POH TOH BUDDHIST ASSOCIATION OF THE PHILIPPINES, INC., REPRESENTED BY DORIAN L. CHUA, PETITIONER, VS. CRISTINA SY A.K.A HENG TE OR HENG TI AND MARGIE LIM MACALALAD, RESPONDENTS.

Poh Toh Buddhist Association versus Sy

The Case

This is a summary action for unlawful detainer. The Poh Toh Buddhist Association of the Philippines, represented by Dorian Chua, sues Cristina Sy, also known as Heng Te or Heng Ti, and Margie Lim Macalalad, to recover possession of a parcel of land in Baguio City on which a Buddhist temple stands. The case matters because it answers a question that recurs whenever a corporation is torn by warring factions: when two groups each claim to be the legitimate board of trustees, who may speak for the corporation in court, and may that recognized group terminate a caretaker's possession by a mere demand to vacate? The Supreme Court holds that it may, and that the courts need not wait for a separate final ruling on the corporate squabble.

Procedural History

The Association, acting through the group led by Benjamin Favis, filed a complaint for unlawful detainer before the Municipal Trial Court in Cities of Baguio City. After hearing, the municipal court ruled for the Association, ordered Sy and Macalalad and all persons claiming under them to vacate and surrender possession of the temple property, and awarded litigation expenses. Both sides appealed.

The Regional Trial Court of Baguio City, Branch 3, affirmed the municipal court in full and dismissed the appeals. It held that the Favis group had been recognized as the temporarily recognized governing body of the Association, even by the Supreme Court, in earlier cases.

Sy then went up to the Court of Appeals by petition for review. The appellate court granted the petition, reversed and set aside the Regional Trial Court, and dismissed the complaint. It reasoned that Sy's possession was initially lawful by tolerance, but that the rival factions within the Association raised a serious question as to which group was the legitimate board with authority to eject her. Prudence, it said, required awaiting a definitive pronouncement, and meanwhile Sy's possession should be maintained. The Court of Appeals denied reconsideration, so the Association came to the Supreme Court by petition for review on certiorari under Rule 45.

Facts

The Association is the registered owner of a parcel of land in Baguio City, covered by a Torrens title, on which a Buddhist temple stands. Sometime in 2009, the Association appointed Cristina Sy, a resident monk, to oversee the maintenance and operations of the property, with full authority to decide and act on all matters concerning it.

In 2014, the Association discovered that Sy had authorized Margie Lim Macalalad to operate a dormitory on the property under the name Paramita Dormitory, and that Sy had failed to remit donations collected from temple patrons. The board of trustees terminated Sy's appointment and ordered her and all persons claiming under her to vacate. Sy refused. She formed a breakaway faction, which issued a board resolution purporting to appoint her officer in charge and administrator. The Association challenged that faction before the Securities and Exchange Commission, which ultimately cancelled the breakaway group's registration.

The Association, through the Favis group, then served a final demand to vacate. Sy and Macalalad refused, insisting that the notice came from a group with no authority over the property, and that Sy's authority as caretaker came from another source and from what they called the legitimate board. The Association sued for unlawful detainer within one year of the demand.

Issues

• Whether or not the Court of Appeals erred in failing to find that the Association, acting through the Favis group, successfully proved its right to eject Sy from the subject property in a summary action.
• Whether or not the Favis group possessed the authority to revoke the tolerance earlier extended to Sy, given the rival claims to the board of trustees.

Applicable Provisions

The decision applies the settled elements of a cause of action for unlawful detainer, as stated by the Court:

A complaint sufficiently proves a cause of action for unlawful detainer if it satisfies the following elements: (1) initially, possession of the property by the defendant was by contract with or by tolerance of the plaintiff; (2) eventually, such possession became illegal upon notice by plaintiff to defendant of the termination of the latter's right of possession; (3) from then on, the defendant remained in possession of the property and deprived the plaintiff of the enjoyment; and (4) within one year from the last demand on defendant to vacate the property, the plaintiff instituted the complaint for ejectment.

These four elements frame the whole inquiry, because the only real dispute is whether the demand that terminated the tolerance came from someone authorized to make it.

The decision also rests on the rule that a corporation acts only through its board, as the Court states:

The general rule is that, in the absence of authority from the board, no person, not even its officers, can validly bind a corporation.

This is why the authority of the Favis group to send the demand to vacate is decisive.

Finally, the Court relies on its earlier pronouncement in the first Poh Toh case:

Unless and until there is a ruling from a proper court that the Go group has been replaced by the Lim group, the authority of the former to represent the PTBA, Inc. in the unlawful detainer case is presumed to continue.

The Court clarifies that the Go group in that earlier case is the same group to which Favis belongs, so that presumption carries over to this case.

Ruling

On the first issue, the Court ruled that the Association proved its cause of action for unlawful detainer. Ownership is not disputed, but the Court reminds us that ownership alone does not determine the right of possession. It cites two settled principles: the holder of a Torrens title is the rightful owner and is entitled to possession, yet even a legal owner cannot simply oust a party in peaceable quiet possession through a summary action for ejectment without establishing by a preponderance of evidence the essential requisites of the action. Here, all four requisites were present. Sy's possession was initially by tolerance. She allowed Macalalad to operate a dormitory without the Association's knowledge and consent. When the demand to vacate was served, she refused to comply. And the complaint was filed within one year from the demand.

On the second issue, the Court held that the Favis group had the requisite authority to revoke the tolerance. A corporation is a juridical entity that acts only through its board of directors or trustees, which exercises almost all corporate powers. An act not authorized by the legitimate board will not bind the corporation. But the Court had already declared, in the earlier Poh Toh case, that unless and until a proper court rules that the Go group has been replaced by the Lim group, the authority of the former to represent the Association is presumed to continue. The Court rejects the argument that this pronouncement was confined to that earlier case. It must be read in light of the principle it established concerning representation and authority pending judicial determination of the legitimate board. Courts may take judicial notice of pronouncements in other causes where they bear on the matter at hand. Accordingly, the Favis group is recognized as the existing board of the Association and is authorized to terminate Sy's authority to occupy the property.

Doctrine

First, in unlawful detainer, ownership alone does not decide the right of possession, but the holder of a Torrens title is entitled to possession, and a complaint states a cause of action when it shows possession initially by contract or tolerance, its becoming illegal upon notice, the defendant's continued possession, and the filing of the complaint within one year from the last demand.

Second, a corporation acts only through its board of trustees, and an act not authorized by the legitimate board does not bind the corporation.

Third, where rival factions claim the board, the authority of the group previously recognized by the courts to represent the corporation is presumed to continue unless and until a proper court rules that it has been replaced. The summary action need not await that separate determination.

Disposition

The petition was granted. The Court of Appeals decision and resolution were reversed and set aside, and the Regional Trial Court decision, which affirmed the municipal court's judgment for the Association, was reinstated.

Remember This

Memorize this line: unless and until a proper court rules that the recognized group has been replaced, its authority to represent the corporation is presumed to continue. Examiners like to use this case on unlawful detainer by tolerance, on corporate representation by warring boards, and on whether a summary ejectment action must wait for a separate ruling on who the legitimate trustees are.