TRUST

DEFINITION
It is the legal relationship between one person having an equitable ownership in a
certain property and another person owning the legal title to such property (Jurado).

NOTE: Trust is founded in equity and can never result from acts violative of law (Deluao
vs Casteel, 26 SCRA 415, 1968 and 29 SCRA 350, 1969).

Three persons involved in the creation of a trust

1. Trustor – the person who establishes the trust.

2. Trustee – one in whom confidence is reposed as regards property for the benefit of
another person.
3. Beneficiary or cesti que trust – person for whose benefit the trust has been created
(NCC, Art. 1440).

Trust property

The subject-matter of trust may be any property of value- real, personal, funds or
money, or choses in action (De Leon, 2014).

CLASSIFICATION OF TRUST

1. As to Creation- From the viewpoint of the creative force bringing them into existence,
they may be either:

a. Express trust (NCC, Arts. 1443-1446.) or one which can come into existence only by
the execution of an intention to create it by the trustor or the parties (De Leon, 2014);
or
b. Implied trust, or one which comes into being by operation of law (NCC, Arts. 1447-
1457) (De Leon, 2014); this latter trust being either:
1) resulting trust; and
2) constructive trust
2. As to Effectivity- From the viewpoint of whether they become effective after the
death of the trustor or during his life, they may be either (De Leon, 2014):

a. testamentary trust- one which is to take effect upon the trustor's death. It is usually
included as part of the will and does not have a separate trust deed (Lorenzo vs.
Posadas, 64 Phil. 353, 1937), (De Leon, 2014).
b. inter vivos trust or "living trust"- one established effective during the owner's life.
The grantor executes a "trust deed," and once the trust is created, legal title to the
trust property passes to the named trustee with duty to administer the property for the
benefit of the beneficiary (De Leon, 2014).
3. As to Revocability- From the viewpoint of whether they may be revoked by the
trustor, they may be either: a. Revocable trust- one which can be revoked or cancelled
by the trustor or another individual given the power; or b. Irrevocable trust- one which
may not be terminated during the specified term of the trust.
NOTE: Whether a trust is revocable or irrevocable depends on the wordings or
language used in the creation of the trust. It will be presumed revocable unless the
creator has expressed a contrary intention in the trust deed (De Leon, 2014).

EXPRESS TRUST

One which come into existence only by the execution of an intention to create it by the
trustor or the parties (De Leon, 2014).

Elements of express trust

1. A competent trustor and trustee;

2. An ascertainable trust res; and
3. Sufficiently certain beneficiaries

NOTE: All of the above elements are required to be established (De Leon, 2014).

Evidence to prove express trust

No express trust concerning an immovable or any interest therein may be proved by
parol evidence (NCC, Art. 1443).

An express trust over personal property or any interest therein, and an implied trust,
whether the property subject to the trust is real or personal, may be proved by oral
evidence (NCC. Art. 1457).
NOTE: The general rule is that the burden of proving the existence of a trust is on the
party alleging its existence; and to discharge the burden, it is generally required that his
proof be clear and satisfactory and convincing (Ramos v. Ramos, 61 SCRA 284, 1974).

NOTE: To affect third persons, a trust concerning an immovable or any interest therein
must be embodied in a public instrument and registered in the Registry of Property (De
Leon, 2014).

Creation of express trust

Express trust are those trust voluntarily and intentionally, created by direct and positive
act of the trustor, by some writing, deed, will, or oral declaration evincing an intention
to create trust (NCC, Art. 1444), (De Leon, 2014).

NOTE: Technical or particular form of words or phrases are not essential to the
manifestation of an intention to create a trust. It is possible to create a trust without
using the word “trust” or “trustee” (De Leon, 2014).

No trust shall fail because the trustee appointed declines the designation, unless the
contrary should appear in the instrument constituting the trust (NCC, Art. 1445).

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 (NCC, Art. 1446).
Kinds of express trust

1. Eleemosynary or Charitable trust- one designed for the benefit of a segment of the
public or of the public in general. Created for charitable, educational, social, religious, or
scientific purposes, or for the general benefit of the humanity (De Leon, 2014).
2. Accumulation trust- one that will accumulate income to be reinvested by the trustee
in the trust for the period of time specified (De Leon, 2014).
3. Spendthrift trust- one established when the beneficiary need to be protected
because of his inexperience or immaturity from his imprudent, spending habits or
simply because the beneficiary is spendthrift (De Leon, 2014).
4. Sprinkling trust- one that gives the trustee the right to determine the income of the
beneficiaries who should receive income each year and the amount thereof (De Leon,
2014).

Termination of express trust

1. Destruction of the Corpus
2. Revocation by the trustor (De Leon v. Molo Peckson, 6 SCRA 978 (1962)
3. Achievement of the objective, or happening of the condition, provided for in the trust
instrument
4. Death or legal incapacity of the trustee
5. Confusion or merger of legal title and beneficial title in the same person
6. Breach of trust.

IMPLIED TRUST

Those which, without being express, are deducible from the nature of the transaction
as matters of intent, or which are superinduced on the transaction by operation of law,
as matters of equity, independently of the particular intention of the parties (Phil.
National Bank v. CA, 217 SCRA 347, 1993).

Kinds of implied trust

1. Resulting trust – broadly defined as a trust which is raised or created by the act or
construction of law, but in its more restricted sense, it is a trust raised by implication of
law and presumed always to have been contemplated by the parties, the intention as to
which is to be found in the nature of their transaction, but not expressed in the deed or
instrument of conveyance (Ramos v. Ramos, 61 SCRA 284).
2. Constructive trust – a trust raised by construction of law or arising by operation of
law. It is a trust not created by any words, either expressly or impliedly evincing a
direct intention to create a trust, but by the construction of equity in order to satisfy the
demands of justice. It does not arise by agreement or intention but by operation of law
(Ramos v. Ramos, 61 SCRA 284).