TRUSTEESHIP OF THE MINORS BENIGNO, ANGELA AND ANTONIO, ALL SURNAMED PEREZ Y TUASON. PHILIPPINE NATIONAL BANK, JUDICIAL GUARDIAN OF BENIGNO ANTONIO M. PEREZ, JUDICIAL GUARDIAN AN…

This is an appeal by writ of error from an order of the Court of
First Instance of Rizal denying a motion of appellant, Antonio M.
Perez, as judicial guardian of his children, the minors Benigno,
Angela, and Antonio, all surnamed Perez y Tuason.

In pursuance of the provisions of the will of the late Angela S.
Tuason—which was probated in Special Proceedings No. 585 of said
Court—appellee J. Antonio Araneta was, on March 24, 1950, appointed, in
Special Proceedings No. Q-73 of the same Court, as trustee of the
property bequeathed by the deceased to some of her heirs, including her
grandchildren, the aforementioned minors. On October 5, 1950, appellee
moved for the approval of his accounts and the fixing of his
compensation as such trustee. Appellant’s wife, Angela I. Tuason,
hereafter referred to as Mrs. Perez, as well as the mother and
guardian, at the time, of said minors, objected thereto and urged the
court to remove appellee as trustee and appoint the Philippine Trust in
his place and to revoke, not only a certain sale made by him, but,
also, an order of the court, dated March 24, 1950, granting him the
power to sell trust properties without special judicial authorization
therefor. Subsequently, appellant joined his wife in seeking this
relief. After appropriate proceedings, said Court issued, on December
23, 1950, an order approving said accounts, deferring action on the
compensation of the trustee, modifying in part said order of March 24,
1950, and denying the motion of Mrs. Perez. The pertinent part of the
aforementioned order of December 23, 1950, reads as follows:

“It being established that the trust was expressly
created by the deceased, we shall now examine whether the trustee comes
under the active supervision of the Court and whether our order of
March 24, 1950, granting to said trustee authority to sell the trustees
without the need of Judicial authorization is erroneous or not. The
Court accepts the view urged by the trustee that only when the testator
‘has omitted in his will to appoint a trustee’ may the Court appoint
one. This is in accordance with Section 2, Rule 99, of the Rules of
Court. When an express trust has been created, the powers of the
trustee shall be determined by the trust instrument itself. In this
particular case, the trustee J. Antonio Araneta was given ‘amplios
poderes de vender los mismos’. The testatrix emphasizes her desire that
the. trustee shall have ample powers when in another part of her will
she states that the powers of said trustee shall be ‘los poderes mas
amplios permitidos por la ley’. There is nothing against the law for a
trustor to grant to the trustee ample powers, and when the deceased
Angela S. Tuason granted said powers to the trustee, she emphasized her
intention that in the exercise of said powers by the trustee, there
should be no court supervision.

‘By the terms of trust, it
may be left to the discretion of the trustee whether or not to exercise
a power, or where he is directed to exercise the power, the time and
manner of its exercise may be left to his discretion. To the extent to
which the trustee has discretion, the Court will not control his
exercise as long as he does not exceed the limits of the discretion
conferred upon him. The court will not substitute its own judgment for
his * * *. The cases are numerous in which it has been held that where
discretion is conferred upon the trustee with respect to the exercise
of a power, the Court will not interfere with him in his exercise or
failure to exercise the power so long as he is not guilty of an abuse
of discretion. (Scott on Trusts, Vol. 2, Sec. 187).

“Such
being the case, there is no reason for the court to intervene in the
execution by the trustee of the powers granted to him by the trustor.
We conclude, therefore, that our order of March 24, 1950 granting
authority to the trustee J. Antonio Araneta to sell the trust res
without judicial authority is correct.

“for the purpose, however, of safe guarding the interest of the beneficiaries of this trust voice said is hereby amended as follows:

(a)
That the bond of the trustee is hereby increased from P10.000.00 to
P30,000.00 and the premium for the bond (P30,000.00) shall be for the
account of the trust;

(b) That the Trustee may sell, encumber
or otherwise dispose of any of the trust res without the need of
judicial authorization; provided, that if the amount involved exceeds
P30,000.00, the trustee shall notify the natural guardians or the
judicial guardian in case there be one appointed by the Court of the
beneficiaries ten (10) days before the proposed sale or encumbrance is
executed, and in case the amount involved be P30,000.00 or less, the
trustee shall advise said guardians within ten (10) days after
executing a deed of sale or encumbrance.

“WHEREFORE, (1) the
accounts filed by the trustee as per Annexes A, B, and C attached to
his motion of October 5, 1950 are hereby approved; (2) the petition of
trustee to fix his compensation is hereby deferred until such time as
he shall present it again; (3) the petition filed by the parents of the
minors for the removal of the trustee J. Antonio Araneta is hereby
denied. Likewise, their petition that the Philippine Trust Co. or Atty.
Frank W. Brady be appointed co-trustee is denied; (4) the petition that
the sale of the bed in favor of Antonio Tuason, Jr. be revoked is
hereby denied; and (5) the petition that the order of this court, dated
March 24, 1950, giving the trustee power to sell without the need of
judicial authorization be revoked is also hereby denied.”

A reconsideration of this order having been denied, Mr. & Mrs.
Perez filed with the Supreme Court a petition—G.R. No. L-6182
thereof—for certiorari, with preliminary injunction, to annul said
orders of March 24 and December 23, 1950. A writ of preliminary
injunction was issued by this Court soon thereafter. In a decision
promulgated on April 13, 1955, we denied said petition and dissolved
said writ of preliminary injunction.

In pursuance of the aforementioned orders of March 24 and December
23, 1950, appellee wrote on June 23, 1959, to appellant, as the then
judicial guardian of said minors, a letter informing him of a proposed
sale to Ortigas & Co., Ltd., of several lots under trusteeship,
located in Marikina, Rizal, and aggregating 42.6091 hectares, at the
rate of P2.93 a square meter. We quote from said communication:

“Pursuant to the order of the Court of First
Instance of Quezon City in trusteeship proceeding No. Q-73, I wish to
advise you that ten (10) days after your receipt of this letter, I, in
my capacity as trustee in said proceeding, shall execute a deed of sale
with mortgage in favor of Ortigas & Company, Limited Partnership,
the following lots located at Marikina which form part of the trust
estate:

“The price is P1,250,000.00 payable under the following conditions:

1. Upon acceptance of the proposal, the sum of P20,000.00.
2. Upon signing the deed of sale with mortgage, the sum of P300,000.00.
3. The balance shall be paid within a period of one and a half- years, with interest at 6% per annum.
4. The property must be sold free from all liens and encumbrances, particularly a guarantee that there are no squatters.
5. Broker’s commission shall be for buyer’s account.”

Three (3) days later, appellant informed appellee by letter (Exhibit
C) of his ((appellant’s) objections to the proposed sale. Moreover, on
July 1, 1959 appellant filed, in the trusteeship proceedings, a motion
praying for a writ of preliminary injunction to restrain appellee from
proceeding with the sale. Subsequently, the Philippine National Bank,
as guardian of the estate of Benigno Perez y Tuason, one of the heirs
of Angela I. Tuason, deceased, adopted said motion of appellant herein
as its own. At the instance of appellant, a notice of lis pendens was, on July 29, 1959 annotated on the original certificates of title to the property in question.

After due hearing, the lower court issued an order, dated October
15, 1959, denying appellant’s motion and petition for a writ of
preliminary injunction. Hence, this appeal by Antonio M. Perez. The
Philippine National Bank has not joined him in the appeal.
Subsequently, appellee effected the sale aforementioned to Ortigas
& Co., Ltd.

The main issues are: (1) whether or not the sum of P2.93 per square
meter agreed upon with Ortigas & Co., Ltd., is the fair market
value of the property aforementioned; and (2) whether the sale thereof
would be injurious to the interest of the beneficiaries or cestui que trust.

With respect to the first issue, appellant maintains that the fair
market value of the property above referred to is P5.00 a square meter,
as stated in the report (Exhibit E) of his realty estate expert, Mr. A.
Varias. It appears from this report, that the conclusion therein
reached by Mr. A. Varias is based upon (a) some offers to sell
properties located in the vicinity of the one involved in this1 case;
and (b) certain sales of real estate specified in the report.

However, offers to sell are not competent evidence of the fair
market value of a property. Said offers to sell are no better than
offers to buy, which have been held to be inadmissible as proof of said
value. (City of Manila vs. Estrada, 25 Phil., 208; Manila Railroad Co. vs. Aguilar, 35 Phil., 118; City of Davao vs. Dumbao, L-3741, May 28, 1952.) Indeed,

“* * * To imagine a sale without a buyer would be absurd, for if there is no buyer the commodity would bring nothing, * * *.

“In
discussing the term ‘market value’ the author of a well-known treaties
on the subject of damages observes that to make a market there must be
both buying and selling; and the ‘market value’ says he, is that
‘reasonable sum which the property would bring on a fair sale by a man
willing but not obliged to sell to a man willing but not obliged to
buy’. (Sedgewick on Damages, sec. 245; cited in Compagnie Franco-Indo
Chinoise vs. Deutsch-Australiache, 39 Phil., 474.)”

The aforementioned report relies, also, upon the sale of a Lot of
9,679 square meters at P5.70 a square meter, and two (2) sales each of
a lot of 20,000 square meters, and a sale of a lot of 281,452 square
meters, at P4.00 a square meter. These transactions can not serve as
basis for the determination of the value of the property in dispute,
for the lands involved in the former are much smaller than the latter,
the area of which is 426,091 square meters, and it is a matter of
common knowledge that the price becomes lesser as the size of the
property sold becomes bigger.

Moreover, the lands covered by said transactions do not appear to be
in the vicinity of the property in litigation. What is more, no effort
has been made to prove that the nature and condition of the former are
analogous, or, at least, comparable to those of the latter. In Manila
Railroad Co. vs. Mitchell (49 Phil., 801), this Court held:

“* * * The exhibits were clearly inadmissible in
evidence and properly rejected by the (lower) court. In order that such
evidence may be admitted, it is necessary that the properties sold be
in the immediate neighborhood or within the zone of the commercial activity with which the condemned property is identified.” (Italics supplied.)

Upon the other hand, it appears that in 1955 the Universal Textile
Mills bought a lot of 110,004 square meters near the trust properties
in question at P2.50 a square meter, whereas a land of 213,458 square
meters, situated in the same neigborhood, was, in 1956, acquired by the
Manila Bay Spinning Mill, at P1.50 a square meter. Again, prior to the
sale of said trust properties to Ortigas & Co., Ltd. offers to
purchase the same wefe made by United Laboratories, Inc. and one Mr.
Philipps at P2.50 and P2.70, respectively, a square meter. It would,
thus appear, that the price of P2.93 a square meter agreed upon with
Ortigas & Co., Ltd., is fairly representative of the market value
of said land, and this is borne out by the testimony of Arturo Ruis and
Lauro Marquez, the real estate brokers who took the witness stand for
herein appellee.

It is next urged that the sale of the property in question is not
only unnecessary, but, also, injurious to the minors represented by
appellant herein, by reason of possible devaluation and high income
taxes. This pretense is predicated, however, upon sheer speculation.
Furthermore, the last will and testament of Angela S. Tuason, in
pursuance of which the trust was established, provides that:

“Cuarta.—Instituyo como mis unicos herederos a mis
mencionados tres hijos, a razon de una novena parte del caudal
hereditario que dejare para cada uno de ellos. Lego a mi hi jo Antonio
otra porcion equivalente a dos novenas partes del caudal hereditario.
Lego asi mismo a mis nietos que fueren hijos de mi hija Nieves, otra
porcion equivalente a dos novenas partes del caudal hereditario. Y
finalmente lego a mis nietos que fueren hijos de mi hija Angela otra
porcion equivalente a dos novenas partes del caudal hereditario. Dichos
tres legados, sin embargo, estan sujetos a la manda que se menciona en
el parrafo siguiente. Los dos legados a favor de mis mencionados nietos
seran administrados por mi Albacea, J. Antonio Araneta (y en defecto de
este, su hermano, Salvador Araneta), con amplios poderes de vender los
mismos y con su producto adquirir otros bienes, y con derecho a cobrar
por su administracion, honorario razonables. Los poderes de dicho
administrator seran los de un trustee con los poderes mas amplios
permitidos por la ley. Debera, sin emlegatarios que fueren mayores de
edad y a los tutores de los que fueren menores de edad. Y asimismo,
debera hacerles entrega de la participacion que a cada legatario
corresponda en las rentas netas de la administracion. La administracion
sobre un grupo cesara cuando todos mis nietos de dicho grupo llegaren a
su mayoria de edad, y una mayoria de los mismos acordaren la
terminacion de la administracion. Por nietos, debe entenderse no
solamente a los nietos varones sino tambien a los nietos mujeres.”

Referring to this provision of said will, we had occasion to say in G. R. No. L-6182:

“* * * throughout clause 4 of the will, one can see
that the testatrix placed implicit confidence and trust in Araneta whom
she designated as trustee, and for him to continue for a long time, not
only until the minor children of Angela S. Tuason, including those yet
unborn, attained the age of majority but only when a majority of them
decided to end the trust.”

In short, the trustor had such faith and confidence in appellee that
she relied fully upon his judgment and discretion. The exercise thereof
by appellee should not be disturbed, therefore, except upon clear proof
of fraud or bad faith, or unless the transaction in question is
manifestly prejudicial to the interest of the minors aforementioned.
Such is not the situation obtaining in the present case.

Wherefore, the orders appealed from are hereby affirmed, with costs against the appellant. It is so ordered.

Bengzon, C. J., Padilla, Bautista Angelo, Labrador, Reyes, J. B. L., Barrera, Paredes, Dizon, Regala and Makalintal, JJ., concur.