Chapter 3

Implied Trust
Article 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
• Are those which, without being express, are deducible from the
nature of the transaction as matters of intent, or which are super
induced on the transaction by operation of law, as matters of equity,
independently of the particular intention of the parties.
Kinds of implied trust
• Resulting trust
• Constructive trust
Resulting trust
• 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.

• Ex: Articles 1448, 1449, 1451, 1452, and 1453.

Constructive trust
• 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 and prevent unjust
enrichment.

• Ex: Articles 1450, 1454, 1455, and 1456.

Enumeration of cases of implied trust
• Not Exclusive
• It is intended to be illustrative of situations in which implied trust is
needed in order to correct a wrong or prevent an unjust enrichment.
Implied trust is base on equity
• The implied trustee shall deliver the possession and reconvey title to
the property to the beneficiary of the trust, and to pay to the latter
the fruits and other net profits received from such property during
the period of wrongful holding and otherwise, to adjust the equities
between the trustee holding the legal title and the beneficiary of the
trust.
Distinction between express trust and implied
trust
• As to creation: Implied trust are created by the intention of the
trustor or parties, while implied trusts come into being by operation
of law.

• As to Proof: An express trust concerning an immovable or any interest

therein cannot be proved by parol evidence, while an implied trust
concerning an immovable or any interest therein may be proved by
oral evidence
Distinction between express trust and implied
trust
• As to Repudiation: In order that laches or acquisitive prescription may
bar an action to enforce an express trust, an express repudiation
made known to the benefi ciary is required, while laches constitutes a
bar to actions to enforce an implied trust even where there is no
repudiation, unless there is concealment of the fact giving rise to the
trust
Acquisition of property through prescription.
• General Rule: Trustee cannot acquire by prescription ownership over
property entrusted to him until and unless he repudiates the trust.

• Exception:
• Constructive implied trusts: prescription may supervene even if the
trustee does not repudiate the relationship.
• In resulting trusts: Imprescriptibility may apply for as long as the
trustee has not repudiated the trust.
Prescriptibility of action for reconveyance
based on implied trust.
• An action for reconveyance to enforce an implied trust in one’s favor
prescribes in ten (10) years from the time the right of action accrues.

• Burden of proof: It is incumbent upon the party who sets up the

defense of prescription to prove the date from which the prescriptive
period began to run.

• Prescription only applies to plaintiff or the person enforcing the trust

is not in possession of the contested property.
When prescriptive period begins to run
• From the moment the law creates the trust.

• Reason: the so-called trustee does not recognize any trust, and has no
intention to hold for the beneficiary.
Laches
• Applies to Implied trust

• The defense of laches is an equitable one and does not concern itself
with the character of the defendant’s title but only with whether or
not by reason of plaintiff’s long inaction or inexcusable neglect, he
should be barred from asserting his claim at all, because to allow him
to do so would be inequitable and unjust to defendant
Article 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.
Sale to a party but price paid by another
• General Rule: A resulting trust arises in favor of a person from whom
a consideration comes for a conveyance of property, whether real or
personal, to another.

• Reason: There is a presumption that he who pays for a thing intends a

beneficial interest therein for himself.

• Purchase money resulting trust

Essential requisites
• There be an actual payment of money, property, or service, or an
equivalent constituting valuable consideration; and

• Such consideration must be furnished by the alleged beneficiary of a

resulting trust
Trust rebuttable
• By proof of a contrary intention of the person from whom the
consideration comes, and such proof may be by parol evidence.

• Effects: The trust results only in favor of one advancing the

consideration, and not in favor of one for whose benefit the purchase
may have been made.
Exception
• The person to whom the legal estate is conveyed is a child, legitimate
or illegitimate, of the payor.

• Reason: It is presumed that a gift or donation was intended in favor of

the child
Example
• A property is sold to X who acquires title but the price is paid by Y for
the purpose of having the beneficial interest in the property. By
operation of law, an implied trust arises with X as the trustee and Y,
the beneficiary.
• If X is the legitimate or illegitimate child of Y, no trust is implied by
law. It is disputably presumed that there is a gift in favor of X, and
consequently no trust is created in favor of Y, absent any clear proof
to rebut the presumption
Purchase by a person with his own funds for
another.
• There is a presumption or implication of law that the intention of the
purchaser, that he intends the purchase for his own benefit and the
conveyance in the name of another as a matter of convenience or
arrangement for collateral purposes.
Example
• To prevent the eventual sale at public auction of the land of A which
was forfeited by the Government for delinquency in payment of real
estate taxes, B paid the delinquent taxes and accepted receipts for
payments issued in the name of A.

• B became a trustee of the land for the benefit of the of A.