DE LEON VS. MOLO-PECKSON G.R. NO.
L-17809; DECEMBER 29, 1962  However, Juana Juan executed a donation inter vivos in favor of Emiliana and Pilar
SYLLABUS
1. TRUSTEESHIP; RECOGNITION OF PRE-EXISTING TRUST. — The document in
question, wherein the appellants agreed to sell to the appellees the lots at a nominal price of
P1.00 per lot, represents a recognition of a pre-existing trust or a declaration of an express
trust, based on the provision in the donor’s will to the effect that the titles to the land should
be conveyed to appellants with the duty to hold them in trust for the appellees.
2. ID.; ID.; PROOF REQUIRED TO ESTABLISH EXISTENCE OF TRUST. — The
requirement that to establish a trust the proof must be clear, satisfactory and convincing, is
sufficiently complied with by the document in question, which clearly and unequivocally
declares the existence of the trust even if the same was executed subsequent to the death
of the trustor.
3. ID.; REVOCATION OF VOLUNTARY TRUST. — In the absence of any reservation of the
power to revoke, a voluntary trust is irrevocable without the consent of the beneficiary.
4. ID.; EXPRESS TRUST CONSTITUTED BEFORE NEW CIVIL CODE TOOK EFFECT;
WHAT LAW GOVERNS. — An express trust constituted before the effectivity of the new
Civil Code shall be governed by the Civil Code of 1889 and other laws and authorities on the
matter, although the instrument recognizing and declaring such trust was executed after the
effectivity of said Code.
5. TERMINATION OF TRUST; DUTY TO RETURN PROPERTY FREE FROM LIENS AND
ENCUMBRANCES. — It is the duty of a trustee to deliver the property in trust to the cestui
que trust free from all liens and encumbrances.
RESURRECCION DE LEON, ET AL. vs. EMILIANA MOLO-PECKSON, ET AL.
SHORT SUMMARY: Emillliana and Pilar executed a document called “Mutual Agreement”
wherein they agreed to sell 10 lots at P1 each to Resurrection De Leon and Justa De Leon,
in conformity of the verbal wish of their late foster parents. However, they later on revoked
the Mutual Agreement, saying that it did not represent the true intention of the verbal wish of
their foster parents. Resurrection De Leon and Justa De Leon demanded the conveyance to
them of the 10 parcels lot. When Emiliana and Pilar refused, Resurrection De Leon and
Justa De Leon consigned the amount and filed an action to compel Emiliana and Pilar to
convey the land.
CFI and SC held that an express trust has been created by the Mutual Agreement in favor of
beneficiaries Resurrection De Leon and Justa De Leon. A declaration of trust has been
defined as an act by which a person acknowledges that the property, title to which he holds,
is held by him for the use of another. And in the absence of any reservation of the power to
revoke a voluntary trust, the trust is irrevocable without the consent of the beneficiary.
Trustor/Donor: Mariano Molo and Juana Juan (foster parents)
Trustee/Donees: Emiliana Molo-Peckson and Pilar Perez Nable (foster children)
Beneficiaries: Resurrection De Leon and Justa De Leon
FACTS:
 Mariano Molo died leaving a will bequeathing his entire estate to his wife, Juana Juan.
Juana Juan in turn executed a will naming therein many devisees and legatees, one of
whom is Guillermo San Rafael, mother of the plaintiffs de Leon, et al. and of the
defendant Pilar.
(foster children) almost all of her entire property leaving only about P16,000.00 worth of
property for the devisees mentioned in the will. Among the properties conveyed are the
10 parcels of land subject of the present action.
 Six months after Juana Juan died, Emiliana and Pilar executed a document called
"Mutual Agreement" wherein the parties mutually agreed to sell ten lots at P1 each to
Resurrection De Leon and Justa De Leon. It was stated in the document that the
agreement is made in conformity with the verbal wishes of their foster parents, which
were repeatedly told to Emiliana before their death and that same should be fulfilled
after their death. In fact, the acknowledgement states that it was "their own free act and
voluntary deed."
 However, almost 6 years after, the same Emiliana and Pilar, executed another
document in which they revoked the Mutual Agreement, and another relating to the
same subject matter, stating therein that the parties, "after matured and thorough study,
realized that the above-mentioned public instruments… do not represent their true and
correct interpretation of the verbal wishes of the late spouses Mariano Molo and Juana
Juan."
 The beneficiaries Resurreccion de Leon and Justa de Leon demanded the conveyance
to them of the 10 parcels of land for the consideration of P1.00 per parcel as stated in
the “Mutual Agreement”.
 Since Emiliana and Pilar refused to do so, Resurreccion de Leon and Justa de Leon
consigned the amount of P10.00 as the consideration of the ten parcels of land.
Subsequently, Resurreccion de Leon and Justa de Leon filed a petition to compel
Emiliana and Pilar to convey to them the 10 parcels of land.
 Trial court ruled in favor of Resurreccion de Leon and Justa de Leon, saying that a trust
has been constituted by the late spouses Mariano Molo and Juana Juan over the 10
parcels of land in question in favor of Resurreccion de Leon and Justa de Leon as
beneficiaries.
ISSUES/HELD: WON the Mutual Agreement created a trust in favor of Resurreccion de
Leon and Justa de Leon– YES.
WON Emiliana and Pilar had a right to revoke the executed Mutual Agreement – NO.
RATIO:
WON the Mutual Agreement created a trust in favor of Resurreccion de Leon and
Justa de Leon as beneficiaries – YES.
 A declaration of trust has been defined as an act by which a person acknowledges that
the property, title to which he holds, is held by him for the use of another.
o The “Mutual Agreement” represents a recognition of pre-existing trust or a
declaration of an express trust impressed on the 10 parcels of land in question.
The document in question clearly and unequivocally declares the existence of the
trust even if the same was executed subsequent to the death of the trustor, Juana
Juan, for the right creating or declaring a trust need not be contemporaneous or
inter-parties.
 The fact that the beneficiaries were not notified of the existence of the trust or that the
latter have not been given an opportunity to accept it is of no importance, for it is not
essential to the existence of a valid trust and to the right of the beneficiaries to enforce
the same that they had knowledge thereof the time of its creation. Neither is it
necessary that the beneficiary should consent to the creation of the trust. In fact it has
been held that in case of a voluntary trust the assent of the beneficiary is not necessary
to render it valid because as a general rule acceptance by the beneficiary is presumed.
WON Emiliana and Pilar had a right to revoke the executed Mutual Agreement – NO.
 Emiliana and Pilar had no right to revoke the trust without the consent of the cestui que
trust. The rule is that in the absence of any reservation of the power to revoke a
 voluntary trust is irrevocable without the consent of the beneficiary. It cannot be advanced by the latter in order to meet the obligation of the trust estate which was dismissed
revoked by the creator alone, nor by the trustee. Here, there is no such reservation. by the court. The court a quo affirmed the MTC’s judgment

On the Validity of the Mutual Agreement
 The Mutual Agreement was executed by about 2yrs and 6mos from the time they
acquired title to the lands by virtue of the donation inter vivos executed in their favor by
their foster mother Juana Juan and 6mos after the death of the donor. There is nobody
who could cajole them to execute it, nor is there any force that could coerce them to
make the declaration therein expressed, except the constraining mandate of their
conscience to comply with the obligations repeatedly told to Emiliana before the death
of Juana Juan.
 Emiliana (pharmacist) and Pilar (lawyer) both studied in reputable schools so it is to be
supposed that they understood and comprehended the legal import of the Mutual
Agreement they executed.
 Moreover, they have more than ample time — the six months intervening between the
death of the donor and the execution of the document — to ponder not only wish of
their predecessors-in-interest but also on the propriety of putting in writing the mandate
they have received. It is, therefore, reasonable to presume that that document
represents the real wish of their foster parents.
Araneta vs. Perez G.R. Nos. L-20787-8; June 29, 1965
SYLLABUS
3. TRUSTS; MEDICAL EXPENSES FOR BENEFICIARY BORNE BY TRUST FUND ONLY
WHEN BENEFICIARY INSOLVENT. — Medical expenses made for the sake of the
beneficiary by the father of the beneficiary should be borne by the trust fund only when the
beneficiary is insolvent.
FACTS: Antonio M. Perez executed a promissory note wherein he agreed to pay J. Antonio
Araneta, or order, the sum of P3,700.00 119 days from said date, or on October 13,1961,
and if it is not paid on the date of maturity, to pay interest at 9% per annum on the amount of
the loan, andP370.00 as attorney's fees in addition to costs and other disbursements taxable
under the Rules of Court.
The note having become due and Antonio M. Perez having failed to pay it despite demand
made upon him to dos o, Araneta filed on October 31, 1961 a complaint in the Municipal
Court of Manila to collect its import under the terms therein stipulated.
Issue: WON Perez is indebted to Araneta and that the true debtor was the trust estate
of the children of Angela
Held: The promissory note signed by appellant clearly states that he agreed to pay Araneta
or order the sum ofP3,700.00 on October 13, 1961 and if the same is not paid on said date
to pay 9% interest thereon per annum until fully paid, plus the sum of P370.00 as attorney's
fees, in addition. to the costs and other disbursements taxable under the Rules of Court.
Under these terms it is clear that appellant bound himself to pay personally said promissory
note which he cannot shift to another without the consent of the payee. Such is the
undertaking of the maker.
Under Sec. 60 of the Negotiable Instruments Law, the maker of a promissory note cannot
escape liability by alleging that he spent the money for the medical treatment of his
daughter, the beneficiary of the trustee who is the payee of the note, since it is not the
payee’s concern to know how said proceeds should be spent, inasmuch as that is the sole
concern of the maker, and payee’s interest is merely to see that the note be paid according
to its terms.
But even assuming for the sake of argument that what is claimed by appellant as to how he
spent the proceeds of the notes is true, that will not exempt him from his liability to Araneta
but would merely give him some basis to claim for recoupment against the share of the trust
fund belonging to the benefited minor if it is properly shown that there is funds coming to
said minor.
Here, no such showing was made. Moreover, the trust herein created merely provides for
delivery to the beneficiaries of the share that may correspond to them in the net income of
the trust fund, but does not impose upon the trustee the duty to pay any obligation or
expenses that may be needed by said beneficiaries.
We hold that appellant's claim is not justified considering that appellee was forced to file the
present suit in view of appellant's refusal to honor the note under consideration. The
request, therefore, for dismissal has no legal basis.

Perez admitted the execution of the promissory note as well as his failure to pay it despite its
maturity and demand. Perez alleged that the proceeds of the note were applied by him to
the payment of the medical treatment of his minor daughter Angela Perez y Tuason, who is
the beneficiary of the trust then administered by Araneta as trustee, and that the trust estate
is bound to pay the expenses of said treatment because they were for the benefit of said
minor and so the personal fund he borrowed from Araneta and for which he executed the
aforesaid promissory note should be paid by Araneta in the manner above-stated.In the
same answer, Perez set up a counterclaim demanding several amounts by way of moral
damages, exemplary damages, and attorney's fees.

MTC ordered Perez to pay the amounts prayed for and dismissed his counterclaim for
damages. Perez filed a complaint with the MTC against Araneta in his capacity as trustee
and prayed that Araneta as trustee be required to pay Perez the amount of P3,700.00

Saltiga De Romero vs CA G.R. No. 109307. November 25, 1999.
Facts:
1. The petitioners filed an action against Lutero Romero and DBP (bank) for the
reconveyance of a parcel of land alleging that the said property was conveyed to Romero by
their father by virtue of a trust.
2. In 1939, Eugenio (father)of petitioners obtained the rights and interest to the then public
land from the Jaug spouses but since he had already applied for a homestead previously, he
could no longer apply for this said land. As a result he caused the application to be under the
name of his eldest son Eustaquio. When the father died, the said land was portioned to the
children who subsequently possessed each share.
3. Romero alleged that he was subsequently forced to sign three affidavits which purportedly
sold the shares to his other siblings. He repudiated the said affidavits which made his sisters
file estafa charges against him.
Issue: Whether or not a trust was created between their father and Romero for the
benefit of the heirs of the former
RULING: No, and even if there was it would be void for being contrary to law. Eugenio
Romero was never the owner of the subject land because all he obtained from the Jaug
spouses were the rights and interests to the land. He could not have owned it as his
application for homestead patent was disapproved.
More importantly, there was no evidence of the supposed trust. A trust is a legal relationship
between a person having an equitable ownership in property and another owning a legal title
to such property. The equitable ownership of the former entitles him to perform certain duties
and powers by the latter. Trust relations can therefore be express or implied. Express being
those created by direct and positive acts of the parties, by a writing or a deed, or will or by
words that evidence an intention to create a trust. Implied trusts refer to those that are
deducible from the nature of the transaction as matters of intent or which are superinduced
on the transaction by operation of law as a matter of equity, independently of the particular
intention of the parties. Implied trust can either be resulting  or constructive trusts, both
coming by operation of law. 
resulting trusts arise from the equitable doctrine that valuable consideration and not legal
title determines the equitable title or interest are presumed always to have been
contemplated by the parties. While cosntructive trusts are created by construction of equity
to satisfy the demands of justice and prevent enrichment.
Landbank vs. CA G.R. No. 129368; August 25, 2003
Facts: The three petitions for the removal of IBAA as trustee of the investment portfolio
created under the custodianship agreements contained substantially similar allegations. The
private respondents alleged inter alia that MSI named and appointed IBAA as the trustee of
an investment portfolio, which was to consist initially of investment funds solicited and
obtained by MSI and IBAA from the issuance and sale to the public of certain securities
denominated as investment agreements and custodian receipts. 19 On May 24, 1977 and
October 4, 1977, MSI and IBAA amended the agreement under instruments entitled
"Amendment to Custodianship Agreement." Under its provisions, the funds of the investors
in the investment pool were to be invested primarily in financing the margin accounts of
clients of MSI and other stockbrokers in the stock market, the payment of which was to be
secured only with certain specified shares of stock at 150% cover and/or real estate
properties at 200% cover, based on the latest available market quotations on such shares
and the latest independent appraisal of such real estate properties. 20 The investment
portfolio was to be held by IBAA in trust for the benefit and protection of the investors
therein, as security for the payment at maturity of the principal and income due on their
respective investments.21
The petitioner in Sp. Proc. Case No. M-125 alleged that on August 3, 1979, IBAA opened
Trust Account No. 576 and entered upon the discharge of its duties as trustee when it
received investment funds in the amount of ₱545,000 and accepted the conveyance and
delivery of 9,900,000 A shares of Basic Petroleum and Minerals, Inc. and 5,990,000 A
shares of Philippine Overseas Drilling and Development Corporation under a deed of
assignment.22
On August 14, 1978, LBP opened Trust Account No. 03-019 in its Makati Branch for the
petitioner in Sp. Proc. Case No. M-126. LBP entered into the discharge of its duties as
trustee upon its acceptance of the conveyance and delivery of certain securities. 23 In Sp.
Proc. Case No. M-108, the custodianship agreement was entered into on August 23, 1976,
upon IBAA’s initial receipt of funds in the amount of ₱1,074,558.66, and the receipt of
specified securities.24
As part of and in connection with the investments made by the private respondents and
other investors in the portfolio, and as security for the payment or return of the said
investments, IBAA as trustee issued custodian receipts to the private respondents, certifying
that it was holding in custody a portfolio of qualified securities with values equivalent to the
amounts of the investments, and acknowledged that its custodian receipts, together with
their corresponding investment agreements, constituted a lien on the portfolio of qualified
securities in its custody to the total amount of the investment portfolio. 25
Despite repeated demands made by the private respondents, MSI refused, failed and
neglected to pay over or return their investments as and when they matured
The private respondents further alleged that MSI failed to maintain the required security
value of the investment portfolio at a level equivalent to at least 100% of the amount of the
outstanding custodian receipts even earlier than July 30, 1979, and at no time during the
period between July 10 to December 10, 1979 did MSI deliver or assign sufficient securities
to bring the security value of the portfolio to the level of at least 100% of the amount of the
outstanding custodian receipts. Thus, the non-payment by MSI to private respondents and
other investors of their returns on the investment agreements at maturity, and the failure of
MSI to maintain the security value of the investment portfolio as agreed upon, constituted
events of default under the terms and conditions of the custodianship agreement. 29
The private respondents claimed that instead of being obliged to deliver additional qualified
securities to cover the recurring deficiencies in the said investment portfolio, MSI was
repeatedly allowed to effect the release or withdrawal and/or substitution of securities which
formed part of the same. IBAA likewise failed and neglected to declare the principal and
income of all investments then outstanding as due and payable, or to make any serious and
prompt demand on MSI to deliver additional securities. IBAA allowed MSI to avail of funds
pertaining to the trust, and to misappropriate and misapply the funds by directly borrowing
therefrom, and/or by extending loans to its parent and subsidiary companies, to companies
and enterprises owned and controlled by its principal officers and directors or their families,
and/or controlling stockholders, as well as to other ineligible borrowers. IBAA furthermore
allowed MSI to accept inadequate security, or to accept as security unimproved real estate,
or real estate of dubious value or with questionable title, notwithstanding clear indications
that such security was worthless, grossly inflated in value, ineligible and not readily
convertible to cash if needed to pay maturing investment agreements.30
To prevent IBAA from declaring all outstanding investment agreements as immediately due
and payable, MSI wrote a letter on December 10, 1979 advising IBAA that it was terminating
the custodianship agreement effective that same date and that LBP was assuming as the
new trustee. On December 12, 1979, MSI and IBAA, together with LBP, executed an
instrument entitled "Substitution of Trustee with Assumption of Liabilities" whereby IBAA
ceased to act as trustee, and LBP assumed as its substitute. Both the purported termination
of the agreement and the purported substitution of IBAA by LBP as trustee of the investment
portfolio were sought to be implemented or carried out without the knowledge and consent of
the investors, without the benefit of any accounting by IBAA, on its administration and
management of the investment portfolio, and without IBAA being discharged of its office and
liability as trustee of the investment portfolio by a court of competent jurisdiction. 31 In the
interim, the SEC had appointed a Management Committee to take custody of the properties
and assets of MSI, to protect the interest of the investors, creditors and stockholders, and to
effectively carry out a program of rehabilitation.
The private respondents prayed that after due proceedings, judgment be rendered in their
favor (a) ordering the removal of IBAA and LBP as trustee and substitute trustee of the
investment portfolio of the private respondents; (b) appointing Prudential Bank as trustee in
substitute of IBAA and LBP; (c) declaring as of no force and effect with respect to them the
"Substitution of Trustee with Assumption of Liabilities" executed by LBP and MSI
Both IBAA and LBP moved to dismiss/suspend the said petitions on the ground that it was
the SEC, and not the RTC, which had jurisdiction over the subject matter of the cases,
pursuant to Presidential Decree No. 902-A as amended by P.D. Nos. 1653 and 1799. Thus,
conformably to Section 6(c) of P.D. 902-A, as amended, all claims against the distressed
corporation should be suspended upon the constitution of the Management Committee. MSI,
through its SEC-Appointed Management Committee, also filed a motion to dismiss/suspend
proceedings in SP Proc. Case No. 125 on the same ground. In behalf of MSI, Ricardo L.
Manotoc, Jr. filed a motion to intervene and a motion to suspend the proceedings, also on
the same ground. In their Reply, the private respondents averred that IBAA and LBP were
trustees of the investment portfolio, and as such, had acquired title over the properties
included in the same; hence, the distressed corporation was not the owner of the said
investment portfolio. Consequently, the SEC had no jurisdiction over the matter.
RTC: Ruled granted the motion to dismiss
CA: The CA reversed and set aside the assailed orders of the RTC. It held that IBAA
and LBP were trustees of the investments of the private respondents and not merely
custodians thereof; hence, IBAA and LBP had legal title over the property covered by
the said investments.
The petitioner received a copy of the assailed decision of the CA on November 18,
1996 and consequently filed its motion for reconsideration on December 3, 1996. On
April 18, 1997, the petitioner received a copy of the questioned resolution dated April
14, 1997, denying its motion for reconsideration. Instead of filing a petition for review
on certiorari under Rule 45 of the Revised Rules of Court, the petitioner filed on June
17, 1997 the instant petition for certiorari under Rule 65.
Issue: won Rule 65 is the proper remedy?
Held: No it is not. The special civil action for certiorari is a remedy designed for the
correction of errors of jurisdiction and not errors of judgment. The raison d’etre for the rule is
when a court exercises its jurisdiction, an error committed while so engaged does not
deprive it of the jurisdiction being exercised when the error is committed. If it did, every error
committed by a court would deprive it of its jurisdiction and every erroneous judgment would
be a void judgment. In such a scenario, the administration of justice would not survive. 65
Hence, where the issue or question involved affects the wisdom or legal soundness of the
decision - not the jurisdiction of the court to render said decision - the same is beyond the
province of a special civil action for certiorari.66
The proper recourse of the aggrieved party from a decision of the CA is a petition for review
on certiorari under Rule 45 of the Revised Rules of Court. On the other hand, if the error
subject of the recourse is one of jurisdiction, or the act complained of was perpetrated by a
quasi-judicial officer or agency with grave abuse of discretion amounting to lack or excess of
jurisdiction, the proper remedy available to the aggrieved party is a petition for certiorari
under Rule 65 of the said Rules. As expostulated by the Court in Fortich v. Corona:67
Anent the first issue, in order to determine whether the recourse of petitioners is proper or
not, it is necessary to draw a line between an error of judgment and an error of jurisdiction.
An error of judgment is one which the court may commit in the exercise of its jurisdiction,
and which error is reviewable only by an appeal. On the other hand, an error of jurisdiction is
one where the act complained of was issued by the court, officer or a quasi-judicial body
without or in excess of jurisdiction, or with grave abuse of discretion which is tantamount to
lack or in excess of jurisdiction. This error is correctible only by the extraordinary writ of
certiorari.68
The supervisory jurisdiction of the court to issue a cert writ cannot be exercised in order to
review the judgment of the lower court as to its intrinsic correctness, either upon the law or
the facts of the case.69
The general rule is that questions or findings of facts in the lower court, board or tribunal,
and the probative weight and sufficiency of the evidence upon which the said findings were
based are not reviewable by certiorari under Rule 65 of the Revised Rules of Court.
However, the sufficiency of the evidence may be inquired into in order to determine whether
jurisdictional facts were or were not proved or whether the lower court had exceeded its
jurisdiction. This exception arises out of the most important office and function of the writ –
the keeping of the lower court and tribunal within their jurisdiction. If the decision of the lower
court as to the sufficiency of the evidence to establish jurisdictional facts were not
reviewable, certiorari would be of no avail as a remedy against an assumption of jurisdiction.
For the purpose of enabling the reviewing court to determine whether jurisdictional facts
were established, it may delve into and review the evidence on which such facts were
based.7
The petitioner received a copy of the decision of the CA on November 18, 1996.1âwphi1 It
had until December 3, 1996 within which to file its motion for reconsideration of the decision.
The petitioner did so on the said date and received on April 18, 1997 the resolution of the
CA denying its motion for reconsideration. The petitioner filed its petition at bar only on June
17, 1997, well beyond the period therefor. Patently then, the decision of the CA had become,
in the interim, final and executory, beyond the purview of this Court to act upon