TITLE V

TRUSTS (n)

CHAPTER 1

General Provisions

Article 1440. A person who establishes a trust is called the trustor; one in whom confidence is
reposed as regards property for the benefit of another person is known as the trustee; and the
person for whose benefit the trust has been created is referred to as the beneficiary.

Article 1441. Trusts are either express or implied. Express trusts are created by the intention of the
trustor or of the parties. Implied trusts come into being by operation of law.

Article 1442. The principles of the general law of trusts, insofar as they are not in conflict with this
Code, the Code of Commerce, the Rules of Court and special laws are hereby adopted.

Article 1440 — Who’s who: trustor, trustee, beneficiary

Text (short): “A person who establishes a trust is called the trustor; one in whom confidence is
reposed as regards property for the benefit of another person is known as the trustee; and the
person for whose benefit the trust has been created is referred to as the beneficiary.” ChanRobles

Plain meaning (one line)

A trust is a fiduciary arrangement in which legal title to property is held by one person (the trustee)
for the benefit of someone else (the beneficiary), who holds the equitable / beneficial interest; the
person who creates the arrangement is the trustor (also called settlor or grantor). ChanRobles

Key legal consequences and unpacking

1. Division of title. The trustee normally holds legal title while the beneficiary holds beneficial
ownership (the right to income, enjoyment, proceeds). This split is central to trust law and
explains why the trustee must act in the beneficiary’s interest. Studocu

2. Fiduciary character. The trustee owes high duties to the beneficiary (loyalty, no conflicts,
impartiality between multiple beneficiaries, prudence, accounting, segregation of trust
assets). Philippine courts treat trustees as fiduciaries and enforce strict standards, especially
if the trustee is paid or is a professional institution. eLibrary

3. Scope — any property of value. The “res” (trust property) can be real property (land),
personal property, money, or a right/claim — anything capable of being owned or
transferred may be held in trust. (See examples and case law below.) Scribd

Everyday examples

 A parent transfers title to a house to a trusted lawyer to hold and manage for a child until
the child turns 25 (trustor = parent; trustee = lawyer; beneficiary = child).

 A bank acting as trustee for an investment trust (bank holds legal title, beneficiaries receive
income).
  A simple nominee arrangement where A holds title as trustee for B (often creates an implied
trust; see Article 1441/1448 discussion). RESPICIO & CO.

Practical tip

When you create or accept a trust, spell out in writing: identity of trustor/trustee/beneficiaries, trust
property, powers and limits of trustee, investment and distribution rules, notice/accounting
frequency, duration and termination conditions, and whether the trust is revocable or irrevocable.

Article 1441 — Express vs. implied trusts

Text (short): “Trusts are either express or implied. Express trusts are created by the intention of the
trustor or of the parties. Implied trusts come into being by operation of law.” ChanRobles

Two big categories

1) Express trusts

 How created: by the deliberate intention of the trustor — typically by a trust instrument
(deed of trust), deed, or a will (testamentary trust). No magic words required; the controlling
factor is clear intent to create a trust. For immovable property, the Civil Code requires
certain formalities (see below). civil-code-philippines-book4.blogspot.com

 Common forms: inter vivos (created during the trustor’s life by deed) and testamentary
(created by will).

 Practical note: For real estate-related trusts, parol evidence may be restricted — an express
trust over land generally must satisfy the statute-of-frauds-like formalities in the Civil Code
(Art. 1443: “No express trusts concerning an immovable or any interest therein may be
proved by parol”). civil-code-philippines-book4.blogspot.com

2) Implied trusts (by operation of law)

 These do not require explicit intent; equity or the statute creates them to reflect the real
ownership or to prevent injustice. Philippine law recognizes two main species:

o Resulting trusts (sometimes called “purchase-money resulting trusts”): arise where

one person pays the purchase price but the legal title is put in another’s name — the
law presumes the titleholder holds the property as trustee for the payer (Art. 1448).
The Code lists many situations that create implied trusts (Arts. 1448–1456).
Lawphil+1

o Constructive trusts: imposed by law/courts to prevent unjust enrichment or fraud —

e.g., when a title is registered in a person’s name but the property actually belongs
to another; equity treats the registered owner as constructive trustee for the true
owner (see cases discussing Art. 1456). eLibrary+1

Examples of implied trusts

 Person A pays for a lot but title is recorded in B’s name “for convenience”; law may treat B as
trustee for A (resulting trust). (Art. 1448 + Supreme Court guidance.) Lawphil
  A corrupt official pockets public funds and registers assets in a relative’s name; courts may
impose a constructive trust in favor of the State or victims to prevent unjust enrichment.
(Constructive trust doctrine explained by Supreme Court decisions.) eLibraryLawphil

Why the distinction matters

 Proof & remedies differ. Express trusts follow the parties’ terms. Implied trusts often give
rise to equitable remedies (reconveyance, accounting, constructive trust remedies) and can
be invoked without a written instrument. Prescription (statute of limitations) and burden of
proof differ between types — courts have elaborated specific rules in many cases. Lawphil+1

Article 1442 — Adoption of general trust law (subject to other laws)

Text (short): “The principles of the general law of trusts, insofar as they are not in conflict with this
Code, the Code of Commerce, the Rules of Court and special laws are hereby adopted.” ChanRobles

Plain meaning and practical effect

 The Civil Code gives a compact statutory framework for trusts (Arts. 1440–1457), but the
Code expressly adopts other general trust doctrines (equitable principles and common-
law/equitable practice) so long as they do not conflict with the Civil Code, the Code of
Commerce, Rules of Court, or any special statute/regulation (for example, banking or tax
laws). In short: the Code provides the base, and courts borrow equitable trust principles to
fill gaps. ChanRoblesScribd

Practical consequences and where to watch for “special laws”

 Banks & trust operations. When a bank acts as trustee (bank trust accounts, investment
trusts), banking laws and BSP regulations apply in addition to the Civil Code’s trust rules —
do not assume plain Civil Code rules govern bank-administered trusts. RESPICIO & CO.

 Corporate trusts and securities. Corporate trust arrangements (trustees under bond
indentures, nominee arrangements for securities) are also governed by the Code of
Commerce, securities law, and regulations — again, Civil Code principles are supplemented
by those regimes. RESPICIO & CO.

Practical, doctrine-to-practice bridge — what you must always check

1. Is the trust express or implied?

o If express, find the trust instrument (deed, will). Check formalities (esp. for
immovables — Art. 1443). civil-code-philippines-book4.blogspot.com

o If implied, identify the statutory or equitable basis (e.g., Art. 1448 purchase-money
resulting trust; Art. 1456 constructive trust). Case law often supplies the missing
elements. LawphileLibrary

2. Who holds legal title and who benefits? — Confirm whether the trustee holds legal title on
record (registrar, land titles) and who has beneficial interest; if land is involved, registry
status matters for third-party rights. Lawphil
 3. Trustee duties & liability — Trustees must: (a) follow the trust instrument; (b) act loyally and
prudently for beneficiaries; (c) segregate trust assets; (d) render accounts; (e) not self-deal
absent disclosure/consent. Philippine jurisprudence enforces these standards strictly.
Remedies for breach include accounting, reconveyance, damages, and imposition of a
constructive trust. eLibraryLawphil

4. Termination & revocability — Check the instrument: trusts may be revocable or irrevocable
by express terms. Where the Code or the instrument is silent, courts look to intent and
equitable principles (many commentators treat trusts as presumptively revocable unless
clearly irrevocable). For property-related trusts, actions for reconveyance (e.g., based on an
implied trust) have special prescription periods set by case law. ScribdLawphil

5. Special-regime traps — bank trusts, employer/employee retirement trusts, securities

nominee arrangements, and trusts involving foreign elements may trigger regulatory rules
(BSP, SEC, tax) that modify ordinary trust practice. Always check regulatory rules. RESPICIO &
CO.+1

Short worked examples (concrete hypos + outcomes)

1. Express inter vivos trust (clear deed). Parent executes a notarized Deed of Trust transferring
condominium title to Trustee T to hold for Beneficiary C until C turns 30; deed lists powers
and distribution rules. Result: Trustee holds legal title, must follow deed, render regular
accounts, and cannot transfer without complying with deed. (Formalities satisfied.)

2. Resulting (purchase-money) trust (Art. 1448). Person A pays the purchase price for Lot X but
the title is recorded in B’s name “for convenience.” A claims beneficial ownership. Result:
Philippine law often presumes a purchase-money resulting trust — A is beneficial owner;
remedy is reconveyance or declaration of trust. See SC cases applying Art. 1448. Lawphil

3. Constructive trust to prevent unjust enrichment. Title registered in C’s name after fraud by
D. Court imposes a constructive trust in favor of the true owner and orders reconveyance
and accounting. Result: Equitable remedies; courts use Art. 1456 and constructive-trust
doctrine. eLibrary

Practical checklist for each role

If you are the trustor (creating the trust):

 Put the trust in writing (trust deed) — identify the trust property, trustee powers, duties,
duration, revocability, successor trustees, distribution rules, accounting schedule. If land is
involved, follow formalities (notarization, registration as appropriate). civil-code-philippines-
book4.blogspot.com

 If you wish the trust to be irrevocable, say so clearly and provide mechanisms (e.g.,
independent trustee, no unilateral revocation).

 Tell the trustee and beneficiaries clearly and provide them with copies.

If you are the trustee:

  Obtain written acceptance; keep trust property segregated (separate accounts/titles where
possible), produce timely accounts, avoid conflicts, obtain indemnities and instructions in
writing for unusual actions, consider insurance or bonding if fiduciary exposure is significant.
eLibrary

If you are the beneficiary (or third party):

 Ask for the trust deed or evidence of trustee authority, insist on periodic accounting, and, if
property is registered in the trustee’s name, get documentary evidence of the equitable
interest (or file appropriate annotations/claims if necessary).

Quick list of authoritative sources (for further reading)

 Civil Code of the Philippines — Title V, Trusts (Arts. 1440–1457). ChanRoblesLawphil

 Leading Supreme Court decisions on implied trusts, constructive/resulting trusts and

remedies (see cases discussing Arts. 1448 and 1456). LawphileLibrary

 Practical commentaries and guides on trusts in the Philippines (news/legal commentaries

summarizing how trusts are used and regulated; see Inquirer/respicio pieces for plain-
language primers). Business InquirerRESPICIO & CO.

One-page “cheat” (copyable language)

Simple express-trust clause (starter):

“I, [Trustor], transfer and convey to [Trustee], as trustee, the property described at Annex A, to hold
in trust for the benefit of [Beneficiary], upon the following terms: (a) trustee shall hold legal title,
collect income and apply net income to the beneficiary during life, and distribute principal as follows
on [event]; (b) trustee shall render an accounting every [6 months]; (c) trustee shall not sell,
mortgage, or encumber the trust property without written consent of [Trustor]/[Beneficiary]; (d) this
trust is [revocable/irrevocable]; (e) successor trustee: [name].”
(Use counsel to adapt to your facts and to satisfy formalities for real property transfers.)

CHAPTER 2

Express Trusts

Article 1443. No express trusts concerning an immovable or any interest therein may be proved by
parol evidence.

Article 1444. No particular words are required for the creation of an express trust, it being
sufficient that a trust is clearly intended.

Article 1445. No trust shall fail because the trustee appointed declines the designation, unless the
contrary should appear in the instrument constituting the trust.
Article 1446. 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.

Article 1443 — “No express trusts concerning an immovable or any interest therein may be proved
by parol evidence.”

Plain rule (one line):

If the trust is an express trust over real property (land) or any interest in land, it cannot be proved by
oral testimony alone — it must be evidenced by a written instrument.

What this means (detail):

 “Parol evidence” = oral statements, conversations, hearsay; the Article bars using those to
establish an express trust in immovables.

 This is essentially a statute-of-frauds protection: trusts that deal with

title/ownership/interests in land must be in writing (deed of trust, trust clause in a deed, will,
or other written document).

 The rule protects 3rd parties and registry certainty: land transactions affect titles, registries,
and third-party rights; parties must reduce trust arrangements to writing and (where
appropriate) register them.

Important caveats & interplay with other doctrines:

 This Article does not prevent courts from recognizing implied/constructive/resulting trusts
created by operation of law in appropriate cases. Those equitable trusts can sometimes be
established by extrinsic evidence (payments, conduct, possession, improvements) — courts
have developed doctrines (e.g., purchase-money resulting trust, constructive trust to prevent
unjust enrichment). In short: express trust over land must be written, but some non-express
trusts may still be proved by parol under other legal doctrines.

 The doctrine of part performance (equitable relief for oral contracts concerning land when
party has partly performed — e.g., possession, payments, improvements) may sometimes
affect outcomes where parties relied on oral arrangement; however the safest route for an
express trust over land is written trust instrument + appropriate notarial/registration steps.

Concrete example:

 Mr. A gives the title of Lot X to Ms. B and says orally “hold Lot X for my daughter.” If the
arrangement was meant to be an express trust of the land, Article 1443 bars enforcing that
trust by oral testimony alone. The daughter will be at risk unless there is a written trust deed
or the evidence can trigger a different doctrine (resulting/constructive trust, part
performance).

Practical checklist / advice:

 Always put any trust that involves land in writing (Deed of Trust, Trust clause in a Deed of
Conveyance, notarized and recorded if transfer of title is involved).
  If you are a beneficiary in an oral land-trust situation, preserve all objective evidence
(payments, receipts, possession, improvements, witnesses) because your claim may have to
rest on resulting/constructive trust or part-performance.

Article 1444 — “No particular words are required for the creation of an express trust, it being
sufficient that a trust is clearly intended.”

Plain rule (one line):

There are no “magic words.” A written instrument need not use formulaic language — clear intent to
create a trust is sufficient.

What this means (detail):

 The law is flexible about wording. What matters is substance (did the trustor intend to create
a fiduciary holding for beneficiaries?) rather than form.

 Trusts can be created by a variety of expressions: “I transfer X to you to hold for Y,” “I want
you to keep this and use the income for Z,” or other phrases that clearly show the trustor
meant to impose fiduciary duties and benefit another.

Examples of acceptable expressions of intent:

 “I give this house to you so you will manage it for my grandchildren and distribute income to
them” — sufficient.

 A clause in a will: “I leave ₱1,000,000 in trust with my lawyer for the education of my niece”
— sufficient though words vary.

Practical drafting tips:

 Even though no particular words are required, clarity reduces litigation. A good express trust
instrument should include: trustor, trustee, beneficiaries, description of trust property (the
“res”), trustee powers/limitations, distribution rules/timing, trustee duties and accounting
schedule, revocability/termination, successor trustee clause, and choice of
law/administration provisions.

 For land: combine clear trust language with the formalities required by Article 1443 (written
instrument + notarialization/registration as needed).

Model sentence (minimal but clear):

“I, [Trustor], hereby transfer to [Trustee] the parcel described in Annex A, to hold in trust for the
benefit of [Beneficiary], to collect income and apply it for the beneficiary’s maintenance and
education until [event].”

Article 1445 — “No trust shall fail because the trustee appointed declines the designation, unless
the contrary should appear in the instrument constituting the trust.”

Plain rule (one line):

If a person nominated as trustee refuses to act, the trust does not automatically fail; the trust
survives and a substitute trustee will be appointed unless the trust instrument expressly provides
otherwise.

What this means (detail):

 The law favors perpetuation of the trust and the beneficiary’s interest over the nominated
trustee’s personal choice. A trustee’s declination does not defeat the trust.

 If the trust instrument spells out that the trust is contingent upon acceptance by that
particular trustee (rare), then the instrument can control; otherwise courts will fill the gap
(appoint a replacement trustee, or beneficiaries/trustor designate replacement).

Practical examples:

 Trustor names Friend F as trustee in a deed; F declines. The trust still stands. The instrument
may name a successor; if not, beneficiaries, the trustor (if alive), or a court may appoint a
trustee.

 Donor names a foreign bank as trustee; the bank refuses due to regulatory constraints — the
trust won’t fail because of the bank’s refusal.

Practical drafting and risk-avoidance:

 Always draft trust instruments with a succession plan: name successor trustees, provide
appointment mechanics, or authorize a court/registrar to appoint a substitute.

 Include optional acceptance language and a short window to accept (e.g., “Trustee shall
indicate acceptance within 14 days of notice; if he declines, [Successor] shall be trustee”).

Model clause (succession):

“If the appointed Trustee declines, dies, becomes incapacitated, or resigns, [Successor Trustee 1]
shall succeed; if unavailable, [Successor Trustee 2] shall be appointed, and failing both, any
beneficiary may petition the court for appointment.”

Article 1446 — “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.”

Plain rule (one line):

A beneficiary must accept the trust; however, where the trust gives only benefits and imposes no
burdens, the law will presume acceptance in the absence of evidence otherwise.

What this means (detail):

 Acceptance required: Generally, a person must accept the beneficial interest (this is because
a trust can sometimes impose duties/conditions). Acceptance may be express or implied by
conduct (e.g., taking benefit).

 Presumed acceptance for non-onerous trusts: If the beneficiary stands only to receive
benefits (money, income, property) and there are no burdens (no obligation to pay debts,
perform services, or assume liabilities), the law presumes acceptance unless the beneficiary
proves otherwise (e.g., proves he refused because of personal reasons).
  Onerous conditions: If the trust requires action or imposes obligations (e.g., pay debts,
administer property, assume liabilities, do acts that cost money/time), the beneficiary’s
explicit acceptance may be required.

Who can accept on behalf of beneficiary:

 If beneficiary is minor or incapacitated, acceptance may be made by legal guardian, parent,

or lawful representative. The trust could also be accepted by a representative designated in
the trust instrument.

 Beneficiary may renounce the trust; renunciation has legal consequences (e.g., trust
property may pass to alternate beneficiaries or be handled per instrument).

Examples:

 Trust created to pay school fees of Child C. Child is minor; acceptance is presumed and
parent/guardian will act.

 Trust created to require Beneficiary B to assume a heavy financial obligation (e.g., maintain
an ailing property at his cost) — this is onerous; the law will require explicit acceptance. If B
refuses, trust might fail as to B and the instrument should provide alternate beneficiaries.

Practical drafting tips:

 If you want a beneficiary to have a choice, provide an acceptance clause and a time limit
(e.g., “Beneficiary must accept or renounce within 60 days of notice; acceptance may be by
written instrument or by taking benefit”).

 For minor beneficiaries, provide for guardian acceptance and for investment of income until
majority.

 If the trust imposes duties or liabilities on beneficiary, include an option to decline and a
fallback plan (substitution, residuary distribution).

Model acceptance clause:

“A beneficiary shall be deemed to have accepted the trust if she receives distributions or other
benefits, unless she timely delivers written renunciation to the Trustee within 60 days of written
notice of the trust; a minor’s acceptance shall be by his legal representative.”

Short practical summary & action steps

If you are creating an express trust over land

 Put it in writing (Article 1443) — preferably a notarized Deed of Trust. Specify

trustee/beneficiary/res, registration instructions, and successor trustees.

If you are naming trustees or beneficiaries

 Provide succession mechanics (Article 1445). Make it clear whether beneficiary acceptance
is automatic or requires formal notice (Article 1446).

If you are a beneficiary

  If trust is purely beneficial, acceptance is usually presumed by law — but if you wish to
refuse, do so expressly and in writing and seek legal advice on consequences.

If you are a trustee

 Provide prompt notice to beneficiaries, secure acceptance where needed, and keep written
records. If you decline appointment, do so in writing and trigger successor appointment
steps.

CHAPTER 3

Implied Trusts

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.

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.

Article 1449. There is also an implied trust when a donation is made to a person but it appears that
although the legal estate is transmitted to the donee, he nevertheless is either to have no
beneficial interest or only a part thereof.

Article 1450. If the price of a sale of property is loaned or paid by one person for the benefit of
another and the conveyance is made to the lender or payor to secure the payment of the debt, 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 the property and compel a conveyance thereof to him.

Implied trusts — Articles 1447–1450 (New Civil Code, Philippines)

Below I unpack Articles 1447–1450 in detail: what each Article means, the legal elements courts look
for, typical fact-patterns, practical consequences, how claims are proved/defended, remedies
available, drafting & prevention tips, and short model clauses/checklists you can use. I keep things
practical so you can use them in litigation, transactions, or teaching.

Quick concept: what is an implied trust?

An implied trust (resulting or constructive) is a trust created by operation of law because equity
(fairness) requires it — not because the parties executed a written trust instrument. Implied trusts
arise where legal title is in one person but justice or the parties’ real arrangement gives the beneficial
interest to another. Article 1447 simply says the Code lists common cases (next Articles) but doesn’t
limit the court from recognizing other implied trusts — subject to Article 1442 (i.e., general trust law
and other statutes/regulations apply).
Article 1448 — Purchase-money / purchase-price resulting trust

Text (summary): When Person A pays the purchase price but title is conveyed to Person B for the
purpose of giving A the beneficial interest, B is trustee and A the beneficiary. Exception: if B (the
titleholder) is a child of the payer, law rebuttably presumes the transfer was a gift — no trust
presumed.

What the Article requires (elements)

1. Payment of the purchase price by claimant (the purported beneficial owner).

2. Legal title conveyed to someone else.

3. Circumstance/intent showing the payment was not meant as an outright gift to the
titleholder but that the payer expected beneficial ownership (or at least to keep beneficial
interest).

4. No statutory/formal bar (e.g., where other laws intervene).

Typical fact patterns

 A (payer) transfers money to buy Lot X; deed registered in B’s name “for convenience.” A
claims beneficial ownership.

 A foreigner cannot hold land, so A has C (a local) hold title; A paid the price and intends to be
beneficial owner → resulting trust.

Evidence that helps prove it

 Bank transfers / cancelled checks / receipts showing payment of purchase price.

 The deed and contemporaneous documents showing who paid taxes, who paid
balance/instalments.

 Conduct: payer occupying property, paying utilities/taxes/maintenance, making

improvements.

 Contemporaneous statements by parties (letters, emails, witnesses) showing the payer’s

intent.

 Lack of consideration from the purported donee, or immediate steps showing nominee
relationship.

Note on the child exception: where the titleholder is the payer’s child (legit/illegit), courts start from
a presumption of gift in favor of the child — it’s rebuttable, but claimant must present convincing
evidence that the transfer was not intended as a gift.

Remedies

 Declaration of trust / equitable ownership (court recognizes payer as beneficial owner).

 Reconveyance / conveyance of legal title to the payer.

 Accounting for rents, fruits, proceeds and possible indemnity.

 Preliminary relief (TRO / injunction / injunction from registry actions) to prevent dissipation.
Defenses by titleholder / third parties

 Bona fide purchaser for value without notice (if third party acquired rights in good faith, for
value, and without notice of the payer’s interest, the third party may prevail).

 Evidence of intent to gift (e.g., explicit gift declaration, statements, donor behavior).

 Prescriptive issues if claimant waited too long — check applicable prescriptive periods.

Practical tips (buyers / payers)

 Always get the agreement in writing (nominee/trust declaration) before letting title be
placed in another’s name.

 Keep documentary proof of payment (bank transfers are best). If you must use a nominee,
sign a written nominee agreement with powers/recourse and consider placing a deed of
trust or mortgage to protect your interest.

Article 1449 — Donation to a person who is not to have beneficial interest

Text (summary): If a donation transfers legal title to the donee, but it appears the donee is not to
have the beneficial interest (or only part), an implied trust exists for the true beneficiary.

Typical scenarios

 Donor “gifts” property to A, but contemporaneous evidence shows donor intended A to hold
for B (nominee/gift pretense).

 A receives title but is only a conduit — beneficial interest intended for someone else.

Proof and evidence

 Testimony and contemporaneous evidence showing donor’s intent (letters, witnesses).

 Who actually benefits (who receives income, uses property).

 Whether the “donee” exercised ownership rights or acted as nominee.

Remedies & practical notes

 Same remedies as other implied trusts: declaration of trust, reconveyance, accounting.

 If donation was formalized (notarized), parol evidence may be admissible under implied-trust
rules (Art.1457) to show the true intent — but the more documents, the better.

Practical tip

 Avoid “secret donations” or nominee arrangements — if donor wants someone else to

benefit, document it clearly (or use a proper trust instrument).

Article 1450 — Loaned/payed price; conveyance to lender as security → trust / right to redeem

Text (summary): If someone loans or pays the purchase price for the benefit of another and title is
conveyed to the lender/payor to secure payment of the debt, the law treats that as creating a trust
in favor of the person who actually benefits (i.e., the buyer/borrower). That beneficiary may
redeem the property and compel conveyance to himself.

What this covers (two common patterns)

1. Security disguised as absolute transfer: Lender advances the price and is given legal title as
security (but parties really intended a security/mortgage-like arrangement). Equity treats the
legal title-holder as trustee/holder of security, not as absolute owner. On repayment, the
borrower can require reconveyance.

2. Loan for purchase; title in lender’s name until repaid: If the payor never intended to keep
beneficial ownership, equity recognizes the buyer’s equitable interest and right to redeem.

Elements

 Advance/loan/payment by the payor for benefit of another.

 Conveyance made to the payor (or lender) to secure the debt (or where circumstances show
security intent).

 The payor’s retention of title was meant as security/assurance — not as a gift.

Remedies & practical effect

 Redemption: beneficiary pays the debt and compels the lender to reconvey.

 Equitable lien / constructive trust: court treats transfer as security; upon payment, legal
ownership reverts.

 If lender refuses to reconvey: beneficiary sues for reconveyance and injunctive relief.

Practical examples

 Parent lends child ₱2M to buy a house; title placed in parent’s name “to secure the loan.”
When child repays, child may demand reconveyance.

 Investor finances purchase of a property for a third party and takes title "for safekeeping" —
if intended as security, donee may redeem.

Drafting & transactional recommendations

 Use a mortgage or deed of trust (or a clear security agreement) instead of giving legal title
to lender — this avoids litigation and clearly expresses intent.

 If you must take title as security, execute a signed written agreement naming the transaction
as security and setting redemption terms (interest, term, reconveyance upon payment).
Register/memo the security if appropriate to protect third-party rights.

Cross-cutting legal & practical points

1) Burden of proof and evidence

 For implied trusts the claimant must produce convincing proof of payment/intent.
Documents (bank transfers, receipts) + contemporaneous statements + consistent conduct
 (who paid taxes, who possessed) are strongest. Because implied trusts often involve land and
title, documentary proof is critical.

 Article 1457 (not included in your excerpt but relevant) allows oral evidence to prove
implied trusts — but courts require corroboration, particularly where land is involved.

2) Third-party protection: bona fide purchaser & registration

 A bona fide purchaser for value without notice and (where applicable) who registers title
may have defenses against an implied-trust claimant. Registration systems and possession
rules (first in time/registration/possession doctrines) affect outcomes. Always consider
whether a third party acquired rights in good faith.

3) Timing / prescription

 Delay may bar relief. Different remedies carry different prescriptive periods (e.g., actions to
recover property/petition for reconveyance may be subject to specific prescriptive periods).
If you have a live claim, act promptly (seek legal advice about deadlines).

4) Equitable relief

 Courts can impose constructive trusts or equitable liens and order reconveyance,
accounting, injunctive relief and damages to prevent unjust enrichment.

Practical checklists (quick — use these when a transaction involves another’s name)

If you are the payer / beneficial claimant

 Keep original banking evidence (canceled checks, SWIFT, deposit slips).

 Keep copies of deed, transfer documents and proof of who paid taxes, maintenance,
improvements.

 Put your nominee/nominee trust arrangement in writing (nominee agreement, trust deed,
or at least a written memorandum).

 If you suspect fraud or risk of dissipation, seek immediate injunctive relief.

If you are the legal titleholder (nominee)

 Keep a written nominee/trust declaration; don’t treat the property as your own; keep
receipts separate.

 If you were given title as security, reduce the arrangement to a clear written security
agreement specifying redemption terms.

If you are a third-party purchaser / lender

 Ask to see who actually paid for the property and inspect payment evidence.

 Require the vendor/titleholder to provide representation that there is no undisclosed

beneficial owner, or obtain indemnity / escrow / title insurance.

Model clauses (copy & adapt)

Nominee / resulting trust declaration (short):

“I, [Legal Holder], hold legal title to [Property] as nominee and trustee for [Beneficial Owner], who
paid the purchase price on [date]. Legal title shall be reconveyed to [Beneficial Owner] on demand
upon proof of payment and/or upon full performance of any agreed obligation.”

Redemption / security clause (instead of transferring title):

“The parties agree this conveyance is security for the loan of ₱[amount]. Upon full repayment of the
loan and interest [terms], [Legal Holder] shall reconvey the property to [Borrower]. This Agreement is
the parties’ record of their intention that title is held as security and not as an absolute gift.”

Short hypotheticals (illustrative answers)

1. You paid ₱3M by bank transfer and title is in another’s name. What to do?

o Preserve bank proof, demand written acknowledgement, ask for reconveyance or a

written nominee agreement; if refused, file a prompt civil action for declaration of
trust / reconveyance and seek injunctive relief.

2. Title placed in your child’s name but you insist it was not a gift. Will the court presume
gift?

o Yes, transfers to a child are presumptively gifts under Art. 1448; you must present
convincing evidence to rebut that presumption.

3. You lent purchase money and title was given to you to “secure the loan.” Can borrower
redeem?

o Yes — equitable principle under Art. 1450: borrower can redeem and compel
reconveyance upon repayment.

Article 1451. When land passes by succession to any person and he causes the legal title to be put
in the name of another, a trust is established by implication of law for the benefit of the true
owner.

Article 1452. If two or more persons agree to purchase property and by common consent the legal
title is taken in the name of one of them for the benefit of all, a trust is created by force of law in
favor of the others in proportion to the interest of each.

Article 1453. When property is conveyed to a person in reliance upon his declared intention to
hold it for, or transfer it to another or the grantor, there is an implied trust in favor of the person
whose benefit is contemplated.

Article 1454. If an absolute conveyance of property is made in order to secure the performance of
an obligation of the grantor toward the grantee, a trust by virtue of law is established. If the
fulfillment of the obligation is offered by the grantor when it becomes due, he may demand the
reconveyance of the property to him.
Article 1455. When any trustee, guardian or other person holding a fiduciary relationship uses
trust funds for the purchase of property and causes the conveyance to be made to him or to a third
person, a trust is established by operation of law in favor of the person to whom the funds belong.

Article 1456. If property is acquired through mistake or 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.

Article 1457. An implied trust may be proved by oral evidence.

Articles 1451–1457 — Implied Trusts (New Civil Code, Philippines)

Below I explain each Article in detail, give the doctrinal elements courts look for, practical examples,
common defenses, remedies, evidence strategies, drafting tips, and short checklists you can use in
transactions or litigation. I end with sample wording you can adapt. This is an explanatory guide — if
you have a real dispute, consult a lawyer quickly so evidence and remedies are preserved.

Quick framing — what an implied trust is

An implied trust (resulting or constructive) is created by operation of law (not by an express written
trust instrument) because equity requires that the person holding legal title must actually hold it for
someone else’s benefit. The Code lists common situations (Arts. 1451–1456). Unlike express trusts
over land (which generally must be in writing), implied trusts may be proved by oral evidence (Art.
1457) — but courts demand convincing proof, especially when land/title is at stake.

Article 1451

Text: When land passes by succession to any person and he causes the legal title to be put in the
name of another, a trust is established by implication of law for the benefit of the true owner.

Plain rule / purpose

If an heir (or successor) receives land by inheritance but then places legal title in somebody else’s
name, the law presumes the registered holder is holding as trustee for the true owner (the heir). The
trust is implied — no need for a written trust deed.

Typical fact patterns / examples

 Grandma dies; her will or intestacy makes A heir. A has the title registered in cousin B’s name
“for convenience.” A is the beneficial owner; B is a trustee by implication.

 An heir in a foreign country causes a relative to hold title locally; the relative holds on
implied trust.

Elements courts examine

 That the land passed by succession (probate, death).

 That the legal title was put in another’s name (transfer, TCT, registry).
  That the heir remains the beneficial owner (payment of taxes by heir, possession, evidence
showing heir’s continued benefits).

Remedies

 Declaration of implied trust / declaration of equitable ownership.

 Reconveyance: court order directing registered owner to convey title back to true owner.

 Accounting for rents/produce if titleholder received benefits.

 Provisional remedies (TRO/injunction) to prevent disposition.

Evidence helpful to a claimant

 Death certificate, succession papers, probate documents.

 Registry records showing transfer to nominee.

 Proof that heir paid estate taxes, or made improvements, or received rents.

 Witness testimony about original intention.

Practical note

Because registration systems and third-party protections exist, act early — if a third party buys in
good faith, the situation is more complex.

Article 1452

Text: If two or more persons agree to purchase property and by common consent the legal title is
taken in the name of one of them for the benefit of all, a trust is created by force of law in favor of
the others in proportion to the interest of each.

Plain rule / purpose

When co-purchasers pool funds but title is registered in the name of one, equity treats the one
registered as trustee for the others in accordance with their respective share/contribution.

Examples

 Friends F1, F2, F3 pay 50/30/20 respectively to buy a condo; title is registered in F1’s name;
F1 holds title in trust proportionally (50/30/20).

 Business partners buy land for joint venture but only partner A’s name appears on title for
convenience — partner A is trustee.

Elements / proof

 Agreement to buy together (written or oral).

 Evidence of contributions (bank transfers, receipts).

 Title in one name by common consent.

Remedies
  Court declaration of beneficial shares and reconveyance or co-ownership recognition.

 Partition or sale and distribution according to interests.

 Accounting for income/expenses.

Practical tips

 Always document contributions and include a written agreement allocating ownership

shares. If title must be in one name, execute a nominee/beneficial-interest document or
declare a trust in writing.

Article 1453

Text: When property is conveyed to a person in reliance upon his declared intention to hold it for, or
transfer it to another or the grantor, there is an implied trust in favor of the person whose benefit is
contemplated.

Plain rule / purpose

If a transfer is made because the transferee promised to hold the property for somebody else or to
transfer it later (the grantor relied on that promise), the transferee is a trustee by implication for the
person intended to benefit.

Examples

 Grantor gives land to T because T promised “I’ll hold this until you sort out legal problems”
or “I’ll transfer it to beneficiary X when X turns 21.” If T keeps title for himself, a trust will be
implied in favor of the intended beneficiary.

 Sale with instruction: seller transfers to nominee because nominee promised to hold on
behalf of purchaser.

Elements to prove

 Conveyance/transfer took place.

 There was a declared intention by transferee to hold/transfer for benefit of another.

 Grantor relied on that declared intention when making the conveyance.

Remedies

 Reconveyance, declaration of implied trust, injunction, accounting.

Practical advice

 Reduce any arrangement to writing (nominee agreement, escrow instructions, trust deed). If
you must rely on a verbal promise, preserve corroborating evidence (messages, witnesses,
payments, deposit slips).

Article 1454
Text: If an absolute conveyance of property is made in order to secure the performance of an
obligation of the grantor toward the grantee, a trust by virtue of law is established. If the fulfillment
of the obligation is offered by the grantor when it becomes due, he may demand the reconveyance of
the property to him.

Plain rule / policy

Equity will treat disguised security transfers (an “absolute” transfer really meant to secure a debt) as
a trust/security arrangement. If the grantor later performs (repays), he can demand reconveyance.
This prevents parties from avoiding formal security devices (mortgages) by calling transfers
“absolute.”

Common situations

 Lender advances money and takes title “in his name” as security.

 Borrower conveys property “absolutely” but intends it as collateral — on repayment,

reconveyance is due.

Practical difference from mortgage

 A properly documented mortgage is preferable; an absolute transfer is risky and may cause
litigation — better use formal security instruments.

Remedies

 Reconveyance upon payment; injunction to stop sale by holder; declaration that legal title is
held only as security.

Drafting tip

 If transfer as security is unavoidable, document it clearly: security agreement, redemption

terms, recording of lien or a deed of trust that sets out redemption and reconveyance
obligations.

Article 1455

Text: When any trustee, guardian or other person holding a fiduciary relationship uses trust funds for
the purchase of property and causes the conveyance to be made to him or to a third person, a trust is
established by operation of law in favor of the person to whom the funds belong.

Plain rule / rationale

A fiduciary who uses trust/ward funds to acquire property and puts title in his own (or a third party’s)
name becomes trustee ipso facto for the true owner — to prevent misappropriation and self-dealing.

Examples

 Guardian purchases land using ward’s money and registers title in guardian’s sibling’s name
— the ward owns the equitable interest; guardian (and sibling) hold on trust.

 Corporate trustee uses trust corpus to buy a building and titles it to a related company —
courts impose implied trust for beneficiaries.

Remedies / consequences
  Reconveyance to true owner, accounting and surcharge against fiduciary, removal of trustee,
restitution, possible criminal charges (if misappropriation/estafa).

Practical safeguard for fiduciaries

 Avoid using trust funds to buy property in personal or third party names; if unavoidable,
obtain written authorization and document the transaction fully; segregate funds and obtain
indemnities/approvals.

Article 1456

Text: If property is acquired through mistake or 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.

Plain rule / policy

Where acquisition occurs by fraud (forgery, deception) or by mistake (e.g., overpayment and
transfer), equity imposes a constructive trust on the property in favor of the injured person. This is
remedial — to prevent unjust enrichment.

Typical examples

 Fraudster forges seller’s signature and registers title — court can impose constructive trust
for true owner and order reconveyance.

 Person receives funds in error and uses them to buy property — the buyer holds the
property in trust for the person who should have had the money.

Remedies

 Reconveyance, restitution, accounting for profits, damages, possibly criminal referral (estafa,
fraud).

 Court may order constructive trust and require surrender of property or proceeds.

Evidence & strategy

 Document the fraud/mistake: declarations, police reports, banking records.

 Seek provisional remedies early (TRO, injunction) to prevent dissipation of asset.

Prescription / time limit caution

 Be mindful of prescription / laches that can bar relief; bring action promptly once
fraud/mistake discovered.

Article 1457

Text: An implied trust may be proved by oral evidence.

Plain rule / practical meaning

Unlike an express trust over land (which must be evidenced in writing — Art. 1443), an implied trust
can be proved with parol/oral evidence. This makes it possible to show that a transfer was actually
intended as a nominee holding, resulting trust, constructive trust, etc.

Important qualifications & evidentiary reality

 Courts require strong, corroborative evidence when title to land is challenged — oral
testimony is permitted but not dispositive. Best evidence includes bank transfers, receipts,
correspondence, witnesses, possession, who paid taxes, who made improvements.

 For immovables, judges scrutinize parol testimony carefully because of the significance of
registered title — but Article 1457 expressly allows it.

Practical tips for claimants

 Gather documentary corroboration to bolster oral testimony: payment evidence,

contemporaneous messages, receipts, proof of occupation or payments of utilities/taxes,
witnesses’ affidavits.

 File civil actions promptly and consider provisional measures (injunction/TRO) to freeze
disposition.

Cross-cutting practical points, defenses & remedies

Common defenses a registered/title holder or third party may assert

 Bona fide purchaser (BFP) for value without notice — if third party bought without notice of
claimant’s equitable interest and for value, they may prevail.

 Registered title protection (Torrens) — registration generally confers strong protection; but
if registration itself was obtained by fraud, it can be annulled. The interplay between implied
trust claims and Torrens protections is fact-sensitive — get legal advice.

 Laches / prescription — delay may limit remedies; check applicable statutes of limitation.

Typical remedies available to an implied-trust claimant

 Declaratory relief (that an implied trust exists).

 Reconveyance order compelling transfer of legal title.

 Accounting for rents, proceeds and expenses.

 Constructive trust remedy for fraud/mistake.

 Injunction / provisional remedies to prevent dissipation (TRO, preliminary injunction).

 Criminal remedies (conversion, estafa) in appropriate cases.

Evidence checklist (what to collect / preserve)

 Bank transfers, canceled checks, deposit slips establishing payment.

 Deeds, TCT copies, registry entries.

 Proof of payment of taxes/insurance/maintenance by claimant.

  Emails, letters, SMS or witness statements showing intention or nominee agreement.

 Receipts for improvements or invoices in claimant’s name.

 Any written agreements (even informal) that refer to the arrangement.

Practical drafting suggestions (preventive measures)

If you must place title in someone else’s name, do this instead of secrecy:

1. Nominee / Beneficial-ownership declaration (written and notarized): short instrument that

records who paid, who is beneficial owner, and reconveyance on demand.

2. Security (mortgage/deed of trust) rather than absolute conveyance when securing loans —
use proper security documents.

3. Joint purchase agreement documenting shares, contribution schedule, and signature of all
contributors (avoid title in one person’s name without documentation).

4. Trust deed if you want a formal trust — name trustee, beneficiaries, powers, accounting,
successor trustee.

Sample short clause (nominee declaration)

“I, [Registered Holder], acknowledge that legal title to [property description] is held by me as
nominee and trustee for [Beneficial Owner], who provided the purchase funds on [date]. I undertake
to reconvey the property to [Beneficial Owner] upon his demand and proof of payment.”

Short hypotheticals (with short answers)

1. Heir H inherits land but registers title in friend F for convenience. Later F refuses to
reconvey.

o Remedy: H can sue for declaration of implied trust (Art. 1451) and reconveyance.
Provide proof of succession and why title was put in F’s name.

2. Three persons buy land together, title in A’s name only; A sells the whole parcel to a third
party B.

o The co-purchasers can seek declaratory relief for their shares (Art. 1452); but B’s
remedy depends on whether B was a bona fide purchaser without notice. If sale to B
occurred and B had notice of co-owners’ equities, sale may be voidable.

3. Guardian uses ward’s funds to buy a house and titles it in guardian’s name.

o Ward (through guardian ad litem) can seek reconveyance and damages (Art. 1455).
Criminal prosecution may also be appropriate.

4. Person obtains title by forgery.

o Constructive trust (Art. 1456) is imposed; owner can seek reconveyance and criminal
action; act quickly.
Final practical checklist — immediate steps if you suspect an implied-trust situation

For a claimant (possible beneficial owner)

 Preserve all documents and bank records (do not delay).

 Collect contemporaneous evidence of payment and intention.

 Avoid confronting the registered holder in a way that dissipates assets; consult counsel about
TRO/injunction.

 Check deadlines for filing suit.

For a registered holder (defending)

 Produce proof of gift or consideration; if bona fide purchaser, gather evidence of good faith
purchase and lack of notice.

 Keep title intact; avoid transfers while claim pending.