G.R. No. 116631 October 28, 1998
MARSH THOMSON, Petitioner, vs. COURT OF APPEALS and THE AMERICAN CHAMPER OF COMMERCE OF THE PHILIPPINES, INC, Respondents.
This is a petition for review on certiorari seeking the reversal of the Decision 1 of the Court of Appeals on May 19, 1994, disposing as follows:
The facts of the case are:
Petitioner Marsh Thomson (Thomson) was the Executive Vice-President and, later on, the Management Consultant of private respondent, the American Chamber of Commerce of the Philippines, Inc. (AmCham) for over ten years, 1979-1989.
While petitioner was still working with private respondent, his superior, A. Lewis Burridge, retired as AmCham's President. Before Burridge decided to return to his home country, he wanted to transfer his proprietary share in the Manila Polo Club (MPC) to petitioner. However, through the intercession of Burridge, private respondent paid for the share but had it listed in petitioner's name. This was made clear in an employment advice dated January 13, 1986, wherein petitioner was informed by private respondent as follows:
On April 25, 1986, Burridge transferred said proprietary share to petitioner, as confirmed in a letter 3 of notification to the Manila Polo Club.
Upon his admission as a new member of the MPC, petitioner paid the transfer fee of P40,000.00 from his own funds; but private respondent subsequently reimbursed this amount. On November 19, 1986, MPC issued Proprietary Membership Certificate Number 3398 in favor of petitioner. But petitioner, however, failed to execute a document recognizing private respondent's beneficial ownership over said share.
Following AmCham's policy and practice, there was a yearly renewal of employment contract between the petitioner and private respondent. Separate letters of employment advice dated October 1, 1986 4, as well March 4, 1988 5 and January 7, 1989 6, mentioned the MPC share. But petitioner never acknowledged that private respondent is the beneficial owner of the share as requested in follow-up requests, particularly one dated March 4, 1988 as follows:
When petitioner's contract of employment was up for renewal in 1989, he notified private respondent that he would no longer be available as Executive Vice President after September 30, 1989. Still, the private respondent asked the petitioner to stay on for another six (6) months. Petitioner indicated his acceptance of the consultancy arrangement with a counter-proposal in his letter dated October 8, 1989, among others as follows:
Private respondent rejected petitioner's counter-proposal.
Pending the negotiation for the consultancy arrangement, private respondent executed on September 29, 1989 a Release and Quitclaim, 9 stating that "AMCHAM, its directors, officers and assigns, employees and/or representatives do hereby release, waive, abandon and discharge J. MARSH THOMSON from any and all existing claims that the AMCHAM, its directors, officers and assigns, employees and/or representatives may have against J. MARSH THOMSON." 10 The quitclaim, expressed in general terms, did not mention specifically the MPC share.
On April 5, 1990, private respondent, through counsel sent a letter to the petitioner demanding the return and delivery of the MPC share which "it (AmCham) owns and placed in your (Thomson's) name." 11
Failing to get a favorable response, private respondent filed on May 15, 1990, a complaint against petitioner praying, inter alia, that the Makati Regional Trial Court render judgment ordering Thomson "to return the Manila Polo Club share to the plaintiff and transfer said share to the nominee of plaintiff." 12
On February 28, 1992, the trial court promulgated its decision, 13 thus:
In said decision, the trial court awarded the MPC share to defendant (petitioner now) on the ground that the Articles of Incorporation and By-laws of Manila Polo Club prohibit artificial persons, such as corporations, to be club members, ratiocinating in this manner:
Not satisfied with the trial court's decision, private respondent appealed to the Court of Appeals.
On May 19, 1994, the Court of Appeals (Former Special Sixth Division) promulgated its decision 16 in said CA-G.R. CV No. 38417, reversing the, trial court's judgment and ordered herein petitioner to transfer the MPC share to the nominee of private respondent, reasoning thus:
On 16 June 1994, petitioner filed a motion for reconsideration 18 of said decision. By resolution 19 promulgated on August 4, 1994, the Court of Appeals denied the motion for reconsideration.
In this petition for review, petitioner alleges the following errors of public respondent as grounds for our review:
As posited above, these assigned errors show the disputed matters herein are mainly factual. As such they are best left to the trial and appellate courts' disposition. And this Court could have dismissed the petition outright, were it not for the opposite results reached by the courts below. Moreover, for the enhanced appreciation of the jural relationship between the parties involving trust, this Court has given due course to the petition, which we now decide.
After carefully considering the pleadings on record, we find there are two main issues to be resolved: (1) Did respondent court err in holding that private respondent is the beneficial owner of the disputed share? (2) Did the respondent court err in ordering petitioner to transfer said share to private respondent's nominees?
Petitioner claims ownership of the MPC share, asserting that he merely incurred a debt to respondent when the latter advanced the funds for the purchase of the share. On the other hand, private respondent asserts beneficial ownership whereby petitioner only holds the share in his name, but the beneficial title belongs to private respondent. To resolve the first issue, we must clearly distinguish a debt from a trust.
The beneficiary of a trust has beneficial interest in the trust property, while a creditor has merely a personal claim against the debtor. In trust, there is a fiduciary relation between a trustee and a beneficiary, but there is no such relation between a debtor and creditor. While a debt implies merely an obligation to pay a certain sum of money, a trust refers to a duty to deal with a specific property for the benefit of another. If a creditor-debtor relationship exists, but not a fiduciary relationship between the parties, there is no express trust. However, it is understood that when the purported trustee of funds is entitled to use them as his or her own (and commingle them with his or her own money), a debtor-creditor relationship exists, not a trust. 21
In the present case, as the Executive Vice-President of AmCham, petitioner occupied a fiduciary position in the business of AmCham. AmCham released the funds to acquire a share in the Club for the use of petitioner but obliged him to "execute such document as necessary to acknowledge beneficial ownership thereof by the Chamber". 22 A trust relationship is, therefore, manifestly indicated.
Moreover, petitioner failed to present evidence to support his allegation of being merely a debtor when the private respondent paid the purchase price of the MPC share. Applicable here is the rule that a trust arises in favor of one who pays the purchase money of property in the name of another, because of the presumption that he who pays for a thing intends a beneficial interest therein for himself. 23
Although petitioner initiated the acquisition of the share, evidence on record shows that private respondent acquired said share with its funds. Petitioner did not pay for said share, although he later wanted to, but according to his own terms, particularly the price thereof.
Private respondent's evident purpose in acquiring the share was to provide additional incentive and perks to its chosen executive, the petitioner himself. Such intention was repeated in the yearly employment advice prepared by AmCham for petitioner's concurrence. In the cited employment advice, dated March 4, 1988, private respondent once again, asked the petitioner to execute proof to recognize the trust agreement in writing:
Petitioner voluntarily affixed his signature to conform with the employment advice, including his obligation stated therein - for him to execute the necessary document to recognize his employer as the beneficial owner of the MPC share. Now, we cannot hear him claiming otherwise, in derogation of said undertaking, without legal and equitable justification.
For private respondent's intention to hold on to its beneficial ownership is not only presumed; it was expressed in writing at the very outset. Although the share was placed in the name of petitioner, his title is limited to the usufruct, that is, to enjoy the facilities and privileges of such membership in the club appertaining to the share. Such arrangement reflects a trust relationship governed by law and equity.
While private respondent paid the purchase price for the share, petitioner was given legal title thereto. Thus, a resulting trust is presumed as a matter of law. The burden then shifted to the transferee to show otherwise, that it was just a loan. Such resulting trust could have been rebutted by proof of a contrary intention by a showing that, in fact, no trust was intended. Petitioner could have negated the trust agreement by contrary, consistent and convincing evidence on rebuttal. However, on the witness stand, petitioner failed to do so persuasively.
On cross-examination, the petitioner testified as follows:
In deciding whether the property was wrongfully appropriated or retained and what the intent of the parties was at the time of the conveyance, the court must rely upon its impression of the credibility of the witnesses. 26 Intent is a question of fact, the determination of which is not reviewable unless the conclusion drawn by the trier is one which could not reasonably be drawn. 27 Petitioner's denial is not adequate to rebut the trust. Time and again, we have ruled that denials, if unsubstantiated by clear and convincing evidence, are deemed negative and self-serving evidence, unworthy of credence. 28
The trust between the parties having been established, petitioner advanced an alternative defense that the private respondent waived the beneficial ownership of MPC share by issuing the Release and Quitclaim in his favor.
This argument is less than persuasive. The quitclaim executed by private respondent does not clearly show the intent to include therein the ownership over the MPC share. Private respondent even asserts that at the time the Release and Quitclaim was executed on September 29, 1989, the ownership of the MPC share was not controversial nor contested. Settled is the rule that a waiver to be valid and effective must, in the first place, be couched in clear and unequivocal terms which leave no doubt as to the intention of a party to give up a right or benefit which legally pertains to him. 29 A waiver may not be attributed to a person when the terms thereof do not explicitly and clearly evidence an intent to abandon a right vested in such person. 30 If we apply the standard rule that waiver must be cast in clear and unequivocal terms, then clearly the general terms of the cited release and quitclaim indicates merely a clearance from general accountability, not specifically a waiver of AmCham's beneficial ownership of the disputed shares.
Additionally, the intention to waive a right or advantage must be shown clearly and convincingly, and when the only proof of intention rests in what a party does, his act should be so manifestly consistent with, and indicative of, an intent to voluntarily relinquish the particular right or advantage that no other reasonable explanation of his conduct is possible. 31 Considering the terms of the quitclaim executed by the President of private respondent, the tenor of the document does not lead to the purported conclusion that be intended to renounce private respondent's beneficial title over its share in the Manila Polo Club. We, therefore, find no reversible error in the respondent Court's holding that private respondent, AmCham, is the beneficial owner of the share in dispute.
Turning now to the second issue, the petitioner contends that the Articles of Incorporation and By-laws of Manila Polo Club prohibit corporate membership. However, private respondent does not insist nor intend to transfer the club membership in its name but rather to its designated nominee. For as properly ruled by the Court of Appeals:
The Manila Polo Club does not necessarily prohibit the transfer of proprietary shares by its members. The Club only restricts membership to deserving applicants in accordance with its rules, when the amended Articles of Incorporation states that: "No transfer shall be valid except between the parties, and shall be registered in the Membership Book unless made in accordance with these Articles and the By-Laws". 33 Thus, as between parties herein, there is no question that a transfer is feasible. Moreover, authority granted to a corporation to regulate the transfer of its stock does not empower it to restrict the right of a stockholder to transfer his shares, but merely authorizes the adoption of regulations as to the formalities and procedure to be followed in effecting transfer. 34
In this case, the petitioner was the nominee of the private respondent to hold the share and enjoy the privileges of the club. But upon the expiration of petitioner's employment as officer and consultant of AmCham, the incentives that go with the position, including use of the MPC share, also ceased to exist. It now behooves petitioner to surrender said share to private respondent's next nominee, another natural person. Obviously this arrangement of trust and confidence cannot be defeated by the petitioner's citation of the MPC rules to shield his untenable position, without doing violence to basic tenets of justice and fair dealing.
However, we still have to ascertain whether the rights of herein parties to the trust still subsist. It has been held that so long as there has been no denial or repudiation of the trust, the possession of the trustee of an express and continuing trust is presumed to be that of the beneficiary, and the statute of limitations does not run between them. 35 With regard to a constructive or a resulting trust, the statute of limitations does not begin to run until the trustee clearly repudiates or disavows the trust and such disavowal is brought home to the other party, "cestui que trust". 36 The statute of limitations runs generally from the time when the act was done by which the party became chargeable as a trustee by operation of law or when the beneficiary knew that he had a cause of action, 37 in the absence of fraud or concealment.
Noteworthy in the instant case, there was no declared or explicit repudiation of the trust existing between the parties. Such repudiation could only be inferred as evident when the petitioner showed his intent to appropriate the MPC share for himself. Specifically, this happened when he requested to retain the MPC share upon his reimbursing the purchase price of P110,000, a request denied promptly by private respondent. Eventually, petitioner refused to surrender the share despite the written demand of private respondent. This act could then be construed as repudiation of the trust. The statute of limitation could start to set in at this point in time. But private respondent took immediate positive action. Thus, on May 15, 1990, private respondent filed an action to recover the MPC share. Between the time of implicit repudiation of the trust on October 9, 1989, as evidenced by petitioner's letter of said date, and private respondent's institution of the action to recover the MPC share on May 15, 1990, only about seven months bad lapsed. Our laws on the matter provide that actions to recover movables shall prescribe eight years from the time the possession thereof is lot, 38 unless the possessor has acquired the ownership by prescription for a less period of four years if in good faith. 39 Since the private respondent filed the necessary action on time and the defense of good faith is not available to the petitioner, there is no basis for any purported claim of prescription, after repudiation of the trust, which will entitle petitioner to ownership of the disputed share. As correctly held by the respondent court, petitioner has the obligation to transfer now said share to the nominee of private respondent.
WHEREFORE, the Petition for Review on Certiorari is DENIED. The Decision of the Court of Appeals of May 19, 1994, is AFFIRMED.
COSTS against petitioner.
Davide, Jr., Vitug and Panganiban, JJ., concur.
Bellosillo, J., is on leave.
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