Trust

A trust is a “fiduciary relationship with respect to property which involves the existence of equitable duties imposed upon the holder of the property to deal with it for the benefit of another.” (Huang v CA, citing Tolentino)

Trust is the legal relationship between one person having an equitable ownership in property and another person 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. (Tolentino)

Trust is the right to the beneficial enjoyment of property, the legal title to which is vested in another.(Paras)

It has three requisites:

1. a trustor – the one who establishes the trust
2. a trustee – the one in whom confidence is reposed as regards to property, for the benefit of another
3. a beneficiary – the one for whose benefit the trust is created (but trustor and beneficiary may be the same person; beneficiary is also referred to as cestui que trust)

Characteristics of trust: (Tolentino)

1. It is a relationship
2. It is a relationship of a fiduciary character
3. It involves property
4. It involves the existence of equitable duties imposed upon the legal owner to deal with it for the benefit of another
5. It arises as a result of a manifestation of intent to create the relationship (does not apply in case of constructive trusts, which arise by operation of law)

CASE:

Salao v Salao:

The plaintiffs, all relatives of the defendants, instituted action for a piece of land in Bataan, alleging it came from common funds and that there was an oral partition made earlier.
They alleged that the defendants, who became administrators of property in Malabon inherited from their grandparents, used common funds to buy property elsewhere. The court ruled that it was not proven that a trust had been created:
**no documentary evidence was presented to prove an express trust, and Art. 1443 says parol evidence cannot be used to prove an express trust concerning realty
**neither can the evidence prove an implied trust. While an implied trust may be proven by oral evidence, it must be TRUSTWORTHY.
**neither was it proven that there was fraud or mistake, enough to create a constructive trust

TWO KINDS OF TRUST

Express
Created by the parties, or by the intention of the trustor
Express trusts do not prescribe unless repudiated

Implied
Created by operation of law
The rule on implied trusts regarding prescription is confusing. In general, resulting trusts do not prescribe, but constructive trusts do

** In Gerona et al v De Guzman, in 1964, the court held that implied trusts prescribe within four years after the discovery of the fraud. But in Caladiao v Vda. De Blas, in a decision made a month before Gerona, the court held that implied trusts do not prescribe if the registration of the property was in bad faith, and the property was still in the trustee’s name, because registration is in the nature of a continuing and subsisting trust. In Gonzales et al v IAC (in Paras, not in syllabus), 1991, the court said that action for reconveyance of real property to enforce an implied trust prescribes in 10 years from the issuance of an adverse title to the property, which operates as constructive notice.

1. Express – articles 1443-1446.

— created by the intention of the trustor or of the parties
— those created by the direct and positive acts of the parties, by some writing or deed, or will, or by words either expressly or impliedly evincing an intention to create a trust (Salao v Salao)

3 requisites for an express trust: (no express trust if any missing; from Mindanao Dev’t Authority v CA))

1. competent trustor and trustee
2. ascertainable trust res
3. beneficiaries

**No particular words are required for the creation of an express trust, as long as it is clear that a trust is intended; but an express trust concerning realty or interest therein may NOT be proved by parol evidence.
**an express trust does not prescribe, unless repudiated.** In this case, the repudiation must be known to the cestui que trust and must be direct, clear, open and equivocal***
** Mindanao Dev’t Authority, citing Tamayo v Callejo: Prescription in case of express trusts can be invoked only from the time the trust is repudiated.
*** Dissenting opinion in Mindanao Dev’t Authority, citing various juris

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