causes thecancellation of the property in the nameof the beneficiaries to his name;For prescriptive period to apply against theperson seeking the reconveyance, he must
not
be in possession of the property. If he is inpossession, then it will not prescribe for he maywait until his possession is disturbed or his title isattached before taking steps to vindicate hisrights.
When prescriptive period begins to run for action for reconveyance of property
1.Constructive Trust – date of registrationof the deed or the date of issuance of said new certificate of title of the propertywhich constitutes constructive notice tothe public.2.In case of fictitious sale to avoidforeclosure of mortgage, from the date of 
ESP Joven | LPU College of Law, Makati3

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