Republic
of the
Supreme
Court
FIRST DIVISION
|
PHILIPPINE
NATIONAL BANK, Petitioner, - versus - MERELO B.
AZNAR; MATIAS B. AZNAR III; JOSE L. AZNAR (deceased), represented by his
heirs; RAMON A. BARCENILLA; ROSARIO T. BARCENILLA; JOSE B. ENAD (deceased),
represented by his heirs; and RICARDO GABUYA (deceased), represented by his
heirs, Respondents. x- - - - - - - - - - - - - - - - - - - - - - - - - x MERELO B. AZNAR and MATIAS B.
AZNAR III,
Petitioners, - versus - PHILIPPINE NATIONAL BANK, Respondent. |
|
G.R. No. 171805
G.R. No. 172021 Present: Chairperson, VELASCO, JR., LEONARDO-DE
CASTRO, PERALTA,* and PEREZ, JJ. Promulgated: May 30, 2011 |
x-
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
LEONARDO-DE CASTRO, J.:
Before the Court are two petitions for review on certiorari under Rule 45 of the Rules of
Court both seeking to annul and set aside the Decision[1] dated September 29, 2005
as well as the Resolution[2]
dated March 6, 2006 of the Court of Appeals in CA-G.R. CV No. 75744, entitled “Merelo
B. Aznar, Matias B. Aznar III, Jose L. Aznar (deceased) represented by his heirs,
Ramon A. Barcenilla (deceased) represented by his heirs, Rosario T. Barcenilla,
Jose B. Enad (deceased) represented by his heirs, and Ricardo Gabuya (deceased)
represented by his heirs v. Philippine National Bank, Jose Garrido and Register
of Deeds of Cebu City.” The
September 29, 2005 Decision of the Court of Appeals set aside the Decision[3] dated November 18, 1998 of
the Regional Trial Court (RTC) of Cebu City, Branch 17, in Civil Case No.
CEB-21511. Furthermore, it ordered the
Philippine National Bank (PNB) to pay Merelo
B. Aznar; Matias B. Aznar III; Jose L. Aznar (deceased), represented by his
heirs; Ramon A. Barcenilla (deceased), represented by his heirs; Rosario T.
Barcenilla; Jose B. Enad (deceased), represented by his heirs; and Ricardo
Gabuya (deceased), represented by his heirs (Aznar, et al.), the amount of their lien based on
the Minutes of the Special Meeting of the Board of Directors[4] (Minutes) of the defunct
Rural Insurance and Surety Company, Inc. (RISCO) duly annotated on the titles
of three parcels of land, plus legal interests from the time of PNB’s
acquisition of the subject properties until the finality of the judgment but
dismissing all other claims of Aznar, et al. On the other hand, the March 6, 2006
Resolution of the Court of Appeals denied the Motion for Reconsideration
subsequently filed by each party.
The facts of this case,
as stated in the Decision dated September 29, 2005 of the Court of Appeals, are
as follows:
In 1958, RISCO ceased operation due to business
reverses. In plaintiffs’ desire to rehabilitate RISCO, they contributed a total
amount of P212,720.00 which
was used in the purchase of the three (3) parcels of land described as follows:
“A parcel of land (Lot No. 3597 of the
Talisay-Minglanilla Estate, G.L.R.O. Record No. 3732) situated in the
“A parcel of land (Lot 7380 of the Talisay
Minglanilla Estate, G.L.R.O. Record No. 3732), situated in the
“A parcel of land (
After the purchase of the above lots, titles were
issued in the name of RISCO. The amount contributed by plaintiffs constituted
as liens and encumbrances on the aforementioned properties as annotated in the
titles of said lots. Such annotation was made pursuant to the Minutes of the Special Meeting of the Board of
Directors of RISCO (hereinafter referred to
as the “Minutes”) on March 14, 1961, pertinent portion of which states:
x x x x
3. The President then explained that in a special
meeting of the stockholders previously called for the purpose of putting up
certain amount of P212,720.00 for the rehabilitation of the Company, the
following stockholders contributed the amounts indicated opposite their names:
CONTRIBUTED SURPLUS
|
MERELO B. AZNAR |
|
|
MATIAS B. AZNAR
|
50,000.00 |
|
JOSE L. AZNAR
|
27,720.00 |
|
RAMON A.
BARCENILLA |
25,000.00 |
|
ROSARIO T.
BARCENILLA |
25,000.00 |
|
JOSE B. ENAD |
17,500.00 |
|
RICARDO GABUYA |
17,500.00 |
|
|
212,720.00 |
x x x x
And that the respective contributions
above-mentioned shall constitute as their lien or interest on the property
described above, if and when said property are titled in the name of RURAL
INSURANCE & SURETY CO., INC., subject to registration as their adverse
claim in pursuance of the Provisions of Land Registration Act, (Act No. 496, as
amended) until such time their respective contributions are refunded to them completely.
x x x x”
Thereafter, various subsequent annotations were made
on the same titles, including the Notice of Attachment and Writ of Execution
both dated August 3, 1962 in favor of herein defendant PNB, to wit:
On TCT No. 8921 for
Entry No. 7416-V-4-D.B. – Notice of Attachment – By
the Provincial Sheriff of Cebu, Civil Case No. 47725, Court of First Instance
of Manila, entitled “Philippine National Bank, Plaintiff, versus Iluminada
Gonzales, et al., Defendants”, attaching all rights, interest and participation
of the defendant Iluminada Gonzales and Rural Insurance & Surety Co., Inc.
of the two parcels of land covered by T.C.T. Nos. 8921, Attachment No. 330 and
185.
Date of Instrument – August 3, 1962.
Date of Inscription – August 3, 1962, 3:00 P.M.
Entry No. 7417-V-4-D.B. – Writ of Execution – By the
Court of First Instance of Manila, commanding the Provincial Sheriff of Cebu,
of the lands and buildings of the defendants, to make the sum of Seventy[-]One
Thousand Three Hundred Pesos (P71,300.00) plus interest etc., in
connection with Civil Case No. 47725, File No. T-8021.
Date of Instrument – July 21, 1962.
Date of Inscription – August 3, 1962, 3:00 P.M.
Entry No. 7512-V-4-D.B. – Notice of Attachment – By
the Provincial Sheriff of
Date of the Instrument – August 16, 1962.
Date of Inscription – August 16, 1962, 2:50 P.M.
Entry No. 7513-V-4-D.B. – Writ of Execution – By the
Municipal Court of the City of Manila, commanding the Provincial Sheriff of
Cebu, of the lands and buildings of the defendants, to make the sum of Three
Thousand Pesos (P3,000.00), with interest at 12% per annum from July 20,
1959, in connection with Civil Case Nos.
IV-74065, 73929, 74613 annotated above.
File
No. T-8921
Date
of the Instrument – August 11, 1962.
Date of the Inscription – August 16, 1962, 2:50 P.M.
On TCT No. 8922 for
(Same
as the annotations on TCT 8921)
On TCT No. 24576 for
Entry No. 1660-V-7-D.B. – Notice of Attachment – by
the Provincial Sheriff of Cebu, Civil Case No. 47725, Court of First Instance
of Manila, entitled “Philippine National Bank, Plaintiff, versus, Iluminada
Gonzales, et al., Defendants”, attaching all rights, interest, and
participation of the defendants Iluminada Gonzales and Rural Insurance &
Surety Co., Inc. of the parcel of land herein described.
Attachment No. 330 & 185.
Date of Instrument – August 3, 1962.
Date of Inscription – August 3, 1962, 3:00 P.M.
Entry No. 1661-V-7-D.B. – Writ of Execution by the
Court of First Instance of Manila commanding the Provincial Sheriff of Cebu, of
the lands and buildings of the defendants to make the sum of Seventy[-]One
Thousand Three Hundred Pesos (P71,300.00), plus interest, etc., in
connection with Civil Case No. 47725.
File No. T-8921.
Date of the Instrument – July 21, 1962.
Date of the Inscription – August 3, 1962 3:00 P.M.
Entry No. 1861-V-7-D.B. - Notice of Attachment – By
the Provincial Sheriff of Cebu, Civil Case Nos. IV-74065, 73929, 74129, 72613
& 72871, in the Municipal Court of the City of Manila, entitled “Jose
Garrido, Plaintiff, versus Rural Insurance & Surety Co., Inc., et als.,
Defendants”, attaching all rights, interest and participation of the
defendants, to the parcel of land herein described.
Attachment No. 186.
File No. T-8921.
Date of the Instrument – August 16, 1962.
Date of the Instription – August 16, 1962 2:50 P.M.
Entry No. 1862-V-7-D.B. – Writ of Execution – by the
Municipal Court of Manila, commanding the Provincial Sheriff of Cebu, of the
lands and buildings of the Defendants, to make the sum of Three Thousand Pesos
(P3,000.00), with interest at 12% per annum from July 20, 1959, in connection
with Civil Case Nos. IV-74065, 73929, 74129, 72613 & 72871 annotated above.
File No. T-8921.
Date of the Instrument – August 11, 1962.
Date of the Inscription – August 16, 1962 at 2:50
P.M.
As a result, a Certificate of Sale was issued in
favor of Philippine National Bank, being the lone and highest bidder of the
three (3) parcels of land known as Lot Nos. 3597 and 7380, covered by T.C.T.
Nos. 8921 and 8922, respectively, both situated at Talisay, Cebu, and Lot No.
1328-C covered by T.C.T. No. 24576 situated at Cebu City, for the amount of
Thirty-One Thousand Four Hundred Thirty Pesos (P31,430.00). Thereafter, a Final
Deed of Sale dated May 27, 1991 in favor of the Philippine National Bank was
also issued and Transfer Certificate of Title No. 24576 for Lot 1328-C
(corrected to 1323-C) was cancelled and a new certificate of title, TCT 119848
was issued in the name of PNB on August 26, 1991.
This prompted plaintiffs-appellees to file the
instant complaint seeking the quieting of their supposed title to the subject
properties, declaratory relief, cancellation of TCT and reconveyance with
temporary restraining order and preliminary injunction. Plaintiffs alleged that
the subsequent annotations on the titles are subject to the prior annotation of
their liens and encumbrances. Plaintiffs further contended that the subsequent
writs and processes annotated on the titles are all null and void for want of
valid service upon RISCO and on them, as stockholders. They argued that the
Final Deed of Sale and TCT No. 119848 are null and void as these were issued
only after 28 years and that any right which PNB may have over the properties
had long become stale.
Defendant PNB on the other hand countered that
plaintiffs have no right of action for quieting of title since the order of the
court directing the issuance of titles to PNB had already become final and
executory and their validity cannot be attacked except in a direct proceeding
for their annulment. Defendant further asserted that plaintiffs, as mere stockholders
of RISCO do not have any legal or equitable right over the properties of the
corporation. PNB posited that even if plaintiff’s monetary lien had not
expired, their only recourse was to require the reimbursement or refund of
their contribution.[5]
Aznar, et al.,
filed a Manifestation and Motion for Judgment on the Pleadings[6] on October 5, 1998. Thus, the trial court rendered the November 18, 1998 Decision, which ruled
against PNB on the basis that there was an express trust created over the
subject properties whereby RISCO was the trustee and the stockholders, Aznar, et al., were the beneficiaries or the cestui que trust. The dispositive portion of the said ruling
reads:
WHEREFORE, judgment is hereby rendered as follows:
a)
Declaring the Minutes of the Special
Meeting of the Board of Directors of RISCO approved on March 14, 1961 (Annex
“E,” Complaint) annotated on the titles to subject properties on May 15, 1962
as an express trust whereby RISCO was a mere trustee and the above-mentioned
stockholders as beneficiaries being the true and lawful owners of Lots 3597,
7380 and 1323;
b)
Declaring all the subsequent annotations
of court writs and processes, to wit: Entry No. 7416-V-4-D.B., 7417-V-4-D.B.,
7512-V-4-D.B., and 7513-V-4-D.B. in TCT No. 8921 for Lot 3597 and TCT No. 8922
for Lot 7380; Entry No. 1660-V-7-D.B., Entry No. 1661-V-7-D.B., Entry No.
1861-V-7-D.B., Entry No. 1862-V-7-D.B., Entry No. 4329-V-7-D.B., Entry No.
3761-V-7-D.B. and Entry No. 26522 v. 34, D.B. on TCT No. 24576 for Lot 1323-C,
and all other subsequent annotations thereon in favor of third persons, as null
and void;
c)
Directing the Register of Deeds of the
Province of Cebu and/or the Register of Deeds of Cebu City, as the case may be,
to cancel all these annotations mentioned in paragraph b) above the titles;
d)
Directing the Register of Deeds of the
Province of Cebu to cancel and/or annul TCTs Nos. 8921 and 8922 in the name of
RISCO, and to issue another titles in the names of the plaintiffs; and
e)
Directing Philippine National Bank to
reconvey TCT No. 119848 in favor of the plaintiffs.[7]
PNB appealed the adverse ruling to the
Court of Appeals which, in its September 29, 2005 Decision, set aside the
judgment of the trial court. Although
the Court of Appeals agreed with the trial court that a judgment on the pleadings was proper, the
appellate court opined that the monetary contributions made by Aznar, et al., to RISCO can only be
characterized as a loan secured by a lien on the subject lots, rather than an express
trust. Thus, it directed PNB to pay
Aznar, et al., the amount of their contributions
plus legal interest from the time of acquisition of
the property until finality of judgment. The dispositive portion of the decision reads:
WHEREFORE, premises considered, the assailed Judgment is hereby
SET ASIDE.
A new judgment is rendered ordering Philippine National Bank to
pay plaintiffs-appellees the amount of their lien based on the Minutes of the Special Meeting of the Board
of Directors duly annotated on the titles, plus legal interests from the
time of appellants’ acquisition of the subject properties until the finality of
this judgment.
All other claims of the plaintiffs-appellees are hereby DISMISSED.[8]
Both parties moved for reconsideration
but these were denied by the Court of Appeals. Hence, each party filed with this Court their
respective petitions for review on certiorari
under Rule 45 of the Rules of Court, which were consolidated in a
Resolution[9]
dated October 2, 2006.
In PNB’s petition, docketed as G.R. No.
171805, the following assignment of errors were raised:
I
THE COURT OF APPEALS ERRED IN AFFIRMING THE FINDINGS OF THE TRIAL
COURT THAT A JUDGMENT ON THE PLEADINGS WAS WARRANTED DESPITE THE EXISTENCE OF
GENUINE ISSUES OF FACTS ALLEGED IN PETITIONER PNB’S ANSWER.
II
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE RIGHT OF
RESPONDENTS TO REFUND OR REPAYMENT OF THEIR CONTRIBUTIONS HAD NOT PRESCRIBED
AND/OR THAT THE MINUTES OF THE SPECIAL MEETING OF THE BOARD OF DIRECTORS OF
RISCO CONSTITUTED AS AN EFFECTIVE ADVERSE CLAIM.
III
THE COURT OF APPEALS ERRED IN NOT CONSIDERING THE DISMISSAL OF THE
COMPLAINT ON GROUNDS OF RES JUDICATA AND LACK OF CAUSE OF ACTION ALLEGED BY
PETITIONER IN ITS ANSWER.[10]
On the other hand, Aznar, et al.’s
petition, docketed as G.R. No. 172021, raised the following issue:
THE COURT OF APPEALS ERRED IN CONCLUDING THAT THE CONTRIBUTIONS MADE BY
THE STOCKHOLDERS OF RISCO WERE MERELY A LOAN SECURED BY THEIR LIEN OVER THE
PROPERTIES, SUBJECT TO REIMBURSEMENT OR REFUND, RATHER THAN AN EXPRESS TRUST.[11]
Anent the first issue
raised in G.R. No.
171805, PNB argues that a
judgment on the pleadings was not proper because its Answer,[12] which
it filed during the trial court proceedings of this case, tendered genuine
issues of fact since it did not only deny material allegations in Aznar, et al.’s Complaint[13] but
also set up special and affirmative defenses. Furthermore, PNB maintains that, by virtue of
the trial court’s judgment on the pleadings, it was denied its right to present
evidence and, therefore, it was denied due process.
The contention is meritorious.
The legal basis for
rendering a judgment on the pleadings can be found in Section 1, Rule 34 of the
Rules of Court which states that “[w]here an answer fails to tender an issue,
or otherwise admits the material allegations of the adverse party’s pleading,
the court may, on motion of that party, direct judgment on such pleading. x x x.”
Judgment on the pleadings
is, therefore, based exclusively upon the allegations appearing in the
pleadings of the parties and the annexes, if any, without consideration of any
evidence aliunde.[14] However, when it appears that not all the
material allegations of the complaint were admitted in the answer for some of
them were either denied or disputed, and the defendant has set up certain
special defenses which, if proven, would have the effect of nullifying plaintiff’s
main cause of action, judgment on the pleadings cannot be rendered.[15]
In the case at bar, the
Court of Appeals justified the trial court’s resort to a judgment on the
pleadings in the following manner:
Perusal of the complaint, particularly, Paragraph 7
thereof reveals:
“7. That in their desire to rehabilitate RISCO, the
above-named stockholders contributed a total amount of PhP212,720.00
which was used in the purchase of the above-described parcels of land, which
amount constituted liens and encumbrances on subject properties in favor of the
above-named stockholders as annotated in the titles adverted to above, pursuant
to the Minutes of the Special Meeting of the Board of Directors of RISCO
approved on March 14, 1961, a copy of which is hereto attached as Annex “E”.
On
the other hand, defendant in its Answer, admitted the aforequoted allegation
with the qualification that the amount put up by the stockholders was “used as
part payment” for the properties. Defendant further averred that plaintiff’s
liens and encumbrances annotated on the titles issued to RISCO constituted as
“loan from the stockholders to pay part of the purchase price of the properties”
and “was a personal obligation of RISCO and was thus not a claim adverse to the
ownership rights of the corporation.” With these averments, We do not find
error on the part of the trial court in rendering a judgment on the pleadings.
For one, the qualification made by defendant in its answer is not sufficient to
controvert the allegations raised in the complaint. As to defendants’
contention that the money contributed by plaintiffs was in fact a “loan” from
the stockholders, reference can be made to the Minutes of the Special Meeting
of the Board of Directors, from which plaintiffs-appellees anchored their
complaint, in order to ascertain the true nature of their claim over the
properties. Thus, the issues raised by the parties can be resolved on the basis
of their respective pleadings and the annexes attached thereto and do not
require further presentation of evidence aliunde.[16]
However, a careful
reading of Aznar, et al.’s Complaint
and of PNB’s Answer would reveal that both parties raised several claims and
defenses, respectively, other than what was cited by the Court of Appeals, which
requires the presentation of evidence for resolution, to wit:
|
Complaint (Aznar, et al.) |
Answer (PNB) |
|
11. That these
subsequent annotations on the titles of the properties in question are
subject to the prior annotation of liens and encumbrances of the above-named
stockholders per Entry No. 458-V-7-D.B. inscribed on TCT No. 24576 on May
15, 1962 and per Entry No. 6966-V-4-D.B. on TCT No. 8921 and TCT No. 8922
on May 15, 1962; |
10) Par. 11 is denied
as the loan from the stockholders to pay part of the purchase price of the
properties was a personal obligation of RISCO and was thus not a claim
adverse to the ownership rights of the corporation; |
|
12. That these writs and
processes annotated on the titles are all null and void for total want of
valid service upon RISCO and the above-named stockholders considering that as
early as sometime in 1958, RISCO ceased operations as earlier stated, and as
early as May 15, 1962, the liens and encumbrances of the above-named
stockholders were annotated in the titles of subject properties; |
11) Par. 12 is denied
as in fact notice to RISCO had been sent to its last known address at Plaza
Goite, |
|
13. That more
particularly, the Final Deed of Sale (Annex “G”) and TCT No. 119848 are null
and void as these were issued only after 28 years and 5 months (in the case
of the Final Deed of Sale) and 28 years, 6 months and 29 days (in the case of
TCT 119848) from the invalid auction sale on December 27, 1962, hence, any
right, if any, which PNB had over subject properties had long become stale; |
12) Par. 13 is denied
for no law requires the final deed of sale to be executed immediately after
the end of the redemption period. Moreover, another court of competent
jurisdiction has already ruled that PNB was entitled to a final deed of sale; |
|
14. That plaintiffs
continue to have possession of subject properties and of their corresponding
titles, but they never received any process concerning the petition filed by
PNB to have TCT 24576 over Lot 1323-C surrendered and/or cancelled; |
13) Par. 14 is denied
as plaintiffs are not in actual possession of the land and if they were,
their possession was as trustee for the creditors of RISCO like PNB; |
|
15. That there is a
cloud created on the aforementioned titles of RISCO by reason of the annotate
writs, processes and proceedings caused by Jose Garrido and PNB which were
apparently valid or effective, but which are in truth and in fact invalid and
ineffective, and prejudicial to said titles and to the rights of the
plaintiffs, which should be removed and the titles quieted.[17] |
14) Par. 15 is denied
as the court orders directing the issuance of titles to PNB in lieu of TCT
24576 and TCT 8922 are valid judgments which cannot be set aside in a
collateral proceeding like the instant case.[18] |
Furthermore, apart from
refuting the aforecited material allegations made by Aznar, et al., PNB also indicated in its Answer
the special and affirmative defenses of (a) prescription; (b) res judicata; (c) Aznar, et al., having no right of action for
quieting of title; (d) Aznar, et al.’s
lien being ineffective and not binding to PNB; and (e) Aznar, et al.’s having no personality to file
the suit.[19]
From the foregoing, it is
indubitably clear that it was error for the trial court to render a judgment on
the pleadings and, in effect, resulted in a denial of due process on the part
of PNB because it was denied its right to present evidence. A remand of this case would ordinarily be the
appropriate course of action. However,
in the interest of justice and in order to expedite the resolution of this case
which was filed with the trial court way back in 1998, the Court finds it
proper to already resolve the present controversy in light of the existence of
legal grounds that would dispose of the case at bar without necessity of presentation
of further evidence on the other disputed factual claims and defenses of the
parties.
A thorough and
comprehensive scrutiny of the records would reveal that this case should be
dismissed because Aznar, et al., have
no title to quiet over the subject properties and their true cause of action is
already barred by prescription.
At the outset, the Court
agrees with the Court of Appeals that the agreement contained in the Minutes of
the Special Meeting of the RISCO Board of Directors held on March 14, 1961 was a
loan by the therein named stockholders to RISCO. We quote with approval the following discussion
from the Court of Appeals Decision dated September 29, 2005:
Careful perusal of the Minutes relied upon by
plaintiffs-appellees in their claim, showed that their contributions shall
constitute as “lien or interest on the property” if and when said properties
are titled in the name of RISCO, subject to registration of their adverse claim
under the Land Registration Act, until such time their respective contributions
are refunded to them completely.
It is a cardinal rule in the interpretation of
contracts that if the terms of a contract are clear and leave no doubt upon the
intention of the contracting parties, the literal meaning of its stipulation
shall control. When the language of the contract is explicit leaving no doubt
as to the intention of the drafters thereof, the courts may not read into it
any other intention that would contradict its plain import.
The term lien as used in the Minutes is
defined as “a discharge on property
usually for the payment of some debt or obligation. A lien is a qualified right
or a proprietary interest which may be exercised over the property of another.
It is a right which the law gives to have a debt satisfied out of a particular
thing. It signifies a legal claim or charge on property; whether real or
personal, as a collateral or security for the payment of some debt or
obligation.” Hence, from the use of the word “lien” in the Minutes, We find
that the money contributed by plaintiffs-appellees was in the nature of a loan,
secured by their liens and interests duly annotated on the titles. The
annotation of their lien serves only as collateral and does not in any way vest
ownership of property to plaintiffs.[20]
(Emphases supplied.)
We are not persuaded by the contention
of Aznar, et al., that the language of the subject Minutes created an express
trust.
Trust is the right to the beneficial
enjoyment of property, the legal title to which is vested in another. It is a fiduciary relationship that obliges
the trustee to deal with the property for the benefit of the beneficiary. Trust relations between parties may either be
express or implied. An express trust is
created by the intention of the trustor or of the parties. An implied trust comes into being by operation
of law.[21]
Express trusts, sometimes referred to
as direct trusts, are intentionally created by the direct and positive acts of
the settlor or the trustor - by some writing, deed, or will or oral
declaration. It is created not
necessarily by some written words, but by the direct and positive acts of the
parties.[22]
This is in consonance with Article 1444
of the Civil Code, which states that “[n]o particular words are required for
the creation of an express trust, it being sufficient that a trust is clearly
intended.”
In other words, the creation of an
express trust must be manifested with reasonable certainty and cannot be
inferred from loose and vague declarations or from ambiguous circumstances
susceptible of other interpretations.[23]
No such reasonable certitude in the
creation of an express trust obtains in the case at bar. In fact, a careful scrutiny of the plain and
ordinary meaning of the terms used in the Minutes does not offer any indication
that the parties thereto intended that Aznar, et al., become beneficiaries under an express trust and that RISCO
serve as trustor.
Indeed, we find that Aznar, et al., have no right to ask for the
quieting of title of the properties at issue because they have no legal and/or
equitable rights over the properties that are derived from the previous
registered owner which is RISCO, the pertinent provision of the law is Section
2 of the Corporation Code (Batas Pambansa
Blg. 68), which states that “[a] corporation is an artificial being created
by operation of law, having the right of succession and the powers, attributes
and properties expressly authorized by law or incident to its existence.”
As a consequence thereof, a corporation
has a personality separate and distinct from those of its stockholders and
other corporations to which it may be connected.[24] Thus, we had previously ruled in Magsaysay-Labrador v. Court of Appeals[25] that the interest of the
stockholders over the properties of the corporation is merely inchoate and
therefore does not entitle them to intervene in litigation involving corporate
property, to wit:
Here, the interest, if it exists at all, of petitioners-movants is
indirect, contingent, remote, conjectural, consequential and collateral. At the
very least, their interest is purely inchoate, or in sheer expectancy of a
right in the management of the corporation and to share in the profits thereof
and in the properties and assets thereof on dissolution, after payment of the
corporate debts and obligations.
While a share of stock represents a proportionate or aliquot
interest in the property of the corporation, it does not vest the owner thereof
with any legal right or title to any of the property, his interest in the
corporate property being equitable or beneficial in nature. Shareholders are in
no legal sense the owners of corporate property, which is owned by the
corporation as a distinct legal person.[26]
In the case at bar, there is no allegation, much less any proof,
that the corporate existence of RISCO has ceased and the corporate property has
been liquidated and distributed to the stockholders. The records only indicate that, as per Securities
and Exchange Commission (SEC) Certification[27]
dated June 18, 1997, the SEC merely suspended RISCO’s Certificate of
Registration beginning on September 5, 1988 due to its non-submission of SEC
required reports and its failure to operate for a continuous period of at least
five years.
Verily, Aznar, et al., who are stockholders of RISCO, cannot claim ownership over
the properties at issue in this case on the strength of the Minutes which, at
most, is merely evidence of a loan agreement between them and the company. There is no indication or even a suggestion
that the ownership of said properties were transferred to them which would
require no less that the said properties be registered under their names. For this reason, the complaint should be dismissed
since Aznar, et al., have no cause to
seek a quieting of title over the subject properties.
At most, what Aznar, et al., had was merely a right to be
repaid the amount loaned to RISCO. Unfortunately,
the right to seek repayment or reimbursement of their contributions used to
purchase the subject properties is already barred by prescription.
Section 1, Rule 9 of the
Rules of Court provides that when it appears from the pleadings or the evidence
on record that the action is already barred by the statute of limitations, the
court shall dismiss the claim, to wit:
Defenses and objections not pleaded either in a
motion to dismiss or in the answer are deemed waived. However, when it appears
from the pleadings or the evidence on record that the court has no jurisdiction
over the subject matter, that there is another action pending between the same
parties for the same cause, or that the action is barred by a prior judgment or
by statute of limitations, the court shall dismiss the claim. (Emphasis
supplied.)
In Feliciano v. Canoza,[28] we
held:
We have ruled that trial courts have authority and
discretion to dismiss an action on the ground of prescription when the parties’
pleadings or other facts on record show it to be indeed time-barred x x x; and
it may do so on the basis of a motion to dismiss, or an answer which sets up
such ground as an affirmative defense; or even if the ground is alleged after
judgment on the merits, as in a motion for reconsideration; or even if the
defense has not been asserted at all, as where no statement thereof is found in
the pleadings, or where a defendant has been declared in default. What is
essential only, to repeat, is that the facts demonstrating the lapse of the
prescriptive period, be otherwise sufficiently and satisfactorily apparent on
the record; either in the averments of the plaintiffs complaint, or otherwise
established by the evidence.[29] (Emphasis
supplied.)
The pertinent Civil Code
provision on prescription which is applicable to the issue at hand is Article
1144(1), to wit:
The following actions must be brought within ten
years from the time the right of action accrues:
1.
Upon a written contract;
2.
Upon an obligation
created by law;
3.
Upon a judgment. (Emphasis
supplied.)
Moreover,
in Nielson & Co., Inc. v. Lepanto
Consolidated Mining Co.,[30] we held that the term “written
contract” includes the minutes of the meeting of the board of directors of a
corporation, which minutes were adopted by the parties although not signed by
them, to wit:
Coming now to the question
of prescription raised by defendant Lepanto, it is contended by the latter that
the period to be considered for the prescription of the claim regarding
participation in the profits is only four years, because the modification of
the sharing embodied in the management contract is merely verbal, no written
document to that effect having been presented. This contention is untenable.
The modification appears in the minutes of the special meeting of the Board of
Directors of Lepanto held on August 21, 1940, it having been made upon the
authority of its President, and in said minutes the terms of modification had
been specified. This is sufficient to have the agreement considered, for the
purpose of applying the statute of limitations, as a written contract even if
the minutes were not signed by the parties (3 A.L.R., 2d, p. 831). It has been
held that a writing containing the terms of a contract if adopted by two persons
may constitute a contract in writing even if the same is not signed by either
of the parties (3 A.L.R., 2d, pp. 812-813). Another authority says that an
unsigned agreement the terms of which are embodied in a document
unconditionally accepted by both parties is a written contract (Corbin on
Contracts, Vol. I, p. 85).[31]
Applied to the case at bar, the Minutes which
was approved on March 14, 1961 is considered as a written contract between
Aznar, et al., and RISCO for the
reimbursement of the contributions of the former. As such, the former had a period of ten (10)
years from 1961 within which to enforce the said written contract. However, it does not appear that Aznar, et al., filed any action for
reimbursement or refund of their contributions against RISCO or even against
PNB. Instead the suit that Aznar, et al., brought before the trial court only
on January 28, 1998 was one to quiet title over the properties purchased by
RISCO with their contributions. It is
unmistakable that their right of action to claim for refund or payment of their
contributions had long prescribed. Thus,
it was reversible error for the Court of Appeals to order PNB to pay Aznar, et al., the amount of their liens based
on the Minutes with legal interests from the time of PNB’s acquisition of the
subject properties.
In view of the foregoing, it is unnecessary
for the Court to pass upon the other issues raised by the parties.
WHEREFORE, the petition of Aznar, et al., in G.R. No. 172021 is DENIED for lack of merit. The petition of PNB in G.R. No. 171805 is GRANTED. The Complaint,
docketed as Civil Case No. CEB-21511, filed by Aznar, et al., is hereby DISMISSED. No
costs.
SO ORDERED.
Associate Justice
WE CONCUR:
Chief Justice
Chairperson
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PRESBITERO J. VELASCO,
JR. Associate Justice
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DIOSDADO M. PERALTA Associate Justice |
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JOSE Associate Justice |
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* Per Special Order No. 994 dated May 27, 2011.
[1] Rollo (G.R. No. 171805), pp. 75-88; penned by Associate Justice Arsenio J. Magpale with Associate Justices Vicente L. Yap and Apolinario D. Bruselas, Jr., concurring.
[2]
[3]
[4]
[5]
[6]
[7]
[8]
[9]
[10]
[11] Rollo (G.R. No. 172021), p. 19.
[12] Rollo (G.R. No. 171805), pp. 120-127.
[13]
[14] Pacific Rehouse Corporation v. EIB
Securities, Inc., G.R. No. 184036, October 13, 2010.
[15]
[16] Rollo (G.R. No. 171805), pp. 82-83.
[17] Id. at 100-102.
[18] Id. at 122.
[19]
[20] Id. at 84-85.
[21] Heirs of Tranquilino Labiste v. Heirs of
Jose Labiste, G.R. No. 162033, May 8, 2009, 587 SCRA
417, 425.
[22] Ringor v. Ringor, 480 Phil. 141, 158 (2004).
[23] Heirs of Pedro Medina v. Court of Appeals,
196 Phil. 205, 213-214 (1981).
[24] Pantranco Employees Association (PEA-PTGWO)
v. National Labor Relations Commission, G.R.
Nos. 170689 & 170705, March 17, 2009, 581
SCRA 598, 612.
[25] 259
Phil. 748 (1989).
[26]
[27] Rollo (G.R. No. 171805), p. 113.
[28] G.R. No. 161746, September 1, 2010, 629 SCRA 550, citing Gicano v. Gegato, 241 Phil. 139, 145 (1988).
[29] Id. at 558-559.
[30] 125 Phil. 204 (1966).
[31] Id. at 223-224.