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G.R.No.179597

TodayisWednesday,March11,2015

RepublicofthePhilippines
SUPREMECOURT
Manila
THIRDDIVISION
G.R.No.179597February3,2014
IGLESIAFILIPINAINDEPENDIENTE,Petitioner,
vs.
HEIRSofBERNARDINOTAEZA,Respondents.
DECISION
PERALTA,J.:
ThisdealswiththePetitionforReviewonCertiorariunderRule45oftheRulesofCourtprayingthattheDecision1
oftheCourtofAppeals(CA),promulgatedonJune30,2006,andtheResolution2datedAugust23,2007,denying
petitioner'smotionforreconsiderationthereof,bereversedandsetaside.
TheCA'snarrationoffactsisaccurate,towit:
TheplaintiffappelleeIglesiaFilipinaIndependiente(IFI,forbrevity),adulyregisteredreligiouscorporation,was
the owner of a parcel of land described as Lot 3653, containing an area of 31,038 square meters, situated at
Ruyu(nowLeonarda),Tuguegarao,Cagayan,andcoveredbyOriginalCertificateofTitleNo.P8698.Thesaid
lotissubdividedasfollows:LotNos.3653A,3653B,3653C,and3653D.
Between1973and1974,theplaintiffappellee,throughitsthenSupremeBishopRev.MacarioGa,soldLot3653
D,withanareaof15,000squaremeters,tooneBienvenidodeGuzman.
OnFebruary5,1976,LotNos.3653Aand3653B,withatotalareaof10,000squaremeters,werelikewisesold
byRev.MacarioGa,inhiscapacityastheSupremeBishopoftheplaintiffappellee,tothedefendantBernardino
Taeza,fortheamountofP100,000.00,throughinstallment,withmortgagetosecurethepaymentofthebalance.
Subsequently,thedefendantallegedlycompletedthepayments.
In 1977, a complaint for the annulment of the February 5, 1976 Deed of Sale with Mortgage was filed by the
ParishCouncilofTuguegarao,Cagayan,representedbyFroilanCalaguiandDanteSantos,thePresidentandthe
Secretary, respectively, of the Laymen's Committee, with the then Court of First Instance of Tuguegarao,
Cagayan,againsttheirSupremeBishopMacarioGaandthedefendantBernardinoTaeza.
The said complaint was, however, subsequently dismissed on the ground that the plaintiffs therein lacked the
personalitytofilethecase.
After the expiration of Rev. Macario Ga's term of office as Supreme Bishop of the IFI on May 8, 1981, Bishop
Abdias dela Cruz was elected as the Supreme Bishop. Thereafter, an action for the declaration of nullity of the
electionswasfiledbyRev.Ga,withtheSecuritiesandExchangeCommission(SEC).
In 1987, while the case with the SEC is (sic) still pending, the plaintiffappellee IFI, represented by Supreme
BishopRev.SolimanF.Ganno,filedacomplaintforannulmentofthesaleofthesubjectparcelsoflandagainst
Rev.GaandthedefendantBernardinoTaeza,whichwasdocketedasCivilCaseNo.3747.Thecasewasfiled
withtheRegionalTrialCourtofTuguegarao,Cagayan,BranchIII,whichinitsorderdatedDecember10,1987,
dismissedthesaidcasewithoutprejudice,forthereasonthattheissueastowhomoftheSupremeBishopscould
sueforthechurchhadnotyetbeenresolvedbytheSEC.
OnFebruary11,1988,theSecuritiesandExchangeCommissionissuedanorderresolvingtheleadershipissue
oftheIFIagainstRev.MacarioGa.
Meanwhile, the defendant Bernardino Taeza registered the subject parcels of land. Consequently, Transfer
CertificateofTitleNos.T77995andT77994wereissuedinhisname.
The defendant then occupied a portion of the land. The plaintiffappellee allegedly demanded the defendant to
vacatethesaidlandwhichhefailedtodo.
InJanuary1990,acomplaintforannulmentofsalewasagainfiledbytheplaintiffappelleeIFI,thistimethrough
Supreme Bishop Most Rev. Tito Pasco, against the defendantappellant, with the Regional Trial Court of
TuguegaraoCity,Branch3.
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OnNovember6,2001,thecourtaquorenderedjudgmentinfavoroftheplaintiffappellee. Itheldthatthedeed
ofsaleexecutedbyandbetweenRev.Gaandthedefendantappellantisnullandvoid.3
1 w p h i1

ThedispositiveportionoftheDecisionofRegionalTrialCourtofTuguegaraoCity(RTC)readsasfollows:
WHEREFORE,judgmentisherebyrendered:
1)declaringplaintifftobeentitledtotheclaimintheComplaint
2)declaringtheDeedofSalewithMortgagedatedFebruary5,1976nullandvoid
3)declaringTransferCertificatesofTitleNumbersT77995andT77994tobenullandvoidabinitio
4)declaringthepossessionofdefendantonthatportionoflandunderquestionandownershipthereofas
unlawful
5)orderingthedefendantandhisheirsandsuccessorsininteresttovacatethepremisesinquestionand
surrenderthesametoplaintiff[and]
6) condemning defendant and his heirs pay (sic) plaintiff the amount of P100,000.00 as
actual/consequentialdamagesandP20,000.00aslawfulattorney'sfeesandcostsoftheamount(sic).4
PetitionerappealedtheforegoingDecisiontotheCA.OnJune30,2006,theCArendereditsDecisionreversing
and setting aside the RTC Decision, thereby dismissing the complaint.5 The CA ruled that petitioner, being a
corporationsole,validlytransferredownershipoverthelandinquestionthroughitsSupremeBishop,whowasat
thetimetheadministratorofallpropertiesandtheofficialrepresentativeofthechurch.Itfurtherheldthat"[t]he
authorityofthethenSupremeBishopRev.Gatoenterintoacontractandrepresenttheplaintiffappelleecannot
beassailed,astherearenoprovisionsinitsconstitutionandcanonsgivingthesaidauthoritytoanyotherperson
orentity."6
PetitionerthenelevatedthemattertothisCourtviaapetitionforreviewoncertiorari,whereinthefollowingissues
arepresentedforresolution:
A.) WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT FINDING THE FEBRUARY 5, 1976
DEEDOFSALEWITHMORTGAGEASNULLANDVOID
B.)ASSUMINGFORTHESAKEOFARGUMENTTHATITISNOTVOID,WHETHERORNOTTHECOURT
OFAPPEALSERREDINNOTFINDINGTHEFEBRUARY5,1976DEEDOFSALEWITHMORTGAGEAS
UNENFORCEABLE,[and]
C.) WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT FINDING RESPONDENT TAEZA
HEREINASBUYERINBADFAITH.7
ThefirsttwoissuesboildowntothequestionofwhetherthenSupremeBishopRev.Gaisauthorizedtoenterinto
acontractofsaleinbehalfofpetitioner.
Petitioner maintains that there was no consent to the contract of sale as Supreme Bishop Rev. Ga had no
authoritytogivesuchconsent.ItemphasizedthatArticleIV(a)oftheirCanonsprovidesthat"Allrealpropertiesof
the Church located or situated in such parish can be disposed of only with the approval and conformity of the
laymen'scommittee,theparishpriest,theDiocesanBishop,withsanctionoftheSupremeCouncil,andfinallywith
theapprovaloftheSupremeBishop,asadministratorofallthetemporalitiesoftheChurch."Itisallegedthatthe
saleofthepropertyinquestionwasdonewithouttherequiredapprovalandconformityoftheentitiesmentioned
intheCanonshence,petitionerarguesthatthesalewasnullandvoid.
Inthealternative,petitionercontendsthatifthecontractisnotdeclarednullandvoid,itshouldneverthelessbe
found unenforceable, as the approval and conformity of the other entities in their church was not obtained, as
requiredbytheirCanons.
Section113oftheCorporationCodeofthePhilippinesprovidesthat:
Sec. 113. Acquisition and alienation of property. Any corporation sole may purchase and hold real estate and
personal property for its church, charitable, benevolent or educational purposes, and may receive bequests or
giftsforsuchpurposes.Suchcorporationmaymortgageorsellrealpropertyheldbyituponobtaininganorder
for that purpose from the Court of First Instance of the province where the property is situated x x x Provided,
Thatincaseswheretherules,regulationsanddisciplineofthereligiousdenomination,sectorchurch,religious
society or order concerned represented by such corporation sole regulate the method of acquiring, holding,
sellingandmortgagingrealestateandpersonalproperty,suchrules,regulationsanddisciplineshallcontrol,and
theinterventionofthecourtsshallnotbenecessary.8
Pursuant to the foregoing, petitioner provided in Article IV (a) of its Constitution and Canons of the Philippine
IndependentChurch,9that"[a]llrealpropertiesoftheChurchlocatedorsituatedinsuchparishcanbedisposed
ofonlywiththeapprovalandconformityofthelaymen's
committee, the parish priest, the Diocesan Bishop, with sanction of the Supreme Council, and finally with the
approvaloftheSupremeBishop,asadministratorofallthetemporalitiesoftheChurch."
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Evidently, under petitioner's Canons, any sale of real property requires not just the consent of the Supreme
Bishop but also the concurrence of the laymen's committee, the parish priest, and the Diocesan Bishop, as
sanctionedbytheSupremeCouncil.However,petitioner'sCanonsdonotspecifyinwhatformtheconformityof
theotherchurchentitiesshouldbemadeknown.Thus,aspetitioner'switnessstated,inpractice,suchconsentor
approvalmaybeassumedasamatteroffact,unlesssomeoppositionisexpressed.10
Here, the trial court found that the laymen's committee indeed made its objection to the sale known to the
Supreme Bishop.11 The CA, on the other hand, glossed over the fact of such opposition from the laymen's
committee,opiningthattheconsentoftheSupremeBishoptothesalewassufficient,especiallysincetheparish
priestandtheDiocesanBishopvoicednoobjectiontothesale.12
TheCourtfindsiterroneousfortheCAtoignorethefactthatthelaymen'scommitteeobjectedtothesaleofthe
lot in question. The Canons require that ALL the church entities listed in Article IV (a) thereof should give its
approval to the transaction. Thus, when the Supreme Bishop executed the contract of sale of petitioner's lot
despitetheoppositionmadebythelaymen'scommittee,heactedbeyondhispowers.
ThiscaseclearlyfallsunderthecategoryofunenforceablecontractsmentionedinArticle1403,paragraph(1)of
theCivilCode,whichprovides,thus:
Art.1403.Thefollowingcontractsareunenforceable,unlesstheyareratified:
(1) Those entered into in the name of another person by one who has been given no authority or legal
representation,orwhohasactedbeyondhispowers
InMercadov.AlliedBankingCorporation,13theCourtexplainedthat:
xxxUnenforceablecontractsarethosewhichcannotbeenforcedbyaproperactionincourt,unlesstheyare
ratified,becauseeithertheyareenteredintowithoutorinexcessofauthorityortheydonotcomplywiththe
statuteoffraudsorbothofthecontractingpartiesdonotpossesstherequiredlegalcapacity.xxx.14
Closely analogous cases of unenforceable contracts are those where a person signs a deed of extrajudicial
partition in behalf of coheirs without the latter's authority15 where a mother as judicial guardian of her minor
children,executesadeedofextrajudicialpartitionwhereinshefavorsonechildbygivinghimmorethanhisshare
of the estate to the prejudice of her other children16 and where a person, holding a special power of attorney,
sellsapropertyofhisprincipalthatisnotincludedinsaidspecialpowerofattorney.17
In the present case, however, respondents' predecessorininterest, Bernardino Taeza, had already obtained a
transfer certificate of title in his name over the property in question. Since the person supposedly transferring
ownershipwasnotauthorizedtodoso,thepropertyhadevidentlybeenacquiredbymistake.InVda.deEsconde
v.CourtofAppeals,18theCourtaffirmedthetrialcourt'srulingthattheapplicableprovisionoflawinsuchcasesis
Article 1456 of the Civil Code which states that "[i]f property is acquired through mistake or fraud, the person
obtainingitis,byforceoflaw,consideredatrusteeofanimpliedtrustforthebenefitofthepersonfromwhomthe
propertycomes."Thus,inAznarBrothersRealtyCompanyv.Aying,19citingVda.deEsconde,20theCourtclarified
theconceptoftrustinvolvedinsaidprovision,towit:
ConstruingthisprovisionoftheCivilCode,inPhilippineNationalBankv.CourtofAppeals,theCourtstated:
A deeper analysis of Article 1456 reveals that it is not a trust in the technical sense for in a typical trust,
confidence is reposed in one person who is named a trustee for the benefit of another who is called the cestui
que trust, respecting property which is held by the trustee for the benefit of the cestui que trust. A constructive
trust,unlikeanexpresstrust,doesnotemanatefrom,orgenerateafiduciaryrelation.Whileinanexpresstrust,a
beneficiaryandatrusteearelinkedbyconfidentialorfiduciaryrelations,inaconstructivetrust,thereisneithera
promise nor any fiduciary relation to speak of and the socalled trustee neither accepts any trust nor intends
holdingthepropertyforthebeneficiary.
Theconceptofconstructivetrustswasfurtherelucidatedinthesamecase,asfollows:
...impliedtrustsarethosewhich,withoutbeingexpressed,arededuciblefromthenatureofthetransactionas
matters of intent or which are superinduced on the transaction by operation of law as matters of equity,
independently of the particular intention of the parties. In turn, implied trusts are either resulting or constructive
trusts.Thesetwoaredifferentiatedfromeachotherasfollows:
Resultingtrustsarebasedontheequitabledoctrinethatvaluableconsiderationandnotlegaltitledeterminesthe
equitabletitleorinterestandarepresumedalwaystohavebeencontemplatedbytheparties.Theyarisefromthe
nature of circumstances of the consideration involved in a transaction whereby one person thereby becomes
investedwithlegaltitlebutisobligatedinequitytoholdhislegaltitleforthebenefitofanother.Ontheotherhand,
constructivetrustsarecreatedbytheconstructionofequityinordertosatisfythedemandsofjusticeandprevent
unjust enrichment. They arise contrary to intention against one who, by fraud, duress or abuse of confidence,
obtains or holds the legal right to property which he ought not, in equity and good conscience, to hold. (Italics
supplied)
Aconstructivetrusthavingbeenconstitutedbylawbetweenrespondentsastrusteesandpetitionerasbeneficiary
ofthesubjectproperty,mayrespondentsacquireownershipoverthesaidproperty?TheCourtheldinthesame
case of Aznar,21 that unlike in express trusts and resulting implied trusts where a trustee cannot acquire by
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prescriptionanypropertyentrustedtohimunlessherepudiatesthetrust,inconstructiveimpliedtrusts,thetrustee
mayacquirethepropertythroughprescriptionevenifhedoesnotrepudiatetherelationship.Itisthenincumbent
uponthebeneficiarytobringanactionforreconveyancebeforeprescriptionbarsthesame.
InAznar,22theCourtexplainedthebasisfortheprescriptiveperiod,towit:
xxxunderthepresentCivilCode,wefindthatjustasanimpliedorconstructivetrustisanoffspringofthelaw
(Art.1456,CivilCode),soisthecorrespondingobligationtoreconveythepropertyandthetitletheretoinfavorof
thetrueowner.Inthiscontext,andvisvisprescription,Article1144oftheCivilCodeisapplicable.
Article1144.Thefollowingactionsmustbebroughtwithintenyearsfromthetimetherightofactionaccrues:
(1)Uponawrittencontract
(2)Uponanobligationcreatedbylaw
(3)Uponajudgment.
xxxxxxxxx
Anactionforreconveyancebasedonanimpliedorconstructivetrustmustperforceprescribeintenyearsandnot
otherwise. A long line of decisions of this Court, and of very recent vintage at that, illustrates this rule.
Undoubtedly, it is now wellsettled that an action for reconveyance based on an implied or constructive trust
prescribesintenyearsfromtheissuanceoftheTorrenstitleovertheproperty.
Ithasalsobeenruledthatthetenyearprescriptiveperiodbeginstorunfromthedateofregistrationofthedeed
orthedateoftheissuanceofthecertificateoftitleovertheproperty,xxx.23
Here,thepresentactionwasfiledonJanuary19,1990,24whilethetransfercertificatesoftitleoverthesubjectlots
wereissuedtorespondents'predecessorininterest,BernardinoTaeza,onlyonFebruary7,1990.25
Clearly, therefore, petitioner's complaint was filed well within the prescriptive period stated above, and it is only
justthatthesubjectpropertybereturnedtoitsrightfulowner.
WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals, dated June 30, 2006, and its
ResolutiondatedAugust23,2007,areREVERSEDandSETASIDE.Anewjudgmentisherebyentered:
(1)DECLARINGpetitionerIglesiaFilipinaIndependienteastheRIGHTFULOWNERofthelotscoveredby
TransferCertificatesofTitleNos.T77994andT77995
(2)ORDERINGrespondentstoexecuteadeedreconveyingtheaforementionedlotstopetitioner
(3)ORDERINGrespondentsandsuccessorsininteresttovacatethesubjectpremisesandsurrenderthe
sametopetitionerand
(4)RespondentstoPAYcostsofsuit.
SOORDERED.
DIOSDADOM.PERALTA
AssociateJustice
WECONCUR:
PRESBITEROJ.VELASCO,JR.
AssociateJustice
Chairperson
ROBERTOA.ABAD
AssociateJustice

JOSECATRALMENDOZA
AssociateJustice

MARVICMARIOVICTORF.LEONEN
AssociateJustice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in consultation before the case was
assignedtothewriteroftheopinionoftheCourt'sDivision.
PRESBITEROJ.VELASCO,JR.
AssociateJustice
Chairperson,ThirdDivision
CERTIFICATION
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PursuanttoSection13,ArticleVIIIoftheConstitutionandtheDivisionChairperson'sAttestation,Icertifythatthe
conclusionsintheaboveDecisionhadbeenreachedinconsultationbeforethecasewasassignedtothewriterof
theopinionoftheCourt'sDivision.
MARIALOURDESP.A.SERENO
ChiefJustice

Footnotes
1

PennedbyAssociateJusticeAmelitaG.Tolentino,withAssociateJusticesPortiaAlioHormachuelosand
SantiagoJavierRanada,concurringrollo,pp.3652.
2

PennedbyAssociateJusticeAmelitaG.Tolentino,withAssociateJusticesPortiaAlioHormachuelosand
ArcangelitaRomillaLontok,concurringid.at5455.
3

Rollo,pp.3739.

Records,p.429.

Rollo,p.51.

Id.at4445.

Rollo,pp.1617.

Emphasissupplied.

Exhibit"F,"records,pp.154157.

10

TSN,July7,1994,p.43.

11

SeeExhibit"H,"records,pp.176177,"ResolutionNo.6.AResolutionRequestingtheSupremeBishop
and the Supreme Council of Bishop Not to Sell the Remaining Portion of Lot No. 8698 Located at Ruyu,
Tuguegarao. Cagayan" See also Exhibit "I," records p. 178. Telegram of Bishop Cuarteros sent to Most
Rev. Macario Ga stating that, "Parishioners of Tuguegarao oppose the sale of the remaining portion of
cemeterylot."
SeeRTCDecision,records,p.427,pertinentportionofwhichreads:
TheotherproofpresentedtoprovethatnoconsentwasgivenbythelaymenistheResolutionNo.6
marked as Exhibit "H" signed by the Secretary, Dante Santos, which shows among others that the
officers and members of the Church are not in favor of the sale because the lot is essential to the
interestofthecongregation.
ThisCourtgivescredencetothisresolutionasgenuine,authentic,andhence,credible.
SeealsoexcerptsfromtheTSNoftheApril28,1994hearing,pp.1415,towit:
Q:xxxx
DoyouknowBishopifthisprovisionregardingthedispositionofthepropertyofthechurchwas
complied?
A:Notcomplied.Infact,weprotestedbeforethesalewasmade.
Q:Doyoumeantosaythatbeforethesaleitwasalreadyprotested?
A:Yes,Sir.
Q:Whatpromptedyoutoprotestbeforethesale,thattherewasanimpendingsalethatprompted
youtomakeaprotest?
A:BecausewehavelearnedalreadyfromrumorsthatMr.Taezahastheplantogetthatlot.
Q:Inwhatmannerorformdidyouprotest?
A:Throughresolution,writtenandverbal.
12

CADecision,rollo,pp.4344.

13

555Phil.411(2007).

14

Id.at429.

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15

HeirsofPolicronioM.Ureta,Sr.v.HeirsofLiberatoM.Ureta,G.R.Nos.165748&165930,September
14,2011,657SCRA555.
16

Vda.deEscondev.CourtofAppeals,323Phil.81(1996).

17

Mercadov.AlliedBankingCorporation,supranote13.

18

Supranote16.

19

497Phil.788,799800(2005).

20

Supranote16.

21

Supranote19.

22

Id.

23

Id.at801.(Emphasissupplied)

24

Records,p.1.

25

Exhibits"B"and"C,"id.at148149.

TheLawphilProjectArellanoLawFoundation

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