Text of the provision
Art. 2240. Property held by the insolvent debtor as a trustee of an express or implied trust, shall be excluded from the insolvency proceedings.
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Civil Code of the Philippines, Republic Act No. 386, approved June 18, 1949, effective August 30, 1950. Reproduced in full; verified verbatim against the LawPhil and ChanRobles official-text renderings.
What this article means
Property held by the insolvent debtor as a trustee of an express or implied trust is excluded from the insolvency proceedings — it never belonged to him.
The rule reflects a basic feature of trusts: a trustee holds legal title to property for someone else's benefit, not for his own. Because that property was never really part of the debtor's own patrimony in the first place, his personal creditors have no claim to it — it belongs, in substance, to the beneficiary of the trust, whether the trust was created expressly by agreement or implied by the circumstances. Excluding it from the insolvency proceedings simply keeps the debtor's estate limited to what was truly his.
Questions about this provision
- The insolvent debtor was only holding my property in trust - can his creditors take it in the insolvency proceedings?
- A debtor holds money in trust for me — if he goes insolvent, can his creditors take that money as part of his estate?
Related provisions
- Article 2239 — Free Property of the Insolvent.
- Article 2241 — Preferred Credits on Specific Movables.
Cases interpreting this article
- Authorities on this article will be added here as each is verified against primary sources.