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THIRD DIVISIONMETROPOLITAN BANK & TRUST COMPANY, INC. (as successor-in-interest of the banking operations of Global Business Bank, Inc. formerly known as PHILIPPINE BANKING CORPORATION),Petitioner,- versus -THE BOARD OF TRUSTEES OF RIVERSIDE MILLS CORPORATION PROVIDENT AND RETIREMENT FUND, represented by ERNESTO TANCHI, JR., CESAR SALIGUMBA, AMELITA SIMON, EVELINA OCAMPO and CARLITOS Y. LIM, RMC UNPAID EMPLOYEES ASSOCIATION, INC., and THE INDIVIDUAL BENEFICIARIES OF THE PROVIDENT AND RETIREMENT FUND OF RMC,Respondents.G.R. No. 176959Present:CARPIO MORALES,J.,Chairperson,BERSAMIN,DELCASTILLO,*VILLARAMA, JR.,andSERENO,JJ.Promulgated:September 8, 2010

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -xDECISIONVILLARAMA, JR.,J.:This petition for review oncertiorariunder Rule 45 of the1997 Rules of Civil Procedure, as amended, prays for the reversal of the Decision[1]dated November 7, 2006 and Resolution[2]dated March 5, 2007 of the Court of Appeals (CA) in CA-G.R. CV No. 76642.The CA had affirmed the Decision[3]datedJune 27, 2002of the Regional Trial Court (RTC), Branch 137,MakatiCityin Civil Case No. 97-997 which declared invalid the reversion or application of the Riverside Mills Corporation Provident and Retirement Fund (RMCPRF) to the outstanding obligation of Riverside Mills Corporation (RMC) with Philippine Banking Corporation (Philbank).The facts are as follows:OnNovember 1, 1973, RMC established a Provident and Retirement Plan[4](Plan) for its regular employees.Under the Plan, RMC and its employees shall each contribute 2% of the employees current basic monthly salary, with RMCs contribution to increase by 1% every five (5) years up to a maximum of 5%.The contributions shall form part of the provident fund (the Fund) which shall be held, invested and distributed by the Commercial Bank and Trust Company.Paragraph 13 of the Plan likewise provided that the Plan may be amended or terminated by the Company at any time on account of business conditions, but no such action shall operate to permit any part of the assets of the Fund to be used for, or diverted to purposes other than for the exclusive benefit of the members of the Plan and their beneficiaries.In no event shall any part of the assets of the Fund revert to [RMC] before all liabilities of the Plan have been satisfied.[5]OnOctober 15, 1979, the Board of Trustees of RMCPRF (the Board) entered into an Investment Management Agreement[6](Agreement) with Philbank (now, petitioner Metropolitan Bank and Trust Company).Pursuant to the Agreement, petitioner shall act as an agent of the Board and shall hold, manage, invest and reinvest the Fund in Trust Account No. 1797 in its behalf.The Agreement shall be in force for one (1) year and shall be deemed automatically renewed unless sooner terminated either by petitioner bank or by the Board.In 1984, RMC ceased business operations.Nonetheless, petitioner continued to render investment services to respondent Board.In a letter[7]datedSeptember 27, 1995, petitioner informed respondent Board that Philbanks Board of Directors had decided to apply the remaining trust assets held by it in the name of RMCPRF against part of the outstanding obligations of RMC.Subsequently, respondent RMC Unpaid Employees Association, Inc. (Association), representing the terminated employees of RMC, learned of Trust Account No. 1797.Through counsel, they demanded payment of their share in a letter[8]datedFebruary 4, 1997.When such demand went unheeded, the Association, along with the individual members of RMCPRF, filed a complaint for accounting against the Board and its officers, namely, Ernesto Tanchi, Jr., Carlitos Y. Lim, Amelita G. Simon, Evelina S. Ocampo and Cesar Saligumba, as well as petitioner bank.The case was docketed as Civil Case No. 97-997 in the RTC of Makati City, Branch 137.OnJune 2, 1998, during the trial, the Board passed a Resolution[9]in court declaring that the Fund belongs exclusively to the employees of RMC.It authorized petitioner to release the proceeds of Trust Account No. 1797 through the Board, as the court may direct.Consequently, plaintiffs amended their complaint to include the Board as co-plaintiffs.OnJune 27, 2002, the RTC rendered a decision in favor of respondents.The trial court declared invalid the reversion and application of the proceeds of the Fund to the outstanding obligation of RMC to petitioner bank.Thefalloof the decision reads:WHEREFORE, judgment is hereby rendered:1.Declaring INVALID the reversion or application of the RiversideMills Corporation Provident and Retirement Fund as payment forthe outstanding obligation of Riverside Mills Corporation withdefendant Philippine Banking Corporation.2.Defendant Philippine Banking Corporation (now [Global Bank])is hereby ordered to:a.Reverse the application of the Riverside Mills CorporationProvident and Retirement Fund as payment for the outstanding obligation of Riverside Mills Corporation with defendant Philippine Banking Corporation;b. Render a complete accounting of the Riverside MillsCorporation Provident and Retirement Fund; the Fund will then be subject to disposition by plaintiff Board of Trustees in accordance with law and the Provident Retirement Plan;c.Pay attorneys fees equivalent to 10% of the total amounts due to plaintiffs Riverside Mills Unpaid Employees Association and the individual beneficiaries of the Riverside Mills Corporation Provident and Retirement Fund; and costs of suit.3.TheRiversideMills Corporation Provident and Retirement Fund isordered to determine the beneficiaries of the FUND entitled tobenefits, the amount of benefits per beneficiary, and pay suchbenefits to the individual beneficiaries.SO ORDERED.[10]On appeal, the CA affirmed the trial court.It held that the Fund is distinct from RMCs account in petitioner bank and may not be used except for the benefit of the members of RMCPRF.Citing Paragraph 13 of the Plan, the appellate court stressed that the assets of the Fund shall not revert to the Company until after the liabilities of the Plan had been satisfied.Further, the Agreement was specific that upon the termination of the Agreement, petitioner shall deliver the Fund to the Board or its successor, and not to RMC as trustor.The CA likewise sustained the award of attorneys fees to respondents.[11]Hence, this petition.Before us, petitioner makes the following assignment of errors:I.THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE REVERSION AND APPLICATION BY PHILBANK OF THE FUND IN PAYMENT OF THE LOAN OBLIGATIONS OF RIVERSIDE MILLS CORPORATION WERE INVALID.[12]II.THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN DECLARING THAT BY HAVING ENTERED INTO AN AGREEMENT WITH THE BOARD, (PHILBANK) IS NOW ESTOPPED TO QUESTION THE LATTERSAUTHORITYASWELL AS THE TERMS AND CONDITIONS THEREOF.[13]III.THE HONORABLE COURT COMMITTED REVERSIBLE ERROR IN AWARDING ATTORNEYS FEES TO PLAINTIFFS-APPELLEES ON THE BASIS THAT [PHILBANK] WAS REMISS IN ITS DUTY TO TREAT RMCPRFS ACCOUNT WITH THE HIGHEST DEGREE OF CARE CONSIDERING THE FIDUCIARY NATURE OF THEIR RELATIONSHIP, PERFORCE, THE PLAINTIFFS-APPELLEES WERE COMPELLED TO LITIGATE TO PROTECT THEIR RIGHT.[14]The fundamental issue for our determination is whether the proceeds of the RMCPRF may be applied to satisfy RMCs debt to Philbank.Petitioner contends that RMCs closure in 1984 rendered the RMCPRF Board of Trusteesfunctus officioand devoid of authority to act on behalf of RMCPRF.It thus belittles the RMCPRF Board Resolution datedJune 2, 1998, authorizing the release of the Fund to several of its supposed beneficiaries.Without known claimants of the Fund for eleven (11) years since RMC closed shop, it was justifiable for petitioner to consider the Fund to have technically reverted to, and formed part of RMCs assets.Hence, it could be applied to satisfy RMCs debts to Philbank.Petitioner also disputes the award of attorneys fees in light of the efforts taken by Philbank to ascertain claims before effecting the reversion.Respondents for their part, belie the claim that petitioner exerted earnest efforts to ascertain claims.Respondents cite petitioners omission to publish a notice in newspapers of general circulation to locate claims against the Fund.To them, petitioners act of addressing the letter datedSeptember 27, 1995to the Board is a recognition of its authority to act for the beneficiaries.For these reasons, respondents believe that the reversion of the Fund to RMC is not only unwarranted but unconscionable.For being compelled to litigate to protect their rights, respondents also defend the award of attorneys fees to be proper.The petition has no merit.A trust is a fiduciary relationship with respect to property which involves the existence of equitable duties imposed upon the holder of the title to the property to deal with it for the benefit of another.A trust is either express or implied.Express trusts are those which the direct and positive acts of the parties create, by some writing or deed, or will, or by words evincing an intention to create a trust.[15]Here, the RMC Provident and Retirement Plan created an expresstrustto provide retirement benefits to the regular employees of RMC.RMC retained legal title to the Fund but held the same in trust for the employees-beneficiaries.Thus, the allocation under the Plan is directly credited to each members account:6.Allocation:a.Monthly Contributions:1.Employeeto becredited to his account.2.Employerto becredited to the respective members accountas stated under the contribution provision.b.Investment Earnings semestral valuation of the fund shall be made and any earnings or losses shallbe credited ordebited, as the case may be, to each members accountinproportion to his account balances based on the lastproceeding (sic) [preceding] accounting period.c.Forfeitures shall be retained in the fund.[16](Emphasis supplied.)The trust was likewise a revocable trust as RMC reserved the power to terminate the Plan after all the liabilities of the Fund to the employees under the trust had been paid.Paragraph 13 of the Plan provided that [i]n no event shall any part of the assets of the Fund revert to the Company before all liabilities of the Plan have been satisfied.Relying on this clause, petitioner, as the Fund trustee, considered the Fund to have technically reverted to RMC, allegedly after no further claims were made thereon since November 1984.Thereafter, it applied the proceeds of the Fund to RMCs debt with the bank pursuant to Paragraph 9 of Promissory Note No. 1618-80[17]which RMC executed onMay 12, 1981.The pertinent provision of the promissory note reads:IN THE EVENT THAT THIS NOTE IS NOT PAID AT MATURITY OR WHEN THE SAME BECOMES DUE UNDER ANY OF THE PROVISIONS HEREOF, I/WE HEREBY AUTHORIZE THE BANK AT ITS OPTION AND WITHOUT NOTICE, TO APPLY TO THE PAYMENT OF THIS NOTE, ANY AND ALL MONEYS, SECURITIES AND THINGS OF VALUE WHICH MAY BE IN ITS HAND OR ON DEPOSIT OR OTHERWISEBELONGING TO ME/USAND, FOR THIS PURPOSE, I/WE HEREBY, JOINTLY AND SEVERALLY, IRREVOCABLY CONSTITUTE AND APPOINT THE SAID BANK TO BE MY/OUR TRUE ATTORNEY-IN-FACT WITH FULL POWER AND AUTHORITY FOR ME/US AND IN MY/OUR NAME AND BEHALF, AND WITHOUT PRIOR NOTICE, TO NEGOTIATE, SELL AND TRANSFER ANY MONEYS, SECURITIES AND THINGS OF VALUE WHICHIT MAY HOLD, BY PUBLIC OR PRIVATE SALE, AND APPLY THE PROCEEDS THEREOF TO THE PAYMENT OF THIS NOTE. (Emphasis supplied.)Petitioner contends that it was justified in supposing that reversion had occurred because its efforts to locate claims against the Fund from the National Labor Relations Commission (NLRC), the lower courts, the CA and the Supreme Court proved futile.We are not convinced.Employees trusts or benefit plans are intended to provide economic assistance to employees upon the occurrence of certain contingencies, particularly, old age retirement, death, sickness, or disability.They give security against certain hazards to which members of the Plan may be exposed.They are independent and additional sources of protection for the working group and established for their exclusive benefit and for no other purpose.[18]Here, while the Plan provides for a reversion of the Fund to RMC, this cannot be done until all the liabilities of the Plan have been paid.And when RMC ceased operations in 1984, the Fund became liable for the payment not only of the benefits of qualified retirees at the time of RMCs closure but also of those who were separated from work as a consequence of the closure.Paragraph 7 of the Retirement Plan states:Separation from Service:A member who is separated from the service of the Company before satisfying the conditions for retirement due to resignationor any reason other than dismissal for cause shall be paid the balance of his account as of the last day of the month prior to separation. The amount representing the Companys contribution and income thereon standing to the credit of the separating member shall be paid to him as follows:Completed Years% of Companys Contributionof Membershipand Earnings Thereon Payable05NIL6 1020%11 1540%16 2060%21 2580%25 over100%A member who is separated for cause shall not be entitled to withdraw the total amount representing his contribution and that of the Company including the earned interest thereon, and the employers contribution shall be retained in the fund.[19](Emphasis supplied.)The provision makes reference to a member-employee who is dismissed for cause.Under theLabor Code, as amended, an employee may be dismissed for just or authorized causes.A dismissal for just cause under Article 282[20]of theLabor Code, as amended, implies that the employee is guilty of some misfeasance towards his employer,i.e.the employee has committed serious misconduct in relation to his work, is guilty of fraud, has perpetrated an offense against the employer or any immediate member of his family, or has grossly and habitually neglected his duties.Essentially, it is an act of the employee that sets off the dismissal process in motion.On the other hand, a dismissal for an authorized cause under Article 283[21]and 284[22]of theLabor Code, as amended, does not entail any wrongdoing on the part of the employee.Rather, the termination of employment is occasioned by the employers exercise of management prerogative or by the illness of the employee matters beyond the workers control.The distinction between just and authorized causes for dismissal lies in the fact that payment of separation pay is required in dismissals for an authorized cause but not so in dismissals for just cause.Therationalebehind this rule was explained in the case ofPhil. Long Distance Telephone Co. v. NLRC[23]and reiterated inSan Miguel Corporation v. Lao,[24]thus:We hold that henceforth separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. Where the reason for the valid dismissal is, for example, habitual intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not be required to give the dismissed employee separation pay, or financial assistance, or whatever other name it is called, on the ground of social justice.x x xx x xx x xThe policy of social justice is not intended to countenance wrongdoing simply because it is committed by the underprivileged.At best[,] it may mitigate the penalty but it certainly will not condone the offense.InSan Miguel Corporation v. Lao, we reversed the CA ruling which granted retirement benefits to an employee who was found by the Labor Arbiter and the NLRC to have been properly dismissed for willful breach of trust and confidence.Applied to this case, the penal nature of the provision in Paragraph 7 of the Plan, whereby a member separated for cause shall not be entitled to withdraw the contributions made by him and his employer, indicates that the separation for cause being referred to therein is any of the just causes under Article 282 of theLabor Code, as amended.To be sure, the cessation of business by RMC is an authorized cause for the termination of its employees.Hence, not only those qualified for retirement should receive their total benefits under the Fund, but those laid off should also be entitled to collect the balance of their account as of the last day of the month prior to RMCs closure.In addition, the Plan provides that the separating member shall be paid a maximum of 40% of the amount representing the Companys contribution and its income standing to his credit.Until these liabilities shall have been settled, there can be no reversion of the Fund to RMC.Under Paragraph 6[25]of the Agreement, petitioners function shall be limited to the liquidation and return of the Fund to the Board upon thetermination of the Agreement.Paragraph 14 of said Agreement further states that it shall be the duty of the Investment Manager to assign, transfer, and pay over to its successor or successors all cash, securities, and other properties held by it constituting the fund less any amounts constituting the charges and expenses which are authorized [under theAgreement] to be payable from the Fund.[26]Clearly, petitioner had no power to effect reversion of the Fund to RMC.The reversion petitioner effected also could hardly be said to have been done in good faith and with due regard to the rights of the employee-beneficiaries.The restriction imposed under Paragraph 13 of the Plan stating that in no event shall any part of the assets of the Fund revert to the Company before all liabilities of the Plan have been satisfied, demands more than a passive stance as that adopted by petitioner in locating claims against the Fund.Besides, the beneficiaries of the Fund are readily identifiable the regular or permanent employees of RMC who were qualified retirees and those who were terminated as a result of its closure.Petitioner needed only to secure a list of the employees concerned from the Board of Trustees which was its principal under the Agreement and the trustee of the Plan or from RMC which was the trustor of the Fund under the Retirement Plan.Yet, petitioner notified respondent Board of Trustees only after Philbanks Board of Directors had decided to apply the remaining trust assets of RMCPRF to the liabilities of the company.Petitioner nonetheless assails the authority of the Board of Trustees to issue the Resolution ofJune 2, 1998recognizing the exclusive ownership of the Fund by the employees of RMC and authorizing its release to the beneficiaries as may be ordered by the trial court.Petitioner contends that the cessation of RMCs operations ended not only the Board members employment in RMC, but also their tenure as members of the RMCPRF Board of Trustees.Again, we are not convinced.Paragraph 13 of the Plan states that [a]lthough it is expected that the Plan will continue indefinitely, it may be amended or terminated by the Company at any time on account of business conditions.There is no dispute as to the management prerogative on this matter, considering that the Fund consists primarily of contributions from the salaries of members-employees and the Company.However, it must be stressed that theRMC Provident and Retirement Plan was primarily established for the benefit of regular and permanent employees of RMC. As such, the Board may not unilaterally terminate the Plan without due regard to any accrued benefits and rightful claims of members-employees.Besides, the Board is bound by Paragraph 13 prohibiting the reversion of the Fund to RMC before all the liabilities of the Plan have been satisfied.As to the contention that the functions of the Board of Trustees ceasedupon with RMCs closure, the same is likewise untenable.Under Section 122[27]of theCorporation Code, a dissolved corporation shall nevertheless continue as a body corporate for three (3) years for the purpose of prosecuting and defending suits by or against it and enabling it to settle and close its affairs, to dispose and convey its property and to distribute its assets, but not for the purpose of continuing the business for which it was established.Within those three (3) years, the corporation may appoint a trustee or receiver who shall carry out the said purposes beyond the three (3)-year winding-up period.Thus, a trustee of a dissolved corporation may commence a suit which can proceed to final judgment even beyond the three (3)-year period of liquidation.[28]In the same manner, during and beyond the three (3)-year winding-up period of RMC, the Board of Trustees of RMCPRF may do no more than settle and close the affairs of the Fund.The Board retains its authority to act on behalf of its members,albeit,in a limited capacity.It may commence suits on behalf of its members but not continue managing the Fund for purposes of maximizing profits.Here, the Boards act of issuing the Resolution authorizing petitioner to release the Fund to its beneficiaries is still part of the liquidation process, that is, satisfaction of the liabilities of the Plan, and does not amount to doing business.Hence, it was properly within the Boards power to promulgate.Anent the award of attorneys fees to respondents, we find the same to be in order.Article 2208(2) of theCivil Codeallows the award of attorneys fees in cases where the defendants act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest.Attorneys fees may be awarded by a court to one (1) who was compelled to litigate with third persons or to incur expenses to protect his or her interest by reason of an unjustified act or omission of the party from whom it is sought.[29]Here, petitioner applied the Fund in satisfaction of the obligation of RMC without authority and without bothering to inquire regarding unpaid claims from the Board of Trustees of RMCPRF.It wrote the members of the Board only after it had decided to revert the Fund to RMC.Upon being met with objections, petitioner insisted on the reversion of the Fund to RMC, despite the clause in the Plan that prohibits such reversion before all liabilities shall have been satisfied, thereby leaving respondents with no choice but to seek judicial relief.WHEREFORE, the petition for review oncertiorariis herebyDENIED.The Decision datedNovember 7, 2006and the Resolution datedMarch 5, 2007of the Court of Appeals in CA-G.R. CV No. 76642 areAFFIRMED.With costs against the petitioner.SO ORDERED.MARTIN S. VILLARAMA, JR.Associate Justice

WE CONCUR:CONCHITA CARPIO MORALESAssociate JusticeChairperson

LUCAS P. BERSAMINAssociate JusticeMARIANO C.DELCASTILLOAssociate Justice

MARIALOURDESP. A. SERENOAssociate Justice

A T T E S T A T I O NI attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.CONCHITA CARPIO MORALESAssociate JusticeChairperson, Third Division

C E R T I F I C A T I O NPursuant to Section 13, Article VIII of the1987 Constitutionand the Division Chairpersons Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.RENATO C. CORONAChief Justice

*Designated additional member per Special Order No. 879 datedAugust 13, 2010.[1]Rollo, pp. 38-45. Penned by Associate Justice Estela M. Perlas-Bernabe and concurred in by AssociateJustices Renato C. Dacudao and Rosmari D. Carandang.[2]Id.at 63.[3]Id.at 89-98.[4]Records, Vol. 2, pp. 409-411.[5]Id.[6]Id.at 295-301.[7]Id.at 316.[8]Id.at 427-428.[9]Records, Vol. I, p. 241.[10]Rollo,pp. 97-98.[11]Id.at 43-44.[12]Id.at 22.[13]Id.at 26.[14]Id.at 28.[15]Development Bank of thePhilippinesv. Commission on Audit, G.R. No. 144516, February 11, 2004, 422 SCRA 459, 472.[16]Records, Vol. 2, p. 409.[17]Id.at 512.[18]Commissioner of Internal Revenue v. Court of Appeals, G.R. No. 95022, March 23, 1992, 207 SCRA 487, 495.[19]Records, Vol. 2, pp. 409-410.[20]ART. 282.TERMINATION BY EMPLOYER.-An employer may terminate an employment for any of the following causes:(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;(b) Gross and habitual neglect by the employee of his duties;(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative;(d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and(e) Other causes analogous to the foregoing.[21]ART. 283.CLOSURE OF ESTABLISHMENT AND REDUCTION OF PERSONNEL. - The employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the worker and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or at least (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered as one (1) whole year.[22]ART. 284.DISEASE AS GROUND FOR TERMINATION. - An employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees:Provided, That he is paid separation pay equivalent to at least one (1) month salary or to one-half (1/2) month salary for every year of service, whichever is greater, a fraction of at least six (6) months being considered as one (1) whole year.[23]No. L-80609,August 23, 1988, 164 SCRA 671, 682.[24]G.R. Nos. 143136-37,July 11, 2002, 384 SCRA 504, 511.[25]The power, duties and discretion conferred upon the Investment Manager by virtue of this Agreement shall continue for purposes ofliquidation and return of the Fundonly, after the notice of termination of this Agreement has been served in writinguntil final delivery of the Fund to the Board of Trusteesor its successors-in-interest or assigns. (Emphasis supplied.) Records, Vol. 2, p. 297.[26]Records, Vol. 2, p. 299.[27]SEC. 122.Corporate liquidation. -Every corporation whose charter expires by its own limitation or is annulled by forfeiture or otherwise, or whose corporate existence for other purposes is terminated in any other manner, shall nevertheless be continued as a body corporate for three (3) years after the time when it would have been so dissolved, for the purpose of prosecuting and defending suits by or against it and enabling it to settle and close its affairs, to dispose of and convey its property and to distribute its assets, but not for the purpose of continuing the business for which it was established.At any time during said three (3) years, said corporation is authorized and empowered to convey all of its property to trustees for the benefit of stockholders, members, creditors, and other persons in interest. From and after any such conveyance by the corporation of its property in trust for the benefit of its stockholders, members, creditors and others in interest, all interests which the corporation had in the property terminates, the legal interest vests in the trustees, and the beneficial interest in the stockholders, members, creditors or other persons in interest.Upon winding up of the corporate affairs, any asset distributable to any creditor or stockholder or member who is unknown or cannot be found shall be escheated to the city or municipality where such assets are located.Except by decrease of capital stock and as otherwise allowed by this Code, no corporation shall distribute any of its assets or property except upon lawful dissolution and after payment of all its debts and liabilities.[28]Knecht v. United Cigarette Corp., G.R. No. 139370, July 4, 2002, 384 SCRA 45, 57, citingReburiano v. Court of Appeals, G.R. No. 102965, January 21, 1999, 301 SCRA 342, 353.[29]Republic v. Court of Appeals, G.R. No. 160379,August 14, 2009, 596 SCRA 57, 76.

G.R. No. 179096 February 06, 2013JOSEPH GOYANKO, JR., as administrator of the Estate of Joseph Goyanko, Sr.,Petitioner,vs.UNITED COCONUT PLANTERS BANK, MANGO AVENUE BRANCH,Respondent.D E C I S I O NBRION,J.:We resolve the petition for review oncertiorari1filed by petitioner Joseph Goyanko, Jr., administrator of the Estate of Joseph Goyanko, Sr., to nullify the decision2dated February 20, 2007 and the resolution3dated July 31, 2007 of the Court of Appeals (CA) in CA-G.R. CV. No. 00257 affirming the decision4of the Regional Trial Court of Cebu City, Branch 16(RTC) in Civil Case No. CEB-22277. The RTC dismissed the petitioners complaint for recovery of sum money against United Coconut Planters Bank, Mango Avenue Branch (UCPB).The Factual AntecedentsIn 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, 19965under 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.The RTC RulingIn its August 27, 2003 decision, the RTC dismissed the petitioners complaint and awarded UCPB attorneys fees, litigation expenses and the costs of the suit.6The RTC did not consider the words "ITF HEIRS" sufficient to charge UCPB with knowledge of any trust relation between PALII and Goyankos 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.The CAs RulingBefore the CA, the petitioner maintained thatby 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 petitioners appeal. It affirmed the August 27, 2003 decision of the RTC, but deleted the award of attorneys 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.7In its July 31, 2007 resolution,8the CA denied the petitioners motion for reconsideration. Hence, the petitioners present recourse.The PetitionThe petitioner argues in his petition that:first, an express trust was created, as clearly shown by PALIIs March 28, 1996 and November 15, 1996 letters.9Citing jurisprudence, the petitioner emphasizes that from the established definition of a trust,10PALII 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.11Also, quotingDevelopment Bank of the Philippines v. Commission on Audit,12the petitioner argues that the naming of thecestui que trustis not necessary as it suffices that they are adequately certain or identifiable.13Second, UCPB was negligent and in bad faith in allowing the withdrawal and in failing to inquire into the nature of the ACCOUNT.14The petitioner maintains that the surrounding facts, the testimony of UCPBs witness, and UCPBs 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 RTCs 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.The Case for UCPBUCPB 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 petitioners assertion, the records failed to show that PALII and UCPB executed a trust agreement, and PALIIs letters made it clear that PALII, on its own, intended to turn-over the proceeds of the ACCOUNT to its rightful owners.The Courts RulingThe 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.We rule in the negative.We first address the procedural issues. We stress the settled rule that a petition for review oncertiorariunder Rule 45 of the Rules of Court resolves only questions of law, not questions of fact.15A question, to be one of law, must not examine the probative value of the evidence presented by the parties;16otherwise, the question is one of fact.17Whether an express trust exists in this case is a question of fact whose resolution is not proper in a petition underRule 45.Reinforcing this is the equally settled rule that factual findings of the lower tribunals are conclusive on the parties and are not generally reviewable by this Court,18especially when, as here, the CA affirmed these findings. The plain reason is that this Court is not a trier of facts.19While this Court has, at times, permitted exceptions from the restriction,20we find that none of these exceptions obtain in the present case.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.21The petitioner now asserts that the express trust exists between PALII as the trustor and UCPB as the trustee, with the HEIRS as the beneficiaries.22At 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";23otherwise, the lower courts will effectively be deprived of the opportunity to decide the merits of the case fairly.24Besides, courts of justice are devoid of jurisdiction to resolve a question not in issue.25For 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 UCPBA trust, either express or implied,26is 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."27Express or direct trusts are created by the direct and positive acts of the trustor or of the parties.28No written words are required to create an express trust. This is clear from Article 1444 of the Civil Code,29but, 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.30InRizal Surety & Insurance Co. v. CA,31we laid down the requirements before an express trust will be recognized:Basically,these elements include a competent trustor and trustee, an ascertainable trustres, 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 trustresand 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 trusts 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 petitioners contention, PALIIs letters and UCPBs records established UCPBs 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,32while in the November 15, 1996 letter, PALII begged the petitioner to trust it with the safekeeping of the investment proceeds and documents.33Had it been PALIIs intention to create a trust in favor of the HEIRS, it would have relinquished any right or claim over the proceeds in UCPBs favor as the trustee. As matters stand, PALII never did.UCPBs records and the testimony of UCPBs witness34likewise 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.35We give credence to UCPBs explanation that the word "ITF" was merely used to distinguish the ACCOUNT from PALIIs 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.36If at all, these words showed a trustee-beneficiary relationship between PALII and the HEIRS.Contrary to the petitioners position, UCPB did not become a trustee by the mere opening of the ACCOUNT.1wphi1While this may seem to be the case, by reason of the fiduciary nature of the banks relationship with its depositors,37this 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."38It 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.39Per Article 1980 of the Civil Code,40a creditor-debtor relationship exists between the bank and its depositor.41The savings deposit agreement is between the bank and the depositor;42by receiving the deposit, the bank impliedly agrees to pay upon demand and only upon the depositors order.43Since the records and the petitioners own admission showed that the ACCOUNT was opened by PALII, UCPBs 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 faith44can 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 inFalton Iron Works Co. v. China Banking Corporation.45the banks 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.46The petitioners 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 defendants obligation to respect that right, and an act or omission of the defendant in breach of that right.47We reiterate that UCPBs 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 petitioners 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.48For 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:ARTURO D. BRIONAssociate JusticeWE CONCUR:ANTONIO T. CARPIOAssociate JusticeChairpersonMARIANO C. DEL CASTILLOAssociate JusticeJOSE PORTUGAL PEREZAssociate Justice

ESTELA M. PERLAS-BERNABEAssociate JusticeA T T E S T A T I O NI attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.ANTONIO T. CARPIOAssociate JusticeChairpersonC E R T I F I C A T I O NPursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court' Division.MARIA LOURDES P.A. SERENOChief Justice

Footnotes1Dated September 25, 2007 and filed on September 24, 2007 under Rule 45 of the 1997 Rules of Civil Procedure:rollo. pp 24-42.2Penned by Associate Justice Priscila Baltazar-Padilla, and concurred in by Executive Justice Arsenio I. Magpale and Associate Justice Romeo F. Barza:id. at 9-17.3Idat 19-20.4Dated August 27, 2008 per the CA decision:idat 9.5The amount deposited was P1,485,685.09 per the CA decision dated February 20, 2007. Per the attached copy of UCPBs record pertaining to the ACCOUNT, and UCPBs comment, the ACCOUNT was opened on May 31, 1996. Also, per UCPBs comment, the initial deposit on the ACCOUNT was P173,250.00, with subsequent deposits made in the succeeding months, the last of which was on October 28, 1996;id. at 60 and 77.6From the dispositive portion of the RTC decision, as quoted by the CA;id.at 10.7Id.at 15.8Supranote 3.9Rollo, pp. 33-35, 113-114; copy of the letters at pp. 59 and 61.10The petitioner cites the Courts ruling inEstate of Edward Grimm v. Estate of Charles Parsons and Patrick C. Parsons, G.R. No. 159810, October 9, 2006, 504 SCRA 67;id.at 36. The petitioner also citesGalvez v. Court of Appeals,485 SCRA 346;id.at 115-116.11Rollo, pp. 34-36, 115-116.12G.R. No. 144516, February 11, 2004, 422 SCRA 459.13Rollo, pp. 35, 116-117.14Id. at 36-40, 119-123.15Andrada v. Pilhino Sales Corporation, G.R. No. 156448, February 23, 2011, 644 SCRA 1, 8-9;Philippine Commercial International Bank v. Balmaceda,G.R. No. 158143, September 21, 2011, 658 SCRA 33, 42-43;Lorzano v. Tabayag, Jr., G.R. No. 189647, February 6, 2012, 665 SCRA 38, 46-47; andRepublic v. De Guzman,G.R. No. 175021, June 15, 2011, 652 SCRA 101, 113.16Lorzano v. Tabayag, Jr. supranote 15, at 46-47;Republic v. De Guzman, supranote 15, at 113. See alsoHeirs of Pacencia Racaza, etc. v. Spouses Florencio Abay-abay, et al., G.R. No. 198402, June 13, 2012.17Lorzano v. Tabayag, Jr., supranote 15, at 46-47; Republicv. De Guzman, supranote 15, at 113.18SeeHeirs of Pacencia Racaza, etc. v. Spouses Florencio Abay-abay, supranote 16.19Id.20Among the recognized exceptions to the restriction are:(a) When the findings are grounded entirely on speculation, surmises, or conjectures;(b) When the inference made is manifestly mistaken, absurd, or impossible;(c) When there is grave abuse of discretion;(d) When the judgment is based on a misapprehension of facts;(e) When the findings of facts are conflicting;(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;(h) When the findings are conclusions without specific citation of specific evidence on which they are based;(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(k) When the CA manifestly overlooked certain relevant facts not disputed by the parties which, if properly considered, would justify a different conclusion.21Seerollo, pp. 12-13.22Id.at 34-36, 115-116.23Morla v. Belmonte,G.R. No. 171146, December 7, 2011, 661 SCRA 717, 727.24Pea v. Tolentino,G.R. Nos. 155227-28, February 9, 2011, 642 SCRA 310, 323.25Id.at 324.26Estate of Margarita D. Cabacungan v. Laigo,G.R. No. 175073, August 15, 2011, 655 SCRA 366, 376. See alsoPhilippine National Bank v. Aznar,G.R. Nos. 171805 and 172021, May 30, 2011, 649 SCRA 214, 230; andTorbela v. Rosario,G.R. Nos. 140528 and 140553, December 7, 2011, 661 SCRA 633, 661.27Estate of Margarita D. Cabacungan v. Laigo, supra, at 376. See alsoPhilippine National Bank v. Aznar, supra;Torbela v. Rosario, supra; andMetropolitan Bank & Trust Company, Inc. v. Board of Trustees of Riverside Mills Corporation Provident and Retirement Fund,G.R. No. 176959, September 8, 2010, 630 SCRA 350, 357.28Torbela v. Rosario, supranote 26; andPNB v. Aznar, supranote 26.29Art. 1444. No particular words are required for the creation of an express trust, it being sufficient that a trust is clearly intended.30Philippine National Bank v. Aznar, supranote 26, at 230.31329 Phil. 789, 805-806, citingMindanao Development Authority v. Court of Appeals,No. L-49087, April 5, 1982, 113 SCRA 429, 436-437.32Rollo, p. 59. The letter stated: "In the meantime, themonthly interest that will accrue to said investments will be, at the instance of our client, deposited in a bank under the account name, Heirs of Joseph Goyanko, Sr., x x x x.x x xour client will be constrained to bring an action before the court for interpleaderto compel the claimants to interplead and litigate their several claims among themselves. (emphasis ours)33Id.at 61. To quote PALII: "Since the money is intact and safe in the bank ready for turn-over to the righteous owner, so with all the documents of the investment in our possession,we would like to request your goodself to please trust us for its safekeeping." (emphasis ours)34Id.at 62-64. UCPBs witness testified that the ACCOUNT was owned by PALII and that he was not personally aware of any trust relation between PALII and the HEIRS since he was not yet the banks branch manager at that time.35Id.at 60. In the copy of the UCPBs record, UCPB Form No. 4-1118, under the heading "TYPE OF ACCOUNT," the option "Savings Account" bears a check mark. Also, on the reverse side, under the heading "TYPE OF ACCT." "Savings Acct." was written. Also the ACCOUNTs authorized signatory was only Crisanto Pescadero, PALIIs general manager.36SeeTorbela v. Rosario, supranote 26, at 661.37SeeBPI Family Bank v. Franco,G.R. No. 123498, November 23, 2007, 538 SCRA 184, 198.38Consolidated Bank and Trust Corporation v. Court of Appeals,G.R. No. 138569, September 11, 2003, 457 Phil. 688, 707.39Id.at 705.40Article 1980 of the Civil Code provides:Art. 1980. Fixed,savings, and currentdeposits of money in banks and similar institutions shall be governed by the provisions concerning simple loan. (emphasis ours)41SeeCentral Bank of the Philippines v. Citytrust Banking Corporation,G.R. No. 141835, February 4, 2009, 578 SCRA 27, 32, quotingConsolidated Bank and Trust Corporation v. Court of Appeals, supranote 38 at, 574-575;Lucman v. Malawi, 540 Phil. 289, 300 (2006); andAllied Banking Corporation v. Lim Sio Wan,G.R. No. 133179, March 27, 2008, 549 SCRA 504, 515. SeeSamsung Construction Co. Phils., Inc. v. FEBTC, 480 Phil. 39, 49 (2004).42Consolidated Bank and Trust Corporation v. Court of Appeals, supranote 38, at 705.43Samsung Construction Co. Phils., Inc. v. FEBTC,supranote 41, at 49; andCentral Bank of the Philippines v. Citytrust Banking Corporation, supranote 41, at 32.44Article 1173. Civil Code of the Philippines provides:"Negligence consists in the omission of that diligence which is required by the nature of the obligation, and corresponds with the circumstances of the persons, of the time and of the place." Bad faith implies a conscious or intentional design to do a wrongful act for a dishonest purpose or moral obliquity. (Arenas v. CA, G.R. No. 126466, January 14, 1999, 345 SCRA 617)4555 Phil. 208; 216-217 (1930).46Ibid.47NAI Rathschild & Sons (Australia) Limited v. Lepanto Consolidated Mining Company,G.R. No. 175799, November 28, 2011, 664 SCRA 328 338-339; andManalo v. PAIC Savings Bank, 493 Phil. 854, 859, 2005).Section 2 of the Rules of Court provides:SEC. 2. Cause of action defined "A cause of action is the act or omission by which a party violates a right of another.48Caezo v. Rojas, G.R. No. 448788, November 23, 2007, 538 SCRA 242, 253; andDuran v. Court of Appeals. 522 Phil. 399, 407 (2006).

G.R. No. 192371, January 15, 2014LAND BANK OF THE PHILIPPINES,Petitioner,v.EMMANUEL OATE,Respondent.D E C I S I O NDEL CASTILLO,J.:This Petition for Review onCertiorari1assails the December 18, 2009 Decision2of the Court of Appeals (CA) in CA-G.R. CV No. 89346, which affirmed with modification the May 31, 2006 Decision3of the Regional Trial Court (RTC), Branch 141, Makati City. The RTC dismissed the Complaint4for Sum of Money, which petitioner Land Bank of the Philippines (Land Bank) filed against respondent Emmanuel C. Oate (Oate), and ordered Land Bank to return the amount of P1,471,416.52 it unilaterally debited from his accounts. On separate appeals by both parties, the CA affirmed the RTC Decision with modification that Land Bank was further ordered to pay Oate the sums of P60,663,488.11 and US$3,210,222.85 representing the undocumented withdrawals and drawings from his trust accounts with 12%per annuminterest compounded annually from June 21, 1991 until fully paid.

Also assailed is the CAs May 27, 2010 Resolution5denying Land Banks Motion for Reconsideration.6chanrobleslaw

Factual Antecedents

Land Bank is a government financial institution created under Republic Act No. 3844.7 From 1978 to 1980, Oate opened and maintained seven trust accounts with Land Bank, more particularly described as follows:chanRoblesvirtualLawlibraryTrust Account No.Date OpenedBeginning Balance

01-01409.07.78P 250,000.008

01-01711.16.781,312,896.009

01-02402.23.79900,000.0010

01-07510.08.79500,000.0011

01-08210.25.79200,001.0012

01-08903.18.8043.9813

01-12503.13.80188,161.0014

Each trust account was covered by an Investment Management Account (IMA) with Full Discretion15and has a corresponding passbook where deposits and withdrawals were recorded. Pertinent portions common to the IMAs read:chanRoblesvirtualLawlibraryYou [Land Bank] are appointed as my agent with full powers and discretion, subject only to the following provisions:chanroblesvirtuallawlibrary

1. You are authorized to hold, invest and reinvest the Fund and keep the same invested, in your sole discretion, without distinction between principal and income, in any assets which you deem advisable, without being restricted to those of the character authorized for fiduciaries under any present or future law.

2. You shall have full power and authority:chanroblesvirtuallawlibrary(a)to treat all the Fund as one aggregate amount for purposes of investment, and to deposit all or any part thereof with a reputable bank including your own commercial banking department;

(b)to pay all costs, expenses and charges incurred in connection with the administration, preservation, maintenance and protection of the Fund and to charge the same to the Fund;

(c)to vote in person or by proxy on any stocks, bonds or other securities held by you, for my/our account;

(d)to borrow money for the Fund (from your banking department or from others) with or without giving securities from the Fund;

(e)to cause any asset of the Fund to be issued, held or registered in your name or in the name of your nominee, or in such form that title will pass by delivery, provided your records shall indicate the true ownership of such assets;

(f)to hold the Fund in cash and to invest the same in fixed income placements traded and sold by your own Money Market Division; and

(g)to sign all documents pertinent to the transaction which you will make in behalf of this Account.

3. All actions taken by you hereunder shall be for my account and risk.Except for willful default or gross misconduct, you shall not be liable for any loss or depreciation in the value of the assets of the Fund arising from any cause whatsoever.

4. You shall maintain accurate records of all investments, receipts, disbursements and other transactions of the Account. Records relating thereto shall be open at all reasonable times to inspection and audit by me either personally or through duly authorized representatives. Statements consisting of a balance sheet, portfolio analysis, statement of income and expenses, and summary of investment changes are to be sent to me/us quarterly.

I/We shall approve such accounting by delivering in writing to you a statement to that effect or by failure to express objection to such accounting in writing delivered to you within thirty (30) days from my receipt of the accounting.

Upon your receipt of a written approval of the accounting, or upon the passage of said period of time within which objections may be filed, without written objections having been delivered to you, such accounting shall be deemed to be approved, and you shall be released and discharged as to all items, matters and things set forth in such accounting as if such accounting had been settled and allowed by a decree of a court of competent jurisdiction, in an action or proceeding in which you and I were parties.16(Emphasis supplied)

In a letter17dated October 8, 1981, however, Land Bank demanded from Oate the return of P4 million it claimed to have been inadvertently deposited to Trust Account No. 01-125 as his additional funds but actually represents the total amount of the checks issued to Land Bank by its corporate borrowers as payment for their pre-terminated loans. Oate refused. To settle the matter, a meeting was held, but the parties failed to reach an agreement. Since then, the issue of miscrediting remained unsettled. Then on June 21, 1991, Land Bank unilaterally applied the outstanding balance in all of Oates trust accounts against his resulting indebtedness by reason of the miscrediting of funds. Although it exhausted the funds in all of Oates trust accounts, Land Bank was able to debit the amount of P1,528,583.48 only.18chanrobleslaw

Proceedings before the Regional Trial Court

To recoup the remaining balance of Oates indebtedness, Land Bank filed a Complaint19for Sum of Money seeking to recover the amount of P8,222,687.8920plus interest at the legal rate of 12%per annumcomputed from May 15, 1992 until fully paid. Pertinent portions of Land Banks Complaint reads:chanRoblesvirtualLawlibrary5. By virtue of the Deeds of Revocable Trust executed on January 9, 198921[sic] and February 5, 198922[sic] by Philippine Virginia Tobacco Administration (PVTA) and Philippine Virginia Tobacco Board (PVTB), LANDBANK likewise became a Trustee of certain funds belonging to PVTA and PVTB.

6. As authorized under the [Deeds] of Revocable Trust, on October 10, 1980, LANDBANK invested P4 Million of the trust accounts of PVTA and PVTB, through a direct lending scheme to the following companies:(a) Republic Telephone Company, Inc. (RETELCO), under Promissory Note No. 1145 dated October 10, 1980, for P1,021,250.00 with maturity date on November 24, 1980, subject to automatic roll-over up to October 10, 1981 at 17% interest per annum.

(b) Philippine Blooming Mills Company, Inc. (PBM), under Promissory Note (unnumbered) dated October 10, 1980, for P1,021,250.00, with maturity date on November 24, 1980, subject to automatic roll-over up to October 10, 1981, at 17% interest per annum;

(c) Cheng Ban Yek (CBY), under Promissory Note (unnumbered) dated October 10, 1980, for P1,023,138.89, with maturity date on November 28, 1980, subject to automatic roll-over up to October 10, 1981, at 17% interest per annum;

(d) Philippine Tobacco Filters Corporation (PHILTOFIL), under Promissory Note (unnumbered) dated October 10, 1980, for P1,021,250.00, with maturity date on November 24, 1980, subject to automatic roll-over up to October 10, 1981, at 17% interest per annum.cralawred

x x x x7. Pursuant to such direct loan transactions granted to the aforementioned companies, LANDBANK issued four (4) cashiers checks for P1 Million each payable to RETELCO, PBM, CBY, and PHILTOFIL x x x

8. On or about November 24 and 28, 1980, the aforesaid borrowers (RETELCO, PBM, CBY, AND PHILTOFIL), pre-terminated their corresponding loans and paid their respective obligations in the form of checks payable to LANDBANK and delivered by [Oates] representative, Mr. Eduardo Polonio.

9. When the checks were delivered, [Oate] fraudulently misrepresented to LANDBANK that they were [Oates] additional capital contribution to his personal trust account. On the basis of this misrepresentation, LANDBANK credited the payments made by the aforementioned corporate borrowers to [Oates] Trust Account No. 01-125.

10. After the payments were credited to his personal trust account, Oate proceeded to withdraw the same, to the damage and prejudice of LANDBANK as the owner thereof.23

In his Answer (With Compulsory Counterclaim),24Oate asserted that the setoff was without legal and factual bases. He specifically denied any knowledge or involvement in the transaction between Land Bank and its clients Philippine Virginia Tobacco Administration (PVTA) and Philippine Virginia Tobacco Board (PVTB). He also denied that he made fraudulent misrepresentation to induce the bank to deposit to his Trust Account No. 01-125 as his additional capital the payments allegedly tendered by the banks corporate borrowers. He maintained that all the funds in his accounts came from legitimate sources and that he was totally unaware of and had nothing to do with the alleged miscrediting. While Oate admitted having received the October 8, 1981 demand letter, he argued that he did not acquiesce thereto and, in fact, disputed the same during a meeting with an officer of Land Bank. He also refuted Land Banks claim that it formally demanded for the return of the disputed amount as the September 3, 1991 letter25it alluded to is not a demand letter. It was sent in response to his counsels letter requesting for an accounting of his trust accounts.

By way of compulsory counterclaim, Oate pointed out that per Balance Sheets26as of June 30, 1982 the funds in his trust accounts already totaled P35,555,464.78. And as of January 1993, the accumulated balance of his accounts reached P229,222,160.25 and $3,472,683.94 computed as follows:chanRoblesvirtualLawlibraryWith interest at the rate of eighteen percent (18%) compounded every ninety (90) days from the third quarter of 1982 to January, 1993, the trustors equity of P35,555,464.78 has earnedinterestin the amount ofP193,666,695.47. Adding the trustors equity to the aforesaid accrued interest thereon, [Oates] peso deposits [in] his trust accounts with plaintiff bank have an accumulated balance ofP229,222,160.25as ofJanuary 1993.

But that is not all. [Oates] dollar deposits to Trust Account No. 01-014 (which is for an Undisclosed Principal) from the period July-September, 1980 alone, already amounted to $1,690,943.78. x x x

With interest at the rate of six percent (6%) compounded every ninety (90) days from the first quarter of 1981, the saiddollardeposits have earned interest of$1,781,740.16up toJanuary, 1993. Thus, [Oates] dollar deposits [in] Trust Account No.01-014have an aggregate balance of$3,472,683.94as ofJanuary 1993.27

Hence, even if the amount of P8,222,687.89 as of May 15, 1992 is deducted from the outstanding balance of his trust accounts as of January 1993, the bank still owes him P220,999,472.36 on top of his dollar deposits amounting to $3,472,683.94.

Oate prayed that a judgment be issued dismissing the Complaint and ordering Land Bank to pay him:chanRoblesvirtualLawlibraryi) The sum of P220,999,472.36, representing the outstanding balance on the peso deposits [of Oates] various trust accounts as of January 1993, with interest thereon from said date at the rate of eighteen percent (18%) compounded every ninety (90) days, until the said amount is fully paid;

ii) The sum of $3,472,683.94, representing the aggregate balance as of January 1993 on [Oates] dollar deposits [in] Trust Account No. 01-014, with interest thereon from said date at the rate of six percent (6%) compounded every ninety (90) days, until the said amount is fully paid;

iii) The sum of P100,000,000.00 as and by way of moral damages;

iv) The sum of P50,000,000.00 as and by way of exemplary damages; and

v) The sum of P15,000,000.00, or 20% of all sums collected, whichever is higher, as and for attorney's fees, the further sum of P3,000.00 as appearance fee for each hearing attended, and such other sums that may be proved during the trial as litigation expenses.28

Upon Oates motion, the RTC issued an Order29dated May 27, 1994, creating a Board of Commissioners (the Board) for the purpose of examining the records of Oates seven trust accounts, as well as to determine the total amount of deposits, withdrawals, funds invested, earnings, and expenses incurred. It was composed of Atty. Engracio M. Escasinas, the Clerk of Court of the RTC of Makati City, as the Chairman; and, Atty. Ma. Cristina C. Malab and Ms. Adeliza M. Jaranilla representing Land Bank and Oate, respectively, as members.

Initially, the Board submitted three reports.30 But for clarity, the trial court ordered31the Board to reconvene and to submit a consolidated report furnishing copies of the same to both parties, who were given 10 days from receipt thereof to file their respective comments thereto. The Board complied and on August 16, 2004 submitted its consolidated report.32 As summarized by the RTC, the said consolidated report revealed that there were undocumented and over withdrawals and drawings33from Oates trust accounts:chanRoblesvirtualLawlibraryThus, the Commissioners Report showed that the total amount of drawings and withdrawals from each account without withdrawal slips are as follows:chanroblesvirtuallawlibrary

In Trust Account No. 01-014, there was a total withdrawals [sic] without withdrawal slips but reflected in the passbook in the amount of P45,103,297.33 and this account showed a negative balance of P40,367,342.34. On the dollar deposit under the same trust account, there was a total [withdrawal] without withdrawal slips but reflected in the passbook in the amount of $3,210,222.85.

In Trust Account No. 01-017, there was a total withdrawal without withdrawal slips in the amount of P2,682,088.58 and there was an over withdrawal of P11,738,470.53 and $30,000.00.

In Trust Account No. 01-024, there was a total withdrawal without withdrawal slips of P900,000.00 and over withdrawal of P13,310,328.01.

In Trust Account No. 01-075, there was a total withdrawal of P500,000.00 without withdrawal slips and there was a negative balance of P33,342,132.64 and $286,399.34 on the dollar account.

In Trust Account No. 01-082, the total amount of withdrawal without withdrawal slips but reflected in the passbook was P1,782,741.86 and there was an over withdrawal of P14,031.63.

In Trust Account No. 01-089, there was a total withdrawal without withdrawal slips in the amount of P5,054,809.00 but the report indicated that there was a negative balance of P1,296,441.92.

In Trust Account No. 01-125, there was a total withdrawal without withdrawal slips in the amount of P4,640,551.34 and there was a negative balance of P58,327,459.23.34

On even date, the Board also submitted a Manifestation35informing the RTC that its findings as to the outstanding balance of each trust account may not be accurate considering that it was not given ample opportunity to collate and sort out the documents related to each trust account and that there may have been double take up of accounts since the documents previously reviewed may have been considered again in subsequent reports.

In his Comment,36Oate asserted that the undocumented withdrawals mentioned in the consolidated report should not be considered as cash outflows. Rather, they should be treated as unauthorized transactions and the amounts subject thereof must be credited back to his accounts.

Land Bank did not file any comment or objection to the Boards consolidated comment.

During the pre-trial conference, the parties agreed that they would submit the case for decision based on the reports of the Board after they have submitted their respective memoranda. They also stipulated on the following issues for resolution of the RTC:chanRoblesvirtualLawlibrary1. Whether x x x Oate could claim on Trust Account Nos. 01-014 and 01-017 which were opened for an undisclosed principal;2. Whether x x x the undocumented withdrawals and drawings are considered valid and regular and, conversely, if in the negative, whether x x x such amounts shall be credited [back] to the accounts.37

In his Memorandum38filed on July 12, 2005, Oate reiterated that Land Bank should be held liable for the undocumented withdrawals and drawings. For its part, Land Bank posited,inter alia, that Trust Account Nos. 01-014 and 01-017 should be excluded from the computation of Oates counterclaim considering his allegation that said accounts are owned by an undisclosed principal whom/which he failed to join as indispensable party. Land Bank further theorized that Oate must answer for the negative balances as revealed by the Boards reports.39chanrobleslaw

Thereafter, the case was submitted for decision.

Ruling of the Regional Trial Court

On May 31, 2006, the RTC rendered a Decision40dismissing Land Banks Complaint for its failure to establish that the amount of P4,086,888.89 allegedly miscredited to Oates Trust Account No. 01-125 actually came from the investments of PVTA and PVTB. Hence, the RTC ordered Land Bank to restore the total amount of P1,471,416.52 which the bank unilaterally debited from Oates five trust accounts.41chanrobleslaw

With regard to Oates counterclaim for the recovery of P220,999,472.36, as well as the alleged US$3,472,683.94 balance of his dollar deposits in Trust Account No. 01-014, the RTC ruled that under the IMAs, Land Bank had the authority to withdraw funds (as in fact it was at all times in possession of the passbooks) from Oates accounts even without a letter of instruction or withdrawal slip coming from Oate. It thus gave weight to the entries in the passbooks since the same were made in the ordinary course of business. The RTC also ruled that Oate is deemed to have approved the entries in the statements of account that were sent to him as he never interposed any objection thereto within the period given him to do so.

Anent Land Banks claim for the negative balances, the RTC likewise denied the same for Land Bank never sought them in its Complaint. Moreover, being the manager of the funds and keeper of the records, the RTC held that Land Bank should not have allowed further withdrawals if there were no more funds.

The RTC likewise debunked Land Banks argument that Oates counterclaim with respect to Trust Account Nos. 01-014 and 01-017 should be dismissed for his failure to join his undisclosed principal. According to the RTC, Land Bank should have earlier invoked such defense when it filed its answer to the counterclaim. Also, if it is true that said accounts are not owned by Oate, then the bank had no right to apply the funds in said accounts as payment for the alleged personal indebtedness of Oate.

The dispositive portion of the RTCs Decision reads:chanRoblesvirtualLawlibraryWHEREFORE, in view of all the foregoing, decision is hereby rendered dismissing the complaint and ordering [Land Bank] to pay [Oate] the total amount of P1,471,416.52 representing the total amount of funds debited from the five (5) trust accounts of the defendant with legal rate of interest of 12%per annum, compounded yearly, effective on 21 June 1991 until fully paid.

No pronouncement as to costs.

SO ORDERED.42

Land Bank filed a Motion for Reconsideration.43 In an Order44dated July 11, 2006, however, the RTC denied the same.

Both parties appealed to the CA.

Ruling of the Court of Appeals

In its December 18, 2009 Decision,45the CA denied Land Banks appeal and granted that of Oate. The CA affirmed the RTCs ruling that Land Bank failed to establish the source of the funds it claimed to have been erroneously credited to Oates account. With respect to Oates appeal, the CA agreed that he is entitled to the unaccounted withdrawals which, as found by the Board, stood at P60,663,488.11 and $3,210,222.85.46 The CAs ruling is anchored on the banks failure to observe Sections X401 and X425 of the Bangko Sentral ng Pilipinas Manual of Regulation for Banks (MORB) requiring it to give full disclosure of the services it offered and conduct its dealings with transparency, as well as to render reports that would sufficiently apprise its clients of the significant developments in the administration of their accounts. Aside from allowing undocumented withdrawals, the CA likewise noted that Land Bank failed to keep an accurate record and render an accounting of Oates accounts. For the CA, the entries in the passbooks are not sufficient because they do not specify where the funds withdrawn from Oates accounts were invested.

The dispositive portion of the CAs Decision reads:chanRoblesvirtualLawlibraryWHEREFORE, the appeal of plaintiff-appellant Land Bank is DENIED.

The appeal of defendant-appellant Emmanuel Oate is hereby partially GRANTED. Accordingly, the May 31, 2006 Decision of the Regional Trial Court, Branch 141, Makati City is hereby MODIFIED in that, in addition to the previous grant of P1,471,416.52 representing the total amount of funds debited from defendant-appellant Oates trust accounts, plaintiff-appellant Land Bank is hereby ordered to pay defendant-appellant Oate the sum of P60,663,488.11 and $3,210,222.85 representing the undocumented withdrawals it debited from the latters trust account with interest at the rate of 12%per annum, compounded yearly from June 21, 1991 until fully paid.

SO ORDERED.47

Land Bank filed a Motion for Reconsideration.48 In a Resolution49dated May 27, 2010, however, the CA denied its motion. Hence, Land Bank filed the instant Petition for Review onCertioraribased on the following issues:chanroblesvirtuallawlibraryIssues

1. WHETHER X X X THE ENTRIES IN THE PASSBOOK ISSUED BY LBP IN OATES TRUST ACCOUNT (EXPRESS TRUST) COVERED BY AN INVESTMENT MANAGEMENT AGREEMENT (IMA) WITH FULL DISCRETION ARE SUFFICIENT TO MEET THE RULE ON PRESUMPTION OF REGULARITY OF ENTRIES IN THE COURSE OF BUSINESS PROVIDED FOR UNDER SECTION 43, RULE 130 OF THE RULES OF COURT.2. WHETHER X X X OATE IS ENTITLED TO CLAIM FOR P1,471,416.52 WHICH IS NOT PLEADED AS COUNTERCLAIM IN HIS ANSWER PURSUANT TO SECTION 2, RULE 9 OF THE RULES OF COURT.3. WHETHER X X X OATE IS ENTITLED TO THE AWARD OF P60,663,488.11 AND $3,210,222.85 REPRESENTING THE ALLEGED UNDOCUMENTED WITHDRAWALS DEBITED FROM HIS TRUST ACCOUNTS ON THE GROUND OF LBPS ALLEGED FAILURE TO MEET THE STANDARDS SET FORTH UNDER THE 2008 MANUAL ON REGULATIONS FOR BANKS (MORB) ISSUED BY BSP.4. WHETHER X X X OATE MAY SUE [ON] TRUST ACCOUNT NOS. 01-014 AND 01-017 OPENED FOR AN UNDISCLOSED PRINCIPAL WITHOUT JOINING HIS UNDISCLOSED PRINCIPAL.5. WHETHER X X X THE AWARD OF INTEREST TO OATE AT THE RATE OF TWELVE PERCENT (12%)PER ANNUM, COMPOUNDED YEARLY FROM JUNE 21, 1991 UNTIL FULLY PAID, IS VIOLATIVE OF ARTICLE 1959 OF THE CIVIL CODE.50

Land Banks Arguments

Land Bank disputes the ruling of both lower courts that it failed to prove the fact of miscrediting the amount of P4,086,888.89 to Oates Trust Account No. 01-125 as the deposit slips pertaining thereto were not presented. Land Bank maintains that in trust accounts the passbooks are always in the banks possession so that it can record the cash inflows and outflows even without the corresponding deposit or withdrawal slips. Citing Section 43, Rule 130 of the Rules of Court, it asserts that the entries in the passbooks must be accepted as proof of the regularity of the transactions reflected in the trust accounts, including the miscrediting of P4,086,888.89, for they were made in the regular course of business. In addition, said entries are supported by demand letters dated October 8, 198151and September 3, 1991,52as well as a Statement of Account53as of May 15, 1992. Land Bank avers that Oate never questioned the statements of account and the reports it presented to him and, hence, he is deemed to have approved all of them.

Land Bank also imputes error on the lower courts in ordering the restoration of the amount of P1,471,416.52 it debited from Oates five trust accounts because he never sought it in his Answer.

Petitioner bank vigorously argues that Oate is not entitled to the undocumented withdrawals amounting to P60,663,488.11 and $3,210,222.85. According to Land Bank, in holding it liable for the said amounts, the CA erroneously relied on the 2008 MORB which was not yet in existence at the time the transactions subject of this case were made or even at the time when Land Bank filed its Complaint. In any case, Land Bank insists that it made proper accounting and apprised Oate of the status of his investments in accordance with the terms of the IMAs. In its demand letter54dated September 3, 1991 Land Bank made a full disclosure that the total outstanding balance of all the trust accounts amounted to P1,471,416.52, but that the same was setoff to recoup the miscredited funds. It faults Oate for not interposing any objection as his silence constitutes as his approval after 30 days from receipt thereof. Land Bank asseverates that Oate could have also inspected and audited the records of his accounts at any reasonable time. But he never did.

Land Bank likewise faults the CA in treating the undocumented withdrawals as unauthorized transactions as the Boards reports do not state anything to that effect. It claims that the CAs reliance on the consolidated report in awarding the extremely huge amounts of P60,663,488.11 and $3,210,222.85 is a grievous mistake because the Board itself already manifested that said report may not be accurate. Consequently too, Land Bank asserts that the reports of the Board cannot prevail over the entries in the passbooks which were made in the regular course of business.

Land Bank further states that as computed by the Board, the amount of negative balances in Oates accounts reached P131,747,487.02 and $818,674.71.55 It thus proposes that if the CA awarded to Oate the undocumented withdrawals on the basis of the Boards reports, then it should have also awarded to Land Bank said negative balances or over withdrawals as reflected in the same reports. After all, Oate admitted in his Answer that all withdrawals from his trust accounts were done in the ordinary course of business.

Furthermore, Land Bank claims that it argued before the CA that Oate cannot sue on Trust Account Nos. 01-014 and 01-017. While Oate alleged that said accounts were opened for an undisclosed principal, he did not, however, join as an indispensable party said principal in violation of Section 3, Rule 3 of the Rules of Court.56 Unfortunately, the CA sidestepped the issue and proceeded to grant Oate the unaccounted withdrawals from said accounts in the aggregate amounts of P47,785,385.91 and $3,210,222.85. FollowingQuilatan v. Heirs of Lorenzo Quilatan,57Land Bank insists that this case should be remanded to the trial court even if the issue of failure to implead an indispensable party was raised for the first time in a Motion for Reconsideration of the trial courts Decision.

Finally, Land Bank questions the ruling of the CA imposing 12%per annumrate of interest. It contends that trust accounts are in the nature of Express Trust and not in the nature of a regular deposit account where a debtor-creditor relationship exists between the bank and its depositor. It was not indebted to Oate but merely held and managed his funds. There being no loan or forbearance of money involved, in the absence of stipulation, the applicable rate of interest is only 6%per annum. Land Bank claims that the CA further erred when it compounded the 12% interest even in the absence of any such stipulation.

Oates Arguments

In opposing the Petition, Oate argues that the issues raised by Land Bank involve factual matters not proper in a petition for review oncertiorari. He posits that the Petition does not fall under any of the exceptions where this Court could review factual issues.

As to Land Banks allegation that he cannot claim the funds without divulging and impleading as an indispensable party his undisclosed principal, Oate points out that in his Answer (With Compulsory Counterclaim) he alleged that Trust Account Nos. 01-014 and 01-017 were opened for an undisclosed principal. Yet Land Bank did not controvert his allegation. It is, therefore, too late in the day for Land Bank to invoke non-joinder of principal as an indispensable party. Besides, when he executed the IMAs, he was acting for himself and on behalf of an undisclosed principal. Hence, he could claim and recover the amounts owing not only to himself but also to his undisclosed principal.

Oate likewise asserts that Land Bank, as uniformly found by both lower courts, failed to prove by preponderance of evidence the fact of miscrediting. As to the demand letters adverted to by Land Bank, Oate asserts that the lower courts did not consider the same because they were not formally offered. Land Bank also failed to present competent and sufficient evidence that he admitted his indebtedness on account of the miscrediting of funds. Since Land Bank failed to prove the fact of miscrediting it had no right to debit any amount from his accounts and must restore whatever funds it had debited therefrom. Oate also denies having failed to seek the return of the funds debited from his account.

Oate further claims that in 1982 his peso trust accounts had a total balance of P35,555,464.78 while the dollar trust accounts had a balance of US$1,690,943.78. Since then, however, he never received any report or update regarding his accounts until the bank sent him financial reports dated June 30, 1991 indicating that the balances of his trust accounts had been unilaterally setoff. According to Oate, Land Banks failure to keep an accurate record of his accounts and to make proper accounting violate several circulars of the Central Bank.58 Hence, it is only proper to require the bank to return the undocumented withdrawals which, as found by the Board, amount to P60,663,488.11 and $3,210,222.82. In addition, Oate points out Land Banks failure to keep an accurate record of his accounts as shown by the huge amounts of unsupported withdrawals and drawings which constitutes willful default if not gross misconduct in violation of the IMAs which, in turn, makes the bank liable for its actions.

Anent Land Banks invocation that the entries in the passbook made in the ordinary course of business are presumed correct and regular, Oate argues that such presumption does not relieve the trustee, Land Bank in this case, from presenting evidence that the undocumented withdrawals and drawings were authorized. In any case, the presumption invoked by Land Bank does not lie as one of its elements that the entrant must be deceased or unable to testify is lacking. Land Bank cannot also excuse itself for failing to regularly submit to him accounting reports as, anyway, he was free to inspect the records at any reasonable day. Oate emphasizes that it is the duty of the bank to keep him updated with significant developments in his accounts.

In refutation of Land Banks claim to negative balances and over withdrawals, Oate posits that the bank cannot benefit from its own negligence in mismanaging the trust accounts.

Lastly, Oate defends the CAs grant of 12%per annumrate of interest as under BSP Circular No. 416, said rate shall be applied in cases where money is transferred from one person to another and the obligation to return the same or a portion thereof is adjudged. In any event, Land Bank is estopped from disputing said rate for Land Bank itself applied the same 12%per annumrate of interest when it sought to recover the amount allegedly miscredited to his account. As to the compounding of interest, Oate claims that the parties intended that interest income shall be capitalized and shall form part of the principal.

Our Ruling

We deny the Petition.

The issues raised are factual anddo not involve questions of law.

From the very start the issues involved in this case are factual the very reason why the RTC created a Board of Commissioners to assist it in examining the records pertaining to Oates accounts and determine the respective cash inflows and outflows in said accounts. Thereafter, the parties agreed to submit the case based on the Boards reports. And when the controversy reached the CA, the appellate court basically conducted an assiduous assessment of the evidentiary records.59 No question of law was ever raised for determination of the lower courts. Now, Land Bank practically beseeches us to assess the probative weight of the documentary evidence on record to resolve the same basic issues of (i) whether Land Bank miscredited P4,086,888.89 to Trust Account No. 01-125 and (ii) whether x x x the undocumented withdrawals and drawings are considered valid and regular and, conversely, if in the negative, whether x x x such amounts shall be credited to the accounts.60chanrobleslaw

These issues could be resolved by consulting the evidence extant on records, such as the IMAs, the passbooks, the letters of instructions, withdrawal and deposit slips, statements of account, and the Boards reports. Land Banks heavy reliance on Section 43, Rule 130 of the Rules of Court61also attests to the factual nature of the issues involved in this case. Well-settled is the rule that in petitions for review oncertiorariunder Rule 45, only questions of law can be raised.62 InVelayo-Fong v. Spouses Velayo,63we defined a question of law as distinguished from a question of fact:chanRoblesvirtualLawlibraryA question of law arises when there is doubt as to what the law is on a certain state of facts, while there is a question of fact when the doubt arises as to the truth or falsity of the alleged facts.For a question to be one of law, the same must not involve an examination of the probative value of the evidence presented by the litigants or any of them. The resolution of the issue must rest solely on what the law provides on the given set of circumstances. Once it is clear that the issue invites a review of the evidence presented, the question posed is one of fact. Thus, the test of whether a question is one of law or of fact is not the appellation given to such question by the party raising the same; rather, it is whether the appellate court can determine the issue raised without reviewing or evaluating the evidence, in which case, it is a question of law; otherwise, it is a question of fact. (Italics supplied)

While there are recognized exceptions64to this rule, none exists in this case.

Anent Land Banks contention that the determination of whether the CA erred in retroactively applying the 2008 MORB poses a legal question, the same deserves scant consideration. True, the CA included in itsratio decidendia discussion on the 2008 MORB to give emphasis to the duties of banks to keep an accurate record and regularly apprise their clients of the status of their accounts. But the issue of whether Land Bank failed to comply with those duties can be resolved even without the MORB as the same duties are also imposed on Land Bank by the IMAs, the contract that primarily governs the parties in this case. As a general rule, a contract is the law between the parties. Thus, from the moment the contract is perfected, the parties are bound not only to the fulfilment of what has been expressly stipulated but also to all consequences which, according to their nature, may be in keeping with good faith, usage and law. Also, the stipulations of the contract being the law between the parties, courts have no alternative but to enforce them as they were agreed [upon] and written x x x.65chanrobleslaw

Based on the factual milieu of this case even without touching on the MORB, we found that Land Bank still failed to perform its bounden duties to keep accurate records and render regular accounting. We also found no cogent reason to disturb the other factual findings of the CA.

Land Bank failed to prove that themiscredited funds came from theproceeds of the pre-terminated loans ofits corporate borrowers.

Land Bank argues that the entries in the passbooks were made in the regular course of business and should be accepted asprima facieevidence of the facts stated therein. But before entries made in the course of business may qualify under the exception to the hearsay rule and given weight, the party offering them must establish that: (1) the person who made those entries is dead, outside the country, or unable to testify; (2) the entries were made at, or near the time of the transaction to which they refer; (3) the entrant was in a position to know the facts stated therein; (4) the entries were