13.

I. SHORT TITLE: SILVERIO V. FBCI

II. FULL TITLE: RICARDO S. SILVERIO, JR., ESSES DEVELOPMENT

CORPORATION, and TRI-STAR FARMS, INC., Petitioners, vs. FILIPINO BUSINESS
CONSULTANTS, INC., Respondent. G.R. NO. 143312. AUGUST 12, 2005

III. TOPIC Separate Juridical Entity

IV. STATEMENT OF FACTS:

The parties are wrangling over possession of a 62 hectare-land in Calatagan, Batangas

("Calatagan Property"). Silverio, Jr. is the President of Esses and Tri-Star. Esses and Tri-Star
were in possession of the Calatagan Property and registered in the names of Esses and Tri-Star.
On 22 September 1995, Esses and Tri-Star executed a Deed of Sale with Assumption of
Mortgage in favor of FBCI. Esses and Tri-Star failed to redeem the Calatagan Property.

V. STATEMENT OF CASE:

FBCI filed a Petition for Consolidation of Title of the Calatagan Property with the RTC Balayan.
The RTC Balayan issued a writ of possession in FBCI’s favor. FBCI then entered the Calatagan
Property.

When Silverio, Jr., Esses and Tri-Star learned of the judgment by default and writ of possession,
they filed a petition for relief from judgment and the recall of the writ of possession. The RTC
Balayan nullified and set aside the judgment by default and the writ of possession. The RTC
Balayan found that the summons and the complaint were not served on Silverio, Jr., Esses and
Tri-Star. The RTC Balayan denied FBCI’s motion for reconsideration of the order. FBCI then
filed a petition for certiorari with the Court of Appeals questioning the RTC Balayan’s 28
December 1998 Order. On 28 April 2000, the Court of Appeals denied FBCI’s petition. The
Court of Appeals also denied FBCI’s motion for reconsideration. On 13 August 2001, the
Supreme Court denied FBCI’s petition.

On 14 April 1999, the RTC Balayan modified its 28 December 1998 Order by upholding FBCI’s
possession of the Calatagan Property. The RTC Balayan ruled that FBCI could not be deprived of
possession of the Calatagan Property because FBCI made substantial improvements on it.
Possession could revert to Silverio, Jr., Esses and Tri-Star only if they reimburse FBCI.

Silverio, Jr., Esses and Tri-Star moved for the partial reconsideration of the 14 April 1999 Order.

On 9 November 1999, the RTC Balayan reversed its 14 April 1999 Order by holding that
Silverio, Jr., Esses and Tri-Star had no duty to reimburse FBCI. The 9 November 1999 Order
also restored possession of the Calatagan Property to Silverio, Jr., Esses and Tri-Star pursuant to
Rule 39, Section 5 of the 1997 Rules of Civil Procedure. This provision provides for restitution
in case of reversal of an executed judgment. On 7 January 2000, the RTC Balayan denied FBCI’s
motion for reconsideration. On 8 May 2000, the RTC Balayan issued the writ of possession to
Silverio, Jr., Esses and Tri-Star.

FBCI filed with the RTC Balayan a Manifestation and Motion to Recall Writ of Possession on
the ground that the decision of the Court of Appeals in CA-G.R. SP No. 56924 was not yet final
and FBCI’s motion for reconsideration was still pending. On 23 May 2000, FBCI filed with the
RTC Balayan an Urgent Ex-Parte Motion to Suspend Enforcement of Writ of Possession. FBCI
pointed out that it is now the new owner of Esses and Tri-Star having purchased the "substantial
and controlling shares of stocks" of the two corporations.

On the 26 May 2000 hearing, FBCI reiterated its claim of a supervening event, its ownership of
Esses and Tri-Star. FBCI informed the RTC Balayan that a new board of directors for Esses and
Tri-Star had been convened following the resignation of the members of the board of directors.
The previous actions of the former board of directors have been abandoned and the services of
Atty. Vicente B. Chuidian, the counsel of petitioners Silverio, Jr., Esses and Tri-Star, have been
terminated. On the same day, the RTC Balayan issued the order suspending the writ of
possession it had earlier issued to Silverio, Jr., Esses and Tri-Star.

VI. ISSUE: WON FBCI may take possession of the Calatagan property after purchasing
substantial and controlling shakes of stocks of Esses and Tri-Star?

VII. RULING: NO

FBCI’s acquisition of the "substantial and controlling shares of stocks" of Esses and Tri-Star
does not create a substantial change in the rights or relations of the parties that would entitle
FBCI to possession of the Calatagan Property, a corporate property of Esses and Tri-Star. Esses
and Tri-Star, just like FBCI, are corporations. A corporation has a personality distinct from that
of its stockholders.

Moreover, FBCI’s alleged controlling shareholdings in Esses and Tri-Star merely represent a
proportionate or aliquot interest in the properties of the two corporations. Such controlling
shareholdings do not vest FBCI with any legal right or title to any of Esses and Tri-Star’s
corporate properties. As a stockholder, FBCI has an interest in Esses and Tri-Star’s corporate
properties that is only equitable or beneficial in nature. Even assuming that FBCI is the
controlling shareholder of Esses and Tri-Star, it does not legally make it the owner of the
Calatagan Property, which is legally owned by Esses and Tri-Star as distinct juridical persons. As
such, FBCI is not entitled to the possession of any definite portion of the Calatagan Property or
any of Esses and Tri-Star’s properties or assets. FBCI is not a co-owner or tenant in common of
the Calatagan Property or any of Esses and Tri-Star’s corporate properties.

We see no reason why the execution of the writ of possession has been long delayed. Possession
of the Calatagan Property must be restored to Esses and Tri-Star through their representative,
Silverio, Jr. There is no proof on record that Silverio, Jr. has ceased to be the representative of
Esses and Tri-Star in this case.

VIII. DISPOSITIVE PORTION:

WHEREFORE, we GRANT the petition. The Regional Trial Court, Branch XI, Balayan,
Batangas is ordered to immediately execute the writ of possession in Civil Case No. 3356 in
favor of Esses Development Corporation and Tri-Star Farms, Inc. through their representative,
Ricardo S. Silverio, Jr. No costs.
14.

I. SHORT TITLE: NISCE V. EQUITABLE BANK

II. FULL TITLE: SPOUSES RAMON M. NISCE and A. NATIVIDAD PARAS-NISCE,

Petitioners, vs. EQUITABLE PCI BANK, INC., Respondent. G.R. No. 167434 February 19,
2007

III. TOPIC Separate Juridical Entity

IV. STATEMENT OF FACTS:

Spouses Ramond and Natividad Nisce contracted loans evidenced by promissory notes
amounting to P34, 087,725.76 with Equitable PCI Bank, secured by a real estate mortgage of the
Petitioners land. Having defaulted, respondents as creditor-mortgagee filed a petition for
extrajudicial foreclosure. Petitioner alleged, among others, that the bank should have set off their
debt with their dollar account which they maintain with PCI Capital Asia Ltd. (Hong Kong), a
subsidiary of Equitable. The Bank, for its part, contends that although the spouses’ debt was
restructured, they nevertheless failed to pay. Moreover, it alleged that there cannot be legal
compensation because PCI Capital had a separate and distinct personality from the PCIB, and a
claim against the former cannot be made against the latter.

V. STATEMENT OF CASE:

On November 26, 2002, Equitable PCI Bank1 (Bank) as creditor-mortgagee filed a petition for
extrajudicial foreclosure before the Office of the Clerk of Court as Ex-Officio Sheriff of the
Regional Trial Court (RTC) of Makati City.

The Nisce spouses filed before the RTC of Makati City a complaint for "nullity of the Suretyship
Agreement, damages and legal compensation" with prayer for injunctive relief against the Bank
and the Ex-Officio Sheriff. They had requested the bank (through their lawyer-son Atty. Rosanno
P. Nisce) to set off the peso equivalent of their obligation against their US dollar account with
PCI Capital Asia Limited (Hong Kong), a subsidiary of the Bank, the Bank accepted their offer
and requested for an estimate of the balance of their account; they complied with the Bank’s
request and in a letter dated February 11, 2002, informed it that the estimated balance of their
account as of December 1991 (including the 11.875% per annum interest) was US$51,000.42,
and that as of December 2002, Natividad’s US dollar deposit with it amounted to at least
₱9,000,000.00; they were surprised when they received a letter from the Bank demanding
payment of their loan account, and later a petition for extrajudicial foreclosure.

In its Answer to the complaint, the Bank alleged that the spouses had no cause of action for legal
compensation since PCI Capital was a different corporation with a separate and distinct
personality; if at all, offsetting may occur only with respect to the spouses’ US$500.00 deposit
account in its Paseo de Roxas branch.
On March 24, 2003, the RTC issued an Order47 granting the spouses Nisce’s plea for a writ of
preliminary injunction on a bond of ₱10,000,000.00. The Bank opted not to file a motion for
reconsideration of the order, and instead assailed the trial court’s order before the CA via petition
for certiorari under Rule 65 of the Rules of Court. The CA rendered judgment granting the
petition and nullifying the assailed Order of the RTC.

VI. ISSUE:

WON the Spouses Nisce may set off their obligation with Equitable PCI bank with their foreign
deposit from PCI Capital Asia Limited being a subsidiary of Equitable?

VII. RULING: NO

Article 1980 of the New Civil Code provides that fixed, savings and current deposits of money in
banks and similar institutions shall be governed by the provisions concerning simple loans.
Under Article 1953, of the same Code, a person who secures a loan of money or any other
fungible thing acquires the ownership thereof, and is bound to pay the creditor an equal amount
of the same kind and quality. The relationship of the depositors and the Bank or similar
institution is that of creditor-debtor. Such deposit may be setoff against the obligation of the
depositor with the bank or similar institution.

When petitioner Natividad Nisce deposited her US$20,500.00 with the PCIB on July 19, 1984,
PCIB became the debtor of petitioner. However, when upon petitioner’s request, the amount of
US$20,000.00 was transferred to PCI Capital, PCI Capital, in turn, became the debtor of
Natividad Nisce. Indeed, a certificate of deposit is a written acknowledgment by a bank or
borrower of the receipt of a sum of money or deposit which the Bank or borrower promises to
pay to the depositor, to the order of the depositor; or to some other person; or to his order
whereby the relation of debtor and creditor between the bank and the depositor is created. The
issuance of a certificate of deposit in exchange for currency creates a debtor-creditor
relationship.

Admittedly, PCI Capital is a subsidiary of respondent Bank. Even then, PCI Capital [PCI
Express Padala (HK) Ltd.] has an independent and separate juridical personality from that of the
respondent Bank, its parent company; hence, any claim against the subsidiary is not a claim
against the parent company and vice versa. The evidence on record shows that PCIB, which had
been merged with Equitable Bank, owns almost all of the stocks of PCI Capital. However, the
fact that a corporation owns all of the stocks of another corporation, taken alone, is not sufficient
to justify their being treated as one entity. If used to perform legitimate functions, a subsidiary’s
separate existence shall be respected, and the liability of the parent corporation, as well as the
subsidiary shall be confined to those arising in their respective business. A corporation has a
separate personality distinct from its stockholders and from other corporations to which it may be
conducted. This separate and distinct personality of a corporation is a fiction created by law for
convenience and to prevent injustice.
On hindsight, petitioners could have spared themselves the expenses and tribulation of a
litigation had they just withdrawn their deposit from the PCI Capital and remitted the same to
respondent. However, petitioner insisted on their contention of setoff.

VIII. DISPOSITIVE PORTION:

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. The Decision
of the Court of Appeals is AFFIRMED. Costs against petitioners.
15.

I. SHORT TITLE: PNB V. AZNAR

II. FULL TITLE: PHILIPPINE NATIONAL BANK, Petitioner, vs. 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. G.R. No.
171805 May 30, 2011

MERELO B. AZNAR and MATIAS B. AZNAR III, Petitioners, vs. PHILIPPINE NATIONAL
BANK, Respondent. G.R. No. 172021

III. TOPIC Separate Juridical Entity

IV. STATEMENT OF FACTS:

In 1958, RISCO (RURAL INSURANCE & SURETY CO. INC.) ceased operation due to
business reverses. In plaintiffs’ (Aznar) desire to rehabilitate RISCO, they contributed a total
amount of ₱212,720.00 which was used in the purchase of the three (3) parcels 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.

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.
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.

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.

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.

V. STATEMENT OF CASE:
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. 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.

PNB appealed the adverse ruling to the Court of Appeals which, 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.

VI. ISSUE:

WON there is an express trust in favor of Aznar et at.?

VII. RULING: NO

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.

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.
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.

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. Thus, we had previously ruled
in Magsaysay-Labrador v. Court of Appeals 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.

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 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.

VIII. DISPOSITIVE PORTION:

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.