G.R. No. 171805, 30 May 2011

FACTS:

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. 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.

ISSUE:

Whether the plaintiffs have a right to the quieting of title on the aforementioned properties as stockholders of the corporation.

RULING:

NO. 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. At 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.

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. 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. Thus, Aznar, et al., who are stockholders of RISCO, cannot claim ownership over the properties at issue.

*Case digest by Earl M. Acoymo, Refresher, Andres Bonifacio Law School, SY 2019-2020