Iglesia Filipina Independiente v. Taeza
REITERATIONFacts
The Antecedents: The Iglesia Filipina Independiente (IFI), a corporation sole, was the owner of a parcel of land. Between 1973 and 1974, its Supreme Bishop, Rev. Macario Ga, sold a portion of the land to Bienvenido de Guzman. On February 5, 1976, Rev. Ga, in his capacity as Supreme Bishop, sold two other lots (Lot Nos. 3653-A and 3653-B) to Bernardino Taeza for ₱100,000.00, through installment with mortgage, which Taeza allegedly completed paying. In 1977, a complaint to annul the sale to Taeza was filed by the Parish Council of Tuguegarao but was dismissed for lack of personality. After Rev. Ga's term ended in 1981, Bishop Abdias dela Cruz was elected Supreme Bishop. Rev. Ga filed a case with the Securities and Exchange Commission (SEC) questioning the election. In 1987, while the SEC case was pending, IFI, represented by Supreme Bishop Rev. Soliman F. Ganno, filed another complaint for annulment of the sale to Taeza, which was dismissed without prejudice as the leadership issue was unresolved. In 1988, the SEC resolved the leadership issue against Rev. Ga. Taeza registered the lots and obtained Transfer Certificate of Title Nos. T-77995 and T-77994 in his name. Taeza occupied a portion of the land, and IFI's demand to vacate was unheeded. In January 1990, IFI, through Supreme Bishop Most Rev. Tito Pasco, filed a third complaint for annulment of sale against Taeza. Procedural History: The Regional Trial Court (RTC) ruled in favor of IFI, declaring the Deed of Sale with Mortgage null and void, the Transfer Certificates of Title null and void ab initio, Taeza's possession unlawful, and ordering him and his heirs to vacate and surrender the premises, and to pay damages and attorney's fees. The Court of Appeals (CA) reversed the RTC Decision, dismissing the complaint. The CA held that IFI, as a corporation sole, validly transferred ownership through its Supreme Bishop, who was the administrator of its properties and official representative, and that the church's constitution and canons did not grant authority to any other person or entity to enter into such contracts. The Petition: IFI filed a petition for review on certiorari with the Supreme Court, questioning the CA's ruling that the deed of sale was not void or unenforceable and that Taeza was not a buyer in bad faith.
Issue(s)
Whether the Court of Appeals erred in not finding the February 5, 1976 Deed of Sale with Mortgage as null and void or unenforceable due to the Supreme Bishop acting beyond his powers. Whether the acquisition of the property by Taeza constituted a constructive trust for the benefit of IFI, and whether the action for reconveyance was filed within the prescriptive period. Whether the Court of Appeals erred in ruling that the Supreme Bishop's consent was sufficient for the sale, overlooking the mandatory concurrence of other church entities as stipulated in the IFI's Canons, and the implications of Section 113 of the Corporation Code.
Ruling
The Supreme Court granted the petition, reversed and set aside the CA Decision and Resolution, declared IFI as the rightful owner of the lots, ordered the respondents to execute a deed reconveying the lots to IFI, ordered respondents and successors-in-interest to vacate the premises and surrender them to IFI, and to pay costs of suit.
Ratio Decidendi
On the issue of whether the Deed of Sale with Mortgage is null and void or unenforceable: The Court found that the CA erred in ignoring the fact that the laymen's committee objected to the sale of the lot. Petitioner's Canons require the approval of the laymen's committee, the parish priest, the Diocesan Bishop, with sanction of the Supreme Council, and finally the approval of the Supreme Bishop. Since the Supreme Bishop executed the contract of sale despite the opposition from the laymen's committee, he acted beyond his powers. This situation falls under Article 1403, paragraph (1) of the Civil Code, which states that contracts entered into in the name of another person by one who has acted beyond his powers are unenforceable, unless ratified. The Court clarified that while the contract is unenforceable, the property was acquired through mistake, thus constituting a constructive trust under Article 1456 of the Civil Code, where Taeza was considered a trustee for the benefit of IFI. The Court reiterated that an action for reconveyance based on a constructive trust prescribes in ten years from the issuance of the Torrens title. In this case, the complaint was filed on January 19, 1990, and the titles were issued on February 7, 1990, well within the prescriptive period. Therefore, the subject property should be returned to its rightful owner, IFI. The Supreme Court found that the CA's ruling that the Supreme Bishop's consent was sufficient was erroneous because it overlooked the mandatory requirement for the concurrence of other church entities as stipulated in the IFI's Canons. The Court emphasized that the specific provisions of the church's internal rules regarding the disposition of real property must be followed, as provided for in Section 113 of the Corporation Code.
Main Doctrine
A sale of real property by a corporation sole, executed by its Supreme Bishop without the required concurrence of other church entities as mandated by its Constitution and Canons, is an unenforceable contract under Article 1403(1) of the Civil Code, and the property acquired by the buyer may be subject to an action for reconveyance based on a constructive trust, provided it is filed within the ten-year prescriptive period.