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Philippine National Bank vs.

Aznar 649 SCRA 214

Facts: In 1958, RISCO ceased operation due to business reverses. With the desire
to rehabilitate the company, some stockholders of RISCO contributed a total
amount of P212,720.00 to purchase three (3) parcels of land. The Minutes of the
Special Meeting of the Board of Directors of RISCO provided that the contributions
constituted a lien or interest in the lands. The lands were, however, attached and
was bought by the PNB as the lone and highest bidder. Subsequently, titles were
issued in the name of PNB which prompted the said stockholders to file a complaint
for quieting of title.
The trial court ruled in favor of the plaintiffs on the basis that there was an express
trust. The decision was, however, set aside by the Court of Appeals on the ground
that the contributions was a loan secured by a lien rather than an express trust.
1. Was there an express trust created between RISCO (trustee) and the
stockholders (beneficiaries)?
2. Were the stockholders entitled to file a complaint for the quieting of title?
1. No. The Court held that Express trusts, sometimes referred to as direct trusts,
are intentionally created by the direct and positive acts of the settlor or the
trustorby 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. This is in consonance with Article 1444 of the Civil Code, which states
that no 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.
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.
2. NO. The Court found 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.