CASES ON TRUST

3. G.R. Nos. L-16185-86, May 31, 1962

ARANETA vs. PEREZ
5 SCRA 338

Facts
Antonio Araneta is the trustee in the trusteeship of the minors Benigno, Angela and Antonio, all
surnamed Perez. Antonio Perez, on the other hand, is the legal guardian of said minors. The law
firm Araneta & Araneta, of which the trustee is a member, had rendered services, as counsel
for Araneta, in the approval of his accounts in several judicial proceedings. Araneta, the
appellee, filed action to withhold certain sums, as payment for services rendered, from the
trust estate because Perez, the appellant, refuse to reimburse the same. The lower court
authorized the payment of P5,500.00 for the services thus rendered by Araneta & Araneta,
which Perez assails upon the rule in 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.
Issue
Whether or not the trustee, 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, in his capacity as
trustee, in several judicial proceedings.
Held
Yes. 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).
A trustee, like, an executor or administrator, holds an office of trust. Generally, Section 7 of
Rule 86 should be applicable to trustees.
When the executor or administrator is an attorney he shall not charge against
the estate any professional fees for legal services rendered by him.
However, the duties of executors or administrators are fixed and/or limited by law, whereas
those of trustee of an express trust are governed by the intention of the trustor or of the
parties, if established by contract (Art. 1441, Civil Code). The duties of trustees may cover a
much wider range than those of executors or administrators of the estate of deceased persons.
The application of Section 7 of Rule 86 to all trusteeships without distinction may dissuade
deserving persons to become trustees and consequently have a deterrent effect upon the
creation of trusts. Courts of justice may determine on a case to case basis, whether or not a
trustee shall be allowed to pay attorney's fees and charge the same against the trust estate,
independently of his payment as a trustee. In the case at bar, appellee was merely defending
himself in proceedings that required services of counsel, and the will creating the trust and
designating the appellee as trustee explicitly granted him the right to collect for his services as
counsel such reasonable fees. Moreover, it may have been costly for the trust estate to engage
the services of a law firm other than Araneta & Araneta.
G.R. No. L-49087, April 5, 1982
MINDANAO DEVELOPMENT AUTHORITY v. COURT OF APPEALS
113 SCRA 429

Facts
Ang Bansing was the owner of a big tract of land situated in Davao City. In 1939, Ang Bansing
sold a portion of that land, Lot 1846-C, to Juan Cruz. The contract provided the following:
That I hereby agree to work for the titling of the entire area of my land under my
own expenses and the expenses for the titling of the portion sold by me shall be
under the expenses of the said Juan Cruz.
Later, Juan Cruz sold Lot 1846-C to the Philippine government. In 1965, the President of the
Philippines issued Proclamation No. 459, transferring ownership of certain parcels of land in
Davao City to the Mindanao Development Authority, subject to private rights, if any. Lot 1846-C
was among the parcels of land transferred to the Mindanao Development Authority under the
law. Mindanao Development Authority filed suit against Ang Bansing for reconveyance of title
over Lot 1846-C on the ground that the former as one who worked to secure the title of his
entire tract of land which included the portion sold by him to Juan Cruz acted in the capacity of
and/or served as trustee for any and all parties who become successor-in-interest to Juan Cruz.
Consequently, Ang Bansing, as trustee, is bound and obligated to give, deliver and reconvey to
Juan Cruz and/or his successor-in-interest the title pertaining to the portion of land sold and
conveyed by him to Juan Cruz by virtue of the deed of sale.

Issue
Whether or not an express trust has been created between Ang Bansing and Juan Cruz?

Held
No. The mentioned stipulation does not categorically create an obligation on the part of Ang
Bansing to hold the property in trust for Juan Cruz. Hence, there is no express trust.

It is fundamental in the law of trusts that the essential elements must exist for a valid trust – a
competent trustor and trustee, an ascertainable trust res (the trust property), and sufficiently
certain beneficiaries. In the creation of express trust, settlor must presently and unequivocally
make a disposition of property and make himself the trustee of the property for the benefit of
another. A declaration of terms is essential, and these must be stated with reasonable certainty
in order that the trustee may administer, and that the court, if called upon so to do, may
enforce, the trusts. The declaration of trust must be clear and unequivocal that the owner holds
property in trust for the purposes named. While Ang Bansing had agreed in the deed of sale
that he will work for the titling of "the entire area of my land under my own expenses," it is not
clear from the statement which parcel of land it refers to. The settlor failing to definitely
describe the subject-matter of the supposed trust or the beneficiaries or object is strong
evidence that he intended no trust. A trust must be proven by clear, satisfactory and convincing
evidence; it cannot rest on vague and uncertain evidence or indefinite declarations. Considering
that the trust intent has not been expressed with such clarity and definiteness, no express trust
can be deduced from the stipulation.