TRUST-AGENCY-2019 (1).pdf - Atty Raymund Christian S Ong Abrantes BUSINESS ORGANIZATION I Ateneo de Davao University College of Law by Carla Louise

TRUST-AGENCY-2019 (1).pdf - Atty Raymund Christian S Ong...

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Unformatted text preview: Atty. Raymund Christian S. Ong Abrantes BUSINESS ORGANIZATION I Ateneo de Davao University College of Law August 23, 2019 by Carla Louise Bayquen TITLE V TRUSTS A trust is a fiduciary relationship between a person having an equitable ownership in property and another owning the legal title to such property. 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. Trust is always has a relation to a property. So kapag walang property you do not talk about the concept of trust. Parties to a Trust: − 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. GILBERT GUY vs COURT OF APPEALS December 10, 2007 Facts: A family feud between the Guys involves the ownership and control of 20,160 shares of stock of Northern Islands engaged in the manufacture, distribution, sales of various home appliances bearing the 3-D Trademark. Northern Islands is a family-owned corporation organized in 1957 by Spouses Francisco and Simny Guy. In 1984, the spouses found that their son Gilbert has been disposing assets of their corporations without authority. In 1986, they incorporated Lincoln Continental Development Foundation as a holding company of the 50% shares of stock of Northern Islands in trust for their three daughters Geraldine, Gladys and Grace. The 20,160 shares covered by the two Stock Certificates were surrendered by Simny and registered n the names of the sisters enabling them to assume an active role in the Management of the Northern Islands. In 2004, in a special meeting of stockholders of Northern Islands • Simny – President • Grace – VP Finance • Geraldine – Corporate Treasurer • Gladys – Corporate Secretary • Gilbert – Executive Vice-President Lincoln Continental filed with RTC for the Annulment of Transfer of Shares of Stock against the respondents (Northern, Simny and the sisters) alleging that it owned the 20,160 shares and that respondents in order to oust Gilbert from the management of Northern Islands, falsely transferred the said shares of stock in the sisters’ names. It also prated for restoration of Gilbert to management. Trial court held that the case is a baseless and unwarranted suit among family members, and that Gilbert was only entrusted to hold the disputed shares of stock in his name for the benefit of other family members and that it was only when he started to dispose assets without his family’s knowledge that the sisters caused the registration of the shares in their respective names. The CA affirmed. Established Fact: Lincoln Continental held disputed shares of stock of Northern Islands merely in trust for the Guy sisters. Issue: Who owns the disputed shares of stock in Northern Islands? - The Sisters Held: ART. 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. (1) Trust, Defined Trust, in its technical sense, is a right of property, real or personal, held by one party for the benefit of another. A trust is a fiduciary relationship with respect to the property, subjecting the person holding the same to the obligation dealing with the property for the benefit of another person. (2) Lincoln and Gilbert does not have evidence to support claim. – While both of them claim for legal title to the shares, the record shows that there is no evidence to support their claim. The evidence on record clearly indicates that the stock certificates representing the contested shares are in the possession of the sisters. Significantly, there is no proof to his contention that the transfer of the shares of stock to the sisters in fraudulent. Fraud is never presumed but must be established by clear and convincing. Respondents sisters own the shares of stock, Gilbert being a mere trustee. In this particular case and the other cases. It always revolves in proving that there is a trust. There is a lot of implications and legal consequences when you prove that something is given as a trust. You have to look trust with relation to a property. In this particular case a trust is a right of property, real or personal, held by one party for the benefit of another. 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. KINDS OF TRUST The problem with this distinction as we go along, is because implied trust is divided into types. You have your resulting implied trust and your constructive implied trust. When you try to look at the definition of the resulting implied trust, it appears that there is that element of intent. So strictly speaking when we talk about trust that come into being by operation of law, we only considering the constructive implied trust. Villanueva tries to rearrange the provisions so that the express trust includes the resulting implied trust because of the definition. I have seen why but there are also some opinions saying that the classification is different as we have copied our law from the US law on trust. As compared to the US law on trust, which contains a hundred provisions, we only have a few. But there is a catch all provision: 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. That tends to catch whatever types of trust are existing in the laws of the United States. Even if they are not listed in the subsequent provisions but they are under the concept of trust, the general law on trusts are equally applicable in our country. CHARACTERISTICS OF TRUST (Morales vs Court of Appeals) • It is a relationship • It is a relationship of a fiduciary character. • It is a relationship with respect to property, not one involving merely personal duties. • It involves the existence of equitable duties imposed upon the holder of the title to the property to deal with it for the benefit of another • It arises as a result of a manifestation of intention to create the relationship. Abrasaldo, Adlawan, Andamon, Banosan, Bayquen, Lagat, Mahusay, Maligad, Picot, Reyes, Rojo | III-Manresa 2019 1 Atty. Raymund Christian S. Ong Abrantes BUSINESS ORGANIZATION I Ateneo de Davao University College of Law Trust do not create separate juridical entities. You do not consider trust. In the same manner and nature of a partnership that has a separate juridical personality. Differentiate this from organizations doing trust services. For example, yung mga IBF, fund management. That is in the nature of a trust. You get your money, they administer the money for your beneficiary. In effect they act as a trustee but they have a separate juridical personality because in effect they act only in trust, they are under a corporation or whatever juridical personality there is. Trust per se based on the civil code does not create per se separate juridical personality. As taxpayers, a trust is considered an individual. Please take note of that, same as an estate. Update: an estate can be a single stockholder. Kapag namatay at maraming income producing property. If you try to look at it kapag maraming milyo-milyones ang property and income producing, sobrang tagal pa nang judicial settlement. What happens to the income, if ipapasok mo siya as an estate magiging taxable siya as individuals (more than 8 million is taxable at 35%). It gives an option to the heirs for it to be taxed as a corporation for a lower tax (30 instead of 35%). It is a good way of planning the estate. EXPRESS TRUSTS Article 1443. No express trusts concerning an immovable or any interest therein may be proved by parol evidence. DELA CRUZ vs COURT OF APPEALS GR 76590, February 26, 1990 Parties: Petitioners: the heirs (children) of the late Maria de la Cruz y Gutierrez, married to Mateo del Rosario Lansang Private respondents: the heirs of Maria de la Cruz y Guevarra, married to Calixto Dimalanta, and Fermin de la Cruz. Facts: The controversy involves a 1,980 square meters portion of Lot 1488. From 1921 until her death in 1951, Maria de la Cruz y Gutierrez resided in the questioned lot in the concept of an owner. She declared the lot for tax purposes in her name. Later, she entrusted the administration of the said lot to her niece Maria de la Cruz y Guevarra. In a cadastral case held, a court adjudicated Lot No. 1488 in favor of “Maria de la Cruz, married to Calixto Dimalanta” and Fermin de la Cruz (another person who has an interest on the said lot), instead of Maria de la Cruz y Gutierrez, who was the claimant. an immovable does not have to be in writing. Thus, Article 1443 may be said to be an extension of the Statute of Frauds. The action to compel the trustee to convey the property registered in his name for the benefit of the cestui for trust does not prescribe. If at all, it is only when the trustee repudiates the trust that the period of prescription may run. Q: How did they prove the trust? Is there a written document? A: No there was no written document. The court said that they referred to Article 1443. No express trusts concerning an immovable or any interest therein may be proved by parol evidence. It merely refers to enforceability not validity of a contract between the parties. Q: They questioned the trust because there is no document. A: It can be written or made orally. Therefore, an express trust need not to be in writing. Q: What does the provision in Article 1443 provides? Is it for the purpose of enforceability or it just concerns the validity? A: Article 1443 of the Civil Code refers merely to enforceability, not validity of a contract between the parties. Otherwise stated, for purposes of validity between the parties, an express trust concerning an immovable does not have to be in writing Discussion: So therefore, even there is no document evidencing an express trust, it does not mean na walang trust. It just means that you cannot enforce it. In fact it is an extension of your Statute of Frauds That id the ruling in Maria Dela Cruz vs CA. But please take note, that you cannot prove an express trust by mere parol evidence if the trust pertains to an immovable or any interest therein. You cannot prove such by parol evidence. Q: What is parol evidence? A: Parol evidence is oral evidence; verbal, not written. In other words you cannot prove 1443 by oral evidence. That is not allowed. There must be some evidence other than parol evidence to prove that there is an express trust. Article 1444. No particular words are required for the creation of an express trust, it being sufficient that a trust is clearly intended. I want you to focus on this because the delineation of an express trust and a resulting implied trust becomes very thin because of their respective definition. October 1, 1974: Petitioners, claiming to have learned of the same only on July 1, 1974, filed a complaint for reconveyance. The main thrust of the complaint is that the claimant of Lot 1488 in Cadastral Case No. 18 was Maria de la Cruz y Gutierrez and not Maria de la Cruz y Guevarra who by not using her maternal surname "Guevarra" succeeded in registering Lot 1488 in her name and that of her brother Fermin de la Cruz. Under the circumstances, it is claimed that Maria de la Cruz married to Calixto Dimalanta and Fermin de la Cruz hold the property in trust for the petitioners. Express trust; hindi kailangang may nakalagay na this is an express trust. It is sufficient na may nakalagay na that is clearly intended. Mark that on your mind, iyan lang ang kailangan. Private respondents claimed that the land in question is their exclusive property, having inherited the same from their parents. Facts: Being of very limited educational attainment, he found it difficult to file his public land application over said lot. Issue: Whether or not petitioners’ action for reconveyance has already prescribed. – No. Constancio then asked his brother, Maximo Labanon who was better educated to file the corresponding public land application under the express agreement that they will divide the said lot as soon as it would be feasible for them to do so. The offer was accepted by Maximo. Held: It has been held that under the law on Trusts, it is not necessary that the document expressly state and provide for the express trust, for it may even be created orally, no particular words are required for its creation. An express trust is created by the direct and positive acts of the parties, by some writing or deed or will or by words evidencing an intention to create a trust. No particular words are required for the creation of an express trust, it being sufficient that a trust is clearly intended. Article 1443 of the Civil Code refers merely to enforceability, not validity of a contract between the parties. Otherwise stated, for purposes of validity between the parties, an express trust concerning Clear intention is material when we discuss resulting implied trust. MAXIMO LABANON vs HEIRS OF CONSTANCIO LABANON 530 SCRA 97, G.R. No. 160711 August 14, 2004 During the time of the application it was Constancio who continued to cultivate the said lot in order to comply with the cultivation requirement set forth under Commonwealth Act 141, as amended, on Homestead applications. After which, on June 6, 1941, due to industry of Constancio, Homestead Application No. 244742 (E-128802) of his brother Maximo was approved with Homestead Patent No. 67512. Eventually, Original Certificate of Title No. P-14320 was issued by Abrasaldo, Adlawan, Andamon, Banosan, Bayquen, Lagat, Mahusay, Maligad, Picot, Reyes, Rojo | III-Manresa 2019 2 Atty. Raymund Christian S. Ong Abrantes BUSINESS ORGANIZATION I Ateneo de Davao University College of Law the Register of Deeds of Cotabato over said lot in favor of Maximo Labanon. Maximo Labanon executed a document denominated as “Assignment of Rights and Ownership” and docketed as Doc. No. 20; Page No. 49; Book No. V; Series of 1955 of the Notarial Register of Atty. Florentino Kintanar. The document was executed to safeguard the ownership and interest of his brother Constancio Labanon. On April 25, 1962, Maximo Labanon executed a sworn statement reiterating his desire that his elder brother Constancio, his heirs and assigns shall own the eastern portion of the Lot. After discovering that the defendant-heirs of Maximo Labanon were taking steps to deprive the heirs of Constancio Labanon of their ownership over the eastern portion of said lot, the latter, thru Alberto Makilang, petitioners filed a complaint for Specific Performance, Recovery of Ownership against respondents. Issue: Whether or not there is an express trust. – Yes. Held: In the instant case, such intention to institute an express trust between Maximo Labanon as trustee and Constancio Labanon as trustor was contained in not just one but two written documents, the Assignment of Rights and Ownership as well as Maximo Labanon’s April 25, 1962 Sworn Statement. Q: What were the documents presented? A: The assignment of rights and ownership and the sworn statement Q: Ano yung nakalagay sa sworn statement? A: That in order that I and the Heirs of Constancio Labanon will exercise our respective rights and ownership over the aforementioned lot, and to give force and effect to said deed of assignment, I hereby, by these presents, request the Honorable Director of Lands and the Land Title Commission to issue a separate title in my favor covering the western half portion of the aforementioned lot and to the Heirs of Constancio Labanon a title for the eastern half portion thereof. Discussion: Sabi ng court hindi naman kailangan na the document must indicate that it is a trust agreement. It is sufficient that there was clear intention. How do you appreciate the clear intention? An express trust is created by the direct and positive acts of the parties, by some writing or deed or by words evidencing an intention to create a trust. The use of the word trust is not required or essential to its constitution, it being sufficient that a trust is clearly intended. Kapag express trust hindi naman talaga kailangang explicit, there must just be a clear intention; a positive act. Article 1445. No trust shall fail because the trustee appointed declines the designation, unless the contrary should appear in the instrument constituting the trust. − Resulting Trust: a trust raised by implication of law and presumed always to have been contemplated by the parties, the intention of which is found in the nature of their transaction, but not expressed in the deed or instrument of conveyance. This is why I have a problem. Sabi, pag may express trust there must be a clear intention. Sabi, kapag implied trust, resulting, the intention of which is found in the nature of their transaction, but not expressed in the deed or instrument of conveyance. So intention parin, paano natin madidifferentiate? Samples of resulting trust are found in 1448, 1451, 1452, and 1453. There is no problem in constructive trust. It is the law that steps in that creates the trust for the purposes of equity. For example there is a payment by mistake, may mali, it is the law that creates a trust for purposes of equity; justice. We have a problem when we talk about resulting implied trust and express trust. Because both of them look at the intention of the trustor. Constructive trust does not arise by agreement or intention but by operation of law against one who, by fraud, duress, or abuse of confidence obtains or holds the legal right to property which he ought not, in equity and good conscience, to hold. For example, si A nanloko, ang initial plan is sa pangalan ni A pero sa relatives. By fraud inangkin ni A ang property. The law steps in, the property does not belong to A. That is in trust of your relatives, the real payor. Constructive trust exists for equity, for purposes of justice. This is precisely why it is not a concept of civil law jurisdiction but common law jurisdiction. Common Law is premised on equity, by reason of justice. That’s why common law countries give emphasis on judges’ decisions because judges can try facts and give exemption to what is written for the interest of justice. For example, nangawat ug Kitkat kay walay makaon. By law, that is punishable but for the interest of justice it is not punishable. So these are the distinctions that you have to know by heart. Again, let’s go back to Constructive trust. This is illustrated in Articles 1450, 1454, 1455, and 1456. We will go to that later individually. So know the problem is in distinguishing express trust and resulting implied trust when both of them is premised on the intention of the trustor. Ok lang sana kung nakalagay sa batas na sa express trust nakalagay na express pero walang requirement na ganoon eh. How can you distinguish the two? Even if the trustee declines the designation, it does not mean that the trust shall fail. DISTINCTION: EXPRESS TRUST OR RESULTING IMPLIED 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 Although properly placed in different categories, in one major respect express trusts and resulting trusts are similar: to be created, both depend upon the transferor’s intention. They differ sharply however, in the role intention pl...
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