RULE 98: TRUSTEES

G.R. No. 46390

September 30, 1939

Testate estate of Petrona Francisco, deceased. CASIMIRO TIANGCO and

MARIA TIANGCO, fiduciaries-appellants,
vs.
PROCESO FRANCISCO, petitioner-appellee.
Ortega and Ortega for appellant.
Clemente E. Felix for appellee.
LAUREL, J.:
Petrona Francisco provided in her last will that the income derived from the onehalf portion of her fishpond in the barrio of Gasak, Navotas, Rizal, shall be
devoted to the celebration of the "Flores de Mayo" in Malabon, Rizal, and for
other religious activities mentioned in the will. Upon probate of the will the Court
of First Instance of Rizal appointed Casimiro Tiangco as trustee. Shortly
afterwards, on March 16, 1922, Maria Tiangco was also appointed co-trustee to
act with Casimiro Tiangco in supervising the affairs of the trust. The records of
the case disclose that from the beginning the submission of annual reports to
the court was very irregular. When the accounts for the year 1935 were
submitted, Proceso Francisco, the herein oppositor-appellee, filed an opposition.
Meanwhile, the court appointed the clerk of court as commissioner to make a
detailed examination of the accounts already submitted, and declared its order
of January 30, 1937, approving the said accounts over the objection of Proceso
Francisco, of no legal force and effect. The trustees entered an opposition to this
decree. Upon the other hand, the oppositor-appellee, on March 22, 1937,
requested for the temporary substitution of the trustees. The report for the year
1936 having been filed on April 13, 1937, an order for the joint hearing of the two
annual accounts was issued. Again, Proceso Francisco made several objections
to the accounts for the year 1936 with reference to certain items. In the
meantime, the clerk of court submitted his report. On April 26, 1938, the court
issued the following order requiring the resignation of the trustees within ten
days, and appointed Father L.R. Arcaira as temporary trustee:
It appearing from the evidence submitted by the commissioner,
regarding the account of the trustees, that the said trustees have not
faithfully discharged their duties and that their continuance in office
would cause further prejudice to the estate under trusteeship, they are
hereby given ten days within which to submit their resignation. It is
understood that action on the resignation will be taken by the court upon
the filing and settlement of their account to be submitted by the trustees
pursuant to the order of this court dated April 20, 1938. In the meantime,
the parish priest of Malabon, Father L.A. Arcaira is hereby appointed

temporarily trustee to take immediate possession of the property under

trust and manage the same until regular trustee is duly appointed. So
ordered.
Pasig, Rizal, Philippines, April 26, 1938.
SIXTO DE LA COSTA
Judge
Appellants assign various errors, the principal bearing on the power of the lower
court to require the resignation of the trustees and the legal sufficiency of the
above-questioned order for this purpose.
The will of the deceased, Petrona Francisco, created a continuing trust, but no
particular persons were named as beneficiaries. The appellants themselves did
not have anything to do with the trust until their appointment by the lower court,
and they were so commissioned not because of any beneficial interest they had
in the estate but t because their selection was approved by the lower court in the
belief that they would faithfully perform their obligations. The same court found
later that they "have not faithfully discharged their duties and that their
continuance in office would cause further prejudice to the estate under
trusteeship," and we cannot, on appeal, override the action of the lower court by
reversing its finding, and indirectly sanction the violation of an unquestioned and
legally existing trust.
It is also contended that the order appealed from does not contain a finding of
facts, as required by section 133 of the Code of Civil Procedure, and for this
reason, the order is ineffectual. We find that the order read in conjunction with
the report of the clerk of court as commissioner, exhibits a finding upon all the
evidence presented during the trial, and is sufficient compliance with the
requirements of the law. (Aringo vs. Arena, 14 Phil., 263, 266.)
The appellants likewise contend that the trial court committed grave abuse of
discretion in ordering the resignation of the trustees-appellants. The power to
appoint a trustee is discretionary with the court before whom application is
made, and this court will decline to interfere except in case of clear abuse.
Thereafter, upon proper showing that the interests of justice would be
adequately served with the removal of the incumbent trustees, it is likewise
within its discretion to do so (section 587, Code of Civil Procedure), and this
court will refuse to interfere in the absence of a showing of grave abuse or
whimsical and capricious exercise of that discretion.

RULE 98: TRUSTEES

The order appealed from is confirmed, with costs against the appellants. So
ordered.
Avancea, C.J., Villa-Real, Imperial, Diaz, Concepcion, and Moran, JJ., concur.

RULE 98: TRUSTEES

G.R. No. L-17809

December 29, 1962

RESURRECCION DE LEON, ET AL., plaintiffs-appellees,

vs.
EMILIANA MOLO-PECKSON, ET AL., respondents-appellants.
Cornelio R. Magsarili for plaintiffs-appellees.
Sycip, Salazar, Luna and Associates for respondents-appellants.
BAUTISTA ANGELO, J.:
Resurreccion De Leon, et al. filed on November 13, 1958 before the Court of
First Instance of Rizal a complaint seeking to compel Emiliana Molo-Peckson, et
al. to convey to the former ten parcel of land located in Pasay City with an area
of 1,749 sq. m. upon payment of P1.00 per parcel upon the plea that said lots
were willed or donated in 1948 to the latter by their foster parents Mariano Molo
y Legaspi and Juana Juan with the understanding that they should sell them to
the plaintiffs under the terms above-stated.
Defendants, in their answer, disclaimed any legal obligation on their part to sell
the above properties to the plaintiffs for the nominal consideration of P1.00 per
lot alleging that if they executed the document on which the complaint is
predicated it was on the mistaken assumption that their foster parents had
requested them that they executed on August 9, 1956 a document revoking said
donation which was acknowledged before Notary Public Leoncio C. Jimenez.
No testimonial evidence was presented by either party. Instead, both agreed to
submit the case upon the presentation of their respective exhibits which were all
admitted by the trial court.
After trial on the merits, the court a quo rendered on September 21, 1960 a
decision wherein it held that, under the facts established by the evidence, trust
has been constituted by the late spouses Mariano Molo and Juana Juan over
the ten parcels of land in question in favor plaintiffs as beneficiaries and, as a
consequence concluded:
Considering all the foregoing, the Court orders:
1. The defendants, jointly and severally to free the said ten (10) parcels
of land from the mortgage lien in favor of the Rehabilitation Finance
Corporation (now Development Bank of the Philippines) and Claro
Cortez, and thereafter to sign and execute in favor of the plaintiffs a
deed of absolute sale of the said properties for and in consideration of

TEN (P10.00) PESOS already deposited in Court after all conditions

imposed in Exhibit A have been complied with;
2. That in the event the defendants shall refuse to execute and perform
the above, they are ordered, jointly and severally, to pay the plaintiffs
the value of said ten (10) parcels of land in question, the amount to be
assessed by the City of Pasay City as the fair market value of the same,
upon orders of the Court to assess said value;
3. The defendants jointly and severally to pay the plaintiffs' Attorney's
fees in the amount of P3,000.00, as defendants acted in gross and
evident bad faith in refusing to satisfy the plaintiffs' plainly valid, just and
demandable claim, under Article 2208 sub-paragraph 5 of the New Civil
Code;
4. The defendants to render an accounting of the fruits of said ten (10)
parcels of land from the time plaintiffs demanded the conveyance of
said parcels of land on August 11, 1956 as per Exhibits B and C, in
accordance with the provisions of Article 1164, New Civil Code which
provides that the creditor has a right to the fruit of the thing from the time
the obligation to deliver it arises; and
5. The defendants to pay the costs.
Defendants took the present appeal.
On January 24, 1941, Mariano Molo y Legaspi died leaving a will wherein he
bequeathed his entire estate to his wife, Juana Juan. This will was probated in
the Court of First Instance of Pasay City, Rizal, which was affirmed by the
Supreme Court on November 26, 1956 (G.R. No. L-8774). On May 11, 1948,
Juana Juan in turn executed a will naming therein many devisees and legatees,
one of whom is Guillermo San Rafael, mother of the plaintiffs and defendant
Pilar Perez Nable. On June 7, 1948, however, Juana Juan executed a donation
inter vivos in favor of Emiliana Molo-Peckson and Pilar Perez Nable of almost all
of her entire property leaving only about P16,000.00 worth of property for the
devisees mentioned in the will. Among the properties conveyed to the donees
are the ten parcels of land subject of the present action. Juana Juan died on
May 28, 1950.
On December 5, 1950, Emiliana Molo-Peckson and Pilar Perez Nable executed
a document which they called "MUTUAL AGREEMENT" the pertinent provisions
of which are:

RULE 98: TRUSTEES

That the above named parties hereby mutually agree by these presents
. . . that the following lots should be sold at ONE (1) PESO each to the
following persons and organization:

OVER THE PROPERTIES IN QUESTION

PLAINTIFFS-APPELLEES AS BENEFICIARIES.

PETITION

WITH

II
xxx

xxx

xxx

TO JUSTA DE LEON and RESURRECCION DE LEON, several

parcels of land located at Calle Tolentino (South of Tenorio and Kapitan
Magtibay), Pasay City, share and share alike or half and half of TEN
(10) LOTS described in:
Transfer Certificate of Title No. 28157 and allocated as follows:
(a) To JUSTA DE LEON Five (5) Lots.

THE LOWER COURT ERRED IN APPLYING ARTICLE 1440, 1441,

1449, 1453 AND 1457 OF THE NEW CIVIL CODE TO THE CASE AT
BAR.
III
THE LOWER COURT ERRED IN HOLDING PLAINTIFFS-APPELLEES'
EXHIBIT "A" TO BE A DECLARATION AGAINST INTEREST AND AN
ADMISSION BY DEFENDANTS-APPELLANTS.

(b) To RESURRECCION DE LEON, the remaining Five (5) Lots.

That this agreement is made in conformity with the verbal wish of the
late Don Mariano Molo y Legaspi and the late Dona Juana Francisco
Juan y Molo. These obligations were repeatedly told to Emiliana Molo
Peckson, before their death and that same should be fulfilled after their
death.
On August 9, 1956, however, the same defendants, assisted by their husbands,
executed another document in which they revoked the so-called mutual
agreement mentioned above, and another relating to the same subject matter,
stating therein that the parties, "after matured and thorough study, realized that
the above-mentioned public instruments . . . do not represent their true and
correct interpretation of the verbal wishes of the late spouses Don Mariano Molo
y Legaspi and Dona Juana Francisco Juan y Molo." But after the execution of
this document, that is, on August 11, 1956, the beneficiary Resurreccion de
Leon and Justa de Leon, thru their counsel demanded the conveyance to them
of the ten parcels of land for the consideration of P1.00 per parcel as stated in
the document of December 5, 1950. And having the defendants refused to do
so, said beneficiaries consigned on July 8, 1957 the amount of P10.00 as the
consideration of the ten parcels of land.lawphil.net
In this appeal, appellants assign the following errors:

IV
THE LOWER COURT ERRED IN HOLDING THAT DEFENDANTSAPPELLANTS HAD NO RIGHT TO REVOKE EXHIBIT "A".
V
THE LOWER COURT ERRED, IN ORDERING APPELLANTS TO
RENDER AN ACCOUNTING OF THE FRUIT OF THE PROPERTIES IN
QUESTION.
VI
THE LOWER COURT ERRED IN ORDERING APPELLANTS TO FREE
THE PROPERTIES FROM THE MORTGAGE LIENS IN FAVOR OF
THE DEVELOPMENT BANK OF THE PHILIPPINES AND CLARO
CORTEZ.
VII
THE LOWER COURT ERRED IN AWARDING ATTORNEY'S FEES TO
THE APPELLEES.
VIII

I
THE LOWER COURT ERRED IN HOLDING THAT THE SPOUSES,
MARIANO MOLO AND JUANA JUAN, CONSTITUTED A TRUST

THE LOWER
COMPLAINT.

COURT

ERRED

IN

NOT

DISMISSING

THE

RULE 98: TRUSTEES

There is no merit in the claim that the document executed on December 5, 1950
does not represent the true and correct interpretation by appellants of the verbal
wish of their foster parents relative to the conveyance for a nominal
consideration to appellees of the ten parcels of land in question considering the
circumstances obtaining in the present case. To begin with, this document was
executed by appellants on December 5, 1950, or about two years and six
months from the time they acquired title to the lands by virtue of the donation
inter vivos executed in their favor by their foster mother Juana Juan and six
months after the death of the donor. There is nobody who could cajole them to
execute it, nor is there any force that could corce them to make the declaration
therein expressed, except the constraining mandat of their conscience to comply
with "the obligations repeatedly told to Emiliana Molo Peckson," one of
appellants, before their death, epitomized inthe "verbal wish of the late Don
Mariano Molo y Legaspi and the late Doa Juana Francisco Juan y Molo" to
convey after their death said ten parcelsof land at P1.00 a parcel to appellees. In
fact, the acknowledgement appended to the document they subscribed states
that it was "their own free act andvoluntary deed."1awphi1.net
Indeed, it is to be supposed that appellants understood and comprehended the
legal import of said documents when they executed it more so when bothof them
had studied in reputable centers of learning, one being a pharmacist and the
other a member of the bar. Moreover, they have more than ample time the six
months intervening betwen the death of the donor and the execution of the
document to ponder not only wish of their predecessors-in-interest but also
on the propriety of putting in writing the mandate they have received. It is,
therefore, reasonable to presume that that document represents the real wish of
appellants' predecessors-in-interest and that the only thing to be determinedis
its real import and legal implications.
That the document represents a recognition of pre-existing trust or a declaration
of an express trust impressed on the ten parcels of land in question is evident. A
declaration of trust has been defined as an act by which a person acknowledges
that the property, title to which he holds, is held by him for the use of another
(Griffith v. Maxfield, 51 S.W. 832, 66Ark. 513, 521). This is precisely the nature
of the will of the donor: to convey the titles of the lands to appellants with the
duty to hold them intrust for the appellees. Appellants oblingly complied with this
duty byexecuting the document under consideration.
True it is that to establish a trust the proof must be clear, satisfactory and
convincing. It cannot rest on vague, uncertain evidence, or on a loose,equivocal
or indefinite declaration (In re Tuttle's Estate, 200 A. 921, 132 Pa. Super 356);
but here the document in question clearly and unequivocallydeclares the
existence of the trust even if the same was executed subsequent to the death of
the trustor, Juana Juan, for it has been held that the right creating or declaring a
trust need not be contemporaneous or inter-parties (Stephenson v. Stephenson,

171 S.W. 2d 265, 351 Mo. 8; In re Corbin's Trust Orhp., 57 York Leg. Rec. 201).
It was even held that an express trust maybe declared by a writing made after
the legal estate has been vested in the trustee (Kurtz v. Robinson, Tex. Civ.
App. 256 S.W. 2d 1003). The contention, therefore, of appellants that the will
and the donation executed by their predecessors-in-interest were absolute for it
did not contain a hint that the lots in question will be held in trust by them does
not merit weight because the fact that an express trust was created by a deed
which was absolute on its face may be shown by a writing separate from the
deed itself (Mugan v. Wheeler, 145 S.W. 462, 241 Mo. 376).
The fact that the beneficiaries were not notified of the existence of the trust or
that the latter have not been given an opportunity to accept it isof no importance,
for it is not essential to the existence of a valid trustand to the right of the
beneficiaries to enforce the same that they had knowledge thereof the time of its
creation (Stoehr v. Miller, 296 F. 414).Neither is it necessary that the beneficiary
should consent to the creation of the trust (Wockwire-Spencer Steel Corporation
v. United Spring Mfg. Co.,142 N.E. 758, 247 Mass. 565). In fact it has been held
that in case of a voluntary trust the assent of the beneficiary is not necessary to
render itvalid because as a general rule acceptance by the beneficiary is
presumed (Article 1446, new Civil Code; Cristobal v. Gomez, 50 Phil. 810).
It is true, as appellants contend, that the alleged declaration of trust was
revoked, and having been revoked it cannot be accepted, but the attempted
revocation did not have any legal effect. The rule is that in the absence of any
reservation of the power to revoke a voluntary trust is irrevocable without the
consent of the beneficiary (Allen v. Safe Deposit and Trust Co.of Baltimore, 7 A.
2d 180, 177 Md. 26). It cannot be revoked by the creatoralone, nor by the
trustee (Fricke v. Weber, C.C.A. Ohio, 145 F. 2d 737;Hughes v. C.I.R., C.C.A. 9,
104 F. 2d 144; Ewing v. Shannahan, 20 S.W. 1065,113 Mo. 188). Here, there is
no such reservation.
Appellants contend that the lower court erred in applying the provisions of the
new Civil Code on trust. This is correct. The express trust was constituted during
the lifetime of the predecessor-in-interest of appellants,that is, before the
effectivity of the new Civil Code, although the instrumentrecognizing and
declaring such trust was executed on December 5, 1950, afterthe effectivity of
said Code. The Civil Code of 1889 and previous laws andauthorities on the
matter, therefore, should govern the herein trust under the provisions of Article
2253 of the new Civil code.
But the Civil Code of 1889 contains no specific provisions on trust as doesthe
new Civil Code. Neither does the Code of Civil Procedure of 1901 for thesame
merely provides for the proceeding to be followed relative to trustsand trustees
(Chapter XVIII). This silence, however, does not mean that thejuridical institution
of trust was then unknown in this jurisdiction, for theprinciples relied upon by the

RULE 98: TRUSTEES

Supreme Court before the effectivity of thenew Civil Code were those embodied
in Anglo-American jurisprudence as derivedfrom the Roman and Civil Law
principles (Government v. Abadilla, 46 Phil. 42).And these are the same
principles on which we predicate our ruling heretoforestated and on which we
now rely for the validity of trust in question.
The trial court ordered appellants to render an accounting of the fruits of the
properties in question even if appellees did not expressly ask for it intheir prayer
for relief. We, however, believe that this is covered by the general prayer "for
such other relief just and equitable under the premises."What is important is to
know from what what date the accounting should bemade. The trial court
ordered that the accounting be made from the time appellees demanded the
conveyance of the ten parcels of land on August 11, 1956, in accordance with
Article 1164 of the new Civil Code which provides that the creditor has a right to
the fruit of the thing from thetime the obligation to deliver it arises. But this
cannot be done without first submitting proof that the conditions stated in the
mutual agreement hadbeen complied with. And this only happened when the
decision of the Supreme Court in G.R. No. L-8774 became final and executory.
The ruling of the trialcourt in this respect should therefore be modified in the
sense that the accounting should be made from the date of the finality of the
said decision.
We find no error in the directive of the trial court that appellants shouldfree the
lands in question from the encumbrance that was created thereon by them in
favor of the Development Bank of the Philippines and one Claro cortez, for as
trustees it is their duty to deliver the properties to the cestui que trust free from
all liens and encumbrances.
To recapitulate, we hold: (1) that the document executed on December 5, 1950
creates an express trust in favor of appellees; (2) that appellants had no right to
revoke it without the consent of the cestui que trust; (3) that appellants must
render an accounting of the fruits of the lands from the datethe judgement
rendered in G.R. No. L-8774 became final and executory; and (4)that appellants
should free said lands from all liens and encumbrances.
WHEREFORE, with the modification as above indicated with regard to
accounting,we hereby affirm the decision appealed from, without
pronouncement as to costs.
Labrador, Reyes, J.B.L., Barrera, Paredes, Dizon, Regala and Makalintal, JJ.,
concur.
Padilla and Concepcion, JJ., took no part.

RULE 98: TRUSTEES

G.R. No. 109307

November 25, 1999

TEODORA SALTIGA DE ROMERO, PRESENTACION ROMERO MAMA,

Represented by SABDULLAH MAMA, LUCITA ROMERO PACAS,
GLORIOSA ROMERO RASONABLE and MINDALINA ROMERO NUENAY,
petitioners,
vs.
THE HONORABLE COURT OF APPEALS, THE HONORABLE
SEVENTEENTH DIVISION and LUTERO ROMERO and NATIVIDAD
ROMERO and THE DEVELOPMENT BANK OF THE PHILIPPINES, ILIGAN
BRANCH, ILIGAN CITY and THE REGISTER OF DEEDS OF LANAO DEL
NORTE, respondents.
GONZAGA-REYES, J.:
Before us is a Petition for Review on Certiorari of the decision of the Court of
1
Appeals in CA-G.R. CV No. 33164 entitled TEODORA SALTIGA DE ROMERO
ET. AL. vs. LUCERO ROMERO ET. AL. and LUTERO ROMERO, ET. AL. vs.
SPOUSES MELITON PACAS, ET. AL. involving two civil cases which were tried
jointly by the Regional Trial Court of Lanao Del Norte, Branch 7, namely:
1. Civil Case No. 591, which was filed by herein
Petitioners Teodora Saltiga De Romero, Presentacion
Romero-Mama (PRESENTACION), Lucita RomeroPacas
(LUCITA),
Gloriosa
Romero-Rasonable
(GLORIOSA),
and
Mindalina
Romero-Nuenay
(MINDALINA) against Lutero Romero (LUTERO) and
the Development Bank of the Philippines (DBP) for
reconveyance of their share in a parcel of land, Lot 23
Pls-35, titled in the name of LUTERO; and
2. Civil Case No. 1056, which was filed by LUTERO
and his wife Natividad S. Romero against LUCITA and
her husband Meliton Pacas, PRESENTACION and her
husband Sabdullah Mama and GLORIOSA and her
husband Dionisio Rasonable for annulment of three
affidavits wherein LUTERO supposedly sold to them
shares over Lot No. 23 Pls-35.
The facts as found by the Court of Appeals are as
follows:
From the evidence presented by the appellants, it appears that
on December 12, 1939 Eugenio Romero bought from spouses

Celedonio Jaug and Sofia Macan the latter's "rights, interest,

participation, ownership and possession" of 12 hectares of land.
The land in question was then public land. When Eugenio
Romero applied for a homestead patent for said land, the same
was disapproved by the Bureau of Lands because said Romero
already had applied for a homestead patent for 24 hectares and
was disqualified from owning the additional 12 hectares.
Eugenio Romero placed the application in the name of his
eldest son, Eutiquio Romero, allegedly in trust for all the
children of Eugenio. When Eutiquio got married and had
children, his brothers and sisters got worried that his heirs may
claim the land so the application was transferred in the name of
Lutero Romero, the second son of Eugenio who was then still
single. When Lutero in turn got married, he relinquished the
application in favor of his younger brother Ricardo through an
instrument dated July 5, 1952.
The spouses Eugenio Romero and Teodora Saltiga had nine (9)
children. Other than the three (3) sons aforenamed, they had six
(6) daughters, namely Generosa, Diosdada, Mindalina, Lucita,
Presentacion and Gloriosa.
Eugenio Romero died sometime in 1948. In 1961 his widow
Teodora caused the land in question to be subdivided among
six (6) of her children, the other three (3) having already been
given their shares in the other properties of the Romero
spouses. The twelve (12) hectares were supposedly divided
equally among Lutero, Ricardo, Mindalina, Lucita, Presentacion,
and Gloriosa who all got about two (2) hectares each.
Subsequently, however, Ricardo conveyed his share to Lucita
and Gloriosa who therefore had 3 hectares each. On the other
hand, Mindalina left her share in the care of her mother Teodora
and her sister Presentacion because she left for Davao City.
Lutero later requested that he be allowed to farm this share of
Mindalina, thus he occupied a total of 4 hectares with the
consent of his mother Teodora and sister Presentacion.
The appellants further claimed that after the partition, they had
been in occupancy of their respective shares through their
tenants.
However, appellee Lutero Romero presented evidence to the
effect that sometime in 1969 a policeman picked him up and

RULE 98: TRUSTEES

brought him to the office of Mayor Pablito Abragan of

Kapatagan where he found his mother Teodora and his three
(3) sisters Gloriosa, Presentacion and Lucita and the respective
husbands of the latter two. He testified that when he arrived at
the office, he was presented three (3) affidavits for his
signature. Said affidavits were to the effect that he sold three (3)
hectares each out of the 12 hectares of land to his sister
Gloriosa, his brother-in-law Sabdullah Mama married to
Presentacion Romero, and to Meliton Pacas married to Lucita
Romero for a consideration of P3,000.00 each.
Appellee Lutero Romero testified that he told the mayor that he
was not selling the land and that he could not do so because
the five-year period had not yet elapsed but the mayor told him
to just sign the affidavits because after five (5) years his sisters
will get the land and pay for them and that if they would not pay,
the mayor will take steps to return the land personally to him.
Lutero stated that he has not been paid for the land by his
sisters.
Lutero Romeo claimed that as early as 1940-1941 he had
already been in occupancy of the 12 hectares in question when
it was shown to him by this father who owned the adjoining
parcel; and that the said land had been titled in his name even
while his father Eugenio was still alive. Indeed it appears that
the title to the property, O.C.T No. P-2,261, had been issued to
Lutero Romero as early as April 26, 1967, after the homestead
patent was issued in his favor on April 7, 1967. He said that his
three (3) sisters occupied portions of the property only in 1969,
after he was forced to sign the affidavits by Mayor Abragan.
Lutero Romero had thereafter repudiated the three (3) affidavits
on August 12, 1974. Because of this, estafa charges were filed
against him by the three (3) parties concerned but said charges
were dismissed.
It further appears that Lutero Romero obtained a loan from the
Development Bank of the Philippines on December 3, 1975 and
mortgaged the land in question as collateral for said loan.
Appellants claim that only then did they know that the land had
been titled in the name of Lutero Romero. Thereafter, through a
letter dated August 2, 1976, Lutero Romero asked his sisters to
vacate the land in question.

A few days thereafter, or on August 14, 1976, Civil Case No.

2
591 was filed against Lutero Romero.
On March 11, 1991, the RTC rendered a decision the dispositive portion of
which reads:
WHEREFORE, judgment is hereby rendered:
1. Declaring the three (3) affidavits of sale as
null and void and no effect;
2. Ordering the plaintiffs in Civil Case No. 591
and defendants in Civil Case No. 1056, namely
Sabdullah Mama, Presentation Romero-Mama
Gloriosa Romero Rasonable, Meliton Pacas
and Lucita Romero to surrender and to deliver
to Lutero Romero the possession of all the
portions of Lot 23, Pls-35;
3. Ordering the Municipal Assessor of
Kapatagan, Lanao del Norte to cancel Tax
Declaration Nos. 6029, 6030, 6031 and 6032 in
the names of defendants (Civil Case No. 1056)
Sabdullah Mama, Gloriosa Rasonable, plaintiff
Lutero Romero and defendant Meliton Pacas
and to restore Tax Declaration No. 1347 in the
name of Lutero Romero for the entire Lot 23,
Pls-35;
4. Ordering the defendants (Civil Case No.
1056) to pay to the plaintiff the sum of TEN
THOUSAND (P10,000.00) PESOS as actual
damages;
5. Ordering the defendants (Civil Case no.
1056) to pay to the plaintiffs the sum of TEN
THOUSAND (P10,000.00) Pesos as moral
damages; and
6. Ordering the defendants (Civil Case No.
1056) to pay the cost of this proceeding.
SO ORDERED.

RULE 98: TRUSTEES

Not satisfied with the decision of the RTC, petitioners appealed to the Court of
Appeals, which affirmed the decision of the RTC in favor of LUTERO. Hence this
petition where the petitioners assign the following issues:

simulated and not supported by any consideration; and they were executed
7
within the five-year prohibitory period from the issuance of the patent.
The Court of Appeals ruled in favor of LUTERO, stating:

WHETHER OR NOT LUTERO ROMERO IS A TRUSTEE OF

LOT 23 PLS-35 FOR THE BENEFIT OF THE HEIRS OF
EUGENIO ROMERO.
WHETHER OR NOT WITH OR WITHOUT SAID THREE (3)
AFFIDAVITS IN QUESTION PETITIONERS' VALID CAUSE OF
4
ACTION CAN STAND OR NOT.
DBP filed its comment to the petition and seeks the dismissal of the case
against it considering that the agricultural loan in favor of LUTERO has been
paid in full. DBP maintains that since the mortgage was already cancelled,
5
petitioners have no cause of action against it.
Petitioners contend that LUTERO merely holds Lot 23 Pls-35 in trust for the
benefit of the heirs of his father EUGENIO since it was actually EUGENIO who
first applied for the homestead but considering that EUGENIO was already
granted a homestead, the application had to be placed in the name of his eldest
son EUTIQUIO. The application was subsequently transferred to the name of
LUTERO who later transferred the application in the name of Ricardo Romero
(RICARDO), his younger brother. To support their contention, petitioners point to
the testimony of LUTERO during the investigation of the homestead application
of RICARDO to the effect that he transferred and relinquished his rights as
trustee of the lot to RICARDO. The fact that LUTERO was able to cause the
issuance of the Homestead title of the land in question under his name clearly
shows that LUTERO employed fraud in procuring the same. Consequently,
herein petitioners are entitled to recover the said lot. Petitioners also rely on the
three affidavits of sale executed by LUTERO wherein he sold portions of Lot 23
Pls-35 in favor of GLORIOSA, PRESENTACION and her husband and LUCITA
and her husband. They claim that pursuant to these three affidavits, LUTERO no
6
longer has a claim over Lot 23 Pls-35.
On the other hand, respondents maintain that LUTERO did not commit fraud in
the titling of Lot 23 Pls-35. They allege that the petitioners failed to prove this
during the trial of the case. On the contrary, LUTERO complied with all the
requirements of the law when he successfully obtained title to the lot.
Respondents also deny that LUTERO held the land in trust for the benefit of the
heirs of his father EUGENIO. According to them, this violates the provisions of
The Public Land Act. Even assuming that a trust in fact was created, such is null
and void for being contrary to law. Finally, respondents maintain that the three
affidavits of sale executed in favor of the petitioners are void since they were

Appellants herein maintain that the land was held by Lutero

Romero, only in trust for his brothers and sisters because the
land belonged to their father Eugenio Romero. We do not find
any basis for this posture. Eugenio Romero was never the
owner of the land in question because all he bought from the
Jaug spouses were the alleged rights and interests, if there was
any, to the said land which was then part of the public domain.
The Jaugs could not have sold said land to Eugenio as they did
not own it. Eugenio Romero was not granted, and could not
have been granted, a patent for said land because he was
disqualified by virtue of the fact that he already had applied for
the maximum limit of 24 hectares to which he was entitled. The
land in question could not therefore have passed on from him to
his children.
On the other hand, Lutero Romero applied for a homestead
patent over the land in question and his application was duly
approved. The appellants have not established that there was
any fraud committed in this application. In fact it appears that
there was even a hearing conducted by the Bureau of Lands on
the application because a certain Potenciano Jaug had been
contesting the application. Under the presumption of law, that
official duty has been regularly performed, there appears to be
no ground to question the grant of the patent to Lutero Romero
in 1967.
His sisters Gloriosa, Presentacion, and Lucita apparently
recognized Lutero's ownership of the property when in 1969
they sought the help of the mayor of Kapatagan to convince
Lutero to execute affidavits of sale in their favor. However,
Lutero could not have sold any portion of the property to them.
Any such sale executed within five (5) year period from the date
of the issuance of the title is null and void even if the sale was
made by the homesteader in favor of his/her descendants
(Gayapano vs. IAC, 199 SCRA 309). Furthermore, it has been
established that the three supposed vendees never paid any
consideration for the supposed sale of the lots they occupied.

RULE 98: TRUSTEES

We agree with the observation of the appellee that under the

theory of the appellants, the latter had sought to circumvent the
law. It would appear that because Eugenio Romero could not
legally qualify to have the land in question, he had allegedly
sought to place the application in another's name with the same
intention to own it through another. This certainly cannot be
8
countenanced.
We find no reversible error committed by the Court of Appeals.
The core issue in this case is whether LUTERO acquired Lot 23 Pls-35 in trust
for the benefit of the heirs of EUGENIO.
"A trust is the legal relationship between a person having an equitable
ownership in property and another person owning the legal title to such property,
the equitable ownership of the former entitling him to performance of certain
9
duties and the exercise of certain powers by the latter." Trust relations between
10
parties may be express or implied. Express trusts are those which are created
by the direct and positive acts of the parties, by some writing or deed, or will, or
11
by words evidencing an intention to create a trust.
Implied trusts are those
which without being express, are deducible from the nature of the transaction as
matters of intent, or which are superinduced on the transaction by operation of
law as a matter of equity, independently of the particular intention of the parties.
12
Implied trusts may either be resulting or constructive trusts, both coming into
by operation of law.
Resulting trusts are based on the equitable doctrine that valuable consideration
and not legal title determines the equitable title or interest and are presumed
always to have been contemplated by the parties. They arise from the nature or
circumstances of the consideration involved in a transaction whereby one
person thereby becomes invested with legal title but is obligated in equity to hold
his legal title for the benefit of another. On the other hand, constructive trusts are
created by the construction of equity in order to satisfy the demands of justice
and prevent unjust enrichment. They arise contrary to intention against one who,
by fraud, duress or abuse of confidence, obtains or hold the legal right to
13
property, which he ought not, in equity and good conscience, to hold.
However, it has been held that a trust will not be created when, for the purpose
of evading the law prohibiting one from taking or holding real property, he takes
14
a conveyance thereof in the name of a third person.
In the present case, the petitioners did not present any evidence to prove the
existence of the trust. Petitioners merely alleged that LUTERO, through
fraudulent means, had the title of Lot 23 Pls-35 issued in his name contrary to

the alleged agreement between the family that LUTERO would merely hold the
lot in trust for the benefit of EUGENIO's heirs. The alleged agreement was not
proven and even assuming that the petitioners duly proved the existence of the
trust, said trust would be of doubtful validity considering that it would promote a
direct violation of the provisions of the Public Land Act as regards the acquisition
of a homestead patent. A homestead applicant is required by law to occupy and
15
cultivate the land for his own benefit, and not for the benefit of someone else.
Furthermore, under Section 12 of The Public Land Act (CA 141), a person is
allowed to enter a homestead not exceeding twenty-four (24) hectares. In the
present case, it is not disputed that EUGENIO already applied for a homestead
patent for twenty-four (24) hectares of land and was disqualified from applying
for an additional twelve (12) hectares. If we uphold the theory of the petitioners
and rule that a trust in fact existed, we would be abetting a circumvention of the
statutory prohibitions stated under the Public Land Act. We therefore find no
legal or factual basis to sustain the contention of the petitioners that LUTERO
merely held Lot 23 Pls-35 in trust for the benefit of the heirs of EUGENIO.
As for the alleged sale of three portions of the lot for a consideration of
P3,000.00 each evidenced by the three affidavits of sale executed by LUTERO
in favor of GLORIOSA, PRESENTACION and LUCITA, the Court of Appeals
correctly declared the three conveyances void. CA 141 prohibits the alienation of
a homestead within five years from the issuance of the patent and grant under
Section 118, which states:
Sec. 118. Except in favor of the Government or any of its
branches, units, or institutions, lands acquired under free patent
or homestead provisions shall not be subject to encumbrance or
alienation from the date of the approval of the application and
for a term of five years from and after the date of issuance of
the patent and grant, nor shall they become liable to the
satisfaction of any debt contracted prior to the expiration of said
period, but the improvements or crops on the land may be
mortgaged or pledged to qualified persons, associations, or
corporations.
No alienation, transfer, or conveyance of any homestead after
five years and before twenty-five years after the issuance of title
shall be valid without the approval of the Secretary of
Agriculture and Commerce, which approval shall not be denied
except on constitutional and legal grounds.
"The conveyance of a homestead before the expiration of the five-year
prohibitory period following the issuance of the homestead patent is null
and void and cannot be enforced, for it is not within the competence of
any citizen to barter away what public policy by law seeks to preserve."

10

RULE 98: TRUSTEES

16

In the present case, since the sales were made on January 17, 1969
or less than two years after the issuance of LUTERO's title to the
homestead on April 7, 1967, the sales are clearly void.
Finally, we cannot grant DBP's prayer to be dropped from the case even
if the mortgage in its favor has been cancelled. DBP did not appeal the
decision of the Court of Appeals and cannot therefore seek affirmative
relief from this Court other than the ones granted in the decision of the
17
court below.
All that said appellee can do is to make a counterassignment of errors or to argue on issues raised at the trial only for he
purpose of sustaining the judgment in his favor, even on grounds not
included in the decision of the court a quo nor raised in the appellant's
assignment of errors or arguments.
WHEREFORE, the instant petition is hereby DENIED.
SO ORDERED.
Melo, Vitug, Panganiban and Purisima, JJ., concur.

11

RULE 98: TRUSTEES

G.R. No. 133047

August 17, 1999

HEIRS OF LORENZO YAP, namely SALLY SUN YAP, MARGARET YAP-UY

and MANUEL YAP, petitioners,
vs.
THE HONORABLE COURT OF APPEALS, RAMON YAP and BENJAMIN
YAP, respondents.
VITUG, J.:
What in essence petitioners seek is the enforcement of an alleged trust
agreement between Lorenzo Yap, now deceased, and his brothers Ramon and
Benjamin, herein co-respondents, covering a piece of land and its improvement.
The case and factual settings found by the Court of Appeals do not appear to
deviate significantly from that priority made by the trial court.1wphi1.nt
Sometime in February 1966, Ramon Yap purchased a parcel of land situated at
123 (formerly 75) Batanes Street, Galas, Quezon City, covered by Transfer
Certificate of Title No. 82001/T-414, from the spouses Carlos and Josefina Nery.
The lot was thereupon registered in the name of Ramon Yap under Transfer
Certificate of Title No. 102132; forthwith, he also declared the property in his
name for tax purposes and paid the real estate taxes due thereon from 1966 to
1992. In 1967, Ramon Yap constructed a two-storey 3-door apartment building
for the use of the Yap family. One-fifth (1/5) of the cost of the construction was
defrayed by Ramon Yap while the rest was shouldered by Chua Mia, the mother
of Lorenzo, Benjamin and Ramon. Upon its completion, the improvement was
declared for real estate tax purposes in the name of Lorenzo Yap in deference
to the wishes of the old woman.
Lorenzo Yap died on 11 July 1970. A few months later, his heirs (herein
petitioners) left their family dwelling in Lucena City to reside permanently in
Manila. Ramon Yap allowed petitioners to use one unit of the apartment
building.
On 18 March 1992, Ramon Yap sold the land and his share of the 3-door
apartment to his brother, his herein co-respondent Benjamin Yap, for the sum of
P337,500.00 pursuant to a Deed of Sale, recorded on even date in the
Memorandum of Encumbrances of the title to said property. Transfer Certificate
of Title No. 73002 was in due time issued in the name of Benjamin Yap.
The controversy started when herein petitioners, by a letter of 08 June 1992,
advised respondents of the former's claim of ownership over the property and
demanded that respondents execute the proper deed necessary to transfer the

title to them. At about the same time, petitioners filed a case for ejectment
against one of the bonafide tenants of the property.
On 29 July 1992, respondents filed an action with the Regional Trial Court
("RTC") of Quezon City, docketed Civil Case No. Q-92-12899, for quieting of title
against petitioners. In their answer, petitioners averred that sometime in 1966
the spouses Carlos and Josefina Nery offered to sell the disputed parcel of land
to their predecessor-in-interest, Lorenzo Yap, for the sum of P15,000.00. Since
Lorenzo and his wife Sally Yap were at that time Chinese citizens, Lorenzo
requested his brother Ramon to allow the use of the latter's name in the
purchase, registration, and declaration for tax purposes of the subject lot to
which Ramon Yap consented. It was agreed that the property would remain
registered in the name of Ramon Yap until such time as Lorenzo would have
acquired Philippine citizenship but that, should Lorenzo predecease, the lot
would then be transferred to Lorenzo's heirs upon the latter's naturalization.
Petitioners contended that it was Lorenzo who had caused the construction of
the 3-door apartment on the property, merely entrusting the money therefor to
Ramon Yap. The death of Lorenzo in 1970 prompted petitioners to move in and
occupy the apartment and the lot, without any objection from Ramon and
Benjamin, although the latter were allowed to stay in the premises since they
had no other place to live in. In 1991, petitioners acquired Philippine citizenship
and, forthwith, they requested Ramon Yap to have the title to the lot transferred
to their names but to their chagrin they discovered that Ramon had sold the lot
to his co-respondent Benjamin.
Assessing the evidence before it, the trial court found for the respondents and
adjudged Benjamin Yap to be the true and lawful owner of the disputed property.
On appeal, the Court of Appeals affirmed the decision of the trial court and
debunked the claim of petitioners that Ramon Yap was merely so used as a
dummy by Lorenzo Yap. Giving full weight and credit to the Deed of Sale
executed by the Nery spouses in favor of Ramon Yap, the appellate court
stressed that to overcome the presumption of regularity in the execution of a
public document, the evidence to the contrary should be clear and convincing
even as it was equally incumbent upon petitioners to show that the subsequent
sale of the property to Benjamin had only been simulated and fictitious. The
appellate court, however, deleted the award of attorney's fees in favor of
respondents for, in its view, it was not adequately shown that petitioners had
acted in bad faith in pursuing their case.
Petitioners are now before this Court seeking a reversal of the decision of the
Court of Appeals and contending that

12

RULE 98: TRUSTEES

VII

THE RESPONDENT COURT OF APPEALS COMMITTED REVERSIBLE

ERROR WHEN IT HOLDS THAT DEFENDANTS-APPELLANTS FATHER,
LORENZO YAP, BEING CHINESE CAN NOT ENTER INTO A TRUST
AGREEMENT AND THE EXISTENCE OF A TRUST AGREEMENT CAN NOT
BE PROVEN BEING CHINESE.

THE RESPONDENT COURT OF APPEALS ERRED IN NOT DECLARING THE

TITLE IN THE NAME OF RAMON YAP VOID BEING ACQUIRED AS DUMMY.

II
THE RESPONDENT COURT OF APPEALS COMMITTED REVERSIBLE
ERROR WHEN IT HOLDS THAT THE FAILURE TO SHOW WRITTEN TRUST
AGREEMENT RENDERS THE ALLEGED AGREEMENT UNENFORCEABLE
BY NOT CONSIDERING THE SAME AS ONE UNDER IMPLIED TRUST.

VIII
THE RESPONDENT COURT OF APPEALS COMMITTED REVERSIBLE
ERROR WHEN IT RULED THAT BENJAMIN YAP HAS POSSESSION OF
APARTMENT UNIT 123 LIKEWISE OWNERSHIP PERSONAL PROPERTIES
THEREIN ON THE BASIS OF THE INVENTORY OF THE SHERIFF OF THE
COURT A QUO BY WAY OF A SUBSEQUENT MANDATORY INJUNCTION
1
WHICH WAS DENIED.
The Court finds no merit in the appeal.

III
THE RESPONDENT COURT OF APPEALS COMMITTED REVERSIBLE
ERROR WHEN IT HOLDS THAT PAROL EVIDENCE AND/OR STATUTE OF
FRAUDS APPLIED IN THE CASE AT BAR.
IV
THE RESPONDENT COURT OF APPEALS COMMITTED REVERSIBLE
ERROR WHEN IT HOLDS THAT APPELLANTS HAVE TO REFUTE THE
DEED OF SALE EXECUTED BY THE NERY SPOUSES IN FAVOR OF
RAMON
YAP
BY
CLEAR
AND
CONVINCING
EVIDENCE
NOTWITHSTANDING ADMISSION OF THE SAID DEED OF SALE.
V
THE RESPONDENT COURT OF APPEALS COMMITTED REVERSIBLE
ERROR WHEN IT DID NOT CONSIDER THAT IN TRUST THE TITLE IS IN
THE NAME OF THE TRUSTEE AND NOT IN THE NAME OF THE NAKED
OWNER.

To begin with, a brief discussion on the trust relation between two parties could
2
be helpful. A trust may either be express or implied. Express trusts are those
which are created by the direct and positive acts of the parties, by some writing
3
or deed, or will, or by words evincing an intention to create a trust. Implied
trusts are those which, without being express, are deducible from the nature of
the transaction as matters of intent or, independently of the particular intention of
the parties, as being superinduced on the transaction by operation of law
4
basically by reason of equity. These species of implied trust are ordinarily
5
subdivided into resulting and constructive trusts. A resulting trust is one that
arises by implication of law and presumed always to have been contemplated by
the parties, the intention as to which can be found in the nature of their
6
transaction although not expressed in a deed or instrument of conveyance.
Resulting trusts are based on the equitable doctrine that it is the more valuable
consideration that the legal title that determines the equitable interest in
7
property. Upon the other hand, a constructive trust is a trust not created by any
word or phrase, either expressly or impliedly, evincing a direct intention to create
a trust, but one that arises in order to satisfy the demands of justice. It does not
8
come about by agreement or intention but in main by operation of law
construed 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
9
conscience, to hold.

VI
THE RESPONDENT COURT OF APPEALS ERRED WHEN IT HOLDS THAT
RAMON YAP CAN NOT BE A DUMMY OF LORENZO YAP BEING ALIEN AND
DISQUALIFIED TO OWN REAL PROPERTY.

One basic distinction between an implied trust and an express trust is that while
the former may be established by parol evidence, the latter cannot. Even then,
in order to establish an implied trust in real property by parol evidence, the proof
should be as fully convincing as if the acts giving rise to the trust obligation are
10
proven by an authentic document. An implied trust, in fine, cannot be
11
established upon vague and inconclusive proof.

13

RULE 98: TRUSTEES

Unfortunately for petitioners, the issues they submit in the case at bar boil down
to the appreciation of the evidence presented. The Court of Appeals, sustaining
the court a quo, has found the evidence submitted by petitioners to be utterly
12
wanting, consisting mainly of the self-serving testimony of Sally Yap. She
herself admitted that the business establishment of her husband Lorenzo was
razed by fire in 1964 that would somehow place to doubt the claim that he
indeed had the means to purchase the subject land about two years later from
the Nery spouses. Upon the other hand, Ramon Yap was by then an accountant
with apparent means to buy the property himself. At all events, findings of fact
by the Court of Appeals, particularly when consistent with those made by the
trial court, should deserve utmost regard when not devoid of evidentiary support.
No cogent reason had been shown by petitioners for the Court to now hold
otherwise.
Not to be dismissed, furthermore, is the long standing and broad doctrine of
clean hands that will not allow the creation or the use of a juridical relation, a
trust whether express or implied included, to perpetrate fraud or tolerate bad
faith nor to subvert, directly or indirectly, the law. The trust agreement between
Ramon and Lorenzo, if indeed extant, would have been in contravention of, in
fact the fundamental law. Then Section 5, Article XIII, of the 1935 Constitution
has provided that
Save in cases of hereditary succession, no private agricultural land shall
be transferred or assigned except to individuals, corporations, or
associations, qualified to acquire or hold lands of the public domain in
the Philippines.
The mandate has also been adopted in Section 14, Article XIV, of the 1973
Constitution and now reiterated under Section 7, Article XII, of the 1987
Constitution. A trust or a provision in the terms of a trust would be invalid if the
enforcement of the trust or provision is against the law even though its
performance does not involve the commission of a criminal or tortuous act. It
likewise must follow that what the parties are not allowed to do expressly is one
that they also may not do impliedly as, for instance, in the guise of a resulting
13
trust.
The foregoing disquisition renders unnecessary the resolution of the incidental
issues raised in the petition.
WHEREFORE, the instant petition is DENIED, and the decision of the
respondent Court of Appeals of 08 January 1998 in C.A.-G.R. CV No. 46838 is
AFFIRMED. Costs against petitioners.
SO ORDERED.

Melo, Panganiban and Purisima, JJ., concur.1wphi1.nt

Gonzaga-Reyes, J., no part. Member of the Court of Appeals Division that
rendered the decision.

14

RULE 98: TRUSTEES

G.R. No. 148788

November 23, 2007

On July 3, 1998, after hearing, the MTC rendered a Decision in favor of the
petitioner, thus:

SOLEDAD CAEZO, substituted by WILLIAM CAEZO and VICTORIANO

CAEZO Petitioners,
vs.
CONCEPCION ROJAS, Respondent.
DECISION

WHEREFORE, premises considered, the Court finds a preponderance of

evidence in favor of plaintiff Soledad Caezo and against defendant Concepcion
Rojas by declaring plaintiff the true and lawful owner of the land more
particularly described under paragraph 5 of the complaint and hereby orders
defendant Concepcion Rojas:
a) To vacate and surrender possession of the land to plaintiff;

NACHURA, J.:
1

This is a petition for review on certiorari from the Decision of the Court of
Appeals, dated September 7, 2000, in CA-G.R. SP No. 53236, and Resolution
dated May 9, 2001.

b) To pay plaintiff the sum of P34,000.00 actual damages, P10,000.00

for attorneys fees and litigation expenses; and
c) To pay the costs.

On January 29, 1997, petitioner Soledad Caezo filed a Complaint for the
recovery of real property plus damages with the Municipal Trial Court (MTC) of
Naval, Biliran, against her fathers second wife, respondent Concepcion Rojas.
The subject property is an unregistered land with an area of 4,169 square
meters, situated at Higatangan, Naval, Biliran. Caezo attached to the complaint
3
a Joint Affidavit executed on May 10, 1979 by Isidro Catandijan and Maximina
Caezo attesting to her acquisition of the property.
In her complaint, the petitioner alleged that she bought the parcel of land in 1939
from Crisogono Limpiado, although the transaction was not reduced into writing.
Thereafter, she immediately took possession of the property. When she and her
husband left for Mindanao in 1948, she entrusted the said land to her father,
4
Crispulo Rojas, who took possession of, and cultivated, the property. In 1980,
she found out that the respondent, her stepmother, was in possession of the
property and was cultivating the same. She also discovered that the tax
5
declaration over the property was already in the name of Crispulo Rojas.
In her Answer, the respondent asserted that, contrary to the petitioners claim, it
was her husband, Crispulo Rojas, who bought the property from Crisogono
Limpiado in 1948, which accounts for the tax declaration being in Crispulos
name. From then on, until his death in 1978, Crispulo possessed and cultivated
the property. Upon his death, the property was included in his estate, which was
administered by a special administrator, Bienvenido Ricafort. The petitioner, as
heir, even received her share in the produce of the estate. The respondent
further contended that the petitioner ought to have impleaded all of the heirs as
defendants. She also argued that the fact that petitioner filed the complaint only
6
in 1997 means that she had already abandoned her right over the property.

SO ORDERED.

Despite the respondents objection that the verbal sale cannot be proven without
infringing the Statute of Frauds, the MTC gave credence to the testimony of the
petitioners two witnesses attesting to the fact that Crisogono Limpiado sold the
property to the petitioner in 1939. The MTC also found no evidence to show that
Crispulo Rojas bought the property from Crisogono Limpiado in 1948. It held
that the 1948 tax declaration in Crispulos name had little significance on
respondents claim, considering that in 1948, the "country was then rehabilitating
itself from the ravages of the Second World War" and "the government was
more interested in the increase in tax collection than the observance of the
8
niceties of law."
The respondent appealed the case to the Regional Trial Court (RTC) of Naval,
Biliran. On October 12, 1998, the RTC reversed the MTC decision on the ground
that the action had already prescribed and acquisitive prescription had set in.
The dispositive portion of the Decision reads:
WHEREFORE, premises considered, the decision of the Municipal Trial Court of
Naval, Biliran awarding ownership of the disputed land to the plaintiff and further
allowing recovery of damages is hereby REVERSED in toto. There is no award
of damages.
The said property remains as the legitime of the defendant Concepcion Rojas
and her children.
SO ORDERED.

15

RULE 98: TRUSTEES

However, acting on petitioners motion for reconsideration, the RTC amended its
10
original decision on December 14, 1998. This time, it held that the action had
not yet prescribed considering that the petitioner merely entrusted the property
to her father. The ten-year prescriptive period for the recovery of a property held
in trust would commence to run only from the time the trustee repudiates the
trust. The RTC found no evidence on record showing that Crispulo Rojas ever
ousted the petitioner from the property. The dispositive portion of the amended
decision reads as follows:
WHEREFORE, in view of the foregoing considerations, the decision of this Court
dated October 12, 1998 is hereby set aside and another is hereby entered
modifying the decision of the Court a quo and declaring Soledad Rojas Vda. De
Caezo as the true and lawful owner of a parcel of land, more particularly
described and bounded as follows:
A parcel of land situated at Higatangan, Naval, Biliran, bounded on the North by
Policarpio Limpiado; on the South by Fidel Limpiado; on the East by Seashore;
and on the West by Crispolo (sic) Limpiado with an approximate area of 4,169
square meters per Tax Declaration No. 2258, later under Tax Declaration No.
4073 in the name of Crispolo Rojas and later in the name of the Heirs of
Crispolo Rojas.
Further, ordering defendant-appellant Concepcion Rojas and all persons
claiming rights or interest under her to vacate and surrender possession of the
land aforecited to the plaintiff or any of her authorized representatives, Ordering
the Provincial and/or Municipal Assessors Office to cancel the present existing
Tax Declaration in the name of Heirs of Crispolo Rojas referring to the abovedescribed property in favor of the name of Soledad Rojas Vda. De Caezo,
Ordering the defendant-appellant Concepcion Rojas to pay the plaintiff-appellee
the sum of P34,000.00 in actual damages, and to pay for the loss of her share in
money value of the products of the coconuts of said land from 1979 to 1997 and
to pay further until the case is terminated at the rate of P200.00 per quarter
based on the regular remittances of the late Crispolo Rojas to the plaintiffappellee, and to pay the costs.
SO ORDERED.

11

The respondent filed a motion to reconsider the Amended Decision but the RTC
denied the same in an Order dated April 25, 1999.
She then filed a petition for review with the Court of Appeals (CA), which
reversed the Amended Decision of the RTC on September 7, 2000, thus:

WHEREFORE, the amended decision dated December 14, 1998 rendered in

Civil Case No. B-1041 is hereby REVERSED and SET ASIDE. The complaint
filed by Soledad Caezo before the Municipal Trial Court of Naval, Biliran is
hereby DISMISSED on grounds of laches and prescription and for lack of merit.
SO ORDERED.

12

The CA held that the petitioners inaction for several years casts a serious doubt
on her claim of ownership over the parcel of land. It noted that 17 years lapsed
since she discovered that respondent was in adverse possession of the property
before she instituted an action to recover the same. And during the probate
proceedings, the petitioner did not even contest the inclusion of the property in
13
the estate of Crispulo Rojas.
The CA was convinced that Crispulo Rojas owned the property, having bought
the same from Crisogono Limpiado in 1948. Supporting this conclusion, the
appellate court cited the following circumstances: (1) the property was declared
for taxation purposes in Crispulos name and he had been paying the taxes
thereon from 1948 until his death in 1978; (2) Crispulo adversely possessed the
same property from 1948 until his death in 1978; and (3) upon his death in 1978,
the property was included in his estate, the proceeds of which were distributed
14
among his heirs.
The CA further held that, assuming that there was an implied trust between the
petitioner and her father over the property, her right of action to recover the
same would still be barred by prescription since 49 years had already lapsed
15
since Crispulo adversely possessed the contested property in 1948.
On May 9, 2001, the CA denied the petitioners motion for reconsideration for
16
lack of merit.
In this petition for review, the petitioner, substituted by her heirs, assigns the
following errors:
That the Court of Appeals committed grave abuse of discretion in setting aside
petitioners contention that the Petition for Review filed by respondent
CONCEPCION ROJAS before the Court of Appeals was FILED OUT OF TIME;
That the Court of Appeals erred and committed grave abuse of discretion
amounting to lack or excess of jurisdiction when it decided that the filing of the
case by SOLEDAD CAEZO for Recovery of Real Property was already barred
17
by PRESCRIPTION AND LACHES.

16

RULE 98: TRUSTEES

The petitioner insists that the respondents petition for review before the CA was
filed out of time. The petitioner posits that the CA may not grant an additional
extension of time to file the petition except for the most compelling reason. She
contends that the fact that respondents counsel needed additional time to
secure the certified copy of his annexes cannot be considered as a compelling
reason that would justify an additional period of
extension. She admits, though, that this issue was raised for the first time in their
motion for reconsideration, but insists that it can be raised at any time since it
concerns the jurisdiction of the CA over the petition.
The petitioner further posits that prescription and laches are unavailing because
there was an express trust relationship between the petitioner and Crispulo
Rojas and his heirs, and express trusts do not prescribe. Even assuming that it
was not an express trust, there was a resulting trust which generally does not
prescribe unless there is repudiation by the trustee.
For her part, the respondent argues that the petitioners are now estopped from
questioning the CA Resolution granting her second motion for extension to file
the petition for review. She notes that the petitioner did not raise this issue in the
comment that she filed in the CA. In any case, the grant of the second extension
of time was warranted considering that the certified true copy of the assailed
RTC orders did not arrive at the office of respondents counsel in Cebu City in
time for the filing of the petition.

the difficulty in securing a certified true copy of the assailed decision because of
the distance between the office of respondents counsel and the trial court as a
compelling reason for the request. In the absence of any showing that the CA
granted the motion for extension capriciously, such exercise of discretion will not
be disturbed by this Court.
On the second issue, the petitioner insists that her right of action to recover the
property cannot be barred by prescription or laches even with the respondents
uninterrupted possession of the property for 49 years because there existed
between her and her father an express trust or a resulting trust. Indeed, if no
trust relations existed, the possession of the property by the respondent, through
her predecessor, which dates back to 1948, would already have given rise to
acquisitive prescription in accordance with Act No. 190 (Code of Civil
19
Procedure). Under Section 40 of Act No. 190, an action for recovery of real
property, or of an interest therein, can be brought only within ten years after the
cause of action accrues. This period coincides with the ten-year period for
20
acquisitive prescription provided under Section 41 of the same Act.
Thus, the resolution of the second issue hinges on our determination of the
existence of a trust over the property --- express or implied --- between the
petitioner and her father.

On the merits, the respondent asserts that the complaint is barred by

prescription, laches and estoppel. From 1948 until his death in 1978, Crispulo
cultivated the property and was in adverse, peaceful and continuous possession
thereof in the concept of owner. It took the petitioner 49 years from 1948 before
she filed the complaint for recovery of the property in 1997. Granting that it was
only in 1980 that she found out that the respondent adversely possessed the
property, still petitioner allowed 17 years to elapse before she asserted her
alleged right over the property.

A trust is the legal relationship between one person having an equitable

ownership of property and another person owning the legal title to such property,
the equitable ownership of the former entitling him to the performance of certain
21
duties and the exercise of certain powers by the latter. Trusts are either
22
express or implied. Express trusts are those which are created by the direct
and positive acts of the parties, by some writing or deed, or will, or by words
23
evincing an intention to create a trust. Implied trusts are those which, without
being expressed, are deducible from the nature of the transaction as matters of
intent or, independently, of the particular intention of the parties, as being
superinduced on the transaction by operation of law basically by reason of
24
equity. An implied trust may either be a resulting trust or a constructive trust.

Finally, the respondent maintains that the other co-owners are indispensable
parties to the case; and because they were not impleaded, the case should be
dismissed.

It is true that in express trusts and resulting trusts, a trustee cannot acquire by
25
prescription a property entrusted to him unless he repudiates the trust. The
following discussion is instructive:

The petition has no merit.

There is a rule that a trustee cannot acquire by prescription the ownership of

property entrusted to him, or that an action to compel a trustee to convey
property registered in his name in trust for the benefit of the cestui que trust
does not prescribe, or that the defense of prescription cannot be set up in an
action to recover property held by a person in trust for the benefit of another, or

On the procedural issue raised by the petitioner, we find no reversible error in

the grant by the CA of the second motion for extension of time to file the
respondents petition. The grant or denial of a motion for extension of time is
18
addressed to the sound discretion of the court. The CA obviously considered

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RULE 98: TRUSTEES

that property held in trust can be recovered by the beneficiary regardless of the
lapse of time.
That rule applies squarely to express trusts. The basis of the rule is that the
possession of a trustee is not adverse. Not being adverse, he does not acquire
by prescription the property held in trust. Thus, Section 38 of Act 190 provides
that the law of prescription does not apply "in the case of a continuing and
subsisting trust."
The rule of imprescriptibility of the action to recover property held in trust may
possibly apply to resulting trusts as long as the trustee has not repudiated the
trust.
xxxx
Acquisitive prescription may bar the action of the beneficiary against the trustee
in an express trust for the recovery of the property held in trust where (a) the
trustee has performed unequivocal acts of repudiation amounting to an ouster of
the cestui que trust; (b) such positive acts of repudiation have been made known
26
to the cestui que trust, and (c) the evidence thereon is clear and conclusive.
As a rule, however, the burden of proving the existence of a trust is on the party
asserting its existence, and such proof must be clear and satisfactorily show the
27
existence of the trust and its elements. The presence of the following elements
must be proved: (1) a trustor or settlor who executes the instrument creating the
trust; (2) a trustee, who is the person expressly designated to carry out the trust;
(3) the trust res, consisting of duly identified and definite real properties; and (4)
28
the cestui que trust, or beneficiaries whose identity must be clear. Accordingly,
it was incumbent upon petitioner to prove the existence of the trust relationship.
And petitioner sadly failed to discharge that burden.
The existence of express trusts concerning real property may not be established
29
by parol evidence. It must be proven by some writing or deed. In this case, the
only evidence to support the claim that an express trust existed between the
petitioner and her father was the self-serving testimony of the petitioner. Bare
allegations do not constitute evidence adequate to support a conclusion. They
30
are not equivalent to proof under the Rules of Court.

manifested by inference from what the trustor has said or done, from the nature
of the transaction, or from the circumstances surrounding the creation of the
purported trust.
However, an inference of the intention to create a trust, made from language,
conduct or circumstances, must be made with reasonable certainty. It cannot
rest on vague, uncertain or indefinite declarations. An inference of intention to
create a trust, predicated only on circumstances, can be made only where they
31
admit of no other interpretation.
Although no particular words are required for the creation of an express trust, a
clear intention to create a trust must be shown; and the proof of fiduciary
relationship must be clear and convincing. The creation of an express trust must
be manifested with reasonable certainty and cannot be inferred from loose and
vague declarations or from ambiguous circumstances susceptible of other
32
interpretations.
In the case at bench, an intention to create a trust cannot be inferred from the
petitioners testimony and the attendant facts and circumstances. The petitioner
testified only to the effect that her agreement with her father was that she will be
given a share in the produce of the property, thus:
Q: What was your agreement with your father Crispulo Rojas when you
left this property to him?
A: Every time that they will make copra, they will give a share.
Q: In what particular part in Mindanao [did] you stay with your husband?
A: Bansalan, Davao del Sur.
Q: And while you were in Bansalan, Davao del Sur, did Crispolo Rojas
comply with his obligation of giving your share the proceeds of the land?
A: When he was still alive, he gave us every three months sometimes
33
P200.00 and sometimes P300.00.

In one case, the Court allowed oral testimony to prove the existence of a trust,
which had been partially performed. It was stressed therein that what is
important is that there should be an intention to create a trust, thus:

This allegation, standing alone as it does, is inadequate to establish the

existence of a trust because profit-sharing per se, does not necessarily translate
to a trust relation. It could also be present in other relations, such as in deposit.

What is crucial is the intention to create a trust. While oftentimes the intention is
manifested by the trustor in express or explicit language, such intention may be

What distinguishes a trust from other relations is the separation of the legal title
and equitable ownership of the property. In a trust relation, legal title is vested in

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RULE 98: TRUSTEES

the fiduciary while equitable ownership is vested in a cestui que trust. Such is
not true in this case. The petitioner alleged in her complaint that the tax
declaration of the land was transferred to the name of Crispulo without her
consent. Had it been her intention to create a trust and make Crispulo her
trustee, she would not have made an issue out of this because in a trust
agreement, legal title is vested in the trustee. The trustee would necessarily
have the right to transfer the tax declaration in his name and to pay the taxes on
the property. These acts would be treated as beneficial to the cestui que trust
34
and would not amount to an adverse possession.
Neither can it be deduced from the circumstances of the case that a resulting
trust was created.1wphi1 A resulting trust is a species of implied trust that is
presumed always to have been contemplated by the parties, the intention as to
which can be found in the nature of their transaction although not expressed in a
deed or instrument of conveyance. A resulting trust is based on the equitable
doctrine that it is the more valuable consideration than the legal title that
35
determines the equitable interest in property.
While implied trusts may be proved by oral evidence, the evidence must be
trustworthy and received by the courts with extreme caution, and should not be
made to rest on loose, equivocal or indefinite declarations. Trustworthy evidence
36
is required because oral evidence can easily be fabricated. In order to
establish an implied trust in real property by parol evidence, the proof should be
as fully convincing as if the acts giving rise to the trust obligation are proven by
an authentic document. An implied trust, in fine, cannot be established upon
37
vague and inconclusive proof. In the present case, there was no evidence of
any transaction between the petitioner and her father from which it can be
inferred that a resulting trust was intended.
In light of the disquisitions, we hold that there was no express trust or resulting
trust established between the petitioner and her father. Thus, in the absence of
a trust relation, we can only conclude that Crispulos uninterrupted possession of
the subject property for 49 years, coupled with the performance of acts of
ownership, such as payment of real estate taxes, ripened into ownership. The
statutory period of prescription commences when a person who has neither title
nor good faith, secures a tax declaration in his name and may, therefore, be said
38
to have adversely claimed ownership of the lot. While tax declarations and
receipts are not conclusive evidence of ownership and do not prove title to the
land, nevertheless, when coupled with actual possession, they constitute
evidence of great weight and can be the basis of a claim of ownership through
39
prescription. Moreover, Section 41 of Act No. 190 allows adverse possession
in any character to ripen into ownership after the lapse of ten years. There could
be prescription under the said section even in the absence of good faith and just
40
title.

All the foregoing notwithstanding, even if we sustain petitioners claim that she
was the owner of the property and that she constituted a trust over the property
with her father as the trustee, such a finding still would not advance her case.
Assuming that such a relation existed, it terminated upon Crispulos death in
1978. A trust terminates upon the death of the trustee where the trust is
personal to the trustee in the sense that the trustor intended no other person to
41
administer it. If Crispulo was indeed appointed as trustee of the property, it
cannot be said that such appointment was intended to be conveyed to the
respondent or any of Crispulos other heirs. Hence, after Crispulos death, the
respondent had no right to retain possession of the property. At such point, a
constructive trust would be created over the property by operation of law. Where
one mistakenly retains property which rightfully belongs to another, a
42
constructive trust is the proper remedial device to correct the situation.
A constructive trust is one created not by any word or phrase, either expressly or
impliedly, evincing a direct intention to create a trust, but one which arises in
order to satisfy the demands of justice. It does not come about by agreement or
intention but in the main by operation of law, construed against one who, by
fraud, duress or abuse of confidence, obtains or holds the legal right to property
43
which he ought not, in equity and good conscience, to hold.
As previously stated, the rule that a trustee cannot, by prescription, acquire
ownership over property entrusted to him until and unless he repudiates the
trust, applies to express trusts and resulting implied trusts. However, in
constructive implied trusts, prescription may supervene even if the trustee does
not repudiate the relationship. Necessarily, repudiation of the said trust is not a
44
condition precedent to the running of the prescriptive period. A constructive
trust, unlike an express trust, does not emanate from, or generate a fiduciary
relation. While in an express trust, a beneficiary and a trustee are linked by
confidential or fiduciary relations, in a constructive trust, there is neither a
promise nor any fiduciary relation to speak of and the so-called trustee neither
45
accepts any trust nor intends holding the property for the beneficiary. The
relation of trustee and cestui que trust does not in fact exist, and the holding of a
constructive trust is for the trustee himself, and therefore, at all times adverse.
In addition, a number of other factors militate against the petitioners case. First,
the petitioner is estopped from asserting ownership over the subject property by
her failure to protest its inclusion in the estate of Crispulo. The CA, thus,
correctly observed that:
Even in the probate proceedings instituted by the heirs of Crispulo Rojas, which
included her as a daughter of the first marriage, Caezo never contested the
inclusion of the contested property in the estate of her father. She even

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RULE 98: TRUSTEES

participated in the project of partition of her fathers estate which was approved
by the probate court in 1984. After personally receiving her share in the
proceeds of the estate for 12 years, she suddenly claims ownership of part of
her fathers estate in 1997.
The principle of estoppel in pais applies when -- by ones acts, representations,
admissions, or silence when there is a need to speak out -- one, intentionally or
through culpable negligence, induces another to believe certain facts to exist;
and the latter rightfully relies and acts on such belief, so as to be prejudiced if
46
the former is permitted to deny the existence of those facts. Such a situation
obtains in the instant case.
Second, the action is barred by laches. The petitioner allegedly discovered that
47
the property was being possessed by the respondent in 1980. However, it was
only in 1997 that she filed the action to recover the property. Laches is
negligence or omission to assert a right within a reasonable time, warranting a
presumption that the party entitled to it has either abandoned or declined to
48
assert it.
Finally, the respondent asserts that the court a quo ought to have dismissed the
complaint for failure to implead the other heirs who are indispensable parties.
We agree. We note that the complaint filed by the petitioner sought to recover
ownership, not just possession of the property; thus, the suit is in the nature of
an action for reconveyance. It is axiomatic that owners of property over which
reconveyance is asserted are indispensable parties. Without them being
impleaded, no relief is available, for the court cannot render valid judgment.
Being indispensable parties, their absence in the suit renders all subsequent
actions of the trial court null and void for want of authority to act, not only as to
the absent parties but even as to those present. Thus, when indispensable
49
parties are not before the court, the action should be dismissed. At any rate, a
resolution of this issue is now purely academic in light of our finding that the
complaint is already barred by prescription, estoppel and laches.
WHEREFORE, premises considered, the petition is DENIED. The Decision of
the Court of Appeals, dated September 7, 2000, and Resolution dated May 9,
2001, are AFFIRMED.
SO ORDERED.
ANTONIO EDUARDO B. NACHURA
Associate Justice

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RULE 98: TRUSTEES

G.R. Nos. L-16185-86

May 31, 1962

TRUSTEESHIP OF THE MINORS BENIGNO, ANGELA and ANTONIO, all

surnamed PEREZ Y TUASON,
PHILIPPINE NATIONAL BANK, Judicial Guardian, J. ANTONIO ARANETA,
trustee-appellee,
vs.
ANTONIO M. PEREZ, judicial guardian-appellant.
Araneta and Araneta for trustee-appellee.
Alfonso Felix, Jr. for judicial guardian-appellant.
CONCEPCION, J.:
These are two (2) incidents of the trusteeship of the minors Benigno, Angela and
Antonio, all surnamed Perez Y Tuason. The issue in G.R. No. L-16185 is
whether or not the trustee, J. Antonio Araneta hereinafter referred to as the
appellee may be allowed to pay a sum of money to the law firm, Araneta &
Araneta, of which he is a member, for services rendered to him, in his
aforementioned capacity as such trustee, in several judicial proceedings,
whereas G.R. No. L-16186 concerns the question whether the purchase of
certain shares of stock nude by the appellee for the benefit of the trusteeship
merits judicial approval. Both questions were decided by the Court of First
Instance of Rizal (Quezon City Branch) in the affirmative. Hence, this appeal by
Antonio M. Perez hereinafter referred to as the appellant as guardian of
the person of said minors.
With respect to G.R. No. L-16185, it appears that the law firm Araneta &
Araneta, through its assistant, Atty. Francisco T. Papa, had rendered services,
as counsel for the appellee, in connection with the following:
1. The approval of his accounts for January to March, 1956, which were
objected to by the appellant. Said objection was, on October 19, 1956,
overruled by the lower court, the action of which was affirmed by this
Court in G.R. No. L-11788, on May 16, 1958, on appeal taken by
appellant.
2. The appellee's accounts for April to June, 1957; which were approved
by the lower court on July 13, 1957, despite appellant's objection
thereto. Although appellant appealed to the Supreme Court, he,
subsequently, withdrew the appeal.
3. In 1958, appellant instituted CA-G.R. No. 22810-R of the Court of
Appeals for a writ of certiorari and mandamus against the appellee and

the lower court, the latter having sustained the action of the appellee in
withholding certain sums from the shares of the minors aforementioned
in the net income of the trust estate for July to September, 1957, in view
of the appellant's refusal to reimburse to said estate identical sums
received in the form of allowances for the period from April to June,
1957, in excess of the shares of said minors in the net income for that
period. After appropriate proceedings, the Court of Appeals rendered a
decision on June 25, 1958, dismissing said petition.
The lower court authorized the payment of P5,500.00 for the services thus
rendered by Araneta & Araneta, which appellant assails upon the ground that,
pursuant to Section 7 of Rule 86 of the Rules of Court:
When the executor or administrator is an attorney he shall not charge
against the estate any professional fees for legal services rendered by
him.
that the services above referred to inured to the benefit, not of the trust estate,
but of the trustee; that the amount of the award is excessive; and that the lower
court should have required the introduction of evidence on the extent of the
services rendered by the aforementioned law firm before making said award.
Appellant's pretense is untenable. Said Section 7 of Rule 86 refers only to
"executors or administrators" of the estate of deceased persons, and does not
necessarily apply to trustees. It is true that some functions of the former bear a
close analogy with those of the latter. Moreover, a trustee, like, an executor or
administrator, holds an office of trust, particularly when, as in the case of
appellee herein, the trustee acts as such under judicial authority. Hence,
generally, the policy set forth in said Section 7 of Rule 86 basically sound and
wise as it is should be applicable to trustees. The duties of executors or
administrators are, however, fixed and/or limited by law, whereas those of
trustee of an express trust like that which we have under consideration
are, usually, governed by the intention of the trustor or of the parties, if
established by contract (Art. 1441, Civil Code of the Philippines). Besides, the
duties of trustees may cover a much wider range than those of executors or
administrators of the estate of deceased persons. Again the application of
Section 7 of Rule 86 to all trusteeships without distinction may dissuade
deserving persons from accepting the position of trustee and consequently have
a deterrent effect upon the establishment of trusts, at a time when a sizeable
part of the burden to undertake important and even essential activities in
advanced and/or developing communities or states, particularly in the field of
education, science and social welfare, is borne by foundations or other similar
organizations based upon the principles of trust. We believe it, therefore, to be
the better policy to acknowledge the authority of courts of justice to exercise a
sound judgment in determining, in the light of the peculiar circumstances

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RULE 98: TRUSTEES

obtaining in each case, whether or not a trustee shall be allowed to pay

attorney's fees and charge the same against the trust estate, independently of
his compensation as a trustee.
In the case at bar, considering that the appellee was merely defending himself in
the proceedings that required the services of counsel; that in each case the
stand taken by the appellee was upheld by the court; that the will creating the
trust and designating the appellee as trustee explicitly grants him the right to
collect for his services such reasonable fees; that, in view of the nature of the
relations between the trustor and the trustee, on the one hand, and the trustor
and appellant on the other, there can be little doubt but that the trustor would
have sanctioned the payment of the attorney's fees involved in this incident; and
that it may have been more costly for the trust estate to engage the services of a
law firm other than that of Araneta & Araneta, we are not prepared to hold that
the lower court has erred in authorizing the payment of said attorney's fees by
herein appellee.
For the rest, it is well settled that "a trustee may be indemnified out of the trust
estate for his expenses in rendering and proving his accounts and for costs and
counsel fees" in connection therewith (54 Am. Jur. 415-416), apart from the fact
that the nature of the professional services in question appeared in the records
before the lower court and that the amount of P5,500 fixed by the same as
compensation for such services is not excessive.
Referring now to G.R. No. L-16186, it appears that from July to September,
1958, the appellee had bought for the trust estate, through a broker (Pedro
Nolasco da Silva & Co.), a total of 118 common shares of stock of the
Philippine-American Drug Co. at P100 each, and that, upon submission of
appellee's accounts for said period, appellant objected to the items of expenses
relative to the acquisition of said common shares, upon the ground that the
investment therein is "unwise in that (the operation of) said company has not, to
our knowledge, proved profitable and unlawful in that it is actually an act of selfdealing between the trustee and the beneficiaries of the trust", because the
former (appellee) is, also, a stockholder of said company. After the introduction
of the evidence of both parties, the lower court overruled the objection and
approved said accounts.
It is not disputed that appellee holds, in his individual capacity, 199 out of 30,000
common shares of stock of the Philippine-American Drug Co., whereas his
children own 270 out of 5,000 preferred shares of stock of the same enterprise.
As a consequence, the interest of appellees and his children in said company is
not such as to warrant the charge that the purchase of 118 common stocks for
the trust estate amounts to self-dealing by the appellee with himself. What is
more, said purchase by the trustee may be considered as an indication that he

had displayed in the management of the trust estate the same interest he had in
the protection of his own property.
Upon the other hand, it has, also, been established that the book value of each
of said 118 common shares of stock, purchased by the trustee at P100 each, is
P202.80; that in 1954 the Philippine-American Drug Co. had paid a cash
dividend of 6%, side from declaring a 33-1/3% stock dividend for its common
shares; and that 6- % and 4% cash dividends were paid in 1955 and 1957,
respectively. Furthermore, the statement of accounts of the company for the
years 1954, 1955, 1956 and 1957, satisfied the lower court that the enterprise
"is financially stable and sound". Under the circumstances, we cannot say that
the investment in question is unwise.
Appellant's allegation to the effect that shares of stock of the San Miguel
Brewery pay higher returns, even if true, does not establish his pretense.
Whether an investment is good or not does not depend upon the general,
abstract possibility of better investments. Again, one factor that should be taken
into account is the degree of influence that the investor may have upon the
management of the enterprise concerned, which appellee admittedly has in the
Philippine-American Drug Co., but which it is not claimed he wields in the San
Miguel Brewery Co.
WHEREFORE, the orders appealed from are hereby affirmed, with costs against
the appellant. It is so ordered.
Padilla, Reyes, J.B.L., Barrera, Paredes and Dizon, JJ., concur.
Bengzon, C.J., is on leave.
Bautista Angelo, J., concurs in the result.

22