G.R. No. L-16708; October 31, 1962
TRUSTEESHIP OF THE MINORS BENIGNO, ANGELA AND ANTONIO, all surnamed PEREZ Y TUASON, PHILIPPINE NATIONAL BANK, Judicial Guardian of BENIGNO PEREZ, ANTONIO M. PEREZ, judicial guardian-appellant, vs. J. ANTONIO ARANETA, trustee-appellee.

FACTS

This case involves a trust established under the will of the late Angela S. Tuason. Appellee J. Antonio Araneta was appointed trustee of property bequeathed to her grandchildren, the minor Perez children. The testatrix’s will granted the trustee “amplios poderes de vender” (ample powers to sell) the trust properties, specifying his powers should be “los poderes mas amplios permitidos por la ley” (the most ample powers permitted by law). Pursuant to a 1950 court order, the trustee was authorized to sell trust properties without needing special judicial authorization for each transaction.
In 1959, the trustee informed appellant Antonio M. Perez, the judicial guardian of the minors, of a proposed sale of trust property to Ortigas & Co., Ltd. The guardian objected, arguing the sale price was too low and the transaction was imprudent and prejudicial to the minors. The guardian filed a motion in the Court of First Instance of Rizal to require the trustee to seek court approval for the sale and to appoint a co-trustee. The court denied this motion, and the guardian appealed.

ISSUE

The core issue is whether the court can interfere with or control the trustee’s exercise of his discretionary power to sell trust property, as granted explicitly by the trust instrument (the will of Angela S. Tuason).

RULING

The Supreme Court affirmed the lower court’s order, ruling that judicial intervention was not warranted. The legal logic rests on the fundamental principle governing express trusts: when a trustor establishes an express trust and grants broad discretionary powers to the trustee in the trust instrument, the court will not substitute its judgment for the trustee’s discretion absent a clear showing of abuse, fraud, or bad faith. The Court emphasized that the testatrix’s will demonstrated “implicit confidence and trust” in Araneta, granting him the “most ample powers permitted by law” to sell and administer the trust res.
The Court cited Scott on Trusts, noting that where discretion is conferred upon a trustee, the court will not interfere with the exercise or non-exercise of that power so long as the trustee does not exceed the limits of the conferred discretion. The appellant’s objections were based on speculation about price inadequacy and future economic conditions, not on proven fraud or manifest prejudice. Since the trustee was acting within the scope of the plenary powers deliberately granted by the trustor, and there was no clear evidence of an abuse of discretion, the lower court correctly refused to intervene. The orders approving the trustee’s continued exercise of his powers without need for prior judicial approval for each sale were therefore affirmed.