Cases on: Agency, Easement, Public Domain

Civil Law: Contract of Agency, Contract to Sell Real Properties

Sally Yoshizaki, Petitioner, vs. Joy Training Center of Aurora, Inc., Respondents
G.R. No. 174978; July 31, 2013
Facts: Richard and Linda Johnson were members of Joy Trainings Board of Trustees who sold the real
properties, a wrangler jeep, and other personal properties in favor of the spouses Sally and Yoshio
Yoshizaki. Joy Training filed an action for cancellation of sales alleging that the spouses Johnson is
without the requisite authority from the Board of Directors. The RTC ruled in favor of the spouses
Yoshizaki. It found that Joy Training owned the real properties and it authorized he spouses Johnson to
sell the real properties. It recognized that there were only five actual members of the board of trustees;
consequently, a majority of the board of trustees validly authorized the sale. It also ruled that the sale of
personal properties was valid because they were registered in the spouses Johnsons name. The CA
upheld the RTCs jurisdiction over the case but reversed its ruling with respect to the sale of real
properties. It also ruled that the resolution is void because it was not approved by a majority of the
board of trustees.
Issue: Was there a contract of agency to sell the real properties between Joy Training and the spouses
Johnson?
Ruling: The SC ruled that there was no contract of agency between Joy Training and the spouses
Johnson to sell the parcel of land with its improvements. Art. 1868 of the Civil Code defines a contract of
agency as a contract whereby a person binds himself to render some service or to do something in
representation or on behalf of another, with the consent or authority of the latter. It may be express,
or implied from the acts of the principal, from his silence or lack of action, or his failure to repudiate the
agency, knowing that another person is acting on his behalf without authority. In this case, the
presented evidence did not convince the SC of the existence of the contract of agency to sell the real
properties. The certification is a mere general power of attorney which comprises all of Joy training. Art.
1877 of CC clearly states that an agency couched in general terms comprises only acts of administration,
even if the principal should state that he withholds no power or that the agent may execute such acts as
he may authorize as general and unlimited management.






Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 174978 July 31, 2013

SALLY YOSHIZAKI, Petitioner,
vs.
JOY TRAINING CENTER OF AURORA, INC., Respondent.

D E C I S I O N

BRION, J.:

We resolve the petition for review on certiorari1 filed by petitioner Sally Yoshizaki to challenge the
February 14, 2006 Decision2 and the October 3, 2006 Resolution3 of the Court of Appeals (CA) in CA-
G.R. CV No. 83773.

The Factual Antecedents

Respondent Joy Training Center of Aurora, Inc. (Joy Training) is a non-stock, non-profit religious
educational institution. It was the registered owner of a parcel of land and the building thereon (real
properties) located in San Luis Extension Purok No. 1, Barangay Buhangin, Baler, Aurora. The parcel of
land was designated as Lot No. 125-L and was covered by Transfer Certificate of Title (TCT) No. T-
25334.4

On November 10, 1998, the spouses Richard and Linda Johnson sold the real properties, a Wrangler
jeep, and other personal properties in favor of the spouses Sally and Yoshio Yoshizaki. On the same date,
a Deed of Absolute Sale5 and a Deed of Sale of Motor Vehicle6 were executed in favor of the spouses
Yoshizaki. The spouses Johnson were members of Joy Trainings board of trustees at the time of sale. On
December 7, 1998, TCT No. T-25334 was cancelled and TCT No. T-260527 was issued in the name of the
spouses Yoshizaki.

On December 8, 1998, Joy Training, represented by its Acting Chairperson Reuben V. Rubio, filed an
action for the Cancellation of Sales and Damages with prayer for the issuance of a Temporary
Restraining Order and/or Writ of Preliminary Injunction against the spouses Yoshizaki and the spouses
Johnson before the Regional Trial Court of Baler, Aurora (RTC).8 On January 4, 1999, Joy Training filed a
Motion to Amend Complaint with the attached Amended Complaint. The amended complaint
impleaded Cecilia A. Abordo, officer-in-charge of the Register of Deeds of Baler, Aurora, as additional
defendant. The RTC granted the motion on the same date.9

In the complaint, Joy Training alleged that the spouses Johnson sold its properties without the requisite
authority from the board of directors.10 It assailed the validity of a board resolution dated September 1,
199811 which purportedly granted the spouses Johnson the authority to sell its real properties. It
averred that only a minority of the board, composed of the spouses Johnson and Alexander Abadayan,
authorized the sale through the resolution. It highlighted that the Articles of Incorporation provides that
the board of trustees consists of seven members, namely: the spouses Johnson, Reuben, Carmencita
Isip, Dominador Isip, Miraflor Bolante, and Abelardo Aquino.12

Cecilia and the spouses Johnson were declared in default for their failure to file an Answer within the
reglementary period.13 On the other hand, the spouses Yoshizaki filed their Answer with Compulsory
Counterclaims on June 23, 1999. They claimed that Joy Training authorized the spouses Johnson to sell
the parcel of land. They asserted that a majority of the board of trustees approved the resolution. They
maintained that the actual members of the board of trustees consist of five members, namely: the
spouses Johnson, Reuben, Alexander, and Abelardo. Moreover, Connie Dayot, the corporate secretary,
issued a certification dated February 20, 199814 authorizing the spouses Johnson to act on Joy
Trainings behalf. Furthermore, they highlighted that the Wrangler jeep and other personal properties
were registered in the name of the spouses Johnson.15 Lastly, they assailed the RTCs jurisdiction over
the case. They posited that the case is an intra-corporate dispute cognizable by the Securities and
Exchange Commission (SEC).16

After the presentation of their testimonial evidence, the spouses Yoshizaki formally offered in evidence
photocopies of the resolution and certification, among others.17 Joy Training objected to the formal
offer of the photocopied resolution and certification on the ground that they were not the best evidence
of their contents.18 In an Order19 dated May 18, 2004, the RTC denied the admission of the offered
copies.

The RTC Ruling

The RTC ruled in favor of the spouses Yoshizaki. It found that Joy Training owned the real properties.
However, it held that the sale was valid because Joy Training authorized the spouses Johnson to sell the
real properties. It recognized that there were only five actual members of the board of trustees;
consequently, a majority of the board of trustees validly authorized the sale. It also ruled that the sale of
personal properties was valid because they were registered in the spouses Johnsons name.20

Joy Training appealed the RTC decision to the CA.

The CA Ruling

The CA upheld the RTCs jurisdiction over the case but reversed its ruling with respect to the sale of real
properties. It maintained that the present action is cognizable by the RTC because it involves recovery of
ownership from third parties.

It also ruled that the resolution is void because it was not approved by a majority of the board of
trustees. It stated that under Section 25 of the Corporation Code, the basis for determining the
composition of the board of trustees is the list fixed in the articles of incorporation. Furthermore,
Section 23 of the Corporation Code provides that the board of trustees shall hold office for one year and
until their successors are elected and qualified. Seven trustees constitute the board since Joy Training
did not hold an election after its incorporation.

The CA did not also give any probative value to the certification. It stated that the certification failed to
indicate the date and the names of the trustees present in the meeting. Moreover, the spouses
Yoshizaki did not present the minutes that would prove that the certification had been issued pursuant
to a board resolution.21 The CA also denied22 the spouses Yoshizakis motion for reconsideration,
prompting Sally23 to file the present petition.

The Petition

Sally avers that the RTC has no jurisdiction over the case. She points out that the complaint was
principally for the nullification of a corporate act. The transfer of the SECs original and exclusive
jurisdiction to the RTC24 does not have any retroactive application because jurisdiction is a substantive
matter.

She argues that the spouses Johnson were authorized to sell the parcel of land and that she was a buyer
in good faith because she merely relied on TCT No. T-25334. The title states that the spouses Johnson
are Joy Trainings representatives.

She also argues that it is a basic principle that a party dealing with a registered land need not go beyond
the certificate of title to determine the condition of the property. In fact, the resolution and the
certification are mere reiterations of the spouses Johnsons authority in the title to sell the real
properties. She further claims that the resolution and the certification are not even necessary to clothe
the spouses Johnson with the authority to sell the disputed properties. Furthermore, the contract of
agency was subsisting at the time of sale because Section 108 of Presidential Decree No. (PD) 1529
requires that the revocation of authority must be approved by a court of competent jurisdiction and no
revocation was reflected in the certificate of title.25

The Case for the Respondent

In its Comment26 and Memorandum,27 Joy Training takes the opposite view that the RTC has
jurisdiction over the case. It posits that the action is essentially for recovery of property and is therefore
a case cognizable by the RTC. Furthermore, Sally is estopped from questioning the RTCs jurisdiction
because she seeks to reinstate the RTC ruling in the present case.

Joy Training maintains that it did not authorize the spouses Johnson to sell its real properties. TCT No. T-
25334 does not specifically grant the authority to sell the parcel of land to the spouses Johnson. It
further asserts that the resolution and the certification should not be given any probative value because
they were not admitted in evidence by the RTC. It argues that the resolution is void for failure to comply
with the voting requirements under Section 40 of the Corporation Code. It also posits that the
certification is void because it lacks material particulars.

The Issues

The case comes to us with the following issues:

1) Whether or not the RTC has jurisdiction over the present case; and

2) Whether or not there was a contract of agency to sell the real properties between Joy Training and
the spouses Johnson.

3) As a consequence of the second issue, whether or not there was a valid contract of sale of the real
properties between Joy Training and the spouses Yoshizaki.

Our Ruling

We find the petition unmeritorious.

The RTC has jurisdiction over disputes concerning the application of the Civil Code

Jurisdiction over the subject matter is the power to hear and determine cases of the general class to
which the proceedings before a court belong.28 It is conferred by law. The allegations in the complaint
and the status or relationship of the parties determine which court has jurisdiction over the nature of an
action.29 The same test applies in ascertaining whether a case involves an intra-corporate
controversy.30

The CA correctly ruled that the RTC has jurisdiction over the present case. Joy Training seeks to nullify
the sale of the real properties on the ground that there was no contract of agency between Joy Training
and the spouses Johnson. This was beyond the ambit of the SECs original and exclusive jurisdiction prior
to the enactment of Republic Act No. 8799 which only took effect on August 3, 2000. The determination
of the existence of a contract of agency and the validity of a contract of sale requires the application of
the relevant provisions of the Civil Code. It is a well-settled rule that "disputes concerning the
application of the Civil Code are properly cognizable by courts of general jurisdiction."31 Indeed, no
special skill requiring the SECs technical expertise is necessary for the disposition of this issue and of
this case.

The Supreme Court may review questions of fact in a petition for review on certiorari when the findings
of fact by the lower courts are conflicting

We are aware that the issues at hand require us to review the pieces of evidence presented by the
parties before the lower courts. As a general rule, a petition for review on certiorari precludes this Court
from entertaining factual issues; we are not duty-bound to analyze again and weigh the evidence
introduced in and considered by the lower courts. However, the present case falls under the recognized
exception that a review of the facts is warranted when the findings of the lower courts are conflicting.32
Accordingly, we will examine the relevant pieces of evidence presented to the lower court.

There is no contract of agency between Joy Training and the spouses Johnson to sell the parcel of land
with its improvements

Article 1868 of the Civil Code defines a contract of agency as a contract whereby a person "binds himself
to render some service or to do something in representation or on behalf of another, with the consent
or authority of the latter." It may be express, or implied from the acts of the principal, from his silence or
lack of action, or his failure to repudiate the agency, knowing that another person is acting on his behalf
without authority.

As a general rule, a contract of agency may be oral. However, it must be written when the law requires a
specific form.33 Specifically, Article 1874 of the Civil Code provides that the contract of agency must be
written for the validity of the sale of a piece of land or any interest therein. Otherwise, the sale shall be
void. A related provision, Article 1878 of the Civil Code, states that special powers of attorney are
necessary to convey real rights over immovable properties.

The special power of attorney mandated by law must be one that expressly mentions a sale or that
includes a sale as a necessary ingredient of the authorized act. We unequivocably declared in Cosmic
Lumber Corporation v. Court of Appeals34 that a special power of attorneymust express the powers of
the agent in clear and unmistakable language for the principal to confer the right upon an agent to sell
real estate. When there is any reasonable doubt that the language so used conveys such power, no such
construction shall be given the document. The purpose of the law in requiring a special power of
attorney in the disposition of immovable property is to protect the interest of an unsuspecting owner
from being prejudiced by the unwarranted act of another and to caution the buyer to assure himself of
the specific authorization of the putative agent.35

In the present case, Sally presents three pieces of evidence which allegedly prove that Joy Training
specially authorized the spouses Johnson to sell the real properties: (1) TCT No. T-25334, (2) the
resolution, (3) and the certification. We quote the pertinent portions of these documents for a thorough
examination of Sallys claim. TCT No. T-25334, entered in the Registry of Deeds on March 5, 1998, states:

A parcel of land x x x is registered in accordance with the provisions of the Property Registration Decree
in the name of JOY TRAINING CENTER OF AURORA, INC., Rep. by Sps. RICHARD A. JOHNSON and LINDA
S. JOHNSON, both of legal age, U.S. Citizen, and residents of P.O. Box 3246, Shawnee, Ks 66203, U.S.A.36
(emphasis ours)

On the other hand, the fifth paragraph of the certification provides:

Further, Richard A. and Linda J. Johnson were given FULL AUTHORITY for ALL SIGNATORY purposes for
the corporation on ANY and all matters and decisions regarding the property and ministry here. They
will follow guidelines set forth according to their appointment and ministerial and missionary training
and in that, they will formulate and come up with by-laws which will address and serve as governing
papers over the center and corporation. They are to issue monthly and quarterly statements to all
members of the corporation.37 (emphasis ours)

The resolution states:

We, the undersigned Board of Trustees (in majority) have authorized the sale of land and building
owned by spouses Richard A. and Linda J. Johnson (as described in the title SN No. 5102156 filed with
the Province of Aurora last 5th day of March, 1998. These proceeds are going to pay outstanding loans
against the project and the dissolution of the corporation shall follow the sale. This is a religious, non-
profit corporation and no profits or stocks are issued.38 (emphasis ours)

The above documents do not convince us of the existence of the contract of agency to sell the real
properties. TCT No. T-25334 merely states that Joy Training is represented by the spouses Johnson. The
title does not explicitly confer to the spouses Johnson the authority to sell the parcel of land and the
building thereon. Moreover, the phrase "Rep. by Sps. RICHARD A. JOHNSON and LINDA S. JOHNSON"39
only means that the spouses Johnson represented Joy Training in land registration.

The lower courts should not have relied on the resolution and the certification in resolving the
case.1wphi1 The spouses Yoshizaki did not produce the original documents during trial. They also failed
to show that the production of pieces of secondary evidence falls under the exceptions enumerated in
Section 3, Rule 130 of the Rules of Court.40 Thus, the general rule that no evidence shall be admissible
other than the original document itself when the subject of inquiry is the contents of a document
applies.41

Nonetheless, if only to erase doubts on the issues surrounding this case, we declare that even if we
consider the photocopied resolution and certification, this Court will still arrive at the same conclusion.

The resolution which purportedly grants the spouses Johnson a special power of attorney is negated by
the phrase "land and building owned by spouses Richard A. and Linda J. Johnson."42 Even if we
disregard such phrase, the resolution must be given scant consideration. We adhere to the CAs position
that the basis for determining the board of trustees composition is the trustees as fixed in the articles of
incorporation and not the actual members of the board. The second paragraph of Section 2543 of the
Corporation Code expressly provides that a majority of the number of trustees as fixed in the articles of
incorporation shall constitute a quorum for the transaction of corporate business.

Moreover, the certification is a mere general power of attorney which comprises all of Joy Trainings
business.44 Article 1877 of the Civil Code clearly states that "an agency couched in general terms
comprises only acts of administration, even if the principal should state that he withholds no power or
that the agent may execute such acts as he may consider appropriate, or even though the agency should
authorize a general and unlimited management."45

The contract of sale is unenforceable

Necessarily, the absence of a contract of agency renders the contract of sale unenforceable;46 Joy
Training effectively did not enter into a valid contract of sale with the spouses Yoshizaki. Sally cannot
also claim that she was a buyer in good faith. She misapprehended the rule that persons dealing with a
registered land have the legal right to rely on the face of the title and to dispense with the need to
inquire further, except when the party concerned has actual knowledge of facts and circumstances that
would impel a reasonably cautious man to make such inquiry.47 This rule applies when the ownership of
a parcel of land is disputed and not when the fact of agency is contested.

At this point, we reiterate the established principle that persons dealing with an agent must ascertain
not only the fact of agency, but also the nature and extent of the agents authority.48 A third person
with whom the agent wishes to contract on behalf of the principal may require the presentation of the
power of attorney, or the instructions as regards the agency.49 The basis for agency is representation
and a person dealing with an agent is put upon inquiry and must discover on his own peril the authority
of the agent.50 Thus, Sally bought the real properties at her own risk; she bears the risk of injury
occasioned by her transaction with the spouses Johnson.

WHEREFORE, premises considered, the assailed Decision dated February 14, 2006 and Resolution dated
October 3, 2006 of the Court of Appeals are hereby AFFIRMED and the petition is hereby DENIED for
lack of merit.

SO ORDERED.

ARTURO D. BRION
Associate Justice



Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 192085 February 22, 2012
CARIDAD SEGARRA SAZON, Petitioner,
vs.
LETECIA VASQUEZ-MENANCIO, represented by Attorney-in-Fact EDGAR S.
SEGARRA, Respondent.
Villarama
*

D E C I S I O N
SERENO, J .:
The present case stems from a Complaint for Recovery of Possession of Real Properties,
Accounting and Injunction
1
filed by Leticia Vasquez-Menancio (respondent) against Caridad S.
Sazon (petitioner) in the Regional Trial Court (RTC) of Ligao City, Albay. The RTC ruled in favor
of respondent, but reversed itself when petitioner filed a Motion for Reconsideration (MR).
Respondent appealed the case to the Court of Appeals (CA), but it affirmed the first Decision of
the RTC. She filed another MR, but the CA denied it for lack of merit.
The Case
Before us is a Petition for Review
2
under Rule 45 of the Rules of Court, assailing the 26
November 2009 Decision
3
of the appellate court in CA-GR CV No. 91570. The challenged
Decision disposed as follows:
WHEREFORE, the appeal is DISMISSED. The Decision dated 31 July 2007 of the Regional
Trial Court, Branch 13, Ligao City, in Civil Case No. T-1944 is AFFIRMED with MODIFICATION
in that Caridad S. Sazon is ORDERED to pay Leticia Vasquez-Menancio the amount
of P 908,112.62, representing the unremitted fruits and income of the subject properties from
1979 to 1997. This is already net of administration expenses, allowance for compensation and
proved real estate taxes paid. The Decision is affirmed in all other respects.
SO ORDERED.
4

Antecedents
Respondent is a resident of the United States of America. Sometime in 1979, she entrusted the
management, administration, care and preservation of her properties to petitioner. These
properties are more specifically described as follows:
I. Residential lot, with an area of 573 sq. m., located in Zone III, Libon, Albay, declared
under Tax No. 097-03-0066 in the sum of P 24,070.00
II. Residential lot, with an area of 299 sq. m., located in Zone III, Libon, Albay, declared
under Tax No. 097-003-00115 in the sum of P 12,560.00
III. Residential lot, with an area of 873 sq. m., located in San Antonio St., Libon, Albay,
declared under Tax No. 097-003-00068 in the sum of P 36,670.00
IV. Irrigated riceland, Cad. Lot No. 852, with an area of 3.1304 hectares, located at San
Isidro, Libon, Albay, declared under Tax No. 07-039-235 in the sum of P 96,580.00
V. Irrigated riceland, with an area of 1.5652 hectares, located at Bololo Centro, Libon,
Albay, declared under Tax No. 07-005-104 in the sum of P 48,290.00
VI. Irrigated riceland, with an area of .6720 hectares, located at Bololo Centro, Libon,
Albay, declared under Tax No. 07-005-103 in the sum of P 29,730.00
VII. Irrigated riceland, with an area of .6380 hectares, located at Balagon Centro, Libon,
Albay, declared under Tax No. 07-005-222 in the sum of P 19,680.00
VIII. Coconut land, with an area of ten (10) hectares, located at Macabugos, Libon,
Albay, declared under Tax No. 07-023-85 in the sum of P 42,840.00
IX. Coconut land, with an area of 3.7102 hectares, located at Macabugos, Libon, Albay,
declared under Tax No. 07-023-86 in the sum of P 15,740.00
5

The properties shall hereinafter be referred to individually as "Lot I," "Lot II" and so on for
brevity.
Respondent avers that Lots I to IX are productive, and that petitioner as the administrator has
collected and received all the fruits and income accruing therefrom. Petitioner, on the other
hand, claims that several of the properties do not produce any fruit or generate any income at
all,
6
and that any supposed income derived from them is not sufficient to answer for all the
expenses incurred to maintain them.
7

According to respondent, petitioner never rendered a full accounting of the fruits and income
derived from the properties, but has instead appropriated and in fact applied these for her own
use and benefit. Denying this allegation, petitioner presented five lettersdated 21 January
1983, 12 March 1984, 15 September 1986, 2 December 1988, and one undatedwhich had
been sent to respondent as proof of the accounting.
8

Furthermore, petitioner denies receipt of any letter asking her to make an accounting or to remit
the fruits collected from the properties.
9
She further avers that, since the start of her agency
agreement with respondent, the latter never answered "any of the communications" petitioner
had sought to initiate.
10

As a result of the foregoing, respondent revoked, in writing, all the powers and authority of
administration granted to petitioner effective March 1997. Thereafter, the former demanded that
petitioner return and/or turn over the possession and administration of the properties.
Respondent claims that she made repeated verbal, and served written, demands upon
petitioner, asking the latter to render an accounting and to remit the owners share of the fruits.
Petitioner, however, continued to fail and to refuse to perform her obligation.
11
In fact, she
continues to hold on to the properties and the management and administration thereof. Further,
she continues to collect, receive, and keep all the income generated by the properties.
Thus, on 30 October 1997, respondent filed her Complaint with Preliminary Injunction,
12
praying
that the RTC order petitioner to render an accounting and remit all the fruits and income the
latter, as the administrator, received from the properties.
In her Answer with Counterclaim,
13
petitioner alleges as follows:
2.a. Lot area of 573 sq.m.-is being leased by Salome S. Segarra which is duly covered
by a Lease Contract executed during the effectivity of the Special Power of Attorney
granted to the herein defendant. Furthermore, the said Lease Contract was entered into
with the express consent, and without any objection on the part of the plaintiff since she
was consulted prior to its execution; xxx,
2.b. Lot area of 299 sq. m. This is included in the [L]ease [C]ontract above-mentioned.
2.c. Lot area of 873 sq. m. This is likewise duly covered by a Lease Contract executed
between the herein defendant as lessee and Ana C. Segarra when the latter was still the
administrator of the properties of the plaintiff. The said Lease Contract was likewise
entered into with the express consent and without any objection on the part of the
plaintiff since she was again consulted prior to its execution; xxx.
2.d. Lot area of 3.1304 hectares this is administered as to 2/3 of the total land area but
not as to the other 1/3 as the same is owned by the defendants mother Ana C. Segarra
by virtue of a contract of sale from Mrs. Josefina Segarra, the co-owner of the plaintiff
over the said land; xxx,
2.e. Lot area of 1.5652 hectares and .6720 hectares are not owned by the plaintiff but
that of the mother of the herein defendant Ana C. Segarra by virtue of a Deed of
Redemption, as in fact, they are in possession thereof as owners and not as
administrator of the plaintiff; xxx,
2.f. Lot area of .6380 hectares said land is presently possessed by the alleged
administrator of the plaintiff yet the plaintiff still seeks the return of the same which
constitutes an act that trifles with the administration of justice and further prove that this
groundless case was filed with this court purely to harass the herein defendant;
2.g. Lot area of 10 hectares and Lot area of 3.7102 hectares the herein defendant is
no longer in possession of these lots as in fact, the fruits of these lands are not being
turned over to the defendant ever since the plaintiff revoked the authority given to the
defendant, xxx.
14

In short, petitioner argues that respondent has no cause of action against her for the following
reasons:
15

1. The properties that cannot be returned because they are under valid lease
agreementsLots I-IIIand those that have been transferred to a third party by virtue of
contracts of sale with corresponding deeds of redemptionLots V and VIcan no
longer be given to respondent;
16

2. Some properties are already in respondents possessionLots IV and VII-IX.
17

By way of compulsory counterclaim, petitioner is asking this Court to order respondent to return
the one-third portion of Lot IV allegedly owned by petitioners mother and the fruits collected
therefrom.
18

During the pretrial conference held on 24 July 1998, the parties agreed that respondent already
had possession over Lots IV, VII, VIII, and IX. They also agreed that all the income derived from
Lots I to IX since 1979 were received by petitioner.
19

In a Decision
20
dated 31 July 2007, the RTC ruled in favor of respondents. The dispositive
portion thereof reads:
WHEREFORE, the foregoing premises duly considered, judgment is hereby rendered in favor of
plaintiff Leticia Vasquez-Menancio and against defendant Caridad S. Sazon, as follows:
a) ordering the defendant to turn over the possession, management and administration
of all the properties enumerated in paragraph 2 of the complaint, except parcels 4, 7, 8
and 9 which were already under plaintiffs possession since August, 1977, to the plaintiff,
thru attorney-in-fact Edgar S. Segarra;
b) ordering the defendant to remit to the plaintiff the total sum of P 1,265,493.75
representing unremitted fruits and income of the subject properties, less the amount
of P 150,000.00 by way of administration expenses incurred by defendant;
c) ordering the defendant to pay the plaintiff the sum of P 50,000.00 as moral damages;
d) ordering the defendant to reimburse the plaintiff the sum of P 20,000.00 as and for
attorneys fees, plus the sum of P 1,000.00 for every court appearance of counsel; and

e) ordering the defendant to pay the costs of the suit.
On the other hand, plaintiff Leticia Vasquez-Menancio is hereby ordered to pay defendant
Caridad S. Sazon the total sum of P 180,000.00, representing the latters compensation in
administering the formers properties based on quantum meruit.
SO ORDERED.
21

Petitioner filed her MR on 20 August 2007 questioning the trial courts Decision to rely on the
computation made by respondents attorney-in-fact. These computations, reflected in paragraph
(b) of the dispositive portion, were used by the RTC to determine the prices of palay, corn and
copra at the time that petitioner administered the properties. Realizing, however, that it should
have considered the Certifications issued by the National Food Authority (NFA) and the
Philippine Coconut Authority (PCA) for that purpose, the RTC ruled in favor of respondent and
partly reversed its 28 March 2008 Decision, the dispositive portion of which reads:
WHEREFORE, the foregoing premises duly considered, the Court resolves to set aside the
Decision dated July 31, 2007. In lieu thereof, a new decision is hereby rendered as follows:
a) ordering the defendant Caridad S. Sazon to turn over the possession, management
and administration of all the properties enumerated in paragraph 2 of the complaint,
except parcels 4, 7, 8 and 9 which were already under plaintiffs possession since
August, 2007, to plaintiff Leticia Vasquez-Menancio, thru her attorney-in-fact Edgar S.
Segarra;
b) ordering the defendant to render full, accurate and complete accounting of all the
fruits and proceeds of the subject properties during the period of her administration; and
c) ordering the defendant to reimburse the plaintiff the sum of P 20,000.00, as and for
attorneys fees;
Costs against defendant.
SO ORDERED.
22
(Emphasis supplied in the original)
Still aggrieved, petitioner raised the matter to the CA, but it dismissed her appeal. It affirmed the
trial courts 31 July 2007 Decision, except for the amount ordered to be remitted to respondent,
which was reduced to P908,112.62. The MR filed by petitioner was also denied on 29 April
2010.
23

Petitioner is now asking this Court to set aside the CAs Decision.
24

In questioning the Decision of the CA, petitioner first raises a procedural issue. She argues that
the appellate court should not have affirmed the RTC Decision in this case, because when the
trial court abandoned its original Decision, the latter impliedly admitted that it had "committed
erroneous findings of facts."
25
Respondent argues that the CA had the power to affirm the
RTCs second Decisionthe Resolution on the MRbecause the entire case was opened for
review upon appeal.
We agree with respondent.
In Heirs of Carlos Alcaraz v. Republic of the Philippines,
26
we reiterated the cardinal rule that
when a case is appealed, the appellate court has the power the review the case in its entirety, to
wit:
In any event, when petitioners interposed an appeal to the Court of Appeals, the appealed case
was thereby thrown wide open for review by that court, which is thus necessarily empowered to
come out with a judgment as it thinks would be a just determination of the controversy. Given
this power, the appellate court has the authority to either affirm, reverse or modify the appealed
decision of the trial court. To withhold from the appellate court its power to render an entirely
new decision would violate its power of review and would, in effect, render it incapable of
correcting patent errors committed by the lower courts.
Thus, we agree with respondent that the CA was free to affirm, reverse, or modify either the
Decision or the Order of the RTC.
Next, petitioner avers that she cannot turn over possession of Lots I to III, because these are
subject of valid lease agreements. None of the parties question the appellate courts finding that
the lease agreements covering Lots I-III should be respected. After all, when petitioner entered
into these agreements, she acted within her authority as respondents agent.
27

In this matter, we agree with the CA in its ruling that even though the lease agreements
covering these lots should be respected, petitioner must turn over the administration of the
leases to respondents attorney-in-fact.
28
The reason is that respondent has already revoked the
authority of petitioner as administrator. Hence, the latter no longer has the right to administer the
properties or to receive the income they generate on respondents behalf.
With respect to the one-third portion of Lot IV, the parties also agree that the sale of one-third of
this lot to petitioners mother should be respected by respondent.
29
Lot IV has been in the
latters possession since 1997. Since it is not controverted that one-third of this lot is now owned
by petitioners mother, respondent should turn over possession of the corresponding one-third
portion and remit all fruits collected therefrom since 1997.
Petitioner questions the factual findings of the appellate court. She claims that the CA erred in
finding that "the reason why petitioner allegedly never rendered an accounting of income is
because the respondent never demanded it."
30
According to petitioner, she never claimed that
this was the reason why she never rendered an accounting of income. In fact, she insists that
she actually sent letters of accounting to respondent. Supposedly, she only said that respondent
never demanded accounting from her to refute the claim of respondent that such demand letter
was sent to her.
Petitioner insists, however, that Article 1891 of the Civil Code contains a few of the obligations
owed by an agent to his principal, viz:
Art. 1891. Every agent is bound to render an account of his transactions and to deliver to the
principal whatever he may have received by virtue of the agency, even though it may not be
owing to the principal.
Every stipulation exempting the agent from the obligation to render an account shall be void.
It is evident that the reason behind the failure of petitioner to render an accounting to
respondent is immaterial. What is important is that the former fulfill her duty to render an
account of the relevant transactions she entered into as respondents agent.
Petitioner claims that in the course of her administration of the properties, the letters she sent to
respondent should be considered as a fulfillment of her obligation, as respondents agent, to
render an accounting of her administration.
31
Both the RTC and the CA found these letters
insufficient. We agree. Petitioner was the administrator of respondents properties for 18 years
or from 1979 to 1997, and four letters within 18 years can hardly be considered as sufficient to
keep the principal informed and updated of the condition and status of the latters properties.
As to Lots V and VI, petitioner avers that ownership thereof was transferred to her mother
through a Deed of Redemption,
32
viz:
Defendant averred that her mother owned parcels 5 and 6. She Identified a Deed of
Redemption purporting to have transferred the property to her mother. When the deed was
executed, plaintiff was in the United States but defendants mother notified her. She saw her
mother putting 100-peso bills amounting to P 6,500.00 in a big brown envelope to pay for the
lot. Her father Simeon Segarra who just came from the United States gave her the money.
33

On this matter, the RTC found thus:
As regards parcels 5 and 6, the defendant averred that they were owned by her mother Ana
Segarra because she was the one who redeemed the properties. But the evidence extant in the
records disclosed that the said parcels of land were declared for taxation purposes in the name
of plaintiff Leticia Vasquez-Menancio. In many cases, it has been repeatedly held that although
tax declarations are not conclusive evidence of ownership, nevertheless, they are good indicia
of possession in the concept of an owner for no one in his right mind would be paying taxes for
a property that is not under his actual or at least constructive possession. Hence, the fruits and
profits of these properties shall still incur to the plaintiff.
34

For its part, the CA held as follows:
To prove that one of Leticias properties now belongs to her mother, Ana Segarra, Sazon
presented evidence showing that when Ana was still the administrator of Leticias properties,
she redeemed Leticias property that was sold by Leticias father to vendee-a-retro, Loreto San
Andres-Seda. However, the Deed of Redemption clearly shows that Ana redeemed the property
only in her capacity as attorney-in-fact of Leticia, and not in her personal capacity.
35

Factual findings of the trial court are accorded high respect and are generally not disturbed by
appellate courts, unless found to be clearly arbitrary or baseless.
36
This Court does not review
the factual findings of an appellate court, unless these findings are "mistaken, absurd,
speculative, conjectural, conflicting, tainted with grave abuse of discretion, or contrary to the
findings culled by the trial court of origin."
37

Although the pronouncement of the trial court is not identical to that of the CA, the declaration of
one corroborates the findings of the other. We rule that the findings of the lower court and the
CA regarding Lots V and VI should be respected. The mother of petitioner purchased both of
these lots in her capacity as respondents attorney-in-fact, which explains why these lots were
for taxation purposesdeclared in the name of respondent.
Petitioner bewails the appellate courts supposed failure to rule on her claim that respondent
promised to give the former a 20% commission for the sale of respondents properties in Las
Pias, Quiapo; and Fraternal, Sampaloc, Manila.
38
We rule that petitioner failed to prove that
this agreement had been entered into. No other evidence, except for her testimony, was
presented to prove that an agreement of this nature had been entered into between the
parties.
39

Finally, the crux of the present Petition is the determination of the value of all the fruits and
proceeds collected from respondents properties from 1979 to 1997 and the total sum thereof.
Petitioner does not deny that she never remitted to respondent any of the fruits or income
derived from the properties. Instead, petitioner claims that (1) the properties did not produce any
fruit or generate any income at all;
40
(2) any supposed income derived from the properties was
not sufficient to answer for all the expenses incurred to maintain them;
41
and (3) she was never
compensated for the services she rendered as the administrator of respondents properties.
As previously mentioned, every agent is bound to deliver to the principal whatever the former
may have received by virtue of the agency, even though that amount may not be owed to the
principal.
42

In determining the value of the fruits, the RTCin its original Decisionrelied on the
computation submitted by respondents attorney-in-fact and ordered petitioner to remit to
respondent the total sum of P 1,265,493.75, to wit:
At the outset, it may be stated that plaintiffs attorney-in-fact Edgar S. Segarra, being a farmer
himself and a resident of the area where the subject properties are located can best testify
regarding the income thereof. In preparing a computation of income of his principal, plaintiff
Leticia Vasquez-Menancio, he consulted people from the agrarian sector, as well as grains
buyers. He also referred to the lease contracts entered into between the former administratrix
and the tenants. Based on his computation, the amount which represented the fruits of the
properties being administered by the defendant but were not remitted to the plaintiff
totaled P 1,265,493.75 xxx, which amount to the mind of the Court, is not colossal but a
reasonable claim, especially in this instance where the subject properties have been
administered by defendant and her mother for more than (10) years.
43

The computation is based on the alleged prevailing price of P 8.75 per kilo for palay and P 12
per kilo for copra. The trial court also ordered respondent to reimburse petitioner in the amount
of P 150,000 representing the administrative expenses the latter incurred as the agent.
Furthermore, petitioner was awarded P 180,000 as compensation for administering
respondents properties. Lastly, petitioner was ordered to pay respondent attorneys fees in the
amount of P 20,000 plus P 1,000 for every appearance of counsel.
In the Order of the RTC reversing its Decision, it found that it should have considered the
Certifications issued by the NFA and PCA with respect to the prevailing prices of palay, corn,
and copra at the time of petitioners administration. These Certifications revealed that the
prevailing prices from 1979 to 1997 were as follows: (1) fromP 1.75 to P 8 per kilo for palay; (2)
from P 1to P 6 per kilo for corn; and (3) from P 3.15 to P 10.77 per kilo for copra. The RTC
found that the parties failed to prove the exact quantity and quality of harvests for the period.
Consequently, it ordered petitioner to "render full, accurate, and complete accounting of all the
fruits and proceeds of the subject properties during the period of her administration."
44

The CA affirmed the RTCs original Decision and ordered petitioner to pay respondent the
amount of P1,315,533.75even though the trial court had ordered the return of
only P 1,265,493.75representing the total value of the fruits and rents derived from the
properties from 1979 to 1997 less the P 150,000 administrative expenses, the P 180,000
compensation for administering the properties, and the P 77,221.13 real estate taxes paid by
petitioner from 1979 to 1997.
We disagree with the appellate courts finding with respect to the total value of fruits and rents
earned by the properties from 1979 to 1997.
As found by the RTC, the following computation of the amounts owed by petitioner to
respondent was submitted by the latters attorney-in-fact, Edgar S. Segarra:
Witness Edgar S. Segarra testified that the properties which were administered by defendant
Caridad S. Sazon consisted of residential and agricultural lands. Caridad Sazon leased the
residential lots to one Salome Segarra in the amount of 100 pesos a month since 1988. Another
parcel of land was leased to defendants mother Ana Segarra in exchange for one sack or 46
kilograms of palay for a period of 20 years. A cornland which is being tenanted by Orlando
Macalinao produced P 72,000.00. The computation was based on a 75/25 sharing plan
multiplied by the price of corn at 6 pesos and again multiplied by 15 years, the number of years
that the properties were being tenanted. Another riceland was tilled by the defendants husband.
This 1.56 hectares Riceland produced 1,932 kilograms of rice per year and at P 8.75 a kilogram,
for 14 years, the amount which was not remitted to the plaintiff amounted to P 836,670.00.
Another property, located at Libon, Albay, containing an area of .6720 hectare and tilled by
defendants husband produced harvest amounting to P 121,030.00. Further, a riceland with an
area of .6380 hectare being farmed by the defendants daughter produced P 183,720.00. Two
coconut lands, located at Macabugos, Libon, Albay, produced coconuts made into copras, thus
bringing in profits of about P 705,600.00.
The foregoing amounts correspond to the years by which the properties were administered by
the defendant, the number of crops they harvested, the sharing plan, and the prevailing price of
the produce during the years of administration. He also asked the comprador (buyer of grains)
about the prices and consulted employees of the department of Agrarian Reform regarding the
sharing of the crops. The lease contracts affecting the properties were also considered. All
these amounts were never remitted by the defendant to the owner-plaintiff.
45

Petitioner correctly posits that it was wrong for the CA to base the computation of unremitted
fruits and rents solely on the evidence submitted by respondents attorney-in-fact, as this
computation was obviously self-serving. Furthermore, the Certifications issued by the NFA and
PCA should have been be given weight, as they are documentary evidence issued by
government offices mainly responsible for determining the buying/selling price of palay, corn,
and other food and coconut products.
We shall review the findings of fact of the Court of Appeals in view of some inconsistencies with
those of the trial court and the evidence on record.
This Court is convinced that the Certifications are genuine, authentic, valid, and issued in the
proper exercise and regular performance of the issuing authoritys official duties. Under Section
3(m), Rule 131 of the Revised Rules of Court, there is a legal presumption that official duty has
been regularly performed. No evidence was presented to rebut or dispute this presumption.
Petitioner claims that several of the properties did not produce any fruit or generate any income
at all.
46
However, the trial court found that not only was there evidence on record showing that
the properties administered yielded agricultural produce and rents, but petitioner herself had
testified that the properties increased when she served as administrator. In effect, she admitted
that the properties indeed generated income.
47

This Court is left with no other choice but to order both parties to present their evidence in
support of their respective claims considering that no evidence was submitted to prove the
quantity and quality of harvests for the relevant period. Neither the RTC nor the CA was able to
explain or present a breakdown to show how it arrived at the supposed amount representing the
total value of the fruits and rents derived from the properties.
The trial court correctly ordered petitioner to "render full, accurate, and complete accounting of
all the fruits and proceeds of the subject properties during the period of her administration."
However, it should have also ordered petitioner to present all her evidence regarding the
alleged transportation expenses, attorneys fees, docket fees, and other fees;
48
the total
amount expended for the purchase of respondents Las Pias property;
49
and the total amount
of real property taxes paid. These claimed expenses, if and when duly proven by sufficient
evidence, should be deducted from the total income earned by the properties.
Both parties should be required to present their evidence to finally resolve the following issues:
(1) the total amount of the income generated by Lots I to IX during the administration of
petitioner; and (2) the total amount of expenses incurred by petitioner that should be borne by
respondent as the owner of the properties, or the total deductibles in petitioners favor.
There is no doubt that petitioner is entitled to compensation for the services she rendered.
Respondent does not deny that she never paid the former, since they had no agreement
regarding the amount, the determination of which she left to petitioner.
50

Petitioner now argues that since the expenses for the maintenance of the properties exceeded
whatever income they generated, then whatever is left of the income should now belong to her
as compensation.
51
She says that the "admission of the respondent admitted during cross-
examination that she expected petitioner to fix her own salary out of the remaining income, if
any, of the administered property" is enough reason to reverse and Decision and Resolution of
the CA.
52

The contention is not acceptable. Considering that neither of the parties was able to prove how
much the properties earned, this Court cannot just agree with petitioners claim that whatever is
left of this income, after the expenses have been deducted, should be considered as her salary.
To begin with, she repeatedly claimed that all the income derived from these properties was
insufficient to cover even just the expenses; thus, there is no "remaining income" left to speak
of.
We have already ruled that petitioner should be compensated for the services she rendered.
Since there was no exact amount agreed upon, and she failed to fix her own salary despite the
authority given to her, the RTC correctly applied the doctrine of quantum meruit. With respect to
this matter, the trial court found thus:
And where the payment is based on quantum meruit, the amount of recovery would only be the
reasonable value of the thing or services rendered regardless of any agreement as to value. In
the instant case, the amount of P1,000.00 per month for 15 years representing defendants
compensation for administering plaintiffs properties appears to be just, reasonable and fair.
53

The doctrine of quantum meruit (as much as one deserves) prevents undue enrichment based
on the equitable postulate that it is unjust for a person to retain benefit without paying for
it.
54
Being an equitable principle, it should only be applied if no express contract was entered
into, and no specific statutory provision is applicable. Although petitioner was given the authority
to set the amount of her salary, she failed to do so. Thus, she should at least be given what she
merits for her services. We find no reason to reverse the finding of both the RTC and the CA
that P 1,000 per month for 15 years is a just, reasonable, and fair compensation to petitioner for
administering respondents properties. The lower court is ordered to add this amount to the
deductibles that petitioner is able to prove or, if the deductibles exceed the monetary value of
the income generated by the properties, to add this amount to whatever respondent ends up
owing petitioner.
We delete the award of moral damages and attorney's fees in the absence of proof of bad faith
and malice on the part of petitioner.
WHEREFORE, in view of the foregoing, the Petition is PARTLY GRANTED, as follows:
(1) Petitioner Caridad S. Sazon is ordered to TURN OVER the possession,
management, and administration of Lots I, II, III, V, and VI to respondent Leticia
Vasquez-Menancio through the latters attorney-in-fact, Edgar S. Segarra.
(2) Respondent is ordered to TURN OVER the possession, management, and
administration of one-third of Lot IV to petitioner.
(3) The case is REMANDED to the Regional Trial Court of Ligao City, Albay, the court of
origin, which is ordered to do the following:
(a) ORDER petitioner to render full, accurate, and complete accounting of all the
fruits and proceeds earned by respondents properties during petitioners
administration thereof;
(b) ORDER petitioner to submit a detailed list with a breakdown of all her claimed
expenses, including but not limited to the following: maintenance expenses
including transportation expenses, legal expenses, attorneys fees, docket fees,
etc; the total amount expended for the purchase of respondents Las Pias
property;
55
and the total amount of real property taxes paid, all for the period
1979 to 1997;
(c) ORDER the parties to submit their evidence to prove the exact quantity and
quality of the harvests or the fruits produced by the properties and all the
expenses incurred in maintaining them from 1979 to 1997;
(d) DETERMINE the total amount earned by the properties by using as basis the
declaration of the National Food Authority and the Philippine Coconut Authority
with respect to the prevailing prices of palay, corn, and copra for the period 1979
to 1997; and
(e) SUBTRACT from the determined total amount the expenses proven by
petitioner and the P180,000 serving as her compensation for administering the
properties from 1979 to 1997.
COSTS against petitioner.
SO ORDERED.
MARIA LOURDES P. A. SERENO
Associate Justice


Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 179597 February 3, 2014
IGLESIA FILIPINA INDEPENDIENTE, Petitioner,
vs.
HEIRS of BERNARDINO TAEZA, Respondents.
D E C I S I O N
PERALTA, J .:
This deals with the Petition for Review on Certiorari under Rule 45 of the Rules of Court praying
that the Decision
1
of the Court of Appeals (CA), promulgated on June 30, 2006, and the
Resolution
2
dated August 23, 2007, denying petitioner's motion for reconsideration thereof, be
reversed and set aside.
The CA's narration of facts is accurate, to wit:
The plaintiff-appellee Iglesia Filipina Independiente (IFI, for brevity), a duly registered religious
corporation, was the owner of a parcel of land described as Lot 3653, containing an area of
31,038 square meters, situated at Ruyu (now Leonarda), Tuguegarao, Cagayan, and covered
by Original Certificate of Title No. P-8698. The said lot is subdivided as follows: Lot Nos. 3653-
A, 3653-B, 3653-C, and 3653-D.
Between 1973 and 1974, the plaintiff-appellee, through its then Supreme Bishop Rev. Macario
Ga, sold Lot 3653-D, with an area of 15,000 square meters, to one Bienvenido de Guzman.
On February 5, 1976, Lot Nos. 3653-A and 3653-B, with a total area of 10,000 square meters,
were likewise sold by Rev. Macario Ga, in his capacity as the Supreme Bishop of the plaintiff-
appellee, to the defendant Bernardino Taeza, for the amount of P100,000.00, through
installment, with mortgage to secure the payment of the balance. Subsequently, the defendant
allegedly completed the payments.
In 1977, a complaint for the annulment of the February 5, 1976 Deed of Sale with Mortgage was
filed by the Parish Council of Tuguegarao, Cagayan, represented by Froilan Calagui and Dante
Santos, the President and the Secretary, respectively, of the Laymen's Committee, with the then
Court of First Instance of Tuguegarao, Cagayan, against their Supreme Bishop Macario Ga and
the defendant Bernardino Taeza.
The said complaint was, however, subsequently dismissed on the ground that the plaintiffs
therein lacked the personality to file the case.
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 elections was filed by Rev. Ga, with the Securities and Exchange
Commission (SEC).
In 1987, while the case with the SEC is (sic) still pending, the plaintiff-appellee IFI, represented
by Supreme Bishop Rev. Soliman F. Ganno, filed a complaint for annulment of the sale of the
subject parcels of land against Rev. Ga and the defendant Bernardino Taeza, which was
docketed as Civil Case No. 3747. The case was filed with the Regional Trial Court of
Tuguegarao, Cagayan, Branch III, which in its order dated December 10, 1987, dismissed the
said case without prejudice, for the reason that the issue as to whom of the Supreme Bishops
could sue for the church had not yet been resolved by the SEC.
On February 11, 1988, the Securities and Exchange Commission issued an order resolving the
leadership issue of the IFI against Rev. Macario Ga.
Meanwhile, the defendant Bernardino Taeza registered the subject parcels of land.
Consequently, Transfer Certificate of Title Nos. T-77995 and T-77994 were issued in his name.
The defendant then occupied a portion of the land. The plaintiff-appellee allegedly demanded
the defendant to vacate the said land which he failed to do.
In January 1990, a complaint for annulment of sale was again filed by the plaintiff-appellee IFI,
this time through Supreme Bishop Most Rev. Tito Pasco, against the defendant-appellant, with
the Regional Trial Court of Tuguegarao City, Branch 3.
On November 6, 2001, the court a quo rendered judgment in favor of the plaintiff-
appellee.1wphi1 It held that the deed of sale executed by and between Rev. Ga and the
defendant-appellant is null and void.
3

The dispositive portion of the Decision of Regional Trial Court of Tuguegarao City (RTC) reads
as follows:
WHEREFORE, judgment is hereby rendered:
1) declaring plaintiff to be entitled to the claim in the Complaint;
2) declaring the Deed of Sale with Mortgage dated February 5, 1976 null and void;
3) declaring Transfer Certificates of Title Numbers T-77995 and T-77994 to be null and
void ab initio;
4) declaring the possession of defendant on that portion of land under question and
ownership thereof as unlawful;
5) ordering the defendant and his heirs and successors-in-interest to vacate the
premises in question and surrender the same to plaintiff; [and]
6) condemning defendant and his heirs pay (sic) plaintiff the amount of P100,000.00 as
actual/consequential damages and P20,000.00 as lawful attorney's fees and costs of the
amount (sic).
4

Petitioner appealed the foregoing Decision to the CA. On June 30, 2006, the CA rendered its
Decision reversing and setting aside the RTC Decision, thereby dismissing the complaint.
5
The
CA ruled that petitioner, being a corporation sole, validly transferred ownership over the land in
question through its Supreme Bishop, who was at the time the administrator of all properties
and the official representative of the church. It further held that "[t]he authority of the then
Supreme Bishop Rev. Ga to enter into a contract and represent the plaintiff-appellee cannot be
assailed, as there are no provisions in its constitution and canons giving the said authority to
any other person or entity."
6

Petitioner then elevated the matter to this Court via a petition for review on certiorari, wherein
the following issues are presented for resolution:
A.) WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT FINDING THE
FEBRUARY 5, 1976 DEED OF SALE WITH MORTGAGE AS NULL AND VOID;
B.) ASSUMING FOR THE SAKE OF ARGUMENT THAT IT IS NOT VOID, WHETHER
OR NOT THE COURT OF APPEALS ERRED IN NOT FINDING THE FEBRUARY 5,
1976 DEED OF SALE WITH MORTGAGE AS UNENFORCEABLE, [and]
C.) WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT FINDING
RESPONDENT TAEZA HEREIN AS BUYER IN BAD FAITH.
7

The first two issues boil down to the question of whether then Supreme Bishop Rev. Ga is
authorized to enter into a contract of sale in behalf of petitioner.
Petitioner maintains that there was no consent to the contract of sale as Supreme Bishop Rev.
Ga had no authority to give such consent. It emphasized that Article IV (a) of their Canons
provides that "All 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." It is alleged that the
sale of the property in question was done without the required approval and conformity of the
entities mentioned in the Canons; hence, petitioner argues that the sale was null and void.
In the alternative, petitioner contends that if the contract is not declared null and void, it should
nevertheless be found unenforceable, as the approval and conformity of the other entities in
their church was not obtained, as required by their Canons.
Section 113 of the Corporation Code of the Philippines provides that:
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 gifts for such purposes. Such corporation may mortgage or sell
real property held by it upon obtaining an order for that purpose from the Court of First Instance
of the province where the property is situated; x x x Provided, 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.
8

Pursuant to the foregoing, petitioner provided in Article IV (a) of its Constitution and Canons of
the Philippine Independent Church,
9
that "[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."
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 sanctioned by the Supreme Council. However, petitioner's Canons do
not specify in what form the conformity of the other church entities should be made known.
Thus, as petitioner's witness stated, in practice, such consent or approval may be assumed as a
matter of fact, unless some opposition is expressed.
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, opining that the consent of the Supreme Bishop to the
sale was sufficient, especially since the parish priest and the Diocesan Bishop voiced no
objection to the sale.
12

The Court finds it erroneous for the CA to ignore the fact that the laymen's committee objected
to the sale of the 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 despite the opposition made by the laymen's
committee, he acted beyond his powers.
This case clearly falls under the category of unenforceable contracts mentioned in Article 1403,
paragraph (1) of the Civil Code, which provides, thus:
Art. 1403. The following contracts are unenforceable, unless they are ratified:
(1) Those 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;
In Mercado v. Allied Banking Corporation,
13
the Court explained that:
x x x Unenforceable contracts are those which cannot be enforced by a proper action in court,
unless they are ratified, because either they are entered into without or in excess of authority or
they do not comply with the statute of frauds or both of the contracting parties do not possess
the required legal capacity. x x x.
14

Closely analogous cases of unenforceable contracts are those where a person signs a deed of
extrajudicial partition in behalf of co-heirs without the latter's authority;
15
where a mother as
judicial guardian of her minor children, executes a deed of extrajudicial partition wherein she
favors one child by giving him more than his share of the estate to the prejudice of her other
children;
16
and where a person, holding a special power of attorney, sells a property of his
principal that is not included in said special power of attorney.
17

In the present case, however, respondents' predecessor-in-interest, Bernardino Taeza, had
already obtained a transfer certificate of title in his name over the property in question. Since the
person supposedly transferring ownership was not authorized to do so, the property had
evidently been acquired by mistake. In Vda. de Esconde v. Court of Appeals,
18
the Court
affirmed the trial court's ruling that the applicable provision of law in such cases is 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." Thus, in Aznar Brothers Realty Company v.
Aying,
19
citing Vda. de Esconde,
20
the Court clarified the concept of trust involved in said
provision, to wit:
Construing this provision of the Civil Code, in Philippine National Bank v. Court of Appeals, the
Court stated:
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, unlike an express trust, does not
emanate from, or generate a fiduciary relation. While in an express trust, a beneficiary and a
trustee are linked by confidential or fiduciary relations, in a constructive trust, there is neither a
promise nor any fiduciary relation to speak of and the so-called trustee neither accepts any trust
nor intends holding the property for the beneficiary.
The concept of constructive trusts was further elucidated in the same case, as follows:
. . . implied trusts are those which, without being expressed, are deducible from the nature of
the transaction as 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. These two are differentiated from each other as
follows:
Resulting trusts are based on the equitable doctrine that valuable consideration and not legal
title determines the equitable title or interest and are presumed always to have been
contemplated by the parties. They arise from the nature of circumstances of the consideration
involved in a transaction whereby one person thereby becomes invested with legal title but is
obligated in equity to hold his legal title for the benefit of another. On the other hand,
constructive trusts are created by the construction of equity in order to satisfy the demands of
justice and prevent 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)
A constructive trust having been constituted by law between respondents as trustees and
petitioner as beneficiary of the subject property, may respondents acquire ownership over the
said property? The Court held in the same case of Aznar,
21
that unlike in express trusts and
resulting implied trusts where a trustee cannot acquire by prescription any property entrusted to
him unless he repudiates the trust, in constructive implied trusts, the trustee may acquire the
property through prescription even if he does not repudiate the relationship. It is then incumbent
upon the beneficiary to bring an action for reconveyance before prescription bars the same.
In Aznar,
22
the Court explained the basis for the prescriptive period, to wit:
x x x under the present Civil Code, we find that just as an implied or constructive trust is an
offspring of the law (Art. 1456, Civil Code), so is the corresponding obligation to reconvey the
property and the title thereto in favor of the true owner. In this context, and vis--vis prescription,
Article 1144 of the Civil Code is applicable.
Article 1144. The following actions must be brought within ten years from the time the right of
action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.
x x x x x x x x x
An action for reconveyance based on an implied or constructive trust must perforce prescribe in
ten years and not otherwise. A long line of decisions of this Court, and of very recent vintage at
that, illustrates this rule. Undoubtedly, it is now well-settled that an action for reconveyance
based on an implied or constructive trust prescribes in ten years from the issuance of the
Torrens title over the property.
It has also been ruled that the ten-year prescriptive period begins to run from the date of
registration of the deed or the date of the issuance of the certificate of title over the property, x x
x.
23

Here, the present action was filed on January 19, 1990,
24
while the transfer certificates of title
over the subject lots were issued to respondents' predecessor-in-interest, Bernardino Taeza,
only on February 7, 1990.
25

Clearly, therefore, petitioner's complaint was filed well within the prescriptive period stated
above, and it is only just that the subject property be returned to its rightful owner.
WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals, dated June 30,
2006, and its Resolution dated August 23, 2007, are REVERSED and SET ASIDE. A new
judgment is hereby entered:
(1) DECLARING petitioner Iglesia Filipina Independiente as the RIGHTFUL OWNER of
the lots covered by Transfer Certificates of Title Nos. T-77994 and T-77995;
(2) ORDERING respondents to execute a deed reconveying the aforementioned lots to
petitioner;
(3) ORDERING respondents and successors-in-interest to vacate the subject premises
and surrender the same to petitioner; and
(4) Respondents to PAY costs of suit.
SO ORDERED.
DIOSDADO M. PERALTA
Associate Justice
WE CONCUR:
PRESBITERO J. VELASCO, JR.
Associate Justice
Chairperson
ROBERTO A. ABAD
Associate Justice
JOSE CATRAL MENDOZA
Associate Justice
MARVIC MARIO VICTOR F. LEONEN
Associate Justice
A T T E S T A T I O N
I attest that the conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Court's Division.
PRESBITERO J. VELASCO, JR.
Associate Justice
Chairperson, Third Division
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's
Attestation, I certify that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Court's Division.
MARIA LOURDES P. A. SERENO
Chief Justice