RULE 98

TRUSTEES
Meaning of Trustee
Trustee is the person who manages assets owned by a trust and distributes the
principal and or income of the trust so as per instructions and powers given in the
trust.
Where a trustee shall be appointed?
A trustee to carry into effect the provisions of a will or written instrument shall be
appointed by the Court of First Instance (RTC) in which the will was allowed if in the
Philippines, otherwise by the Court of First Instance of the province in which the
property, or some portion thereof is situated.
The executor or administrator, or the person named as trustee under the will shall
file a petition for the appointment of trustee.
In what situations may a trustee be appointed?
If a testator has omitted in his will to appoint a trustee in the Philippines, and
if such appointment is necessary to carry into effect the provisions of the will, the
Court of First Instance may, after notice to all parties interested, appoint a trustee
whom the estate shall vest, as if had been appointed by the testator.
The court may exercise its discretion in appointing a trust where it is actually
created in a will where certain property shall be kept indisposed for stated purpose.
Appointment and powers of the new trustee under a written instrument
The powers of the trustee appointed in the Philippines cannot extend beyond the
jurisdiction under whose court he was appointed. This is based on the sovereign
equality of states.
Bonds filed by the trustee
The trustee appointed is required to file a bond except where the testator or all
interested party in the trust, request the exemption.Failure of the trustee to file a
bond disqualifies him to be so but it does not defeat the trust.
Compensation of the trustee
Compensation of the trustee lies in the discretion of the

court.

All necessary and reasonable expenditures such as

payments with express authority, attorneys fees incurred in carrying out

directions of the court shall be reimbursed to the trustee.

When may a trustee be removed?

A trustee whose acts or omissions show want of

reasonable fidelity;

If such removal appears essential in the interest of the

petitioners;

Incapable of discharging his duties as trustee;

Misapplication of trust estate
*Resignation by the trustee is allowed.

Trustees have no power to change the character of the property unless it is

perishable in nature and then to convert it into substantial, or revenue producing
investment but must be allowed by the court.
BY: KRISTINA C. DE VERA

Araneta vs. Perez

G.R. Nos. L-16185-86
Facts:
Minors Benigno, Angela and Antonio, all surnamed Perez Y Tuason were under the
trusteeship of Antonio Araneta. Said trustee is also a member of Araneta & Araneta
law firm.
In 1958, Antonio Perez, judicial guardian of the minors instituted CA-G.R. No.
22810-R of the Court of Appeals for a writ of certiorari and mandamus against the
trustee and the lower court, the latter having sustained the action of Areneta in
withholding certain sums from the shares of the minors in the net income of the
trust estate for July to September.
Perez refuse 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.
Issue: Whether or not the trustee Antonio Araneta 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.
Ruling:

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. Section 7 of Rule 86 refers only to
"executors or administrators" of the estate of deceased persons, and does not
necessarily apply to trustees. The duties of trustees may cover a much wider range
than those of executors or administrators of the estate of deceased persons.
BY: KRISTINA C. DE VERA