The Supreme Court ruled that for religious corporations sole like the Iglesia Filipina Independiente (IFI), the sale of church property requires the consent of multiple entities within the church, not just the Supreme Bishop. When a sale occurs without all required approvals, it results in an unenforceable contract. This means that the sale can be challenged and potentially overturned, especially if objections were raised prior to the transaction. The court emphasized the importance of adhering to the specific rules and regulations outlined in the church’s canons regarding property disposal, protecting the interests of the religious community and ensuring proper governance of church assets.

Selling Sacred Ground: Did a Bishop Exceed His Authority?

This case revolves around a parcel of land owned by the Iglesia Filipina Independiente (IFI) in Tuguegarao, Cagayan. In 1976, the then Supreme Bishop, Rev. Macario Ga, sold two lots to Bernardino Taeza. However, this sale was contested, leading to a legal battle that reached the Supreme Court. The central question was whether Rev. Ga had the authority to sell the land without the consent of other key entities within the church, as stipulated in IFI’s own canons. The outcome hinged on interpreting the church’s internal rules regarding property disposal and the legal implications of non-compliance.

The petitioner, Iglesia Filipina Independiente (IFI), argued that the sale was invalid because Rev. Ga, the Supreme Bishop at the time, did not obtain the necessary approvals from the laymen’s committee, the parish priest, and the Diocesan Bishop, as required by Article IV (a) of their Canons. According to the Canons, “[a]ll real properties of the Church located or situated in such parish can be disposed of only with the approval and conformity of the laymen’s committee, the parish priest, the Diocesan Bishop, with sanction of the Supreme Council, and finally with the approval of the Supreme Bishop, as administrator of all the temporalities of the Church.” IFI maintained that without these approvals, there was no valid consent to the contract of sale.

The respondents, the heirs of Bernardino Taeza, contended that the Supreme Bishop’s authority was sufficient, especially since no objections were raised by the parish priest or the Diocesan Bishop. The Court of Appeals (CA) initially sided with the respondents, stating that the Supreme Bishop’s role as the administrator of church properties allowed him to execute the sale. However, the Supreme Court disagreed, placing significant emphasis on the importance of adhering to the church’s own internal rules.

The Supreme Court highlighted Section 113 of the Corporation Code of the Philippines, which addresses the acquisition and alienation of property by corporations sole. The provision states that, “in cases where the rules, regulations and discipline of the religious denomination, sect or church, religious society or order concerned represented by such corporation sole regulate the method of acquiring, holding, selling and mortgaging real estate and personal property, such rules, regulations and discipline shall control, and the intervention of the courts shall not be necessary.” This provision underscores that a church’s internal regulations take precedence in governing property transactions.

The Court emphasized that the IFI’s Canons clearly stipulated that the sale of real property required not just the Supreme Bishop’s consent, but also the concurrence of other church entities. The Supreme Court noted that while the Canons did not specify the exact form of this conformity, the trial court found that the laymen’s committee had indeed objected to the sale. This objection was a crucial factor in the Court’s decision, as it demonstrated a clear violation of the requirements outlined in the church’s internal rules.

The Supreme Court classified the contract of sale as an unenforceable contract under Article 1403, paragraph (1) of the Civil Code. This article states that contracts entered into in the name of another person by one who has been given no authority or legal representation, or who has acted beyond his powers, are unenforceable unless ratified. Citing Mercado v. Allied Banking Corporation, the Court reiterated that unenforceable contracts cannot be enforced in court unless ratified, because they are entered into without or in excess of authority.

In this case, because the Supreme Bishop acted beyond his authority by executing the sale despite the laymen’s committee’s objection, the contract was deemed unenforceable. However, the respondents’ predecessor-in-interest, Bernardino Taeza, had already obtained a transfer certificate of title for the property. The Court then invoked Article 1456 of the Civil Code, which states that “[i]f property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes.”

The Court clarified that this constituted a constructive trust, where the respondents were considered trustees and the IFI was the beneficiary. In constructive implied trusts, the trustee may acquire the property through prescription even if he does not repudiate the relationship, placing a time limit on the beneficiary to bring an action for reconveyance. Thus, the Court looked at whether the action for reconveyance was filed within the prescriptive period.

Drawing from Aznar Brothers Realty Company v. Aying, the Court reiterated that an action for reconveyance based on an implied or constructive trust must be brought within ten years from the issuance of the Torrens title over the property. In this case, the action was filed on January 19, 1990, while the transfer certificates of title were issued on February 7, 1990, placing the filing well within the prescriptive period. As a result, the Court ruled in favor of the IFI, ordering the reconveyance of the property.

FAQs

What was the key issue in this case?	The central issue was whether the Supreme Bishop of the Iglesia Filipina Independiente had the authority to sell church property without the consent of other entities within the church, as required by its Canons. The court examined whether a sale lacking such consent was valid and enforceable.
What is a corporation sole?	A corporation sole is a special form of corporation consisting of one person, usually a religious leader, who holds property in trust for the benefit of the religious organization. It allows for continuity of ownership and management of church assets.
What does ‘unenforceable contract’ mean?	An unenforceable contract is one that cannot be enforced in a court of law unless it is ratified. This typically occurs when the contract is entered into without proper authority or does not comply with certain legal requirements.
What is a constructive trust?	A constructive trust is an implied trust created by law to prevent unjust enrichment. It arises when someone obtains property through mistake or fraud and is considered a trustee for the benefit of the rightful owner.
What is an action for reconveyance?	An action for reconveyance is a legal remedy sought to compel the transfer of property back to its rightful owner. In cases of constructive trust, the beneficiary of the trust may file this action to recover the property held by the trustee.
What is the prescriptive period for reconveyance based on constructive trust?	The prescriptive period for an action for reconveyance based on a constructive trust is ten years from the issuance of the Torrens title over the property. This means the lawsuit must be filed within ten years of the title registration.
What was the role of the Corporation Code in this case?	The Corporation Code, specifically Section 113, was crucial because it acknowledges that religious organizations’ internal rules govern property transactions. This provision gave weight to the IFI’s Canons in determining the validity of the sale.
What was the outcome of the case?	The Supreme Court ruled in favor of the Iglesia Filipina Independiente, declaring them the rightful owner of the property. The Court ordered the respondents to execute a deed reconveying the lots to the church and to vacate the premises.

This case underscores the importance of adhering to internal regulations within religious organizations when dealing with property transactions. It serves as a reminder that even high-ranking officials must act within the bounds of their authority, and that failure to obtain required approvals can render a sale unenforceable, potentially leading to the recovery of the property by the rightful owner.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Iglesia Filipina Independiente vs. Heirs of Bernardino Taeza, G.R. No. 179597, February 03, 2014