Case Digest (G.R. No. 220617)
Facts:
In Philippine National Bank v. Aznar (G.R. No. 171805 and G.R. No. 172021, May 30, 2011), petitioners Aznar and others were stockholders of the defunct Rural Insurance and Surety Company, Inc. (RISCO). In 1961, they contributed ₱212,720.00 to finance RISCO’s purchase of three Cebu parcels (Lot 3597, Lot 7380 and Lot 1323), and had their contributions annotated on the titles as liens pursuant to the March 14, 1961 Minutes of a RISCO board meeting. In 1962, Philippine National Bank (PNB) obtained Notices of Attachment and Writs of Execution on those same titles, resulting in a sheriff’s sale and PNB’s registration as owner in 1991. In 1998, Aznar et al. filed in the Regional Trial Court of Cebu City Civil Case No. CEB-21511 seeking quieting of title, cancellation of PNB’s title and reconveyance. The trial court granted judgment on the pleadings, declaring an express trust in favor of Aznar et al. and voiding PNB’s annotations, deeds and certificates. The Court of Appeals reversed,Case Digest (G.R. No. 220617)
Facts:
- Corporate Rehabilitation and Acquisition of Properties
- In 1958, Rural Insurance and Surety Company, Inc. (RISCO) ceased operations. To rehabilitate it, stockholders contributed a total of ₱212,720.00.
- The contributions funded the purchase of three parcels of land in Cebu, titled in RISCO’s name:
- Lot 3597, Talisay-Minglanilla Estate (TCT No. 8921), 78,185 sq.m.
- Lot 7380, Talisay-Minglanilla Estate (TCT No. 8922), 329,547 sq.m.
- Lot 1323 (subd. plan Psd-No. 5988), Lahug, Cebu City (TCT No. 24576), 55,653 sq.m.
- Annotation of Liens
- On March 14, 1961, RISCO’s Board of Directors approved minutes stating each stockholder’s contribution “shall constitute as their lien or interest on the property … until such time their respective contributions are refunded to them completely.”
- These liens were duly annotated on the three TCTs on May 15, 1962.
- Attachments, Execution, and Sale to PNB
- August 1962: Multiple Notices of Attachment and Writs of Execution in favor of Philippine National Bank (PNB) and Jose Garrido were annotated on the three TCTs, arising from various Manila court cases.
- PNB became the lone bidder at the ensuing auction; a Certificate of Sale was issued for the three parcels for ₱31,430.00. A Final Deed of Sale dated May 27, 1991 and new TCT No. 119848 in PNB’s name were registered on August 26, 1991.
- Trial Court Proceedings (RTC, Cebu City, Branch 17; Civil Case No. CEB-21511)
- January 28, 1998: Aznar, et al. filed a complaint for quieting of title, declaratory relief, cancellation of TCT No. 119848, and reconveyance, alleging:
- Their liens annotated in 1962 were prior and superior to subsequent attachments and sale;
- The writs and sale were null for lack of valid service and stale execution;
- The Final Deed of Sale and new TCT issued after 28 years were void.
- PNB answered, denying material allegations and asserting:
- The contributions were loans secured by liens, not adverse claims;
- Aznar, et al. lacked cause of action for quieting; res judicata and prescription barred their claims; their remedy was refund of contributions.
- October 5, 1998: Aznar, et al. moved for judgment on the pleadings.
- RTC Decision (November 18, 1998)
- The court granted judgment on the pleadings, declaring an express trust in favor of Aznar, et al. over the three lots; annulled all subsequent annotations and TCT transfers; ordered reconveyance of TCT 119848 to Aznar, et al.
- Court of Appeals Decision (CA-G.R. CV No. 75744; September 29, 2005; Resolution March 6, 2006)
- Set aside the RTC decision, holding that the contributions constituted a loan secured by liens, not an express trust.
- Ordered PNB to pay Aznar, et al. the amount of their liens with legal interest from PNB’s acquisition until finality of judgment; dismissed all other claims.
Issues:
- In G.R. No. 171805 (PNB petition):
- Whether the Court of Appeals erred in affirming the grant of judgment on the pleadings despite genuine issues of fact.
- Whether the right of Aznar, et al. to repayment had prescribed and/or whether the 1961 Minutes constituted an effective adverse claim.
- Whether the CA erred in not considering PNB’s defenses of res judicata and lack of cause of action.
- In G.R. No. 172021 (Aznar, et al. petition):
- Whether the CA erred in characterizing stockholders’ contributions as loans secured by liens rather than as an express trust.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)