G.R. No. 164317 - Ching vs. Secretary of Justice

Case Summary (G.R. No. 164317)

Factual Background

In 1995, Joseph Goyanko, Sr. invested P2,000,000 with Philippine Asia Lending Investors, Inc. (PALII) and died before the investment matured. Conflicting claims to PALII for the release of the investment arose between his legitimate and illegitimate families. Pending resolution, PALII deposited the investment proceeds with UCPB on October 29, 1996 under the account name "Phil Asia: ITF (In Trust For) The Heirs of Joseph Goyanko, Sr." The account balance on September 27, 1997 was P1,509,318.76. On December 11, 1997, UCPB allowed PALII to withdraw P1,500,000 from the account, leaving P9,318.76. After UCPB refused the petitioner's demand to restore the withdrawn amount plus legal interest, the petitioner filed a complaint for recovery of a sum of money before the RTC. In its answer, UCPB admitted the opening of the account under the ITF designation and the December 11, 1997 withdrawal.

Trial Court Proceedings

The Regional Trial Court dismissed the petitioner's complaint in its August 27, 2003 decision and awarded UCPB attorneys' fees, litigation expenses, and costs. The RTC reasoned that the words "ITF Heirs" were insufficient to charge UCPB with knowledge of any trust relation between PALII and the heirs. The RTC concluded that UCPB merely performed its duty as a depository bank since the contract of deposit was between PALII, in its own capacity, and UCPB.

Court of Appeals Proceedings

The Court of Appeals affirmed the RTC decision but deleted the award of attorneys' fees and litigation expenses. The CA held that no express trust existed between PALII and UCPB in favor of the heirs. Quoting the RTC, the CA found that the deposit contract was only between PALII and UCPB, and that the designation "ITF Heirs" did not establish the existence of a trust. The CA underscored the legal requirements for creating an express trust and concluded that those requirements were not satisfied. The CA denied the petitioner's motion for reconsideration in its July 31, 2007 resolution.

Petition to the Supreme Court

Before the Supreme Court, the petitioner argued that an express trust was created by PALII as shown in its letters of March 28, 1996 and November 15, 1996. He maintained that PALII was the trustor, UCPB the trustee, and the heirs the beneficiaries, and relied on jurisprudence on the definition and requirements of a trust. The petitioner also argued that naming the cestui que trust was unnecessary so long as beneficiaries were adequately identifiable, and that UCPB acted negligently or in bad faith in permitting the withdrawal. UCPB countered that the account was an ordinary deposit creating a creditor-debtor relation between PALII and the bank, that the ITF designation did not convert the deposit into a trust, and that the petitioner had altered his theory of the case by now contending that UCPB was the trustee.

Issues Presented

The central issue was whether UCPB should be held liable for the withdrawn amount because an express trust existed between PALII and UCPB in favor of the heirs when the account was opened. A preliminary procedural issue was whether the existence of such a trust, which depends on factual findings, was properly reviewable under a Rule 45 petition confined to questions of law.

Procedural Rulings by the Supreme Court

The Court emphasized that a petition under Rule 45 resolves only questions of law and not questions of fact. The existence of an express trust is a question of fact that turns on the probative value of evidence and therefore is not ordinarily reviewable in a Rule 45 petition. The Court further found that the petitioner had changed his theory of the case from that advanced in the lower courts by now asserting that PALII was the trustor and UCPB the trustee. The Court held that such a late change of theory violates principles of fair play and due process and deprives lower courts of the opportunity to decide the issue. For these procedural reasons alone, the petition failed.

Merits: Legal Standard for Express Trusts

On the merits, the Court reviewed the law on trusts. It stated that a trust, whether express or implied, is a fiduciary relationship between one person having equitable ownership and another holding legal title. Article 1444 provides that no particular words are required for the creation of an express trust, but the intention to create it must be clearly shown. The Court reiterated the elements distilled in Rizal Surety & Insurance Co. v. CA: a competent trustor and trustee, an ascertainable trust res, sufficiently certain beneficiaries, a present and complete disposition of the trust property, an active purpose, some power of administration beyond a mere contractual duty, and terms stated with reasonable certainty so the trustee may administer and the court may enforce the trust.

Merits: Application and Findings

Applying these standards, the Court held that no express trust was created. Although the trust res and beneficiaries may have been ascertainable, the essential elements of a competent trustor and trustee were absent. UCPB was never shown to have been vested with any equitable duty or power of administration over the account. The Court found from PALII's letters and UCPB's records and witness testimony that PALII intended to hold and eventually turn over the proceeds to the rightful owners, not to transfer beneficial ownership to UCPB as trustee. The mere use of "ITF Heirs" did not manifest an intention to create a trust in favor of the heirs with UCPB as trustee; it was consistent with a designation to distinguish the account among PALII's accounts. The Court cautioned that the fiduciary character of the bank-depositor relationship does not convert a deposit contract from a simple loan into a trust agreement.

Banks, Deposits, and Obligations

The Court reiterated that deposits are governed by Article 1980 and that a creditor-debtor relationship exists between a bank and its depositor. By receiving the deposit, the bank impliedly agrees to pay upon demand and only upon the depositor's order. Because the account was opened by PALII, UCPB's permission for PALII to withdraw was performance of its c

Case Syllabus (G.R. No. 164317)

Parties and Procedural Posture

Petitioner was Joseph Goyanko, Jr., administrator of the Estate of Joseph Goyanko, Sr., who filed a complaint for recovery of money against United Coconut Planters Bank, Mango Avenue Branch (“UCPB”).
The complaint originated in the Regional Trial Court, Cebu City, Branch 16, as Civil Case No. CEB-22277, where the petition was dismissed in an August 27, 2003 decision.
The Court of Appeals resolved the appeal in CA-G.R. CV. No. 00257 by decision dated February 20, 2007 affirming the RTC judgment but deleting the award of attorneys’ fees and litigation expenses.
The CA denied the petitioner’s motion for reconsideration in a July 31, 2007 resolution.
The petitioner filed a petition for review on certiorari under Rule 45, Rules of Court, which was dated September 25, 2007 and filed on September 24, 2007.
The Supreme Court, through a decision penned by Justice Brion, denied the petition and affirmed the CA decision and resolution, with costs against the petitioner.

Key Factual Allegations

In 1995, the late Joseph Goyanko, Sr. invested Two Million Pesos (P2,000,000.00) with Philippine Asia Lending Investors, Inc. (“PALII”).
Goyanko died before the investment matured, and conflicting claims to the investment arose between his legitimate and illegitimate families.
Pending resolution of the competing claims, PALII deposited the investment proceeds with UCPB on October 29, 1996 under the account name “Phil Asia: ITF (In Trust For) The Heirs of Joseph Goyanko, Sr.” (the “ACCOUNT”).
On September 27, 1997 the deposit under the ACCOUNT was P1,509,318.76, and on December 11, 1997 UCPB allowed PALII to withdraw P1,500,000.00, leaving a balance of P9,318.76.
UCPB admitted in its answer that the ACCOUNT was opened under the name ITF HEIRS and that the December 11, 1997 withdrawal occurred.
PALII sent letters dated March 28, 1996 and November 15, 1996 expressing its intent to hold and eventually turn over proceeds to rightful owners and to safeguard the funds and documents.
UCPB records indicated the ACCOUNT was a savings account and that its authorized signatory was Crisanto Pescadero, PALII’s general manager.
A UCPB witness testified that the ACCOUNT was owned by PALII and that the witness was not personally aware of any trust relation between PALII and the heirs.

Issues Presented

Whether an express trust arose when PALII opened the ACCOUNT with UCPB in favor of the heirs of Joseph Goyanko, Sr.
Whether UCPB became a trustee and was liable for allowing PALII to withdraw funds from the ACCOUNT.
Whether UCPB acted negligently or in bad faith in permitting the withdrawal.
Whether the petitioner improperly changed his theory of the case on appeal and whether that procedural change barred relief.
Whether the questions raised were reviewable as questions of law under Rule 45.

Contentions of the Parties

The petitioner contended that an express trust existed based on PALII’s letters and that UCPB was the trustee, PALII the trustor, and the heirs the beneficiaries, so UCPB was liable for the withdrawal.
The petitioner contended further that UCPB was negligent and acted in bad faith by failing to inquire into the ACCOUNT’s nature.
UCPB contended that the ACCOUNT constituted an ordinary savings deposit by PALII and that the label “ITF HEIRS” was insufficient to create a trust or charge the bank with knowledge of a trust relation.
UCPB further contended that it performed its duties as depository by p