The trust as a way of preventing the sale of property in saecula saeculorum

Posted on July 22, 2009 by Hector M. de Leon Jr Can a testator use a trust to prevent the sale of his properties in saecula saeculorum after his death? n her !ill, "o#a Mar$arita %odri$ue& provided for the creation of a trust to 'ana$e the inco'e fro' her properties. (he prohibited the 'ort$a$e or sale of certain of these properties, so that the inco'e fro' these properties can be used for the benefit of the specified beneficiaries. (he !rote) CL*+(+L* ",C M* - P*./0(*MP+) 1 pina$uutos 2o na an$ 'an$a pa$aaren$ nasasabi sa Clausulan$ ito ay pan$an$asi!aan sa haban$ panahon, at ito n$a an$ ipa$bubu2as n$ 34ideico'iso5 sa Jus$ado pa$2atapos na 'aayos an$ nai!anan 2on$ pa$aare. *n$ pan$an$asi!aan$ pa$aare ay an$ 'an$a su'usunod . . . *n$ lahat n$ pa$aarin$ nasasabe sa Clusulan$ ito 6hindi 2asa'a an$ 3$enerator5 at auto'ovil7 hindi 'aisasanla o 'aipa$bibili 2ailan 'an, 'aliban sa pa$aarin$ nasa 8ue&on 9oulevard, Maynila, na 'aarin$ isanla 2un$ !alan$ fondo na $a$a'itin sa ipa$papai$ui o ipa$papa$a!a n$ paniba$o alinsunod sa 2aayusan$ hinihin$i n$ panahon. 6underscorin$ supplied7 *t the ti'e of her death in :9;0, Mar$arita left no co'pulsory or forced heirs and, conse<uently, !as co'pletely free to dispose of her properties, !ithout re$ard to le$iti'es, as provided in her !ill. *l'ost four decades after her death, petitioners Hilarion, Jr. and ,nrico -rendain, heirs of Hilarion -rendain, (r. 6!ho !as 'entioned in Clause 2= of Mar$arita>s !ill7, 'oved to dissolve the trust on Mar$arita>s estate, !hich they ar$ued had been in e?istence for 'ore than 20 years, in violation of *rticle @A0 of the Civil Code, a'on$ others. *rticle @A0 provides) Bhe dispositions of the testator declarin$ all or part of the estate inalienable for 'ore than t!enty years are void. n 200C, the %e$ional Brial Court 6%BC7 ruled that !hile the testa'entary disposition prohibitin$ the 'orta$a$e or sale of the property is void after the lapse of the 20 year period, the trust does not beco'e void after the 20 year period. *ccordin$ to the %BC) Bhere is no <uestion that the testa'entary disposition of "o#a Mar$arita %odri$ue& prohibitin$ the 'ort$a$e or sale of properties 'entioned in clause D of her Last Eill and Besta'ent forever'ore is void after the lapse of the t!enty year period. Ho!ever, it does not 'ean that the trust created by FtheG testatri? in order to carry out her !ishes under clauses :2, :H and 2= !ill

also beco'e void upon e?piration of the t!enty year period. *s ruled by the (upre'e Court in ,'etrio 9arcelon v. C*, 3the codal provision cited in *rt. @A0 is clear and une<uivocal and does not need any interpretation. Ehat is declared void is the testa'entary disposition prohibitin$ alienation after the t!enty year period.5 Hence, the trustees 'ay dispose of the properties left by the testatri? in order to carry out the latter>s testa'entary disposition. n other !ords, the %BC ruled that) 6:7 627 and only the perpetual prohibition to alienate or 'ort$a$e is voidI the trust over her properties stipulated in Clauses :2, :H and 2= of the !ill re'ains validI

6H7 the trustees 'ay dispose of these properties in order to carry out the latter>s testa'entary disposition. Bhe (upre'e Court disa$reed !ith the %BC>s rulin$. *ccordin$ to the (upre'e Court, the %BC !as 'ista2en in denyin$ petitioners> 'otion to dissolve the trust and orderin$ the disposition of the properties in Clause :0 accordin$ to Mar$arita>s !ishes. *s re$ards these properties, intestacy should apply as the decedent did not institute an heir therefor 6citin$ *rticle A@2, in relation to para$raph 2, *rticle 9;0 of the Civil Code7. Bhe (upre'e Court ruled that the trust on Mar$arita>s properties 'ust be dissolved and re'anded the case to the %BC to deter'ine the follo!in$) 6:7 the properties listed in Clause :0 of the !ill, constitutin$ the perpetual trust, !hich are still !ithin reach and have not been disposed of as yetI and 627 the intestate heirs of the decedent, !ith the nearest relative of the deceased entitled to inherit the re'ainin$ properties. Bhe (upre'e Court !as conscious that its rulin$ 'ay be read to be a departure fro' Palad, et al. vs. Governor of Quezon Province, et al., =; (C%* HC= 6:9A27, !herein the (upre'e Court ruled that *rticle @A0 is not violated by a trust created by the testator) *rticle @A0 of the .e! Civil Code, !hich re$ards as void any disposition of the testator declarin$ all or part of the estate inalienable for 'ore than 20 years, is not violated by the trust constituted by the late Luis PaladI because the !ill of the testator does not interdict the alienation of the parcels devised. Bhe !ill 'erely directs that the inco'e of said t!o parcels be utili&ed for the establish'ent, 'aintenance and operation of the hi$h school. (aid *rticle @A0 !as desi$ned 3to $ive 'ore i'petus to the sociali&ation of the o!nership of property and to prevent the perpetuation of lar$e holdin$s !hich $ive rise to a$rarian troubles.5 Bhe trust herein involved covers only t!o lots, !hich have not been sho!n to be a lar$e landholdin$. *nd the inco'e derived therefro' is bein$ devoted to a public and social purpose 1 the education of the youth of the land. Bhe use of said parcels therefore is in a sense sociali&ed. Bhere is no hint in the record that the trust has spa!ned a$rarian conflicts.

Bhe (upre'e Court e?plained the difference as follo!s) n this case, ho!ever, !e reach a different conclusion as the testatri? specifically prohibited the alienation or 'ort$a$e of her properties !hich !ere definitely 'ore than the t!o 627 properties in the aforecited case. Bhe herein testatri?>s lar$e landholdin$s cannot be subJected indefinitely to a trust because the o!nership thereof !ould then effectively re'ain !ith her even in the afterlife. Bhe (upre'e Court>s state'ent su$$ests that follo!in$ Palad, a trust 'ay be upheld if the testator does not e?pressly prohibit the 'ort$a$e or sale of the properties covered by the trust. 6Hilarion, Jr. and Enrico Orendain, represented by Fe Orendain vs. Trustees ip of t e Estate of !o"a #ar$arita %odri&uez, /.%. .o. :;@;;0, June H0, 20097