The Islamic Directorate of the Philippines (IDP) was incorporated in 1971 to establish an Islamic center. In 1989, a group calling itself the IDP board illegally sold land donated to IDP to the Iglesia ni Cristo (INC). The SEC ruled this sale void as the group was not the legitimate board. However, a trial court upheld the sale. The Supreme Court reinstated the SEC ruling, finding that the SEC has the authority to determine the legitimate board and any acts of bogus boards are void, including the land sale. The sale did not comply with requirements that a majority of the legitimate board and members approve sale of substantially all corporate assets.
The Islamic Directorate of the Philippines (IDP) was incorporated in 1971 to establish an Islamic center. In 1989, a group calling itself the IDP board illegally sold land donated to IDP to the Iglesia ni Cristo (INC). The SEC ruled this sale void as the group was not the legitimate board. However, a trial court upheld the sale. The Supreme Court reinstated the SEC ruling, finding that the SEC has the authority to determine the legitimate board and any acts of bogus boards are void, including the land sale. The sale did not comply with requirements that a majority of the legitimate board and members approve sale of substantially all corporate assets.
The Islamic Directorate of the Philippines (IDP) was incorporated in 1971 to establish an Islamic center. In 1989, a group calling itself the IDP board illegally sold land donated to IDP to the Iglesia ni Cristo (INC). The SEC ruled this sale void as the group was not the legitimate board. However, a trial court upheld the sale. The Supreme Court reinstated the SEC ruling, finding that the SEC has the authority to determine the legitimate board and any acts of bogus boards are void, including the land sale. The sale did not comply with requirements that a majority of the legitimate board and members approve sale of substantially all corporate assets.
The Islamic Directorate of the Philippines (IDP) was incorporated in 1971 to establish an Islamic center. In 1989, a group calling itself the IDP board illegally sold land donated to IDP to the Iglesia ni Cristo (INC). The SEC ruled this sale void as the group was not the legitimate board. However, a trial court upheld the sale. The Supreme Court reinstated the SEC ruling, finding that the SEC has the authority to determine the legitimate board and any acts of bogus boards are void, including the land sale. The sale did not comply with requirements that a majority of the legitimate board and members approve sale of substantially all corporate assets.
Download as DOCX, PDF, TXT or read online from Scribd
Download as docx, pdf, or txt
You are on page 1/ 3
I.SHORT TITLE: ISLAMIC DIRECTORATE V.
COURT OF APPEALS
II. FULL TITLE: ISLAMIC DIRECTORATE OF THE PHILIPPINES, MANUEL F.
PEREA and SECURITIES & EXCHANGE COMMISSION versus COURT OF APPEALS and IGLESIA NI CRISTO – G.R. No. 117897 May 14, 1997, J. Hermosisima, Jr.
III. TOPIC: Corporate Powers - Power to Sell or Dispose of Corporate Assets
IV. STATEMENT OF FACTS:
Sometime in 1971, Islamic leaders of all Muslim major tribal groups in the Philippines organized and incorporated Islamic Directorate of the Philippines (IDP) for the purpose of establishing an Islamic Center in Quezon City.
Its 1971 Board of Trustees include Senator Mamintal Tamano, Congressman Ali Dimaporo, Congressman Salidapa Pendatun, Dean Cesar Adib Majul, Sultan Harun Al-Rashid Lucman, Delegate Ahmad Alonto, Commissioner Datu Mama Sinsuat, and Mayor Aminkadra Abubakar. The record shows that Libyan Government donated money to IDP for the purchase of the land which was covered by two titles.
In 1972, Martial Law was declared and so, Tamano, Pendatun, Alonto, and Lucman fled the country to escape the grip of political persecution.
Sometime after, two Muslim groups suddenly appeared–the Carpizo group and the Abbas group —each claiming to be the legitimate IDP. However, in the case decided by the SEC, the Commission debunked the claims of the two and declared the election that elected the groups as board members of IDP null and void. Consequently, the by-laws that the two groups adopted was also nullified. Since there is a need for approved by-laws that shall govern before any election, SEC ordered the two groups to prepare and adopt their by-laws for approval of the Commission. However, the two groups ignored the order, thus, the IDP was left with no legitimate board members.
Defiantly and without authority, the Carpizo group caused the sale of the subject two parcels of land in favor of Iglesia ni Cristo and subsequently executed a Deed of Absolute Sale in 1989.
In 1991, the 1971 IDP Board of Trustees, led by Tamano, filed a petition before the SEC to nullify the sale between the Carpizo group and INC on the ground that the Carpizo group was not authorized as they are not the legitimate trustees of IDP. (SEC Case)
INC, on the other hand, filed before RTC a Specific Performance suit against Carpizo group to compel the group to deliver the complete and full possession of the subject property. The subject land was previously subjected to a mortgage contract; thus, mortgagee Mrs. Ligon was ordered to surrender the owner’s duplicate copy of the titles to enable INC to properly register its name as the owner of the subject land. In the RTC case, The Tamano group was denied intervention in the case on the ground of lack of juridical personality and that the matters raised involve an intra-corporate dispute which jurisdiction belongs to SEC.
Notwithstanding the pendency of SEC case to decide on the legitimacy of the sale, the RTC judge rendered a decision in favor of INC and ordered the surrender of title for registration in the name of INC. Mortgagee Ligon went to the CA but her case was dismissed. Therefore, she filed a petition for review before the Supreme Court which was docketed as G.R. No. 107751.
Meanwhile in the SEC Case, the Commission declared the sale between the Carpizo group as IDP and INC as null and void. It also nullified the by-laws adopted by the group and the elections conducted from 1986 to 1991. The INC sought to intervene but it was denied.
V. STATEMENT OF THE CASE:
The INC elevated the SEC case to the Court of Appeals by way of special civil action for certiorari. The appellate court granted the petition of INC,
The appellate court rendered a decision that set aside that portion of the SEC Decision that nullified the sale of the subject land to INC.
Thus, the Tamano group filed the instant petition for review asserting that the appellate court gravely erred in setting aside the decision of SEC.
VI. ISSUE: Whether or not the Court of Appeals erred in not upholding he SEC Decision.
VII. RULING: Yes. Indeed, the SEC has the authority to pass upon the issue as to who among the different contending groups is the legitimate Board of Directors or Board of Trustees of a corporation. Concomitant with this authority is the authority to determine and declare who is not a legitimate Board.
In this case, the SEC expressly and unequivocally declared that the Carpizo group is a bogus Board of Trustees and has no authority to execute on behalf of IDP any kind of contract or transaction. In fact, even prior to the SEC case, there was a previous SEC decision debunking the authority of Carpizo and Abbas group as Board of Trustees. The INC contracted with a fake IDP Board. Thus, all acts and transactions, including the sale of the subject land, executed by the Carpizo group is void for lack of consent of the IDP through a legitimate Board.
Furthermore, the records show that the subject land is all of the property owned by the IDP. Thus, Section 40 of the Corporation Code (now Section 39 of the RCC) shall govern.
Section 40 of the Corporation Code provides that for the sale or disposition of all or substantially all of the corporation’s property to be valid, there must be a majority vote of the legitimate Board of Directors in a stock corporation or legitimate Board of Trustees in case of a non-stock corporation and at least 2/3 vote of the bona fide members of the corporation. These requirements were obviously not met because the Carpizo group has no authority in the first place to act as Board of Trustees.
The sale executed between the bogus Board Carpizo group and INC is therefore void ab initio.
INC’s claim that SEC has no jurisdiction to nullify the sale on the ground that it is not an intra- corporate dispute is rendered moot and academic by the inherent nullity of the sale due to the lack of consent by the IDP.
VIII. DISPOSITIVE PORTION:
WHEREFORE, the petition is GRANTED. The Decision of the public respondent Court of Appeals dated October 28, 1994 in CA-G.R. SP No. 33295 is SET ASIDE. The Decision of the Securities and Exchange Commission dated July 5, 1993 in SEC Case No. 4012 is REINSTATED. The Register of Deeds of Quezon City is hereby ordered to cancel the registration of the Deed of Absolute Sale in the name of respondent Iglesia Ni Cristo, if one has already been made. If new titles have been issued in the name of Iglesia Ni Cristo, the Register of Deeds is hereby ordered to cancel the same, and issue new ones in the name of petitioner Islamic Directorate of the Philippines. Petitioner corporation is ordered to return to private respondent whatever amount has been initially paid by INC as consideration for the property with legal interest, if the same was actually received by IDP. Otherwise, INC may run after Engineer Farouk Carpizo and his group for the amount of money paid. SO ORDERED.
