Академический Документы
Профессиональный Документы
Культура Документы
x-----------------------------------------------------------------------------------------x
CARPIO, J.:
I concur in the result of the majority opinion that IEMELIF, a corporation sole, may
be converted into a corporation aggregate by a mere amendment of its articles of
incorporation. However, I maintain that the amendment can be effected by the
corporation sole without the concurrence of two-thirds of the members of the
religious denomination, sect or church that the corporation sole represents.
Section 110 of the Corporation Code[1] defines a corporation sole as one formed by
the chief archbishop, bishop, priest, minister, rabbi or other presiding elder of a
religious denomination, sect or church for the purpose of administering and
managing, as trustee, the affairs, property and temporalities of such religious
denomination, sect or church. It is a special form of corporation designed to facilitate
the exercise of the functions of ownership carried on by the clerics for and on behalf
of the church which is regarded as the property owner.[2]
First, Section 110 of the Corporation Code provides that a corporation sole
administers and manages, as trustee, the affairs, properties and temporalities of the
religious denomination, sect or church. As a trustee, a corporation sole can exercise
such corporate powers as maybe necessary to carry out its duties of administering
and managing the affairs, properties and temporalities of the religious organization,
provided that such powers are not inconsistent with the law and the Constitution.
One of the powers authorized under Section 36 of the Corporation Code is the power
to amend the articles of incorporation.[6]
Second, as pointed out in the majority opinion, Section 109 of the Code allows the
application to religious corporations of the general provisions governing non-stock
corporations, insofar as they may be applicable. The lack of specific provision on
amendments of articles of incorporation of a corporation sole calls for the suppletory
application of relevant provisions on non-stock corporations. Thus, Section 16 of the
Code applies, to wit:
Sec. 16. Amendment of Articles of Incorporation. Unless otherwise
prescribed by this Code or by special law, and for legitimate purposes, any
provision or matter stated in the articles of incorporation may be amended
by a majority vote of the board of directors or trustees and the vote or
written assent of the stockholders representing at least two-thirds (2/3) of
the outstanding capital stock, without prejudice to the appraisal right of
dissenting stockholders in accordance with the provisions of this Code, or
the vote or written assent of at least two-thirds (2/3) of the members if it
be a non-stock corporation.
x x x (Italics supplied)
The majority opinion holds that applying the above provision, amendment can be
made by the corporation sole with the concurrence of at least two-thirds of the
members of the religious organization it represents.
I do not agree. Section 16 requires the majority vote of the board of trustees and the
vote or written assent of at least two-thirds of the members of a non-stock
corporation.Applying this, a corporation sole, as the lone trustee and member of
the corporation, can amend its articles of incorporation.
The religious denomination, sect or church represented by the corporation sole has
members who are distinct and different from the member of the corporation
sole. The members of the religious organization should not be considered for
purposes of Section 16. Thus, the votes of those members are not necessary in
amending the articles of incorporation of the corporation sole, the vote of the latter
being sufficient in effecting the amendment.
It bears emphasizing that once the conversion from corporation sole to corporation
aggregate is perfected, the provisions of the Corporation Code specifically designed
for a corporation sole cease to apply to the corporation aggregate, and the latter shall
be governed by the relevant provisions on non-stock or even stock corporations.[7]
For instance, the rules on the sale of properties of a corporation sole are governed
by Section 113 of the Code.[8] The corporation sole may sell or mortgage real
properties held by it in accordance with the rules, regulations and discipline of the
religious denomination, sect or church concerned. It is only in the absence of such
rules that court intervention becomes necessary, and real properties are sold or
mortgaged by obtaining an order from the Regional Trial Court of the province
where the property is situated. On the other hand, the sale or other disposition of all
or substantially all of the properties and assets of a corporation aggregate shall be
governed by Section 40 of the Code which applies to stock and non-stock
corporations. Under this section, the sale, lease, exchange, mortgage, pledge or
disposition of all or substantially all of the properties and assets of the corporation
may generally be done through a majority vote of its board of trustees, and the vote
of at least two-thirds of its members in a members meeting duly called for that
purpose. Hence, unlike in the case of a corporation sole, a corporation aggregate may
not apply its own rules, regulations and discipline in selling all or substantially all of
its properties, as this process shall be governed by secular principles and rules of
law.
JOSEPH GOYANKO, JR., as administrator of the Estate of Joseph Goyanko, Sr., Petitioner,
vs.
UNITED COCONUT PLANTERS BANK, MANGO AVENUE BRANCH, Respondent.
DECISION
BRION, J.:
We resolve the petition for review on certiorari1 filed by petitioner Joseph Goyanko, Jr., administrator
of the Estate of Joseph Goyanko, Sr., to nullify the decision2 dated February 20, 2007 and the
resolution3 dated July 31, 2007 of the Court of Appeals (CA) in CA-G.R. CV. No. 00257 affirming the
decision4 of the Regional Trial Court of Cebu City, Branch 16(RTC) in Civil Case No. CEB-22277.
The RTC dismissed the petitioner’s complaint for recovery of sum money against United Coconut
Planters Bank, Mango Avenue Branch (UCPB).
In 1995, the late Joseph Goyanko, Sr. (Goyanko) invested Two Million Pesos (P2,000,000.00) with
Philippine Asia Lending Investors, Inc. family, represented by the petitioner, and his illegitimate
family presented conflicting claims to PALII for the release of the investment. Pending the
investigation of the conflicting claims, PALII deposited the proceeds of the investment with UCPB on
October 29, 19965 under the name "Phil Asia: ITF (In Trust For) The Heirs of Joseph Goyanko,
Sr." (ACCOUNT). On September 27, 1997, the deposit under the ACCOUNT was P1,509,318.76.
On December 11, 1997, UCPB allowed PALII to withdraw One Million Five Hundred Thousand
Pesos (P1,500,000.00) from the Account, leaving a balance of only P9,318.76. When UCPB refused
the demand to restore the amount withdrawn plus legal interest from December 11, 1997, the
petitioner filed a complaint before the RTC. In its answer to the complaint, UCPB admitted, among
others, the opening of the ACCOUNT under the name "ITF (In Trust For) The Heirs of Joseph
Goyanko, Sr.," (ITF HEIRS) and the withdrawal on December 11, 1997.
In its August 27, 2003 decision, the RTC dismissed the petitioner’s complaint and awarded UCPB
attorney’s fees, litigation expenses and the costs of the suit.6 The RTC did not consider the words
"ITF HEIRS" sufficient to charge UCPB with knowledge of any trust relation between PALII and
Goyanko’s heirs (HEIRS). It concluded that UCPB merely performed its duty as a depository bank in
allowing PALII to withdraw from the ACCOUNT, as the contract of deposit was officially only
between PALII, in its own capacity, and UCPB. The petitioner appealed his case to the CA.
Before the CA, the petitioner maintained that by opening the ACCOUNT, PALII established a
trust by which it was the "trustee" and the HEIRS are the "trustors-beneficiaries;" thus, UCPB
should be liable for allowing the withdrawal.
The CA partially granted the petitioner’s appeal. It affirmed the August 27, 2003 decision of the RTC,
but deleted the award of attorney’s fees and litigation expenses. The CA held that no express trust
was created between the HEIRS and PALII. For a trust to be established, the law requires, among
others, a competent trustor and trustee and a clear intention to create a trust, which were absent in
this case. Quoting the RTC with approval, the CA noted that the contract of deposit was only
between PALII in its own capacity and UCPB, and the words "ITF HEIRS" were insufficient to
establish the existence of a trust. The CA concluded that as no trust existed, expressly or impliedly,
UCPB is not liable for the amount withdrawn.7
In its July 31, 2007 resolution,8 the CA denied the petitioner’s motion for reconsideration. Hence, the
petitioner’s present recourse.
The Petition
The petitioner argues in his petition that: first, an express trust was created, as clearly shown by
PALII’s March 28, 1996 and November 15, 1996 letters.9 Citing jurisprudence, the petitioner
emphasizes that from the established definition of a trust,10 PALII is clearly the trustor as it created
the trust; UCPB is the trustee as it is the party in whom confidence is reposed as regards the
property for the benefit of another; and the HEIRS are the beneficiaries as they are the persons for
whose benefit the trust is created.11 Also, quoting Development Bank of the Philippines v.
Commission on Audit,12 the petitioner argues that the naming of the cestui que trust is not necessary
as it suffices that they are adequately certain or identifiable.13
Second, UCPB was negligent and in bad faith in allowing the withdrawal and in failing to inquire into
the nature of the ACCOUNT.14 The petitioner maintains that the surrounding facts, the testimony of
UCPB’s witness, and UCPB’s own records showed that: (1) UCPB was aware of the trust relation
between PALII and the HEIRS; and (2) PALII held the ACCOUNT in a trust capacity. Finally, the CA
erred in affirming the RTC’s dismissal of his case for lack of cause of action. The petitioner insists
that since an express trust clearly exists, UCPB, the trustee, should not have allowed the withdrawal.
UCPB posits, in defense, that the ACCOUNT involves an ordinary deposit contract between PALII
and UCPB only, which created a debtor-creditor relationship obligating UCPB to return the proceeds
to the account holder-PALII. Thus, it was not negligent in handling the ACCOUNT when it allowed
the withdrawal. The mere designation of the ACCOUNT as "ITF" is insufficient to establish the
existence of an express trust or charge it with knowledge of the relation between PALII and the
HEIRS.
UCPB also argues that the petitioner changed the theory of his case. Before the CA, the petitioner
argued that the HEIRS are the trustors-beneficiaries, and PALII is the trustee. Here, the petitioner
maintains that PALII is the trustor, UCPB is the trustee, and the HEIRS are the beneficiaries.
Contrary to the petitioner’s assertion, the records failed to show that PALII and UCPB executed a
trust agreement, and PALII’s letters made it clear that PALII, on its own, intended to turn-over the
proceeds of the ACCOUNT to its rightful owners.
The issue before us is whether UCPB should be held liable for the amount withdrawn because a
trust agreement existed between PALII and UCPB, in favor of the HEIRS, when PALII opened the
ACCOUNT with UCPB.
Second, we find that the petitioner changed the theory of his case. The petitioner argued before the
lower courts that an express trust exists between PALII as the trustee and the HEIRS as the trustor-
beneficiary.21 The petitioner now asserts that the express trust exists between PALII as the trustor
and UCPB as the trustee, with the HEIRS as the beneficiaries.22 At this stage of the case, such
change of theory is simply not allowed as it violates basic rules of fair play, justice and due process.
Our rulings are clear - "a party who deliberately adopts a certain theory upon which the case was
decided by the lower court will not be permitted to change [it] on appeal";23 otherwise, the lower
courts will effectively be deprived of the opportunity to decide the merits of the case fairly.24 Besides,
courts of justice are devoid of jurisdiction to resolve a question not in issue.25 For these reasons, the
petition must fail. Independently of these, the petition must still be denied.
No express trust exists; UCPB exercised the required diligence in handling the ACCOUNT;
petitioner has no cause of action against UCPB
A trust, either express or implied,26 is the fiduciary relationship "x x x between one person having an
equitable ownership of 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."27 Express or direct trusts are created by the direct and positive acts
of the trustor or of the parties.28 No written words are required to create an express trust. This is
clear from Article 1444 of the Civil Code,29 but, the creation of an express trust must be firmly shown;
it cannot be assumed from loose and vague declarations or circumstances capable of other
interpretations.30
In Rizal Surety & Insurance Co. v. CA,31 we laid down the requirements before an express trust will
be recognized:
Basically, these elements include a competent trustor and trustee, an ascertainable trust res,
and sufficiently certain beneficiaries. xxx each of the above elements is required to be
established, and, if any one of them is missing, it is fatal to the trusts (sic). Furthermore,
there must be a present and complete disposition of the trust property, notwithstanding that
the enjoyment in the beneficiary will take place in the future. It is essential, too, that the purpose
be an active one to prevent trust from being executed into a legal estate or interest, and one that is
not in contravention of some prohibition of statute or rule of public policy. There must also be some
power of administration other than a mere duty to perform a contract although the contract is
for a thirdparty beneficiary. A declaration of terms is essential, and these must be stated with
reasonable certainty in order that the trustee may administer, and that the court, if called upon
so to do, may enforce, the trust. [emphasis ours]
Under these standards, we hold that no express trust was created. First, while an ascertainable
trust res and sufficiently certain beneficiaries may exist, a competent trustor and trustee do
not. Second, UCPB, as trustee of the ACCOUNT, was never under any equitable duty to deal with
or given any power of administration over it. On the contrary, it was PALII that undertook the duty to
hold the title to the ACCOUNT for the benefit of the HEIRS. Third, PALII, as the trustor, did not have
the right to the beneficial enjoyment of the ACCOUNT. Finally, the terms by which UCPB is to
administer the ACCOUNT was not shown with reasonable certainty. While we agree with the
petitioner that a trust’s beneficiaries need not be particularly identified for a trust to exist, the
intention to create an express trust must first be firmly established, along with the other
elements laid above; absent these, no express trust exists.
Contrary to the petitioner’s contention, PALII’s letters and UCPB’s records established UCPB’s
participation as a mere depositary of the proceeds of the investment. In the March 28, 1996 letter,
PALII manifested its intention to pursue an active role in and up to the turnover of those proceeds to
their rightful owners,32 while in the November 15, 1996 letter, PALII begged the petitioner to trust it
with the safekeeping of the investment proceeds and documents.33 Had it been PALII’s intention to
create a trust in favor of the HEIRS, it would have relinquished any right or claim over the proceeds
in UCPB’s favor as the trustee. As matters stand, PALII never did.
UCPB’s records and the testimony of UCPB’s witness34 likewise lead us to the same conclusion.
While the words "ITF HEIRS" may have created the impression that a trust account was created, a
closer scrutiny reveals that it is an ordinary savings account.35 We give credence to UCPB’s
explanation that the word "ITF" was merely used to distinguish the ACCOUNT from PALII’s other
accounts with UCPB. A trust can be created without using the word "trust" or "trustee," but the mere
use of these words does not automatically reveal an intention to create a trust.36 If at all, these words
showed a trustee-beneficiary relationship between PALII and the HEIRS.
Contrary to the petitioner’s position, UCPB did not become a trustee by the mere opening of the
ACCOUNT. While this may seem to be the case, by reason of the fiduciary nature of the bank’s
1âwphi1
relationship with its depositors,37 this fiduciary relationship does not "convert the contract between
the bank and its depositors from a simple loan to a trust agreement, whether express or implied."38 It
simply means that the bank is obliged to observe "high standards of integrity and performance" in
complying with its obligations under the contract of simple loan.39 Per Article 1980 of the Civil
Code,40 a creditor-debtor relationship exists between the bank and its depositor.41 The savings
deposit agreement is between the bank and the depositor;42 by receiving the deposit, the bank
impliedly agrees to pay upon demand and only upon the depositor’s order.43
Since the records and the petitioner’s own admission showed that the ACCOUNT was opened by
PALII, UCPB’s receipt of the deposit signified that it agreed to pay PALII upon its demand and only
upon its order. Thus, when UCPB allowed PALII to withdraw from the ACCOUNT, it was merely
performing its contractual obligation under their savings deposit agreement. No negligence or bad
faith44 can be imputed to UCPB for this action. As far as UCPB was concerned, PALII is the account
holder and not the HEIRS. As we held in Falton Iron Works Co. v. China Banking Corporation.45 the
bank’s duty is to its creditor-depositor and not to third persons. Third persons, like the HEIRS here,
who may have a right to the money deposited, cannot hold the bank responsible unless there is a
court order or garnishment.46 The petitioner’s recourse is to go before a court of competent
jurisdiction to prove his valid right over the money deposited.
In these lights, we find the third assignment of error mooted. A cause of action requires that there be
a right existing in favor of the plaintiff, the defendant’s obligation to respect that right, and an act or
omission of the defendant in breach of that right.47 We reiterate that UCPB’s obligation was towards
PALII as its creditor-depositor. While the HEIRS may have a valid claim over the proceeds of the
investment, the obligation to turn-over those proceeds lies with PALII. Since no trust exists the
petitioner’s complaint was correctly dismissed and the CA did not commit any reversible error in
affirming the RTC decision. One final note, the burden to prove the existence of an express trust lies
with the petitioner.48 For his failure to discharge this burden, the petition must fail.
WHEREFORE, in view of these considerations, we hereby DENY the petition and AFFIRM the
decision dated February 20, 2007 and the resolution dated July 31, 2007 of the Court of Appeals in
CA-G.R. CV. No. 00257. Costs against the petitioner.
SO ORDERED:
Republic of the Philippines
Supreme Court
Manila
THIRD DIVISION
DECISION
BERSAMIN, J.:
An appeal by petition for review on certiorari under Rule 45 shall raise only
questions of law. Thus, the herein petition for review must fail for raising a question
essentially of fact.
Antecedents
On December 28, 1990, respondent Pilhino Sales Corporation (Pilhino) sued Jose
Andrada, Jr. and his wife, Maxima, in the Regional Trial Court in Davao City (RTC)
to recover the principal sum of P240,863.00, plus interest and incidental charges
(Civil Case No. 20,489-90). Upon Pilhinos application, the RTC issued a writ of
preliminary attachment, which came to be implemented against a Hino truck and a
Fuso truck both owned by Jose Andrada, Jr. However, the levies on attachment were
lifted after Jose filed a counter-attachment bond.
In due course, the RTC rendered a decision against Jose Andrada, Jr. and his
wife. Pilhino opted to enforce the writ of execution against the properties of the
Andradas instead of claiming against the counter-attachment bond considering that
the premium on the bond had not been paid. As a result, the sheriff seized the Hino
truck and sold it at the ensuing public auction, with Pilhino as the highest bidder.
However, the Hino truck could not be transferred to Pilhinos name due to its having
been already registered in the name of petitioner Moises Andrada. It appears that the
Hino truck had been meanwhile sold by Jose Andrada, Jr. to Moises Andrada, which
sale was unknown to Pilhino, and that Moises had mortgaged the truck to BA
Finance Corporation (BA Finance) to secure his own obligation.
BA Finance sued Moises Andrada for his failure to pay the loan (Civil Case No.
5117). After a decision was rendered in the action in favor of BA Finance, a writ of
execution issued, by which the sheriff levied upon and seized the Hino truck while
it was in the possession of Pilhino and sold it at public auction, with BA Finance as
the highest bidder.
Consequently, Pilhino instituted this action in the RTC in Davao City against
Spouses Jose Andrada, Jr. and Maxima Andrada, Spouses Moises Andrada and
Clemencia Andrada, Jose Andrada, Sr., BA Finance, Land Transportation Office (in
Surallah, South Cotabato), and the Registrar of Deeds of General Santos City to
annul the following: (a) the deed of sale between Jose Andrada, Jr. and Moises
Andrada; (b) the chattel mortgage involving the Hino truck between Moises Andrada
and BA Finance; (c) the deed of conveyance executed by Jose Andrada, Jr. in favor
of his father, Jose Andrada, Sr., involving a hard-top jeep; and (d) the certificate of
registration of the Hino truck in the name of Moises Andrada as well as the
registration of the chattel mortgage with the Registry of Deeds of General Santos
City. The action was docketed as Civil Case No. 21,898-93.
Of the Andradas who were defendants in Civil Case No. 21,898-93, only Moises
Andrada and his wife filed their responsive pleading. Later on, Jose Andrada, Jr. and
his wife and Pilhino submitted a compromise agreement dated August 20, 1993.
They submitted a second compromise agreement dated March 4, 1994 because the
first was found to be defective and incomplete. The RTC thereafter rendered a partial
judgment on March 21, 1994 based on the second compromise agreement. After
that, further proceedings were taken in Civil Case No. 21,898-93 only with respect
to Moises Andrada and his wife, and BA Finance.
Moises Andrada and his wife averred as defenses that they had already acquired the
Hino truck from Jose Andrada, Jr. free from any lien or encumbrance prior to its
seizure by the sheriff pursuant to the writ of execution issued in Civil Case No.
20,489-90; that their acquisition had been made in good faith, considering that at the
time of the sale the preliminary attachment had already been lifted; and that Pilhinos
recourse was to proceed against the counter-attachment bond.
For its part, BA Finance claimed lack of knowledge of the truth of the material
allegations of the complaint of Pilhino; and insisted that the Hino truck had been
validly mortgaged to it by Moises Andrada, the lawful owner, to secure his own valid
obligation.
On March 25, 1998, the RTC, citing the compromise agreement between Pilhino and
Jose Andrada, Jr. that had settled all the claims of Pilhino against Jose Andrada, Jr.,
and the good faith of Pilhino and BA Finance in filing their respective actions,
rendered its decision in Civil Case No. 21,898-93,[1] disposing:
SO ORDERED.
Spouses Moises and Clemencia Andrada appealed the decision rendered on March
25, 1998 to the extent that the RTC thereby: (a) dismissed their counterclaim; (b)
declared that the deed of sale of the Hino truck between Jose Andrada, Jr. and Moises
Andrada had been simulated; and (c) approved the compromise agreement between
Pilhino and Spouses Jose Andrada, Jr. and Maxima Andrada.
On December 13, 2001, the Court of Appeals (CA) promulgated its decision, as
follows:[2]
SO ORDERED.
Spouses Moises and Clemencia Andrada are now before the Court via petition
for review on certiorari to pose the following issues: [3]
1. Whether or not Pilhino should be held liable for the damages the
petitioners sustained from Pilhinos levy on execution upon the Hino
truck under Civil Case No. 20,489-90; and
Ruling
The petitioners assail the decision promulgated by the CA to the extent that it denied
their claim for the damages they had sought by way of counterclaim. They anchored
their claim on Article 21 of the Civil Code, which provides that any person who
willfully causes loss or injury to another in a manner that is contrary to morals,
good customs or public policy shall compensate the latter for damage.
Article 21 of the Civil Code, in conjunction with Article 19 of the Civil Code,
is part of the cause of action known in this jurisdiction as abuse of rights. The
elements of abuse of rights are: (a) there is a legal right or duty; (b) exercised in bad
faith; and (c) for the sole intent of prejudicing or injuring another.[4]
In its assailed decision, the CA found that Pilhino had acted in good faith in
bringing Civil Case No. 21,898-93 to annul the deed of sale involving the Hino truck
executed by Jose Andrada, Jr. in favor of Moises Andrada, considering that Pilhino
had believed that the sale in favor of defendants-appellants [had been] resorted to so
that Jose Andrada [might] evade his obligations.[5] The CA concluded that no
remedy was available for any damages that the petitioners sustained from the filing
of Civil Case No. 21,898-93 against them because the law affords no remedy for
such damages resulting from an act which does not amount to a legal injury or
wrong.[6]
Worthy to note is that the CAs finding and conclusion rested on the RTCs
own persuasion that the sale of the Hino truck to Moises Andrada had been
simulated.[7]
Yet, the petitioners still insist in this appeal that both lower courts erred in
their conclusion on the absence of bad faith on the part of Pilhino.
We cannot side with the petitioners. Their insistence, which represents their
disagreement with the CAs declaration that the second and third elements of abuse
of rights, supra, were not established, requires the consideration and review of
factual issues. Hence, this appeal cannot succeed, for an appeal by petition for review
on certiorari cannot determine factual issues. In the exercise of its power of review,
the Court is not a trier of facts and does not normally undertake the re-examination
of the evidence presented by the contending parties during the trial. Perforce, the
findings of fact by the CA are conclusive and binding on the Court. This restriction
of the review to questions of law has been institutionalized in Section 1, Rule 45 of
the Rules of Court, viz:
(f) When in making its findings the CA went beyond the issues of the
case, or its findings are contrary to the admissions of both the
appellant and the appellee;
(g) When the CAs findings are contrary to those by the trial court;
(i) When the facts set forth in the petition as well as in the petitioners
main and reply briefs are not disputed by the respondent;
(j) When the findings of fact are premised on the supposed absence of
evidence and contradicted by the evidence on record; or
Herein, the element of bad faith on the part of Pilhino in commencing and
prosecuting Civil Case No. 21,898-93, which was necessary to predicate the lawful
grant of attorneys fees based on Article 2208 (4) of the Civil Code, was not
established. Accordingly, the petitioners demand for attorneys fees must fail.
WHEREFORE, we deny the petition for review on certiorari for its lack of
merit, and affirm the decision of the Court of Appeals.
SO ORDERED.
Republic of the Philippines
Supreme Court
Manila
SECOND DIVISION
x------------------------------------------------------------------------------------x
DECISION
BRION, J.:
Since Balmaceda did not file an Answer, he was declared in default. On the other
hand, Ramos filed an Answer denying any knowledge of Balmacedas scheme.
According to Ramos, he is a reputable businessman engaged in the business of
buying and selling fighting cocks, and Balmaceda was one of his clients. Ramos
admitted receiving money from Balmaceda as payment for the fighting cocks that
he sold to Balmaceda, but maintained that he had no knowledge of the source of
Balmacedas money.
On September 22, 2000, the RTC issued a decision in favor of PCIB, with the
following dispositive portion:
SO ORDERED.[4]
From the evidence presented, the RTC found that Balmaceda, by taking undue
advantage of his position and authority as branch manager of the Sta. Cruz, Manila
branch of PCIB, successfully obtained and misappropriated the banks funds by
falsifying several commercial documents. He accomplished this by claiming that he
had been instructed by one of the Banks corporate clients to purchase Managers
checks on its behalf, with the value of the checks to be debited from the clients
corporate bank account. First, he would instruct the Bank staff to prepare the
application forms for the purchase of Managers checks, payable to several persons.
Then, he would forge the signature of the clients authorized representative on these
forms and sign the forms as PCIBs approving officer. Finally, he would have an
authorized officer of PCIB issue the Managers checks. Balmaceda would
subsequently ask his subordinates to release the Managers checks to him, claiming
that the client had requested that he deliver the checks.[5] After receiving the
Managers checks, he encashed them by forging the signatures of the payees on the
checks.
In ruling that Ramos acted in collusion with Balmaceda, the RTC noted that
although the Managers checks payable to Ramos were crossed checks, Balmaceda
was still able to encash the checks.[6] After Balmaceda encashed three of these
Managers checks, he deposited most of the money into Ramos account.[7] The RTC
concluded that from the P11,937,150.00 that Balmaceda misappropriated from
PCIB, P895,000.00 actually went to Ramos. Since the RTC disbelieved Ramos
allegation that the sum of money deposited into his Savings Account (PCIB, Pasig
branch) were proceeds from the sale of fighting cocks, it held Ramos liable to pay
PCIB the amount of P895,000.00.
On appeal, the CA dismissed the complaint against Ramos, holding that no sufficient
evidence existed to prove that Ramos colluded with Balmaceda in the latters
fraudulent manipulations.[8]
According to the CA, the mere fact that Balmaceda made Ramos the payee in some
of the Managers checks does not suffice to prove that Ramos was complicit in
Balmacedas fraudulent scheme. It observed that other persons were also named as
payees in the checks that Balmaceda acquired and encashed, and PCIB only chose
to go after Ramos. With PCIBs failure to prove Ramos actual participation in
Balmacedas fraud, no legal and factual basis exists to hold him liable.
No costs.
SO ORDERED.[9]
THE PETITION
I
THE APPELLATE COURT ERRED IN HOLDING THAT THERE IS
NO EVIDENCE TO HOLD THAT RESPONDENT RAMOS ACTED IN
COMPLICITY WITH RESPONDENT BALMACEDA
II
PCIB contends that the circumstantial evidence shows that Ramos had
knowledge of, and acted in complicity with Balmaceda in, the perpetuation of the
fraud. Ramos explanation that he is a businessman and that he received the Managers
checks as payment for the fighting cocks he sold to Balmaceda is unconvincing,
given the large sum of money involved. While Ramos presented evidence that he is
a reputable businessman, this evidence does not explain why the Managers checks
were made payable to him in the first place.
PCIB maintains that it had the right to freeze and debit the amount
of P251,910.96 from Ramos bank account, even without his consent, since legal
compensation had taken place between them by operation of law. PCIB debited
Ramos bank account, believing in good faith that Ramos was not entitled to the
proceeds of the Managers checks and was actually privy to the fraud perpetrated by
Balmaceda. PCIB cannot thus be held liable for moral and exemplary damages.
OUR RULING
We partly grant the petition.
At the outset, we observe that the petition raises mainly questions of fact
whose resolution requires the re-examination of the evidence on record. As a general
rule, petitions for review on certiorari only involve questions of law.[11] By way of
exception, however, we can delve into evidence and the factual circumstance of the
case when the findings of fact in the tribunals below (in this case between those of
the CA and of the RTC) are conflicting. When the exception applies, we are given
latitude to review the evidence on record to decide the case with finality.[12]
In civil cases, the party carrying the burden of proof must establish his case
by a preponderance of evidence, or evidence which, to the court, is more worthy of
belief than the evidence offered in opposition.[13] This Court, in Encinas v. National
Bookstore, Inc.,[14] defined preponderance of evidence in the following manner:
The party, whether the plaintiff or the defendant, who asserts the affirmative
of an issue has the onus to prove his assertion in order to obtain a favorable judgment,
subject to the overriding rule that the burden to prove his cause of action never leaves
the plaintiff. For the defendant, an affirmative defense is one that is not merely a
denial of an essential ingredient in the plaintiff's cause of action, but one which, if
established, will constitute an "avoidance" of the claim.[15]
[1] Exhibits A, D, PPPP, QQQQ, and RRRR and their submarkings, the
application forms for MCs, show that [these MCs were applied for
in favor of Ramos;]
[2] Exhibits K, N, SSSS, TTTT, and UUUU and their submarkings prove
that the MCs were issued in favor of x x x Ramos[; and]
On its face, all that PCIBs evidence proves is that Balmaceda used Ramos
name as a payee when he filled up the application forms for the Managers checks.
But, as the CA correctly observed, the mere fact that Balmaceda made Ramos the
payee on some of the Managers checks is not enough basis to conclude that Ramos
was complicit in Balmacedas fraud; a number of other people were made payees on
the other Managers checks yet PCIB never alleged them to be liable, nor did the
Bank adduce any other evidence pointing to Ramos participation that would justify
his separate treatment from the others. Also, while Ramos is Balmacedas brother-in-
law, their relationship is not sufficient, by itself, to render Ramos liable, absent
concrete proof of his actual participation in the fraudulent scheme.
Moreover, the evidence on record clearly shows that Balmaceda acted on his
own when he applied for the Managers checks against the bank account of one of
PCIBs clients, as well as when he encashed the fraudulently acquired Managers
checks.
Mrs. Elizabeth Costes, the Area Manager of PCIB at the time of the relevant
events, testified that Balmaceda committed all the acts necessary to obtain the
unauthorized Managers checks from filling up the application form by forging the
signature of the clients representative, to forging the signatures of the payees in order
to encash the checks. As Mrs. Costes stated in her testimony:
xxxx
Q: After the accomplishment of this application form as you stated
Mrs. witness, do you know what happened to the application form?
A: Before that application form is processed it goes to several
stages. Here for example this was signed supposed to be by the client and
his signature representing that, he certified the signature based on their
records to be authentic.
xxxx
Q: Could you please show us where these checks are now, the one
applied for in Exhibit A which is in the amount of P150,000.00, where is
the corresponding check?
Q: Can you tell us whether the same modus operandi was ad[o]pted
by Mr. Balmaceda in so far as he is concerned?
A: Yes sir he is also the right signer and he authorized the
cancellation of the cross check.[17] (emphasis ours)
xxxx
xxxx
xxxx
Mrs. Nilda Laforteza, the Commercial Account Officer of PCIBs Sta. Cruz,
Manila branch at the time the events of this case occurred, confirmed Mrs. Costes
testimony by stating that it was Balmaceda who forged Ramos signature on the
Managers checks where Ramos was the payee, so as to encash the amounts
indicated on the checks.[19] Mrs. Laforteza also testified that Ramos never went to
the PCIB, Sta. Cruz, Manila branch to encash the checks since Balmaceda was the
one who deposited the checks into Ramos bank account. As revealed during Mrs.
Lafortezas cross-examination:
Even Mrs. Rodelia Nario, presented by PCIB as its rebuttal witness to prove
that Ramos encashed a Managers check for P480,000.00, could only testify that the
money was deposited into Ramos PCIB bank account. She could not attest that
Ramos himself presented the Managers check for deposit in his bank
account.[21] These testimonies clearly dispute PCIBs theory that Ramos was
instrumental in the encashment of the Managers checks.
We also find no reason to doubt Ramos claim that Balmaceda deposited these
large sums of money into his bank account as payment for the fighting cocks that
Balmaceda purchased from him. Ramos presented two witnesses Vicente
Cosculluela and Crispin Gadapan who testified that Ramos previously engaged in
the business of buying and selling fighting cocks, and that Balmaceda was one of
Ramos biggest clients.
Quoting from the RTC decision, PCIB stresses that Ramos own witness and business
partner, Cosculluela, testified that the biggest net profit he and Ramos earned from
a single transaction with Balmaceda amounted to no more than P100,000.00, for the
sale of approximately 45 fighting cocks.[22] In PCIBs view, this testimony directly
contradicts Ramos assertion that he received approximately P400,000.00 from his
biggest transaction with Balmaceda. To PCIB, the testimony also renders
questionable Ramos assertion that Balmaceda deposited large amounts of money
into his bank account as payment for the fighting cocks.
In considering this case, one point that cannot be disregarded is the significant
role that PCIB played which contributed to the perpetration of the fraud. We cannot
ignore that Balmaceda managed to carry out his fraudulent scheme primarily
because other PCIB employees failed to carry out their assigned tasks flaws
imputable to PCIB itself as the employer.
Ms. Analiza Vega, an accounting clerk, teller and domestic remittance clerk
working at the PCIB, Sta. Cruz, Manila branch at the time of the incident, testified
that Balmaceda broke the Banks protocol when he ordered the Banks employees to
fill up the application forms for the Managers checks, to be debited from the bank
account of one of the banks clients, without providing the necessary Authority to
Debit from the client.[26] PCIB also admitted that these Managers checks were
subsequently released to Balmaceda, and not to the clients representative, based
solely on Balmacedas word that the client had tasked him to deliver these checks.[27]
The General Banking Law of 2000[31] requires of banks the highest standards
of integrity and performance. The banking business is impressed with public interest.
Of paramount importance is the trust and confidence of the public in general in the
banking industry. Consequently, the diligence required of banks is more than that of
a Roman pater familias or a good father of a family.[32] The highest degree of
diligence is expected.[33]
PCIB maintains that even if Ramos did not collude with Balmaceda, it still
has the right to recover the amounts unjustly received by Ramos pursuant to the
principle of unjust enrichment. This principle is embodied in Article 22 of the Civil
Code which provides:
Article 22. Every person who through an act of performance by another,
or any other means, acquires or comes into possession of something at the
expense of the latter without just or legal ground, shall return the same to
him.
Unjust enrichment claims do not lie simply because one party benefits
from the efforts or obligations of others, but instead it must be shown that
a party was unjustly enriched in the sense that the term unjustly could
mean illegally or unlawfully.
We also find that PCIB acted illegally in freezing and debiting Ramos bank
account. In BPI Family Bank v. Franco,[36] we cautioned against the unilateral
freezing of bank accounts by banks, noting that:
We see no legal merit in PCIBs claim that legal compensation took place
between it and Ramos, thereby warranting the automatic deduction from Ramos
bank account. For legal compensation to take place, two persons, in their own right,
must first be creditors and debtors of each other.[38] While PCIB, as the depositary
bank, is Ramos debtor in the amount of his deposits, Ramos is not PCIBs debtor
under the evidence the PCIB adduced. PCIB thus had no basis, in fact or in law, to
automatically debit from Ramos bank account.
Bad faith does not simply connote bad judgment or negligence; it imports a dishonest
purpose or some moral obliquity and conscious commission of a wrong; it partakes
of the nature of fraud.[39]
As the facts of this case bear out, PCIB did not act out of malice or bad faith
when it froze Ramos bank account and subsequently debited the amount
of P251,910.96 therefrom. While PCIB may have acted hastily and without regard
to its primary duty to treat the accounts of its depositors with meticulous care and
utmost fidelity,[40] we find that its actions were propelled more by the need to protect
itself, and not out of malevolence or ill will. One may err, but error alone is not a
ground for granting moral damages.[41]
We also disallow the award of exemplary damages. Article 2234 of the Civil Code
requires a party to first prove that he is entitled to moral, temperate or compensatory
damages before he can be awarded exemplary damages. Since no reason exists to
award moral damages, so too can there be no reason to award exemplary damages.
We deem it just and equitable, however, to uphold the award of attorneys fees in
Ramos favor. Taking into consideration the time and efforts involved that went into
this case, we increase the award of attorneys fees from P20,000.00 to P75,000.00.
SO ORDERED.
SECOND DIVISION
CARPIO, J.,
Chairperson,
- versus - BRION,
PEREZ,
SERENO, and
REYES, JJ.
Promulgated:
JUAN TABAYAG, JR.,
Respondent. February 6, 2012
x------------------------------------------------------------------------------------x
DECISION
REYES, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court filed
by Nancy T. Lorzano (petitioner) assailing the Court of Appeals (CA)
Decision[1] dated March 18, 2009 and Resolution[2] dated September 16, 2009 in CA-
G.R. CV No. 87762 entitled Juan Tabayag, Jr. v. Nancy T. Lorzano.
After the petitioners eldest son finished college, her siblings asked her to
return to them the possession of the subject property so that they could partition it
among themselves. However, the petitioner refused to relinquish her possession of
the subject property claiming that she purchased the subject property from their
father as evidenced by a Deed of Absolute Sale of Real Property[4] executed by the
latter on May 25, 1992.
The respondent claimed that their father did not execute the said deed of sale.
He pointed out that the signature of their father appearing in the said deed of sale
was a forgery as the same is markedly different from the real signature of Tabayag.
Further, the respondent asserted that the said deed of sale was acknowledged
before a person who was not a duly commissioned Notary Public. The deed of sale
was acknowledged by the petitioner before a certain Julian P. Cabaes (Cabaes) on
May 25, 1992 at Iriga City. However, as per the Certification[5] issued by the Office
of the Clerk of Court of the RTC on May 16, 2002, Cabaes has never been
commissioned as a Notary Public for and in the Province of Camarines Sur and in
the Cities of Iriga and Naga.
The respondent alleged that the petitioner purposely forged the signature of Tabayag
in the said deed of sale to deprive him and their other siblings of their share in the
subject property. He then averred that the subject property was already covered by
Original Certificate of Title (OCT) No. 1786[6] issued by the Register of Deeds of
Iriga City on January 9, 2001 registered under the name of the petitioner. OCT No.
1786 was issued pursuant to Free Patent No. 051716 which was procured by the
petitioner on June 24, 1996.
For her part, the petitioner maintained she is the owner of the subject parcel of land
having purchased the same from Tabayag as evidenced by the May 25, 1992 deed
of sale. Further, the petitioner asserted that the respondent failed to establish that the
signature of Tabayag appearing on the said deed of sale was a forgery considering
that it was not submitted for examination by a handwriting expert.
On April 28, 2006, the RTC rendered an Amended Decision[7] the decretal
portion of which reads:
SO ORDERED.[8]
The RTC opined that a cursory comparison between the signature of Tabayag
appearing on the said deed of sale and his signatures appearing on other documents
would clearly yield a conclusion that the former was indeed a forgery. Moreover,
the RTC asserted that the nullity of the said May 25, 1992 deed of sale all the more
becomes glaring considering that the same was purportedly acknowledged before a
person who is not a duly commissioned Notary Public.
The CA Decision
Thereafter, the petitioner appealed the decision with the CA. On March 18,
2009, the CA rendered the assailed decision affirming in toto the RTC
decision.[9] The CA held that the testimony of a handwriting expert in this case is not
indispensable as the similarity and dissimilarity between the questioned signature of
Tabayag as compared to other signatures of the latter in other documents could be
determined by a visual comparison.
Further, the CA upheld the award of moral damages and attorneys fees in
favor of the respondent as the petitioners conduct caused great concern and anxiety
to the respondent and that the latter had to go to court and retain the services of
counsel to pursue his rights and protect his interests.
In his Comment,[10] the respondent claimed that the issues raised in the instant
petition are factual in nature and, hence, could not be passed upon by this Court in a
petition for review on certiorari under Rule 45. Likewise, the respondent asserted
that the petitioners free patent, having been issued on the basis of a falsified
document, does not create a right over the subject property in her favor.
Issues
In sum, the threshold issues for resolution are the following: (a) whether the
lower courts erred in declaring the May 25, 1992 deed of sale a nullity; (b) whether
an action for reconveyance is proper in the instant case; and (c) whether the
respondent is entitled to an award of moral damages and attorneys fees.
First and Third Issues: Nullity of the Deed of Sale and Award of Moral
Damages and Attorneys Fees
This Court shall jointly discuss the first and third issues as the resolution of
the same are interrelated.
That the signature of Tabayag in the May 25, 1992 deed of sale was a forgery
is a conclusion derived by the RTC and the CA on a question of fact. The same is
conclusive upon this Court as it involves the truth or falsehood of an alleged fact,
which is a matter not for this Court to resolve. [12] Where a petitioner casts doubt on
the findings of the lower court as affirmed by the CA regarding the existence of
forgery is a question of fact.[13]
In any case, the CA aptly ruled that a handwriting expert is not indispensable
to prove that the signature of Tabayag in the questioned deed of sale was indeed a
forgery. It is true that the opinion of handwriting experts are not necessarily binding
upon the court, the experts function being to place before the court data upon which
the court can form its own opinion. Handwriting experts are usually helpful in the
examination of forged documents because of the technical procedure involved in
analyzing them. But resort to these experts is not mandatory or indispensable to the
examination or the comparison of handwriting. A finding of forgery does not depend
entirely on the testimonies of handwriting experts, because the judge must conduct
an independent examination of the questioned signature in order to arrive at a
reasonable conclusion as to its authenticity.[14]
For the same reason, we would ordinarily disregard the petitioners allegation
as to the propriety of the award of moral damages and attorneys fees in favor of the
respondent as it is a question of fact. Thus, questions on whether or not there was a
preponderance of evidence to justify the award of damages or whether or not there
was a causal connection between the given set of facts and the damage suffered by
the private complainant or whether or not the act from which civil liability might
arise exists are questions of fact.[15]
Here, the lower courts ordered the petitioner to pay the respondent moral
damages in the amount of P100,000.00. We find the said amount to be excessive.
Moral damages are not intended to enrich the complainant at the expense of the
defendant. Rather, these are awarded only to enable the injured party to obtain
means, diversions or amusements that will serve to alleviate the moral suffering that
resulted by reason of the defendants culpable action. The purpose of such damages
is essentially indemnity or reparation, not punishment or correction. In other words,
the award thereof is aimed at a restoration within the limits of the possible, of the
spiritual status quo ante; therefore, it must always reasonably approximate the
extent of injury and be proportional to the wrong committed.[17]
The petitioner asserted that the CA erred in not finding that her ownership over the
subject property was by virtue of a free patent issued by the government and, thus,
even assuming that the subject deed of sale is invalid, her title and ownership of the
subject property cannot be divested or much less ordered reconveyed to the heirs of
Tabayag.
Simply put, the petitioner points out that the subject property, being acquired by her
through a grant of free patent from the government, originally belonged to the public
domain. As such, the lower courts could not order the reconveyance of the subject
property to the heirs of Tabayag as the latter are not the original owners thereof. If
at all, the subject property could only be ordered reverted to the public domain.
This Court notes that the foregoing argument is being raised by the petitioner
for the first time in the instant petition. It is well-settled that no question will be
entertained on appeal unless it has been raised in the proceedings below. Points of
law, theories, issues and arguments not brought to the attention of the lower
court, administrative agency or quasi-judicial body, need not be considered by a
reviewing court, as they cannot be raised for the first time at that late stage. Basic
considerations of fairness and due process impel this rule. Any issue raised for the
first time on appeal is barred by estoppel.[18]
Accordingly, the petitioners attack on the propriety of the action for
reconveyance in this case ought to be disregarded. However, in order to obviate any
lingering doubt on the resolution of the issues involved in the instant case, this Court
would proceed to discuss the cogency of the petitioners foregoing argument.
The petitioner asserts that the amended complaint for annulment of document,
reconveyance and damages that was filed by the respondent with the RTC is a
collateral attack on her title over the subject property. She avers that, when the said
amended compliant was filed, more than a year had already lapsed since OCT No.
1786 over the subject property was issued under her name. Thus, the petitioner
maintains that her title over the subject property is already indefeasible and, hence,
could not be attacked collaterally.
We do not agree.
Nonetheless, a free patent that was fraudulently acquired, and the certificate
of title issued pursuant to the same, may only be assailed by the government in an
action for reversion pursuant to Section 101 of the Public Land Act.[24] In Sherwill
Development Corporation v. Sitio Sto. Nio Residents Association, Inc.,[25] this Court
pointed out that:
Since it was the Director of Lands who processed and approved the
applications of the appellants and who ordered the issuance of the
corresponding free patents in their favor in his capacity as administrator
of the disposable lands of the public domain, the action for annulment
should have been initiated by him, or at least with his prior authority and
consent.[28]
In Roco, et al. v. Gimeda,[31] we stated that if a patent had already been issued
through fraud or mistake and has been registered, the remedy of a party who has
been injured by the fraudulent registration is an action for reconveyance, thus:
The controlling legal norm was set forth in succinct language by Justice
Tuason in a 1953 decision, Director of Lands v. Register of Deeds of
Rizal. Thus: The sole remedy of the land owner whose property has been
wrongfully or erroneously registered in another's name is, after one year
from the date of the decree, not to set aside the decree, as was done in the
instant case, but, respecting the decree as incontrovertible and no longer
open to review, to bring an ordinary action in the ordinary court of justice
for reconveyance or, if the property has passed into the hands of an
innocent purchaser for value, for damages." Such a doctrine goes back to
the 1919 landmark decision of Cabanos v. Register of Deeds of Laguna. If
it were otherwise the institution of registration would, to quote from
Justice Torres, serve "as a protecting mantle to cover and shelter bad faith
...." In the language of the then Justice, later Chief Justice, Bengzon: "A
different view would encourage fraud and permit one person unjustly to
enrich himself at the expense of another." It would indeed be a signal
failing of any legal system if under the circumstances disclosed, the
aggrieved party is considered as having lost his right to a property to which
he is entitled. It is one thing to protect an innocent third party; it is entirely
a different matter, and one devoid of justification, if [deceit] would be
rewarded by allowing the perpetrator to enjoy the fruits of his nefarious
deed. As clearly revealed by the undeviating line of decisions coming
from this Court, such an undesirable eventuality is precisely sought to be
guarded against. So it has been before; so it should continue to
be.[34] (citations omitted)
Here, the respondent, in filing the amended complaint for annulment of
documents, reconveyance and damages, was not seeking a reconsideration of the
granting of the patent or the decree issued in the registration proceedings. What the
respondent sought was the reconveyance of the subject property to the heirs of the
late Tabayag on account of the fraud committed by the petitioner. Thus, the lower
courts did not err in upholding the respondents right to ask for the reconveyance of
the subject property. To hold otherwise would be to make the Torrens system a
shield for the commission of fraud.
That the subject property was not registered under the name of the heirs of
Tabayag prior to the issuance of OCT No. 1786 in the name of the petitioner would
not effectively deny the remedy of reconveyance to the former. An action for
reconveyance is a legal and equitable remedy granted to the rightful landowner,
whose land was wrongfully or erroneously registered in the name of another, to
compel the registered owner to transfer or reconvey the land to him.[35]
It cannot be gainsaid that the heirs of Tabayag, by themselves and through their
predecessors-in-interest, had already acquired a vested right over the subject
property. An open, continuous, adverse and public possession of a land of the public
domain from time immemorial by a private individual personally and through his
predecessors confers an effective title on said possessors whereby the land ceases to
be public, to become private property, at least by presumption.[36] Hence, the right
of the heirs of Tabayag to ask for the reconveyance of the subject property is
irrefutable.
The fact that petitioner was able to secure a title in her name did not
operate to vest ownership upon her of the subject land. Registration of a
piece of land under the Torrens System does not create or vest title,
because it is not a mode of acquiring ownership. A certificate of title is
merely an evidence of ownership or title over the particular property
described therein. It cannot be used to protect a usurper from the true
owner; nor can it be used as a shield for the commission of fraud; neither
does it permit one to enrich himself at the expense of others. Its issuance
in favor of a particular person does not foreclose the possibility that the
real property may be co-owned with persons not named in the certificate,
or that it may be held in trust for another person by the registered
owner.[38] (citations omitted)
SO ORDERED.