JPLCACOSTA – ATP REVIEWER (AY 2018-2019)

BASED ON THE RECITATION, AND LECTURES OF ATTY. BATUNGBAKAL

1. What is a Contract of Partnership? 5. What if a partner uses money for another purpose other than
what the money is supposed to be for?
Art. 1767. By the CONTRACT OF PARTNERSHIP two or
more persons bind themselves: Art. 1788. A partner who has undertaken to contribute a sum
of money and fails to do so becomes a debtor for the interest
1.) to contribute money, property, or industry to a common and damages from the time he should have complied with
fund, his obligation.
2.) with the intention of dividing the profits among
themselves. The same rule applies to any amount he may have taken
from the partnership coffers, and his liability shall begin from
2. What is General Liability? the time he converted the amount to his own use.

Partners are liable personally and subsidiarily for partnership 6. Capitalist Partner vs. Industrial Partner
debts to third persons.
Capitalist Partner Industrial Partner
3. What does the Principle of Delectus Personae presuppose?
Contributes money or Contributes his industry or
That no person shall become a partner of the partnership property personal service
without the consent of ALL the partners.
Cannot engage in the Cannot engage in any
4. What happens if a person promises to contribute and fails to same or similar enterprise business himself unless
unless there is stipulation there is a stipulation to the
do so?
to the contrary. contrary
Art. 1786. Every partner is a debtor of the partnership for Shares in the profits Receives a just and
whatever he may have promised to contribute thereto. according to agreement, if equitable share
there is none; pro-rata.
He shall also be bound for warranty in case of eviction with Is liable for the debts but not
regard to specific and determinate things which he may have Is liable for the debts and losses as between the
contributed to the partnership, in the same cases and in the losses up to his separate partners; but is liable to
same manner as the vendor is bound with respect to the property. losses with third persons
vendee. He shall also be liable for the fruits thereof from the without prejudice to
time they should have been delivered, without the need of reimbursement to the
any demand. Capitalist Partners.

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7. Article 1770 OF NCC 10. Universal Partnership of All Present Property vs. Universal
Partnership of All Profits
Art. 1770. A partnership must have a lawful object or
purpose, and must be established for the common benefit or UPPP UPAP
interest of the partners.
All present property actually Property, which the
belonging to the partners partners owned at the time
When an unlawful partnership is dissolved by a judicial
are contributed to the of the celebration of the
decree, the profits shall be confiscated in favor of the State, partnership which then contract, shall continue to
without prejudice to the provisions of the Penal Code becomes the common pertain to them. Only the
governing the confiscation of the instruments and effects of a property of all partners and USUFRUCT passing to the
crime. of the partnership partnership

8. What happens if real property is contributed? Only profits derived from All profits acquired through
the property contributed the industry or work of
Art. 1773. A contract of partnership is void, whenever become common property. partners become common
immovable property is contributed thereto, if an inventory of property
said property is not made, signed by the parties, and
attached to the public instrument.

11. Can a Corporation be a partner?

9. How does a partnership share in profits? NO, A corporation cannot be a partner. Unless its charter
allows it do so.
Art. 1797. The losses and profits shall be distributed in
conformity with the agreement. If only the share of each
partner in the profits has been agreed upon, the share of
each in the losses shall be in the same proportion.

In the absence of stipulation, the share of each partner in the

profits and losses shall be in proportion to what he may have
contributed, but the industrial partner shall not be liable for
the losses. As for the profits, the industrial partner shall
receive such share as may be just and equitable under the
circumstances. If besides his services he has contributed
capital, he shall also receive a share in the profits in
proportion to his capital.

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12. What are the obligations of a partner? c. To contribute additional capital

a. To Contribute what he promised to contribute i. Art. 1791. If there is no agreement to the

contrary, in case of an imminent loss of the
i. Art. 1786. Every partner is a debtor of the business of the partnership, any partner who
partnership for whatever he may have refuses to contribute an additional share to
promised to contribute thereto. the capital, except an industrial partner, to
save the venture, shall he obliged to sell his
He shall also be bound for warranty in case interest to the other partners
of eviction with regard to specific and
determinate things which he may have
contributed to the partnership, in the same d. Obligation of a Managing Partner who collects
cases and in the same manner as the money
vendor is bound with respect to the vendee.
He shall also be liable for the fruits thereof i. Art. 1792. If a partner authorized to manage
from the time they should have been collects a demandable sum which was owed
delivered, without the need of any demand. to him in his own name, from a person who
owed the partnership another sum also
ii. Art. 1787. When the capital or a part thereof demandable, the sum thus collected shall be
which a partner is bound to contribute applied to the two credits in proportion to
consists of goods, their appraisal must be their amounts, even though he may have
made in the manner prescribed in the given a receipt for his own credit only; but
contract of partnership, and in the absence should he have given it for the account of
of stipulation, it shall be made by experts the partnership credit, the amount shall be
chosen by the partners, and according to fully applied to the latter.
current prices, the subsequent changes
thereof being for account of the partnership. The provisions of this article are understood
(n) to be without prejudice to the right granted to
the other debtor by Article 1252, but only if
iii. Art. 1788. A partner who has undertaken to the personal credit of the partner should be
contribute a sum of money and fails to do so more onerous to him.
becomes a debtor for the interest and
damages from the time he should have e. When a partner receives share in partnership
complied with his obligation.
i. Art. 1793. A partner who has received, in
b. Not to engage in other business whole or in part, his share of a partnership

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credit, when the other partners have not iii. Art. 1809. Any partner shall have the right to
collected theirs, shall be obliged, if the a formal account as to partnership affairs:
debtor should thereafter become insolvent,
to bring to the partnership capital what he (1) If he is wrongfully excluded from the
received even though he may have given partnership business or possession of its
receipt for his share only. property by his co-partners;

f. Obligation of Partner to damages in Partnership (2) If the right exists under the terms of any
agreement;
i. Art. 1794. Every partner is responsible to
the partnership for damages suffered by it (3) As provided by article 1807;
through his fault, and he cannot compensate
them with the profits and benefits which he (4) Whenever other circumstances render it
may have earned for the partnership by his just and reasonable
industry. However, the courts may equitably
lessen this responsibility if through the h. Obligation when a partner becomes a trustee for the
partner's extraordinary efforts in other Partnership
activities of the partnership, unusual profits
have been realized. Art. 1807. Every partner must account to the
g. To render information partnership for any benefit, and hold as
trustee for it any profits derived by him
i. Art. 1805. The partnership books shall be without the consent of the other partners
kept, subject to any agreement between the from any transaction connected with the
partners, at the principal place of business formation, conduct, or liquidation of the
of the partnership, and every partner shall at partnership or from any use by him of its
any reasonable hour have access to and property.
may inspect and copy any of them.
i. Obligations of the Partnership to Partner
ii. Art. 1806. Partners shall render on demand
true and full information of all things i. Art. 1796. The partnership shall be
affecting the partnership to any partner or responsible to every partner for the amounts
the legal representative of any deceased he may have disbursed on behalf of the
partner or of any partner under legal partnership and for the corresponding
disability. interest, from the time the expense are
made; it shall also answer to each partner
for the obligations he may have contracted

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in good faith in the interest of the partnership without just or lawful cause. The vote of the partners
business, and for risks in consequence of its representing the controlling interest shall be necessary for
management. such revocation of power.

13. Is furnishing of Additional Capital mandatory? A power granted after the partnership has been constituted
may be revoked at any time. (1692a)
Art. 1791. If there is no agreement to the contrary, in case of
an imminent loss of the business of the partnership, any Art. 1801. If two or more partners have been intrusted with
partner who refuses to contribute an additional share to the the management of the partnership without specification of
capital, except an industrial partner, to save the venture, their respective duties, or without a stipulation that one of
shall he obliged to sell his interest to the other partners them shall not act without the consent of all the others, each
one may separately execute all acts of administration, but if
14. Can a third person be delegated to decide the distribution of any of them should oppose the acts of the others, the
losses and profits? decision of the majority shall prevail. In case of a tie, the
matter shall be decided by the partners owning the
Art. 1798. If the partners have agreed to intrust to a third controlling interest. (1693a)
person the designation of the share of each one in the profits
and losses, such designation may be impugned only when it Art. 1802. In case it should have been stipulated that none
is manifestly inequitable. In no case may a partner who has of the managing partners shall act without the consent of the
begun to execute the decision of the third person, or who others, the concurrence of all shall be necessary for the
has not impugned the same within a period of three months validity of the acts, and the absence or disability of any one
from the time he had knowledge thereof, complain of such of them cannot be alleged, unless there is imminent danger
decision. of grave or irreparable injury to the partnership. (1694)

Art. 1803. When the manner of management has not been

The designation of losses and profits cannot be intrusted to agreed upon, the following rules shall be observed:
one of the partners.
(1) All the partners shall be considered agents and whatever
15. Can a partnership exclude a partner in profit or loss sharing? any one of them may do alone shall bind the partnership,
without prejudice to the provisions of Article 1801.
Art. 1799. A stipulation which excludes one or more partners
from any share in the profits or losses is void. (2) None of the partners may, without the consent of the
others, make any important alteration in the immovable
16. What are the kinds of Managing Partner? property of the partnership, even if it may be useful to the
Art. 1800. The partner who has been appointed manager in partnership. But if the refusal of consent by the other
the articles of partnership may execute all acts of partners is manifestly prejudicial to the interest of the
administration despite the opposition of his partners, unless partnership, the court's intervention may be sought.
he should act in bad faith; and his power is irrevocable

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17. Article 1804 OF NCC 22. Obligations of Partners with 3rd Persons?

Art. 1804. Every partner may associate another person with Art. 1815. Every partnership shall operate under a firm
him in his share, but the associate shall not be admitted into name, which may or may not include the name of one or
the partnership without the consent of all the other partners, more of the partners.
even if the partner having an associate should be a Those who, not being members of the partnership, include
manager. their names in the firm name, shall be subject to the liability
18. Article 1805 OF NCC of a partner.

Art. 1805. The partnership books shall be kept, subject to Art. 1816. All partners, including industrial ones, shall be
any agreement between the partners, at the principal place liable pro rata with all their property and after all the
of business of the partnership, and every partner shall at any partnership assets have been exhausted, for the contracts
reasonable hour have access to and may inspect and copy which may be entered into in the name and for the account
any of them. of the partnership, under its signature and by a person
authorized to act for the partnership. However, any partner
may enter into a separate obligation to perform a partnership
19. What are the Property Rights of a Partner? contract.

Art. 1810. The property rights of a partner are: 23. May a deceased partner be still included in the Partnership
Name?
(1) His rights in specific partnership property; Yes. Provided that the public is notified of the death of the
(2) His interest in the partnership; and concerned partner.
(3) His right to participate in the management.

20. What properties are covered by the property right of a

Partner? 24. Are Industrial Partners liable for losses or debts? Why?

Specific Partnership Property No. The law provides that in the absence of capital
contribution, an industrial partner is not liable for the losses
21. What is the interest of a Partner in the Partnership? of the partnership. His efforts being rendered futile is
considered already a loss on his part.
Art. 1812. A partner's interest in the partnership is his share
of the profits and surplus.

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25. When is a Partnership bound by the acts of a Partner?

No act of a partner in contravention of a restriction on
Art. 1818. Every partner is an agent of the partnership for authority shall bind the partnership to persons having
the purpose of its business, and the act of every partner, knowledge of the restriction.
including the execution in the partnership name of any
instrument, for apparently carrying on in the usual way the 26. What is a Partner by Estoppel?
business of the partnership of which he is a member binds
the partnership, unless the partner so acting has in fact no Art. 1825. When a person, by words spoken or written or by
authority to act for the partnership in the particular matter, conduct, represents himself, or consents to another
and the person with whom he is dealing has knowledge of representing him to anyone, as a partner in an existing
the fact that he has no such authority. partnership or with one or more persons not actual partners,
he is liable to any such persons to whom such
An act of a partner which is not apparently for the carrying on representation has been made, who has, on the faith of such
of business of the partnership in the usual way does not bind representation, given credit to the actual or apparent
the partnership unless authorized by the other partners. partnership, and if he has made such representation or
consented to its being made in a public manner he is liable
Except when authorized by the other partners or unless they to such person, whether the representation has or has not
have abandoned the business, one or more but less than all been made or communicated to such person so giving credit
the partners have no authority to: by or with the knowledge of the apparent partner making the
representation or consenting to its being made:
(1) Assign the partnership property in trust for creditors or on
the assignee's promise to pay the debts of the partnership; (1) When a partnership liability results, he is liable as though
he were an actual member of the partnership;
(2) Dispose of the good-will of the business;
(2) When no partnership liability results, he is liable pro rata
(3) Do any other act which would make it impossible to carry with the other persons, if any, so consenting to the contract
on the ordinary business of a partnership; or representation as to incur liability, otherwise separately.

(4) Confess a judgment; When a person has been thus represented to be a partner in
an existing partnership, or with one or more persons not
(5) Enter into a compromise concerning a partnership claim actual partners, he is an agent of the persons consenting to
or liability; such representation to bind them to the same extent and in
the same manner as though he were a partner in fact, with
(6) Submit a partnership claim or liability to arbitration; respect to persons who rely upon the representation. When
all the members of the existing partnership consent to the
(7) Renounce a claim of the partnership. representation, a partnership act or obligation results; but in

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all other cases it is the joint act or obligation of the person 31. Differences between General & Limited
acting and the persons consenting to the representation. Partners/Partnerships

27. Requisites of a Partner by Estoppel? Limited Partnership General Partnership

Composed of one or Composed of general partners

a. That there be a misrepresentation
more general partners ONLY.
b. That the 3rd party relies on such representation in
and one or more limited
good faith partners – CANNOT BE
SOLELY BE
28. What are the liabilities of a Newly Admitted Partner? COMPOSED OF
LIMITED PARTNERS
Art. 1826. A person admitted as a partner into an existing
partnership is liable for all the obligations of the partnership
arising before his admission as though he had been a Limited partner may only General partner can contribute
partner when such obligations were incurred, except that this contribute cash or property or industry to the
liability shall be satisfied only out of partnership property, property but NOT partnership
unless there is a stipulation to the contrary. SERVICES
29. When is there a demise of a Partnership?
The limited partnership As a general rule, may be
Upon the dissolution. must be executed in a constituted in ANY FORM by
CERTIFICATE of limited contract or conduct of the
30. What is Winding Up for? partnership, duly signed partnership, UNLESS immovable
and sworn to by all the property is contributed
partners and
To settle obligations. RECORDED in the SEC

The name of a limited NO RESTRICTIONS on the

partner, as a general name of a general partner
rule, SHOULD NOT included in the firm name,
appear in the firm name EXCEPT in cases where the
general partner has died; to
Firm name MUST BE which the public must be notified
FOLLOWED by the word or there must be a cross followed
“limited” by the name of the said
deceased partner

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Retirement, death, Retirement, death, insanity or (2) To inspect profits and usual remedies
insanity or insolvency of insolvency of a general partner and copy at a surplus of the provided by law
a limited partner DOES DISSOLVES THE reasonable hour partnership. in the event of
NOT DISSOLVE THE PARTNERSHIP partnership fraud in the
PARTNERSHIP, for his books or any of (3) Right to management.
executor or administrator them. participate in the
shall have the rights of a management. (3) To receive
limited partner for the (3) To demand the assignor’s
purpose of selling his true and full (4) Right to interest in case
estate information of all reimbursement of dissolution.
things affecting for amounts
the partnership advanced to the (4) To require an
There is a REQUIRED May be a partnership with a term partnership and account of
to have a fixed term or a or a partnership by will (4) To demand a to indemnification partnership
particular undertaking; it formal account of for risks in affairs, but only
CANNOT BE a partnership consequence of in case the
partnership by will affairs whenever the management. partnership is
circumstances dissolved, and
render it just and (5) Access and such account
reasonable. inspect shall cover the
32. Is limited partnership created by mere consent? partnership period from the
(5) To ask for books. date only of the
NO. It must executed in a certificate of limited partnership, dissolution and last account
duly signed and sworn to by all partners and recorded in the winding up by (6) To know true agreed to by all
SEC decree of court. and full the partners.
information of all
33. Rights of General & Limited Partners & Assignee (6) To receive a things affecting
share of profits or the partnership.
other
Limited Partner General Partner Assignee
compensation by (7) The right to a
(1) To require (1) To possess (1) To receive in way of income. formal account of
that the specific accordance with partnership affairs
partnership partnership his contract the (7) To receive the under certain
books be kept at property for profits accruing return of his circumstances.
the principal partnership to the assigning contribution (8) The right to
place of business purposes. partner. provided the dissolve the
of the partnership partnership under
partnership. (2) To receive his (2) To avail assets are in certain
share in the himself of the conditions.

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excess of all its

liabilities. 39. Requisites of a Contract of Agency which will bind the
principal?
34. What is a Contract of Agency
a. Consent
Art. 1868. By the CONTRACT OF AGENCY a person binds b. Object
himself to render some service or to do something in c. Cause
representation or on behalf of another, with the consent or d. ACTS IN REPRESENTATION of the principal
authority of the latter. e. ACTS WITHIN THE SCOPE OF HIS AUTHORITY

35. Proponents in a Contract of Agency 40. Who is an undisclosed principal?

The principal and the agent. It is when the agent acts within the scope of his authority but
IN HIS OWN NAME
The principal is the one whom the agent represents; the
agent is the one who acts for and represents another. 41. What is the effect if the principal is undisclosed?

36. Characteristics of a Contract of Agency It shall be as if there was no principal, rendering the agent
PERSONALLY LIABLE; EXCEPT WHEN THE
a. Preparatory TRANSACTION INVOLVES A THING BELONGING TO
b. Fiduciary THE PRINCIPAL
c. Bilateral (but may also be unilateral)
d. Onerous (generally) 42. What may be delegated to the agent?
e. Representative relation
f. Nominate Acts which are not personal in nature, e.g. right to vote, right
g. Consensual to marry, making of a will, those which require to be done
h. Principal under oath and etc.

37. What do you mean by Principal Contract? 43. Nature of the relationship between Principal & Agent?

It is a contract that can stand alone. Fiduciary in nature.

38. Is a contract of agency compensable?

Art. 1875. Agency is PRESUMED TO BE FOR

COMPENSATION, unless there is proof to the contrary

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44. You were appointed as agent, then you just smiled, are you 46. What are the obligations of an agent?
now an agent? a. To obey all lawful orders and instructions of the
principal
YES. b. To act with utmost good faith and loyalty
c. To exercise reasonable care, skill and diligence
Art. 1870. Acceptance by the agent may also be express, or d. To carry out the agency
implied from his acts which carry out the agency, or from his e. To answer for damages which through his non-
silence or inaction according to the circumstances. performance the principal may suffer
f. To finish the business already begun on the death of
45. What do you mean by Agency by Estoppel? the principal
g. Observe diligence of a good father of a family in the
One who clothes another with APPARENT AUTHORITY AS custody and preservation of the goods forwarded to
HIS AGENT, AND HOLDS HIM OUT TO THE PUBLIC AS him by the owner
SUCH, CANNOT BE PERMITTED TO DENY THE h. To advance necessary funds in case of stipulation
AUTHORITY OF SUCH PERSON IN GOOD FAITH, AND IN i. Not to carry out the agency if it would manifestly
THE HONEST BELIEF THAT HE IS WHAT HE APPEARS result to loss or damage
TO BE j. To answer for damages should he prefer his interest
over the principal’s
k. Not to loan to himself unless the principal consents
to the same
l. To render account of his transactions and to deliver
whatever he may have received
m. To be responsible for the acts of his substitute
n. To pay interest on funds he has applied to his own
use
o. To act in accordance with the instructions
p. To inform the principal on authorized sale of credit
q. To distinguish goods by countermarks
r. To bear the risk of collection should he receive on
sale, a guarantee commission
s. To indemnify the principal for damages for his failure
to collect credits of his principal
t. To be responsible for fraud or negligence

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47. What is the diligence of a good father of a family?

Art. 1927. An agency cannot be revoked if a 1.) bilateral
Ordinary diligence or that diligence of a prudent man. contract depends upon it, or 2.) if it is the means of fulfilling
an obligation already contracted, or 3.) if a partner is
48. Modes of Extinguishment of an Agency? appointed manager of a partnership in the contract of
partnership and his removal from the management is
Art. 1919. Agency is extinguished: unjustifiable.

(1) By its revocation; 4.) when it is COUPLED WITH INTEREST

(2) By the withdrawal of the agent; 52. When is there an Agency “coupled with interest”?

(3) By the death, civil interdiction, insanity or If, for example there is an additional compensation on top of
insolvency of the principal or of the agent; your monthly salary as an agent.

(4) By the dissolution of the firm or corporation which EXACT SCENARIOS PROVIDED BY ATTY.
entrusted or accepted the agency; BATUNGBAKAL
(a) You are paid monthly as an employee as a broker – THIS
(5) By the accomplishment of the object or purpose IS NOT AN EXAMPLE OF AGENCY COUPLED WITH
of the agency; INTEREST, THE PRINCIPAL MAY REVOKE THE AGENCY
AT WILL.
(6) By the expiration of the period for which the (b) You are paid monthly as an employee as a broker, and in
agency was constituted. addition you gain a certain compensation on each sale you
do as a broker – THIS IS AN AGENCY COUPLED WITH AN
49. If the purpose of the agency has been accomplished does INTEREST, THE PRINCIPAL MAY NOT UNILATERALLY
the principal need to notify the agent of the extinguishment of REVOKE THE AGENCY IN THIS CASE.
the Agency?
53. What do you mean by Civil Interdiction
NO. The extinguishment is automatic.
Civil interdiction is a legal restraint upon a person incapable
50. May the principal unilaterally revoke the agency? of managing his estate, because of mental incapacity, from
signing any deed or doing any act to his own prejudice,
Generally, the principal may unilaterally revoke the agency. without the consent of his curator or interdictor.

51. Exceptions when the principal may not revoke the agency at
will?

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54. Is insolvency as a mode of extinguishment REQUIRE a court (6) To make gifts, except customary ones for charity
declaration? or those made to employees in the business
managed by the agent;
NO. Court declaration is not required.
(7) To loan or borrow money, unless the latter act be
55. Special Power of Attorney VS. General Power of Attorney urgent and indispensable for the preservation of the
things which are under administration;
GPA is a power of attorney granted for the
ADMINISTRATION OF PROPERTY (8) To lease any real property to another person for
more than one year;
SPA is a power of attorney which is required for the exercise
of SPECIFIC ACTS OR ACTS OF STRICT DOMINION (9) To bind the principal to render some service
without compensation;
Art. 1878. Special powers of attorney are necessary in the
following cases: (10) To bind the principal in a contract of
partnership;
(1) To make such payments as are not usually
considered as acts of administration; (11) To obligate the principal as a guarantor or
surety;
(2) To effect novations which put an end to
obligations already in existence at the time the (12) To create or convey real rights over immovable
agency was constituted; property;

(3) To compromise, to submit questions to (13) To accept or repudiate an inheritance;

arbitration, to renounce the right to appeal from a
judgment, to waive objections to the venue of an (14) To ratify or recognize obligations contracted
action or to abandon a prescription already acquired; before the agency;
(4) To waive any obligation gratuitously;
(15) Any other act of strict dominion.
(5) To enter into any contract by which the
ownership of an immovable is transmitted or 56. Doctrine of Apparent Authority
acquired either gratuitously or for a valuable
consideration; It is that power which though not actually granted, the
principal knowingly permits the agent to exercise or hold him
out as possessing as such.

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57. What is a Trust? latter is the beneficiary. However, if the person to whom the
title is conveyed is a child, legitimate or illegitimate, of the
A fiduciary relationship between one person having an one paying the price of the sale, no trust is implied by law, it
equitable ownership in a property, and another owning the being disputably presumed that there is a gift in favor of the
legal title to such property, the equitable ownership of the child.
former entitling him to the performance of certain duties and
the exercise of certain powers by the latter for the benefit of Art. 1449. There is also an implied trust when a donation is
the former. made to a person but it appears that although the legal
estate is transmitted to the donee, he nevertheless is either
Art. 1440. A person who establishes a trust is called the to have no beneficial interest or only a part thereof.
trustor; one in whom confidence is reposed as regards
property for the benefit of another person is known as the Art. 1451. When land passes by succession to any person
trustee; and the person for whose benefit the trust has been and he causes the legal title to be put in the name of
created is referred to as the beneficiary. another, a trust is established by implication of law for the
benefit of the true owner.
58. Can the trustor be the beneficiary at the same time?
Art. 1452. If two or more persons agree to purchase property
YES, no law prohibits such. 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
59. Kinds of Trusts of law in favor of the others in proportion to the interest of
each.
Art. 1441. Trusts are either express or implied. Express
trusts are created by the intention of the trustor or of the Art. 1453. When property is conveyed to a person in reliance
parties. Implied trusts come into being by operation of law. 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
60. Resulting Trust vs. Constructive Trust person whose benefit is contemplated.

RESULTING TRUSTS are those created through the intent CONSTRUCTIVE TRUSTS are those created by law
of the parties or implied by law from the nature of their irrespective of or even contrary to the intention of the parties
transaction; FOUND IN ARTICLES 1448, 1449, 1451, 1452 to promote justice, frustrate fraud and to prevent unjust
& 1453 enrichment; FOUND IN ARTICLES 1450, 1454, 1455 &
1456
Art. 1448. There is an implied trust when property is sold,
and the legal estate is granted to one party but the price is Art. 1450. If the price of a sale of property is loaned or paid
paid by another for the purpose of having the beneficial by one person for the benefit of another and the conveyance
interest of the property. The former is the trustee, while the is made to the lender or payor to secure the payment of the

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JPLCACOSTA – ATP REVIEWER (AY 2018-2019)
BASED ON THE RECITATION, AND LECTURES OF ATTY. BATUNGBAKAL

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.

Art. 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.

Art. 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.

Art. 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.

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