Title
Gaston vs. Republic Planters Bank
Case
G.R. No. 77194
Decision Date
Mar 15, 1988
Sugar producers sought RPB shares funded by stabilization fees; SC ruled fees as public funds, denying private ownership claims.

Case Summary (G.R. No. 77194)

Petitioners’ Claims and Requested Remedy

Petitioners assert that stabilization fees collected under Section 7 of P.D. No. 388 were administered in trust for sugar producers, millers and planters and that proceeds from those fees were used to subscribe to the capital stock of Republic Planters Bank on their behalf. They contend that, although the shares were held in PHILSUCOM’s name, the true beneficial ownership belongs to the sugar producers and ask the Court to compel respondents to effect privatization by transferring the shares to the producers.

Respondents’ Position and Procedural Posture

Republic Planters Bank took no opposing substantive position to the petition, acknowledging it had no beneficial interest affected by the outcome and welcoming a definitive legal determination. PHILSUCOM and SRA vigorously contested petitioners’ claims, arguing (i) Section 7 of P.D. No. 388 did not create a trust in favor of the sugar producers, (ii) the stabilization fees are government funds subject to government auditing rules, (iii) transfer of the shares to private parties would be irregular or illegal, and (iv) the petition is barred by laches. The Solicitor General framed the dispositive legal questions as whether the stabilization fees were funds held in trust for sugar producers or public funds, and whether the bank shares purchased with those fees belong to PHILSUCOM or to the individual planters and millers.

Statutory Provision Invoked: Section 7, P.D. No. 388

Section 7 of P.D. No. 388 establishes a Development and Stabilization Fund “to be administered in trust by the Commission” for financing growth and stabilization of the sugar industry. The statute prescribes collection of stabilization fees (P2.00 per picul for five years after the decree, thereafter P1.00 per picul), and stipulates that P0.50 per picul of the amount levied will be used to pay personnel salaries and benefits of the Commission. The statute further provides that the amount constitutes a lien on sugar quedans and/or warehouse receipts.

Court’s Analysis — Resulting Trust Doctrine and Requirement of Clear Intent

The Court recognized that Section 7’s language includes the phrase “administered in trust by the Commission,” which indicates some element of intent to create a trust. However, the Court held that the creation of a resulting trust requires a reasonably ascertainable presumed intention that the Commission hold the funds for the private persons who paid them. The doctrine of resulting trusts rests on the presumed intention of the parties; it arises only where such intention can be reasonably inferred from the facts and circumstances of the transaction. Because the statute itself did not unambiguously show that PHILSUCOM intended to place an obligation on itself to hold stabilization fees as a trust for individual sugar producers, the Court found that a resulting trust in favor of the producers could not be established solely from the statutory language.

Court’s Analysis — Implied Trust, Levy Character, and Administrative Source

The Court explained that an implied trust involves an antagonism between trustee and cestui que trust and must be clearly demonstrated—particularly when the administrative agency that enacted the regulation would be imposing a burden on itself. The Court refused to infer that PHILSUCOM, as the regulatory agency, had thereby placed itself under an obligation to hold the levies as a trust for payors. The mere fact that the fees were collected from producers did not convert them into trust funds for those producers; levies may come from those who will benefit from public expenditures without creating private ownership of the collected funds.

Facts on the Bank Subscription and the Failed Trust Agreement

Petitioners traced the genesis of the Bank subscription to financial difficulties of the original owners and a rehabilitation plan in 1978 that resulted in capital infusion, which petitioners claim was effected by PHILSUCOM using stabilization funds. Petitioners argued that shares were placed in PHILSUCOM’s name only for convenience and that the beneficial ownership remained with the sugar producers. A Trust Agreement (dated May 28, 1986) purporting to acknowledge that PHILSUCOM “holds said shares for and in behalf of the sugar producers” failed to take effect because it did not receive PHILSUCOM Board approval as required. The SRA declined to approve the Trust Agreement after an adverse opinion from the SRA Resident Auditor, which was affirmed by the Chairman of the Commission on Audit (COA). SRA later resolved to revoke the Agreement given COA’s view that it was of doubtful validity.

Commission on Audit Opinion and Administrative Findings

The Court gave significant weight to COA’s legal opinion that stabilization fees collected under P.D. No. 388 accrued to PHILSUCOM and were not collected for the account of the sugar producers. COA concluded that the government — PHILSUCOM or its successor SRA — owns the shares that were subscribed for with such collections. COA treated the stabilization fees as charges or levies accruing to PHILSUCOM under the decree and not as trust funds held for the exclusive benefit of private payors.

Court’s Analysis — Character of Stabilization Fees as Public Revenue and Special Fund

The Court characterized the stabilization fees as akin to a tax or regulatory levy imposed under the State’s police power to promote and stabilize an industry of national importance (citing precedent and the regulatory purpose of the levy). The fees constitute sugar liens and were deposited in the Philippine National Bank rather than the Philippine Treasury, emphasizing their nature as a special fund held for a specific public purpose. The Court explained that although the statute directs the funds to be

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