ANTONIO M. PEREZ, AS JUDICIAL GUARDIAN OF BENIGNO, ANGELA, AND ANTONIO, ALL SURNAMED PEREZ Y TUASON, PETITIONER-APPELLANT, VS. J. ANTONIO ARANETA, AS TRUSTEE OF MINORS, RESPONDE…

Rebuffed in this attempt
to oust as trustee, appellee J. Antonio Araneta, not the first of its kind either,
appellant-guardian Antonio M. Perez of the minors, his children, Benigno, Angela and Antonio Perez y Tuason,
filed this appeal from the order of the lower court dated October 31, 1960,
dismissing his petition to remove such trustee.  The charges and the evidence relied upon to
substantiate them were discussed fully in that order.  The lower court took parti­cular pains to
inquire into each alleged grievance.  Reference to its
appraisal of the matter will thus prove helpful.  It will place things in their proper perspective and
explain why the appeal cannot prosper.

The first charge,
according to the appealed order, imputed to the trustee the withholding of
“the allowances due the beneficiaries for October, November and December,
1956.” Why it could not be sustained was explained by the lower court thus: “The guardian filed his motion of September
4, 1956 praying for
the modification of the monthly
allowances previously fixed in the order of August 10, 1955.  Said
motion was granted in the order of November 9, 1956 which counsel for the trustee received only
on November 13, 1956 when both the trustee and the guardian were abroad.  Exactly when the guardian requested for the
payment of the allowances after his arrival in Manila was not shown, and while
the guardian appeared before this Court on December 22, 1956 and asked for the
order of said date directing the payment of the allowances fixed in the order of
November 9, 1956, it appeared that the trustee complied by delivering the allow­ances
on December 24, 1956.  Under these
circumstances, the delay in payment is not attributable to the trustee, and in
any case can not be said to have occurred because he was withholding the
allowances.”2

Neither was the second
charge found meritorious.  It attributed
to an associate of the trustee in the practice of the law the statement that if
appellant-guardian “would not withdraw his opposition to the trustee’s
investment in the Philippine-American Drug Company shares, the trustee would
charge to income of the trust the amount of P30, 120.95 which the trustee had
been authorized to collect as trustee’s and attorney’s fees.”3 The lower
court was not convinced about a remark of that character having been made, or even if it were, that it was in fact authorized by
the trustee.

The third charge
consisted in the trustee again failing to pay the allowances with the
end in view of coercing appellant-guardian to condone “the sale of the Marikina property which the trustee had consummated and which had been previously
approved in the order of October 15, 1959.”4 Again, the lower court was unimpressed,
there being no proof “that the trustee refused to deliver the allowances
though he had enough funds in his possession for that purpose.  On the contrary, the accounts of the trustee,
the guardian’s acquiescence to ‘the belated payment of allowances and net
income, and the fact that in the trustee’s and the guardian’s Joint Manifestation
of November 2, 1959 the latter expressly acknowledged the
insufficiency of funds to pay the balance of the net income which was then
due all indicate that the failure of the trustee to deliver on time the
allowances and net income was because of lack of funds and not because he
wanted to withhold payment thereof.”5

Appellant-guardian in the fourth charge contested trustee’s
investing in shares of the Philippine-American Drug Co., Ramie Textiles, Inc.
and International Textiles Mills, Inc. alleged to be business enterprises of
trustee’s family as improper and unwise as no dividends on said shares were
forthcoming.  The appealed order dealt
with such a charge in this wise “Insofar as the Philippine-American Drug
Company shares are concerned, it is improper to touch upon them in this
incident because the propriety of their pur­chase is precisely the issue in
the guardian’s unresolved appeal from the order of February 14, 1959 wherein this Court upheld said
purchase.  Furthermore, considering the
additional evidence pre­sented in this incident there is no reason to disturb
said order of February 14, 1959.”6 The evidence failed to sustain, according to the
lower court, the imputation that Ramie Textile, Inc. and Inter­national Textile
Mills, Inc. were Araneta controlled.  As to no dividends having been declared by
Ramie Textiles, Inc. and Inter­national Textile Mills, Inc., admitted by the
trustee, with the qualification that the former firm was organized only in 1956
and the latter only 1957, the lower court stated: “There is merit in this
contention.  Delayed payment of dividends
alone is not decisive of the profitability of an investment and certainly does
not by itself establish the instability of the enterprise concerned.  This is particularly true in this case where
the corporations involved have been recently organized and no evidence of the
failing financial status was presented.”7 Neither
did the lower court sustain the contention of the appellant-guardian that when
the trustee subscribed to Ramie Textiles and International Textile shares, he
knew that they had been declared speculative in nature by the Securities and
Exchange Commission.

Appellant-guardian, in his fifth charge, questioned the trustee’s
acquisition of Lepanto shares.  Again, the evidence, according to the lower
court, proved “that Lepanto Consolidated Mining
Co. is very sound and the trustee’s accounts show that the trusteeship has
regular­ly earned substantial dividends out of said investment.”8 There was “no adequate evidence or sound basis”
according to the appealed order “to sustain the charge that the
investments in question are improper or that the making of said investments
constitutes an abuse of dis­cretion which, as this Court as repeatedly held, is
the sole factor that will justify its interference with the
trustee’s personal judgment in the administration of this trust.”9

The sixth charge of
non-cooperation against the trustee was dismissed by the lower court as
“palpably baseless because the data the trustee did not furnish him were
either those that the trustee was not bound to furnish
him or those that should be re­ported in the trustee’s quarterly accounts.  If the trustee can at any time be compelled
to furnish him things that the accounts will anyway contain the trustee’s duty
to account will become unduly burdensome. 
In this regard, this Court notes from the records of this proceeding
that in the numerous conflicts of views between the guardian and the trustee
the latter’s views were upheld by this Court and in those incidents which the
guardian elevated to the Appellate Courts not once was he sustained.  It is therefore inclined to hold that the
disagreements between the trustee and the guardian were provoked by the
guardian’s untenable views and not by any lack of cooperation on the part of
the trustee.”10

Again, after a
full-discussion of the evidence, the lower court refused to believe the seventh
charge that the trustee was guilty “of deception and self-dealing on the
allegation that the trustee notified him of the sale of certain lots belonging
to the trust in favor of Caltex (Phil.) Inc. but
subsequently sold them to the Insular Life Assurance Co., Ltd. in which the
trustee is substantially interested.”11 Why such
should be the conclusion was explained thus: “In his letter to the
guardian dated January 3, 1958, the trustee advised the guardian that he
had offered to sell to Caltex and the latter had
agreed to buy the lots under the terms therein stated.  In its letter to
the trustee dated December 27, 1957, Caltex finally
accepted the terms of the sale stating therein that the lots were to be
conveyed either to it or its nominee, and in its
letter of January 14, 1958 advised the trustee that its nominee was the
Insular Life Assurance Co., Ltd.  This is
the reason why the sale was executed by the trustee in favor of the Insular
Life Assurance Co., Ltd.  It appeared
that Caltex designated said company to receive
conveyance of the property because Caltex did not
have funds to carry out its expansions programs.  Under these circumstances, this Court rejects
the allegation that the trustee deceived the guardian because the trustee’s
notice of January 3, 1958 correctly stated the fact that the sale was
in favor of Caltex:”12

As to why the
allegation of self-dealing is untenable, there being the imputation of
trustee’s interest in the Insular Life Assurance Co., Ltd., is set forth thus: “* * * on January 15, 1958, the
date of the sale, the trustee owned only 100 common shares in said compan out of its outstanding 114, 826 common shares at
P10.00 per share and 117, 000 preferred shares at P100.00 per share.  This neglible stock?holding
of the trustee in the Insular Life Assurance Co., Ltd. will not suffice to destroy the distinction between their
separate persona­lities and serve as basis to hold that the trustee dealt with
himself when he executed the sale in its favor.”13

It was further noted in the appealed order: “The guardian’s
serious charge that the trustee wanted the Insular Life Assurance Co., Ltd. instead of this trust to reap
the benefits of the lease subsequently agreed upon between said company and Caltex is unfounded. 
The guardian’s own witness, Mr. W. E. Menefee,
General Manager of Caltex, testified that he would
not agree to lease the lots from the trustee and pay the same rentals Caltex is now paying the Insular Life Assurance Co., Ltd.
on a 5-year, 7-year or 10-year contract. 
It is sufficiently clear the Caltex agreed to
pay said rentals to the Insular Life Assurance Co., Ltd. because the latter
agreed to give a term of ten (10) years renewable for another ten (10) years at
the option of Caltex.”14

In the appealed order, the plea of appellant-guardian for the
removal of the trustee or, the
alternative, “to strip him of his power to sell, mortgage or otherwise
alienate or exercise any power of strict dominion unless with the unanimous
consent of the co-trustee” sought to be appointed in the event that
removal is not effected was denied “and the trustee [was] absolved of all
the charges * * * presented.” Hence this appeal.

Appellant-guardian is far
from reconciled to the conclusion reached by the lower court.  For him, the lower court erred in absolving
the trustee from the seven charges filed. 
That is the first error alleged. 
It is net easy to accept his contention that there was in fact such an
error committed.  The appealed order
speaks for itself.  It is far from an
arbitrary dismissal of the charges aired by the appellant-guardian.  Rather, a careful effort was made to inquire
into and dispassionately pass upon the alleged shortcomings and failures of the trustee.

Nor is the above the only
obstacle to the hopes of appellant-guardian as far as the
reversal of the challenged order is concerned.  It is obvious on the face
of the first assignment of error that the same is essentially factual in
character.  Considering that the appeal
is direct to this Court, what appellant-guardian seeks to accomplish by this
first assigned error lacks support in law. 
Nothing is better settled than that where the correctness of the findings
of fact of the lower court is assailed, the Court of Appeals is the proper
forum.  If resort be had directly to us,
then appellant must be deemed to have waived the opportunity otherwise his to
inquire into such findings and to limit himself to disputing the correctness of
the law applied.  In a 1949 decision, Portea v. Pabellon,15 the matter was simply and tersely summarized
in the’ statement that the appellant cannot raise questions of fact.  In the latest case,16 decided on
this point, the established rule is restated thus: “* * * when a party
appeals directly to the Supreme Court, and submits his case there for decision,
he is deemed to have waived the right to dispute any
finding of fact made by the trial Court.”

The other assigned error to the effect that the failure to remove
the trustee or in the
alternative to provide that he could no longer exercise his power to sell, mortgage,
alienate or for that matter any power of strict dominion without the consent of
such co-trustee or co-trustees as might he appointed is likewise
untenable.  With the lower court
carefully examining the charges preferred and thereafter absolving the trustee,
it logically follows that there is no justification for his removal or for restricting his authority in the manner suggested.

Moreover, what appellant-guardian would want us to do is to
substitute our own discretion on this particular aspect of the case for that of
the lower court.  Such power we
undoubtedly possess, but we are not prepared to exercise it considering all the
attendant circumstances which reveal the care and circumspection taken by the
lower court.  What was said by us in Arrieta v. National Rice and Corn Corp.17 Is not entirely inappropriate.  Thus: “Appellant’s explanation has
neither force nor
merit.  In the first place, the
explanation reaches into an area of the proceedings into which we are not at liberty to encroach.  The explanation refers to a question of
fact.  Nothing in the record suggests any
arbitrary or abusive conduct on the part of the trial judge in the formulation
of the ruling.  His conclusion on the
matter is
sufficiently borne out by the
evidence presented.  We are denied,
therefore, the prerogative to disturb that finding, consonant to the
time-honored tradition of this Tribunal to hold trial judges better situated t
make conclusions on questions of fact.”    

That is all then that
this case presents.  It appears obvious
that there is no occasion for the reversal of the order appealed from.  It may not be inappropriate to refer to the absence
of goodwill that undeniably marks the relationship of appellant-guardian and
the trustee, J. Antonio Araneta – a matter which is
apparent from the number of litigations between them.18
Undoubtedly, there are clashes of temperament. 
Personality differences have intruded themselves time and time
again.  It may very well be that the
trustee could have at times ruffled the feelings and wounded the suscepti­bilities
of appellant-guardian.

What must be emphasized, however, is that the uppermost
consideration should be the welfare of the minor beneficiaries, the children of
appellant-guardian, for whom the trust was created.  Certainly, as of this time and after all these litigations, there is no
requisite showing of the failure of the trustee to live up to the exacting
responsibility entrusted to him or his subordination of the well-being of such
minors to his own personal interest. 
What was said by the present Chief Justice in Trusteeship of the Minors
v. Araneta,19 bears repeating: “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 appealed order of October 31, 1960, absolving the trustee, J. Antonio Araneta, from the charges filed by appellant-guardian, Antonio M. Perez, is affirmed.  With costs against the
aforesaid appellant-guardian.

Concepcion, C.J., Reyes, JBL, Dizon, Makalintal, Zaldivar, Sanchez, Ruiz Castro and Angeles, JJ., concur.

¹ Order,
Record on Appeal, p. 364.

2 Ibid, pp. 364-365.

3 Ibid,
p. 365.

4 Ibid, p. 366.

5 Ibid, p. 366.

6 Ibid,
p. 367.

7 Ibid,
p. 368.

8 Ibid,
p. 371.

9 Ibid, pp. 371-372.

10 Ibid, pp.
373-374.

11 Ibid,
p. 374.

12 Ibid, pp. 374-375.

13 Ibid, p. 375.

14 Ibid, pp. 377-378.

15  84 Phil. 298.

16 Republic
v. Luzon.  Stevedoring Corp.,
L-21749, September 29, 1967.  The other cases on the same point
follow:  Pendon
v. Diasnes, 91 Phil. 848 (1952); Flores v.
Plasima, 94 Phil. 327 (1954); Son v. Cebu Autobus Co., 94 Phil. 892 (1954); Cadiz v.
Nicolas, 102 Phil. 1032 (1958); Abijuela v. Dolosa, L-14245, December 29, 1960; Mañacop v. Cansino, L-13971, February
27, 1961; Descutido v. Baltazar,
L-11765, April 29, 1961; Rodriguez v.
Francisco, L-12039, June 30, 1961; Cuajao v.
Tan, L-16298, September 29, 1962; J. M. Tuason  & Co., Inc. v. Macalindong,
L-15398, December 29, 1962; J. M. Tuason v.
Aguirre,    L-16827, January 31, 1963; Saturnino v.
Phil. American Life Insurance Co., L-16163, February 28, 1963; Aballe v. Santiago, L-16307, April 30, 1963; Cabrera
v. Tiano, L-17299, July 31, 1963; Savellano v. Diaz, L-17944, July 31, 1963; Cason. v.
San Pedro, L-18928, December 28, 1963; Arrieta v.
NARIC, L-15645, January 31, 1964; Nieto de Comilang v.
Delenela, L-18897, March 31, 1964; Malaguit v. Alipio,
L-18596, September 30, 1964; Esquejo v. Fortaleza, L-15897, February 26, 1965; GSIS v. Cloribel, L-22236, June 22, 1965; DBP v.
Ozarraga, L-16631, July 20, 1965; Pisalbon
v. Balmoja, L-17517, August 31, 1965; Navarro v.
Bacalla, L-20607, October 14, 1965; Eusebio v. Sociedad Agricole de Balarin, L-21519,
March 31, 1966; MRR Co. v. Ballesteros,
L-19161, April 29, 1966; Sotto v. Sotto, L-20921, May 24, 1966; Dirige v. Biranya,
L-22033, July 30, 1966; State Bonding Insurance Co., Inc. v. Manila Port Service, L-22395, December
17, 1966.

17 L-15645, January 31, 1964.

18 Tuason
de Perez c. Caluag, L-6182, April 13, 1955; Perez v.
Araneta, L-16962, Feb. 27, 1962; Araneta
v. Perez, L-16185-86, May 31, 1962; Araneta v.
Perez, L-16187, Feb. 27, 1963.

19 L-16708, October 31, 1962.