Powerless

Joy Training (JT) is a non-stock, non-profit corporation, and the registered owner of a parcel of land and the building thereon (the “real properties”).

The pertinent provision of the transfer certificate title reads:

A parcel of land x x x is registered in accordance with the provisions of the Property Registration Decree in the name of JT, Rep. by Sps. Ric and Lin, both of legal age, xxxx xxx.

On different occasions, JT issued the following certification and resolution, the pertinent portions thereof read:

CERTIFICATION

xxx xxx xxx

Further, Ric and Lin were given FULL AUTHORITY for ALL SIGNATORY purposes for the corporation on ANY and all matters and decisions regarding the property xxx xxx xxx

RESOLUTION

We, the undersigned Board of Trustees (in majority) have authorized the sale of land and building owned by spouses Ric and Lin xxx xxx xxx.

On the basis of the above, spouses Ric and Lin sold the real properties to spouses Sal and Yo. On the same date, a Deed of Absolute Sale was executed in favor of spouses Sal and Yo.

Accordingly, a new transfer certificate title was issued in favor of spouses Sal and Yo.

In 1998, JT, represented by its acting chairperson, filed an action for the Cancellation of the Sale and Damages with prayer for the issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction against the spouses Sal and You, spouses Ric and Lin, and the officer-in-charge of the Register of Deeds.

JT alleged that spouses Ric and Lin sold its properties without the requisite authority from the board of directors. It further averred that only a minority of the board authorized the sale through the resolution.

In riposte, spouses Sal and Yo claimed that:

the Regional Trial Court does not have jurisdiction over the subject matter because it involves an intra-coprorate dispute. Consequently, at the time the complaint was filed, it was the SEC that has the power to hear and decide the case;

JT authorized the spouses Ric and Lin to sell the parcel of land; and a majority of the board of trustees approved the resolution.

After the presentation of their testimonial evidence, spouses Sal and Yo formally offered in evidence photocopies of the resolution and certification, among others. JT 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.

Q: What is jurisdiction?

A: 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.

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. The same test applies in ascertaining whether a case involves an intra-corporate controversy. (Yoshizaki vs. Joy Training Center of Aurora, Inc., G.R. No. 174978, July 31, 2013)

Q: Does the Regional Trial Court (RTC) have jurisdiction over the controversy?

A: Yes. The RTC has jurisdiction over the present case.

JT seeks to nullify the sale of the real properties on the ground that there was no contract of agency between JT and spouses Ric and Lin.

This was beyond the ambit of the SEC’s 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.”

Indeed, no special skill requiring the SEC’s technical expertise is necessary for the disposition of this issue and of this case. (Yoshizaki vs. Joy Training Center of Aurora, Inc., G.R. No. 174978, July 31, 2013)

Q: What is a contract of agency?

A: 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. 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. (Yoshizaki vs. Joy Training Center of Aurora, Inc., G.R. No. 174978, July 31, 2013)

Q: Was there a contract of agency to sell the real properties between JT and spouses Ric and Lin?

A: None. There is no contract of agency between JT and and the spouses Johnson to sell the real properties.

TCT No. T-25334 does not create a relationship of agency between JT and spouses Ric and Lin. It merely states that JT 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, it only means that the spouses Johnson represented JT in land registration.

The photocopies of the resolution and the certification should not be considered by the court since spouses Sal and Yo were not able to 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. 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. (Yoshizaki vs. Joy Training Center of Aurora, Inc., G.R. No. 174978, July 31, 2013)

Q: Assuming that the original certification was produced, would the sale be deemed valid?

A: No, the certification is a mere general power of attorney which comprises all of JT’s business. 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. (Yoshizaki vs. Joy Training Center of Aurora, Inc., G.R. No. 174978, July 31, 2013)

Q: What then is the nature of the contract between JT and the spouses Sal and Yo?

A: The absence of a contract of agency renders the contract of sale unenforceable.

JT effectively did not enter into a valid contract of sale with the spouses Sal and Yo.

Sal 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.

This rule applies when the ownership of a parcel of land is disputed and not when the fact of agency is contested.

Persons dealing with an agent must ascertain not only the fact of agency, but also the nature and extent of the agent’s authority. 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.

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.(Yoshizaki vs. Joy Training Center of Aurora, Inc., G.R. No. 174978, July 31, 2013)

Ma. Soledad Deriquito-Mawis is currently the Dean, Lyceum of the Philippines University; president of Philippine Association of Law Schools; and Senior Partner at Gatchalian Castro & Mawis Law Office