PNB vs.

AZNAR ET AL
G.R. No. 171805, May 30, 2011
LEONARDO-DE CASTRO, J.

DOCTRINE: 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

FACTS: In 1958, Rural Insurance and Surety Company (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. 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. The land 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
stockholders contended that the subsequent writs and service upon RISCO and on
them, as stockholders.

PNB on the other hand countered the plaintiffs have no right of action of quieting of
title. Defendant further asserted that plaintiffs, as mere stockholders of RISCO do no
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. The trial court ruled in
favor of respondents holding 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 same was reversed by the CA. Thus, this
petition.

Issue: Whether the CA 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

RULING: NO. 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.
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.