Islamic Directorate of the Phils. v. CA

Doctrines: 

• Where a corporate body never gave its consent, thru a legitimate governing board, to a deed of absolute sale, the subject sale is void and produces no effect whatsoever. 
• For the sale of the only property of a corporation to be valid, the majority vote of the legitimate board, concurred in by the vote of at least 2/3 of the bona fide members of the corporation, should be obtained. 

Facts: Petitioner IDP-Tamano Group alleges that sometime in 1971, Islamic leaders of all Muslim major tribal groups in the Philippines headed by Dean Cesar Adib Majul organized and incorporated the IDP, the primary purpose of which is to establish an Islamic Center in Quezon City for the construction of a “Mosque (prayer place), Madrasah (Arabic School), and other religious infrastructures” so as to facilitate the effective practice of Islamic faith in the area.

The Libyan government donated money to the IDP to purchase land at Culiat, Tandang Sora, Quezon City, to be used as a Center for the Islamic populace. The land was covered by two titles, both registered in the name of IDP. 

In 1972, after the purchase of the land by the Libyan government in the name of IDP, Martial Law was declared by the late President Ferdinand Marcos. Most of the members of the 1971 Board of Trustees flew to the Middle East to escape political persecution. Thereafter, two Muslim groups sprung, the Carpizo Group, headed by Engineer Farouk Carpizo, and the Abbas Group, led by Mrs. Zorayda Tamano and Atty. Firdaussi Abbas. Both groups claimed to be the legitimate IDP. The SEC, in a suit between these two contending groups, came out with a Decision declaring the election of both the Carpizo Group and the Abbas Group as IDP board members to be null and void. Neither group, however, took the necessary steps prescribed by the SEC and, thus, no valid election of the members of the Board of Trustees of IDP was ever called. Although the Carpizo Group attempted to submit a set of by-laws, the SEC found that, aside from Engineer Farouk Carpizo and Atty. Musib Buat, those who prepared and adopted the by-laws were not bona fide members of the IDP, thus rendering the adoption of the by-laws likewise null and void. 

Without having been properly elected as new members of the Board of Trustees of IDP, the Carpizo Group caused to be signed an alleged Board Resolution of the IDP, authorizing the sale of the subject two parcels of land to the private respondent INC. 

Petitioner 1971 IDP Board of Trustees (IDP-Tamano Group ) filed a petition before the SEC seeking to declare null and void the Deed of Absolute Sale signed by the Carpizo Group and the INC since the group of Engineer Carpizo was not the legitimate Board of Trustees of the IDP. 

INC filed an action for Specific Performance with Damages against the vendor, Carpizo Group, before RTC QC to compel said group to clear the property of squatters and deliver complete and full physical possession thereof to INC. Likewise, INC filed a motion in the same case to compel one Mrs. Leticia P. Ligon to produce and surrender to the Register of Deeds of Quezon City the owner’s duplicate copy of TCTs.

Without waiting for the SEC Decision, Judge Reyes of RTC QC ordered the IDP-Carpizo Group to comply with its obligation under the Deed of Sale of clearing the subject lots of squatters and of delivering the actual possession thereof to INC and treated INC as the rightful owner of the real properties.

Mortgagee Ligon went to the CA, through a petition for certiorari assailing the Orders of Judge Reyes. CA dismissed the petition. Ligon filed a PetRev before the SC.

In the meantime, SEC rendered its Decision: Declaring the by-laws submitted by the respondents as unauthorized, and hence, null and void; Declaring the sale of the 2 parcels of land in QC covered by the Deed of Absolute Sale entered into by Iglesia ni Kristo and the Islamic Directorate of the Philippines, Inc. null and void; Declaring the election of the Board of Directors of the corporation from 1986 to 1991 as null and void; and Declaring the acceptance of the respondents, except Farouk Carpizo and Musib Buat, as members of the IDP null and void. 

INC filed a Motion for Intervention but was denied. INC elevated the case to the CA which set aside the SEC Decision.

IDP-Tamano Group filed a PetRev in the SC.

SC denied Ligon’s petition.

Issue: Whether or not the CA erred in not upholding the jurisdiction of SEC to declare the nullity of the sale

Held: Yes. There can be no question as to the authority of the SEC to pass upon the issue as to who among the different contending groups is the legitimate Board of Trustees of the IDP since this is a matter properly falling within the original and exclusive jurisdiction of the SEC by virtue of Sections 3 and 5(c) of Presidential Decree No. 902-A. 

If the SEC can declare who is the legitimate IDP Board, then by parity of reasoning, it can also declare who is not the legitimate IDP Board. This is precisely what the SEC did in SEC Case No. 4012 when it adjudged the election of the Carpizo Group to the IDP Board of Trustees to be null and void. By this ruling, the SEC in effect made the unequivocal finding that the IDP-Carpizo Group is a bogus Board of Trustees. Consequently, the Carpizo Group is bereft of any authority whatsoever to bind IDP in any kind of transaction including the sale or disposition of IDP property. 

Premises considered, all acts carried out by the Carpizo Board, particularly the sale of the Tandang Sora property, allegedly in the nam e of the IDP, have to be struck down for having been done without the consent of the IDP thru a legitimate Board of Trustees. Article 1318 of the New Civil Code lays down the essential requisites of contracts: “There is no contract unless the following requisites concur: (1) Consent of the contracting parties; (2) Object certain which is the subject matter of the contract; (3) Cause of the obligation which is established.” 

All these elements must be present to constitute a valid contract. For, where even one is absent, the contract is void. As succinctly put by Tolentino, consent is essential for the existence of a contract, and where it is wanting, the contract is non-existent. In this case, the IDP, owner of the subject parcels of land, never gave its consent, thru a legitimate Board of Trustees, to the disputed Deed of Absolute Sale executed in favor of INC. This is, therefore, a case not only of vitiated consent, but one where consent on the part of one of the supposed contracting parties is totally wanting. Ineluctably, the subject sale is void and produces no effect whatsoever. 

The Tandang Sora property, it appears from the records, constitutes the only property of the IDP. Hence, its sale to a third-party is a sale or disposition of all the corporate property and assets of IDP falling squarely within the contemplation of the foregoing section. For the sale to be valid, the majority vote of the legitimate Board of Trustees, concurred in by the vote of at least 2/3 of the bona fide members of the corporation should have been obtained. These twin requirements were not met as the Carpizo Group which voted to sell the Tandang Sora property was a fake Board of Trustees, and those whose names and signatures were affixed by the Carpizo Group together with the sham Board Resolution authorizing the negotiation for the sale w ere, from all indications, not bona fide members of the ID P as they were made to appear to be. Apparently, there are only fifteen (15) official members of the petitioner corporation including the eight (8) members of the Board of Trustees.

All told, the disputed Deed of Absolute Sale executed by the fake Carpizo Board and private respondent INC was intrinsically void ab initio.