(Article published in the Oct 18, 2006
issue of Manila Standard Today)
practice of estate planning, or, more precisely, the deliberate attempt to
put in order one’s financial affairs before dying, recently received a
welcome endorsement from the Supreme Court.
In the case of The Estate of Edward Miller Grimm v. The Estate of
Charles Parsons, et al, G.R. No. 159810, promulgated 09 October 2006,
Justice Cancio-Garcia, writing for the court, observed:
legal and situational ambiguities often lead to disagreements even between
or amongst the most agreeable of persons, it behooves all concerned to put
their financial affairs and proprietary interests in order before they
depart for the great beyond. Leaving legal loose ends hanging or allowing
clouds to remain on property titles when one can do something about them
before the proverbial thief in the night suddenly comes calling only opens
the door to bruising legal fights and similar distracting
the law on trusts, the rules that seek to tie up those “legal loose
ends” for those who during their lifetimes failed to do so are embodied
in that portion of the subject known as “resulting trusts.” Typically,
the factual background involves the conferment of ownership over property
to a person under such ambiguous circumstances that it is not clear what
the true intent of the parties were.
In the absence of clear evidence to the contrary, the law steps in
to state that a trust has in fact resulted in favor of the person whom the
law assumes was intended to be benefited by the arrangement.
resulting trust has been described in another jurisdiction as “the last
resort to which the law has recourse when the draftsman has made a blunder
or failed to dispose of that which he has set out to dispose of” (Re
Cochrane  Ch. 309, per Harman J). Sometimes, though, it is not just
the lawyer’s fault. As in Grimm,
the parties simply did not, on account of their relationship, consider it
worth their while to cross the “T”s and dot the “I”s of their
1952, Charles Parsons (Parsons) and Edward Miller Grimm (Grimm), together
with Conrado Y. Simon (Simon), formed a partnership registered
under the name G - P and
Company. Before September 1964, Parsons and Grimm each owned
proprietary membership share in Manila Golf and Country Club. Parsons
owned Membership Certificate (MC) No.374 for 100 units and Grimm owned MC
No. 590 which was issued to him on May 25, 1960.
On 07 September 1964, Grimm transferred his MC No. 590 to Parsons.
MC No. 590 was subsequently replaced by MC No. 1088.
the case eventually got to court, the person whose name appears in the
certificate and his successors-in-interest did not claim ownership over
the certificate. The problem of before the court was for whom was
certificate held by Parsons and his successors-in-interest?
Two parties claimed to be the beneficial owners, the estate of
Edward Miller Grimm and a partnership named G.P. & Co., which traces
its origins to G-P and Company mentioned above.
arguments have been marshaled by both contenders, but, for purposes of
this item, I am interested only in how trust principles were invoked to
resolve the issue. The good justice prefaced his disquisition with a
summary of what I used to teach at the opening sessions of the Trust
Course annually conducted by the Trust Institute Foundation of the
is the legal relationship between one having an equitable ownership in
property and another person owning the legal title to such property, the
equitable ownership of the former entitling him to the performance of
certain duties and the exercise of certain powers by the latter. Trust
relations between parties may be express, as when the trust is created by
the intention of the trustor. An express trust is created by the direct
and positive acts of the parties, by some writing or deed or by words
evidencing an intention to create a trust; the use of the word trust
is not required or essential to its constitution, it being sufficient that
a trust is clearly intended. Implied trust comes into existence by
operation of law, either through implication of an intention to create a
trust as a matter of law or through the imposition of the trust
irrespective of, and even contrary to any such intention.
the court looked at the circumstances that attended the transfer of MC No.
590 from Grimm to Parsons. Sometime
in early 1964, Parsons recommended to Manila Golf Club’s management the
approval of a certain Mr. Yoshida’s
“Application For Waiting List Eligible To [Club] Proprietary Membership.”
Then, in a letter of August 10, 1964 to
the golf club’s Board of Directors, Parsons endorsed the
application of Yoshida as Club member. The application was apparently not given due course exactly
as requested, since later Parsons addressed a letter to the club’s
honorary secretary, E.C. von Kauffman requesting that Yoshida be taken in
as a Company assignee.
his reply-letter of August 29, 1964, Kauffman explained why he cannot,
under Club rules, favorably
act on Parsons’ specific request, but suggested a viable solution that
essentially meant a transfer be made of some of Grimm’s interest to
Parsons followed by an assignment by Parsons of some of the latter’s
playing rights to Yoshida. In response, Parsons suggested simply a more
direct approach: Grimm was to transfer his playing rights to Yoshida.
some reason or another, the practical solution took the legal form of a
transfer of MC No. 590 from Grimm to Parsons.
But the court was quick to point out that “the conclusion easily
deductible from the foregoing exchanges is that, given existing Club
restrictions, the simplest way to accommodate and qualify Yoshida for Club
membership was for Grimm to transfer his 100-unit share to Parsons who
will then assign the playing rights of that share to Yoshida.”
circumstantial evidence was invoked to buttress the court’s conclusion
that the true intent behind the transfer was a temporary one.
Testimonial and documentary proof, both from persons who dealt with
the situation as well as from Parsons and Grimm themselves, appeared to
overwhelmingly support the view that the true intention of the parties was
not really to transfer ownership over the certificate but simply to
overcome technical objections from the rules of the club.
fact, Grimm in a letter to the club, maintained that the certificate “is
still my property and I wish it recorded as such in the Club’s file.”
for his part, wrote:
to the transfer of [MC] #590 in the name of Mr. E.M. Grimm to my name, for
which I now have the new Certification No. 1088 …, please be advised
that this transfer was made on a temporary basis and that said new
certificate is still the property of Mr. E.M. Grimm and I enclose the
certificate duly endorsed by me for safekeeping.”
posed for the other contending party, to be sure, are not lacking in logic
and strength. In fact, they
were convincing enough to get the nod of the Court of Appeals.
But, at the end of the day, situations like this hinge on what the
court of last resort believes was the true intent of the parties.
The moral lesson, as my English teacher at the Lakan Dula Elementary School always concludes her classes, is: Spare no effort to document what you really intend by your transaction. Let not hiya nor friendship with the other party nor intellectual sloth nor understandable distaste for paying any amount to your lawyer deter you from making clear what is your true intention. Otherwise, you bequeath to your heirs, as the good justice points out, the legacy of “bruising legal fights and similar distracting inconveniences.”