CLASSIFICATION: IMPLIED TRUST

Case Gaston v. Republic Planters Bank, 158 SCRA 626/ G.R. No. L-77194
Citation:

Date: March 15, 1988

Petitioner Virgilio Gaston, Hortencia Starke, Romeo Guanzon, Oscar Villanueva, Jose Abello, Remo Ramos,
s: Carolina Lopez, Jesus Isasi, Manuel Lacson, Javier Lacson, Tito Tagarao, Eduardo Suatengco, Augusto
Llamas, Rodolfo Siason, Pacifico Maghari, Jr., Jose Jamandre, Aurelio Gamboa, Et Al.

Respond Republic Planters Bank, Philippine Sugar Commission, And Sugar Regulatory Administration,
ents Respondents, Angel H. Severino, Jr., Glicerio Javellana, Gloria P. De La Paz, Joey P. De La Paz, Et Al.,
And National Federation Of Sugarcane Planters

Doctrine: - The doctrine of resulting trusts is founded on the presumed intention of the parties; and as a general
rule, it arises where, and only where such may be reasonably presumed to be the intention of the
parties, as determined from the facts and circumstances existing at the time of the transaction out of
which it is sought to be established.
- The stabilization fees collected are in the nature of a tax, which is within the power of the State to
impose for the promotion of the sugar industry.
- Having been levied for a special purpose, the revenues collected are to be treated as a special fund,
to be, in the language of the statute, "administered in trust' for the purpose intended. Once the
purpose has been fulfilled or abandoned, the balance, if any, is to be transferred to the general funds
of the Government. That is the essence of the trust intended (See 1987 Constitution, Article VI, Sec.
29(3), lifted from the 1935 Constitution, Article VI, Sec. 23(l]).

Antecede  Respondent Philippine Sugar Commission (PHILSUCOM) was formerly the govt office tasked with the
nt Facts: function of regulating and supervising the sugar industry until it was superseded by its co-respondent
Sugar Regulatory Administration (SRA).
 Although an EO abolished the PHILSUCOM, its existence as a juridical entity was mandated to
continue for 3 more years "for the purpose of prosecuting and defending suits by or against it and
enables it to settle and close its affairs, to dispose of and convey its property and to distribute its
assets.
 Respondent Republic Planters Bank (the Bank) is a commercial banking corporation.
 Angel H. Severino, Jr., et al., are sugarcane planters planting and milling their sugarcane in different
mill districts of Negros Occidental, were allowed to intervene by the Court, since they have common
cause with petitioners and respondents having interposed no objection to their intervention. National
Federation of Sugar Planters (NFSP) also moved to intervene, which the Court allowed.
 Petitioners and Intervenors have come to this Court praying for a Writ of mandamus commanding
respondents: to implement and accomplish the privatization of republic planters bank by the transfer
and distribution of the shares of stock in the said bank; now held by and still carried in the name of the
Philippine sugar commission, to the sugar producers, planters and millers, who are the true beneficial
owners of the 761,416 common shares valued at P36,548.000.00, and 53,005,045 preferred shares
with a total par value of P254,424,224.72, or a total investment of P290,972,224.72, the said
investment having been funded by the deduction of Pl.00 per picul from sugar proceeds of the sugar
producers commencing the year 1978-79 until the present as stabilization fund pursuant to P.D. #
388.
o P. D. No. 388, promulgated on February 2,1974, which created the PHILSUCOM, provided for the
collection of a Stabilization Fund. Section 7 of P.D. No. 388 does provide that the stabilization fees
collected "shall be administered in trust by the Commission." However, while the element of an
intent to create a trust is present, a resulting trust in favor of the sugar producers, millers and
planters cannot be said to have ensued because the presumptive intention of the parties is not
reasonably ascertainable from the language of the statute itself.
 Respondent Bank does not take issue with either petitioners or its correspondents as it has no
beneficial or equitable interest that may be affected by the ruling in this Petition, but welcomes the
filing of the Petition since it will settle finally the issue of legal ownership of the questioned shares of
stock.
 Respondents PHILSUCOM and SRA, for their part, squarely traverse the petition arguing that no trust
results from P.D. No. 388; that the stabilization fees collected are considered government funds under
the Government Auditing Code; that the transfer of shares of stock from PHILSUCOM to the sugar
producers would be irregular, if not illegal; and that this suit is barred by laches.
Issue: Whether the stabilization fees collected from sugar planters and millers pursuant to Section 7 of P.D. No.
388 are funds in trust for them, or public funds.

SC The Writ of mandamus is denied.

No implied trust in favor of the sugar producers either can be deduced from the imposition of the levy. "The
essential Idea of an implied trust involves a certain antagonism between the cestui que trust and the
trustee even when the trust has not arisen out of fraud nor out of any transaction of a fraudulent or immoral
character (65 CJ 222). It is not clearly shown from the statute itself that the PHILSUCOM imposed on itself
the obligation of holding the stabilization fund for the benefit of the sugar producers. It must be
categorically demonstrated that the very administrative agency which is the source of such regulation
would place a burden on itself. (Batchelder v. Central Bank of the Philippines)

- The stabilization fees collected are in the nature of a tax, which is within the power of the State to
impose for the promotion of the sugar industry (Lutz vs. Araneta, 98 Phil. 148). They constitute
sugar liens (Sec. 7[b], P.D. No. 388). The collections made accrue to a "Special Fund," a
"Development and Stabilization Fund," almost Identical to the "Sugar Adjustment and Stabilization
Fund" created under Section 6 of Commonwealth Act 567. 1 The tax collected is not in a pure
exercise of the taxing power. It is levied with a regulatory purpose, to provide means for the
stabilization of the sugar industry. The levy is primarily in the exercise of the police power of the
State (Lutz vs. Araneta, supra.).

The stabilization fees in question are levied by the State upon sugar millers, planters and producers for a
special purpose — that of "financing the growth and development of the sugar industry and all its
components, stabilization of the domestic market including the foreign market the fact that the State has
taken possession of moneys pursuant to law is sufficient to constitute them state funds, even though they
are held for a special purpose.

- Having been levied for a special purpose, the revenues collected are to be treated as a special
fund, to be, in the language of the statute, "administered in trust' for the purpose intended. Once
the purpose has been fulfilled or abandoned, the balance, if any, is to be transferred to the general
funds of the Government. That is the essence of the trust intended (See 1987 Constitution, Article
VI, Sec. 29(3), lifted from the 1935 Constitution, Article VI, Sec. 23(l]).

The character of the Stabilization Fund as a special fund is emphasized by the fact that the funds are
deposited in the Philippine National Bank and not in the Philippine Treasury, moneys from which may be
paid out only in pursuance of an appropriation made by law (1987) Constitution, Article VI, Sec. 29[1],1973
Constitution, Article VIII, Sec. 18[l]).

That the fees were collected from sugar producers, planters and millers, and that the funds were
channeled to the purchase of shares of stock in respondent Bank do not convert the funds into a trust fired
for their benefit nor make them the beneficial owners of the shares so purchased. It is but rational that the
fees be collected from them since it is also they who are to be benefited from the expenditure of the funds
derived from it. The investment in shares of respondent Bank is not alien to the purpose intended because
of the Bank's character as a commodity bank for sugar conceived for the industry's growth and
development. Furthermore, of note is the fact that one-half, (1/2) or PO.50 per picul, of the amount levied
under P.D. No. 388 is to be utilized for the "payment of salaries and wages of personnel, fringe benefits
and allowances of officers and employees of PHILSUCOM" thereby immediately negating the claim that
the entire amount levied is in trust for sugar, producers, planters and millers.

To rule in petitioners' favor would contravene the general principle that revenues derived from taxes
cannot be used for purely private purposes or for the exclusive benefit of private persons. The Stabilization
Fund is to be utilized for the benefit of the entire sugar industry, "and all its components, stabilization of the
domestic market," including the foreign market the industry being of vital importance to the country's
economy and to national interest.