G.R. No. 168660 - Orendain vs. Trusteeship of the Estate of Rodriguez

DoAa Margarita Rodriguez died in Manila on July 19, 1960, leaving a last will and testament.
The will was admitted to probate on September 23, 1960, by the Court of First Instance of Manila City (CFI Manila) in Special Proceeding No. 3845.
On August 27, 1962, the CFI Manila approved the executor’s project of partition of the estate.

At the time of decedent's death, there were no compulsory or forced heirs, allowing free disposition of her properties under her will.
The will created a trust (fideicomiso) to manage the properties and income for designated beneficiaries, as expressed in several clauses:

Clause 2 ordered the creation of the trust after settlement of the estate.
Clause 3 directed that the income from properties (except certain titled lands) be deposited in a bank for payment of estate taxes, expenses, and trusts.
Clause 10 expressly provided that specified properties would be administered perpetually under the trust and forbade their alienation or mortgage, except limited conditions.
Clause 12 detailed the distribution and use of income and funds accumulated from the trust estate.
Clause 24 instructed trustees to use trust funds for the medical needs and welfare of named beneficiaries, including Hilarion Orendain and heirs.

In Rodriguez, et al. v. Court of Appeals (G.R. No. L-28734, Mar. 28, 1969), the Court held:

The prohibition against alienation or mortgage of properties in Clause 10 was valid only for the first twenty years, consistent with Article 870 of the Civil Code, which voids inalienability beyond twenty years.
The testatrix’s will must be respected during that twenty-year period.
No intestate succession would occur before the lapse of this period.
The challenge to the clause prematurely was denied, as the time limit had not yet expired then.

Nearly forty years later, petitioners Hilarion, Jr. and Enrico Orendain (heirs of Hilarion Orendain, Sr. named in the will) moved to dissolve the trust, arguing it had exceeded the twenty-year limit and violated Articles 867 and 870 of the Civil Code, relying on Rodriguez v. Court of Appeals.
The RTC, Branch 4, Manila, denied the motion and concluded:

The prohibition on alienation after twenty years is void, but the trust itself remains valid.
The trustees are authorized to dispose of the trust properties to fulfill the testatrix’s directives (Clauses 12, 13, and 24).
Article 1013(4) of the Civil Code permits the court to establish permanent trusts so only income is used, supporting the trust’s perpetuity.

Petitioners assailed the RTC order denying dissolution, raising issues on the application of Articles 867, 870, and 1013 of the Civil Code in relation to the perpetual trust and alienability of properties.

Whether the trusteeship over the properties left by DoAa Margarita Rodriguez can be dissolved applying Articles 867 and 870 of the Civil Code.
Whether the lower court erred in ruling that Articles 867 and 870 of the Civil Code do not apply to the trust and that the trust remains valid despite the expiration of the twenty-year period.
Whether the lower court correctly applied Article 1013, paragraph 4 of the Civil Code to uphold a perpetual trust over the decedent’s estate.