G.R. No. 179597 February 3, 2014
IGLESIA FILIPINA INDEPENDIENTE, Petitioner, vs. HEIRS of BERNARDINO TAEZA, Respondents.

FACTS

Petitioner Iglesia Filipina Independiente (IFI), a registered religious corporation sole, owned a parcel of land in Tuguegarao, Cagayan. Between 1973 and 1974, IFI, through its then Supreme Bishop Rev. Macario Ga, sold a portion of the lot to Bienvenido de Guzman. On February 5, 1976, Rev. Ga, as Supreme Bishop, also sold two other portions (Lot Nos. 3653-A and 3653-B) to respondent Bernardino Taeza for ₱100,000.00 via a Deed of Sale with Mortgage. Taeza allegedly completed payments and subsequently registered the properties, obtaining Transfer Certificate of Titles in his name. In 1977, the Parish Council of Tuguegarao filed a complaint for annulment of the 1976 sale against Rev. Ga and Taeza, but it was dismissed for lack of personality. After Rev. Ga’s term expired in 1981, leadership disputes arose within IFI. In 1990, IFI, through Supreme Bishop Most Rev. Tito Pasco, filed a complaint for annulment of the 1976 sale. The Regional Trial Court (RTC) declared the deed null and void, ordered the cancellation of Taeza’s titles, and directed him and his heirs to vacate the property and pay damages. The Court of Appeals (CA) reversed the RTC, ruling that the Supreme Bishop validly represented IFI in the sale and that the deed was valid. IFI elevated the case to the Supreme Court, arguing that Rev. Ga lacked authority under its Canons to sell the property without the required approvals.

ISSUE

Whether the February 5, 1976 Deed of Sale with Mortgage is null and void or unenforceable due to the Supreme Bishop’s lack of authority to execute it under IFI’s Constitution and Canons.

RULING

The Supreme Court ruled that the contract is unenforceable. Under Section 113 of the Corporation Code, the rules of a religious denomination control the method of alienating its property. Article IV (a) of IFI’s Constitution and Canons requires that any disposal of real property must have “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.” The evidence, including a resolution and a telegram, established that the laymen’s committee objected to the sale. Since the Canons require approval from all listed entities, Rev. Ga acted beyond his powers by executing the sale despite the laymen’s committee’s opposition. This falls under Article 1403(1) of the Civil Code as an unenforceable contract—one entered into by a person who has acted beyond his powers. The Court further applied Article 1456 of the Civil Code, stating that if property is acquired through mistake, a constructive trust is created. Therefore, Bernardino Taeza, having acquired the property by mistake due to the unauthorized sale, is considered a trustee of an implied trust for the benefit of IFI. The CA decision was reversed, and the RTC decision was reinstated with the modification that Taeza and his heirs are declared trustees of the property for IFI’s benefit.