Government of the Philippine Islands vs. Abadilla

A testamentary devise creating a trust for a secondary school to be established is valid even if the cestui que trust is not yet in esse, and the provincial governor may act as trustee as the legal successor of the civil governor named in the will. The Statute of Limitation does not run between trustee and cestui que trust while the trust subsists, but it may run between the trust and third persons, allowing a third person in adverse possession to acquire title by prescription.

Luis Palad, a school teacher, owned lands in Tayabas that he had titled by composicion gratuita in 1894. He executed a holographic will partly in Spanish and partly in Tagalog and died in 1896 without descendants, survived by his widow Dorotea Lopez. The Municipality of Tayabas and the collateral heirs of Luis Palad later asserted competing claims to the lands under the will. The case required construction of a testamentary clause creating a trust for a secondary school in Tayabas.

The lands in controversy—lots Nos. 3464, 3469, and 3470—were originally owned by Luis Palad, a school teacher, who obtained title to the land by composicion gratuita in 1894. On January 25, 1892, Palad executed a holographic will partly in Spanish and partly in Tagalog. He died on December 3, 1896, without descendants, survived by his widow Dorotea Lopez, whom he had married on October 4, 1885. The will was later protocolized by order of the Court of First Instance of Tayabas over the opposition of Leopoldo and Policarpio Palad, collateral heirs from whom the appellants Palad descend.

The will contained a clause in Tagalog, translated into English, providing that the cocoanut land in Colongcolong, which Palad had put under cultivation, be used by his wife after his death during her life or until she marries; that from the land should be taken what is to be lent to persons who are to plant cocoanut trees and what is to be paid to them as their share of the crop if any should remain; that she try to earn with the product of the cocoanut trees; and that when the times mentioned should arrive, he prepared and donated it to a secondary college to be erected in the capital of Tayabas, to be delivered by his wife and the executors to the Ayuntamiento of the town, if any, and if not, to the civil governor of the province, to cause the manager to comply with his wishes for the good of many and the welfare of the town.

After Luis Palad's death, Dorotea Lopez remained in possession of the land and in 1900 married Calixto Dolendo. On April 20, 1903, the collateral heirs of Luis Palad brought an action against the widow for partition of the lands in question, alleging that by reason of her second marriage she had lost the right to their exclusive use and possession. In the same action, the Municipality of Tayabas intervened, claiming the land under the clause of the Palad will. During the pendency of the action, the parties arrived at an agreement under which the land now constituting lots Nos. 3464 and 3469 was turned over to the municipality as its share of the inheritance under the will, while the remaining portion, now lot No. 3470, was left in the possession of Dorotea Lopez.

On the strength of that agreement, the action was dismissed on November 9, 1904, upon motion by counsel for the municipality and concurred in by all parties, reserving to the collateral heirs the right to bring another action. The Municipality of Tayabas has been in possession of lots Nos. 3464 and 3469 ever since, and Dorotea Lopez has likewise held uninterrupted possession of lot No. 3470. The dispute later reached the Court of First Instance of Tayabas in cadastral and land registration case No. 3, where lots Nos. 3464, 3469, and 3470 were claimed by the Municipality of Tayabas and the governor of the province on one side, and by Maria, Eufemio, Eugenia, Felix, Caridad, Segunda, and Emilia Palad on the other; lot No. 3470 was also claimed by Dorotea Lopez.

• Trustee and Cestui Que Trust: Counsel for appellants Palad argued that the testamentary trust could not become effective because there was no ayuntamiento, no Gobernador Civil of the province, and no secondary school in the town of Tayabas.
• Collateral Heirs' Right to Income: Counsel for appellants Palad argued that even assuming the trust was valid, the collateral heirs of the deceased would nevertheless be entitled to the income of the land until the cestui que trust is actually in esse.
• Lot No. 3470: Dorotea Lopez contended that the Colongcolong land was community property of her marriage with Luis Palad and that lot No. 3470 represented her share thereof; she held possession of said lot adverse to all other claimants since 1904 and had acquired title by prescription.

• Validity of Testamentary Trust: Whether the clause in Luis Palad's will created a valid trust for a secondary school in Tayabas, with the provincial governor as trustee, despite the absence of an ayuntamiento, a civil governor, or an existing secondary school.
• Right to Income: Whether the collateral heirs of Luis Palad are entitled to the income of the devised land until the cestui que trust is actually in esse.
• Lot No. 3470: Whether lot No. 3470 should be registered in the name of Dorotea Lopez by prescription or as her share of the community property.

• Validity of Testamentary Trust: Yes. The clause created a valid charitable trust; the provincial governor, as successor of the civil governor, may act as trustee, and the cestui que trust need not be named or in esse at the time the trust is created.
• Right to Income: No. The trustee holds legal title; the natural heirs retain only a reversionary interest if the devise fails, and the testator intended the income to accumulate for the proposed school until it is established.
• Lot No. 3470: Yes. Dorotea Lopez acquired title by prescription, having held possession adverse to all other claimants since 1904; the Statute of Limitation may run as between the trust and third persons.

• Validity of Testamentary Trust: The clause was unskillfully drawn, ungrammatical, and obscure, but on closer examination it sufficiently revealed the testator's purpose. Testamentary dispositions must be liberally construed to give effect to the testator's intention as revealed by the will itself. Applying that rule, Luis Palad proposed to create a trust for the benefit of a secondary school to be established in Tayabas, naming as trustee the ayuntamiento of the town or, if there were none, the civil governor of the province. Although there was no ayuntamiento in the sense of a municipal corporation and no civil governor under the existing regime, the provincial governor was the legal successor of the civil governor and could act as trustee. The cestui que trust need not be named or even be in esse at the time the trust is created; in charitable trusts, the rule is further relaxed. Article 788 of the Civil Code validated dispositions imposing on heirs the obligation to invest sums in charitable works or public educational institutions, and the general principle applied even if the devise did not require periodical investments. The devise violated no rule against perpetuities because it did not prohibit alienation; it did not violate article 670 because the making of the will and the continuance or quantity of the heir's estate were not left to the discretion of a third party; the devisee was not uncertain and the devise was not repugnant to article 750; and the provincial governor was not a public establishment under article 748, so he could receive the inheritance without prior government approval. The judgment as to lots Nos. 3464 and 3469 was therefore affirmed.
• Right to Income: The collateral heirs argued that they were entitled to the income until the cestui que trust came into existence. This was rejected. If the trustee held legal title and the devise was valid, the natural heirs had no remaining interest in the land except a right to the reversion if the devise should fail, which had not occurred. The testator's intention was for the income of the property to accumulate for the benefit of the proposed school until it should be established.
• Lot No. 3470: Although the Statute of Limitation does not run as between trustee and cestui que trust while the trust relations subsist, it may run as between the trust and third persons. Dorotea Lopez contended that the Colongcolong land was community property of her marriage with Luis Palad and that lot No. 3470 represented her share. She had held possession of lot No. 3470 adverse to all other claimants since 1904 and had acquired title by prescription. The judgment was therefore reversed as to lot No. 3470, which was ordered registered in her name.

• Liberal Construction of Testamentary Dispositions — Testamentary dispositions must be liberally construed so as to give effect to the intention of the testator as revealed by the will itself. The Court applied this rule to uphold the unskillfully drawn clause as creating a trust for a secondary school.
• Charitable Trusts; Cestui Que Trust Need Not Be In Esse — A trust requires a trustee and a cestui que trust, but the cestui que trust need not be named or even be in esse at the time the trust is created. In charitable trusts, the rule is further relaxed. The Court held that the secondary school, though not yet established, could be the beneficiary.
• Provincial Governor as Successor of the Civil Governor for Trust Purposes — Where a will names the ayuntamiento or, in its absence, the civil governor as trustee, the provincial governor may act as trustee as the legal successor of the civil governor. The Court found no ayuntamiento in the required sense but held that the provincial governor could serve.
• Validity of Charitable Dispositions under Article 788 of the Civil Code — Article 788 validates dispositions imposing on heirs the obligation to invest specified sums in charitable works or public educational institutions, subject to conditions. The Court found the general principle applicable even if the devise did not require periodical investments.
• No Violation of Rule Against Perpetuities or Articles 670, 750, and 748 — The devise did not prohibit alienation, did not leave the making of the will or the continuance or quantity of the heir's estate to a third party's discretion, did not make the devisee uncertain, and did not make the provincial governor a public establishment requiring prior government approval. The trust was therefore valid.
• Legal Title, Beneficial Title, and Heirs' Reversionary Interest — If the trustee holds legal title and the devise is valid, the natural heirs have no remaining interest except a right to the reversion if the devise should fail. They are not entitled to the income while the trust subsists.
• Prescription Between Trust and Third Persons — The Statute of Limitation does not run as between trustee and cestui que trust as long as the trust relations subsist, but it may run as between the trust and third persons. Thus Dorotea Lopez's adverse possession since 1904 ripened into title by prescription over lot No. 3470.

• "It is a well-known rule that testamentary dispositions must be liberally construed so as to give effect to the intention of the testator as revealed by the will itself." — This states the canon of construction the Court used to uphold the unskillfully drawn testamentary clause as a valid charitable trust.
• "In regard to private trust it is not always necessary that the cestui que trust should be named, or even be in esse at the time the trust is created in his favor." — This defines the trust principle that allowed the secondary school, though not yet established, to be the beneficiary.
• "In charitable trust such as the one here under discussion, the rule is still further relaxed." — This confirms that the requirement of a named or existing cestui que trust is relaxed even more for charitable trusts.
• "It may be noted that though the Statute of Limitation does not run as between trustee and cestui que trust as long as the trust relations subsist, it may run as between the trust and third persons." — This is the ratio for reversing as to lot No. 3470 and allowing Dorotea Lopez to acquire it by prescription.

• Frazier vs. Frazier, 2 Hill Ch., 305 — Cited in the majority opinion, along with Ashurt vs. Given and Carson vs. Carson, for the rule that a cestui que trust need not be named or in esse at the time the trust is created.
• Ashurt vs. Given, 5 Watts & S., 329 — Cited for the same trust principle.
• Carson vs. Carson, 1 Wins. (N.C.) 24 — Cited for the same trust principle.
• Arriola vs. Gomez de la Serna, 14 Phil. 627 (1909) — Cited in Malcolm, J.'s separate opinion for the rule that in civil law jurisdictions, including the Philippines, adverse possession to perfect title must be held in good faith.
• Santiago vs. Cruz, 19 Phil. 145 (1911) — Cited in the separate opinion for the same good-faith requirement.
• Cuaycong vs. Benedicto, 37 Phil. 781 (1918) — Cited in the separate opinion for the same good-faith requirement.
• Tolentino vs. Vitug, 39 Phil. 126 (1918) — Cited in the separate opinion as particularly applicable to the facts on adverse possession and good faith.
• Ochoa vs. Hernandez, 230 U.S. 139 (1913) — Cited in the separate opinion for the good-faith requirement in adverse possession.
• Kennedy vs. Townsley, 16 Ala. 239 (1849) — Cited in the separate opinion for the same principle.
• Abshire vs. Lege, 133 La. 254 (1913) — Cited in the separate opinion for the same principle.

• Article 788, Civil Code — Quoted in full by the Court; validates dispositions imposing on heirs the obligation to periodically invest specified sums in charitable works, such as dowries for poor maidens, scholarships for students, or in favor of the poor or any charitable public educational institution; applied to uphold the testamentary trust for a secondary school.
• Article 670, Civil Code — Cited and found not violated because the making of the will and the continuance or quantity of the estate of the heir were not left to the discretion of a third party.
• Article 750, Civil Code — Cited and found not violated because the devisee was not uncertain and the devise was not repugnant to the article.
• Article 748, Civil Code — Cited and found not violated because the provincial governor could not be regarded as a public establishment and could receive the inheritance without previous approval of the Government.
• Section 41, Code of Civil Procedure — Cited as the adverse possession provision; the Court found it doubtful whether the municipality's possession could be considered adverse within its meaning, so the case as to lots Nos. 3464 and 3469 turned on the construction and validity of the will rather than prescription.

Street, Avanceña, Villamor, and Romualdez, JJ., concurred.

• Malcolm, J. — He concurred as to lots Nos. 3464 and 3469 but dissented as to lot No. 3470. He reasoned that Dorotea Lopez, having remarried, should have turned the property over to the Municipality of Tayabas under the will; the 1904 agreement could not alter the basic and controlling facts, and her possession was in contravention of the trust and in bad faith. In civil law jurisdictions, including the Philippines, adverse possession to perfect title must be in good faith. He would have affirmed the judgment in all respects.