G.R. No. 174978 ; July 31, 2013
SALLY YOSHIZAKI, Petitioner, vs. JOY TRAINING CENTER OF AURORA, INC., Respondent.

FACTS

Respondent Joy Training Center of Aurora, Inc. is a non-stock, non-profit religious educational institution and the registered owner of a parcel of land. On November 10, 1998, spouses Richard and Linda Johnson, who were members of Joy Training’s board of trustees, sold the said land and other properties to spouses Sally and Yoshio Yoshizaki. The title was subsequently cancelled and reissued in the name of the Yoshizakis. Joy Training filed a complaint for cancellation of sales and damages, alleging that the spouses Johnson sold the properties without the requisite authority from the board of trustees. It assailed the validity of a board resolution dated September 1, 1998, claiming it was approved by only a minority of the board.
The spouses Yoshizaki claimed the sale was valid, asserting that a majority of the board of trustees approved the resolution authorizing the sale. They argued that the actual board consisted of only five members, not the seven listed in the Articles of Incorporation. They also relied on a certification from the corporate secretary authorizing the spouses Johnson. The Regional Trial Court ruled in favor of the Yoshizakis, finding the sale valid. The Court of Appeals reversed, holding the resolution void for lack of majority approval from the proper seven-member board and giving no probative value to the secretary’s certification.

ISSUE

The core issues were: (1) whether the RTC had jurisdiction over the case; (2) whether the spouses Johnson were duly authorized to sell the subject real property; and (3) whether petitioner Sally Yoshizaki was a buyer in good faith.

RULING

The Supreme Court denied the petition and affirmed the CA decision. On jurisdiction, the Court held that the action was for the recovery of ownership of real property, which is within the general jurisdiction of the RTC, not an intra-corporate dispute. On the authority to sell, the Court ruled that the board resolution was invalid. Under the Corporation Code, the basis for determining the board’s composition is the articles of incorporation. Since Joy Training’s articles listed seven trustees and no election had changed that number, seven constituted the board. The resolution was approved by only three trustees (the Johnsons and Alexander Abadayan), which did not constitute a majority of the seven-member board. The certification from the corporate secretary was also correctly accorded no probative value as it was a mere photocopy and its contents were not properly proven. Finally, the Court ruled that Sally Yoshizaki was not a buyer in good faith. A buyer of registered land must show diligence beyond the certificate of title. Here, the title itself did not confer authority to sell; it merely named the Johnsons as representatives. Yoshizaki failed to verify the existence of proper board authority through the original resolution or secretary’s certificate, which constituted gross negligence. Consequently, the sale was void for lack of authority.