Metropolitan Bank & Trust Company v. The Board of Trustees of Riverside Mills Corporation Provident

Summary

This case involves Metropolitan Bank & Trust Company's unauthorized application of the Riverside Mills Corporation Provident and Retirement Fund to satisfy RMC's debt obligations. RMC had established an employee retirement fund in 1973, which was managed by Philippine Banking Corporation under a trust arrangement. When RMC ceased operations in 1984, the bank unilaterally decided to apply the fund proceeds to RMC's outstanding loans, claiming technical reversion after no claims were made for eleven years. The terminated employees' association and individual beneficiaries filed suit challenging this action. The Supreme Court ruled that the fund was held in express trust exclusively for employee benefits, and that reversion to RMC could not occur until all plan liabilities were satisfied. The Court emphasized that employees terminated due to business closure were entitled to their fund benefits, and the bank trustee lacked authority to effect reversion under the Investment Management Agreement. The decision protects employee retirement funds from unauthorized creditor claims and reinforces fiduciary duties in trust relationships.