Islamic Directorate of the Philippines v. Court of Appeals

Summary

The Islamic Directorate of the Philippines (IDP), incorporated in 1971 by Muslim leaders to establish an Islamic Center, owned valuable land in Quezon City purchased with Libyan government donation. After martial law, competing groups claimed legitimacy as IDP's board. The SEC declared both groups' elections null and void in 1986. Despite this, the Carpizo Group sold IDP's property to Iglesia Ni Cristo in 1989 for over P22 million. The legitimate IDP board challenged this sale. The SEC nullified the sale, but the Court of Appeals reversed this decision. The Supreme Court ultimately reinstated the SEC ruling, finding the sale void due to lack of proper corporate authorization, violation of Corporation Code requirements for asset disposition, and absence of valid consent. The Court emphasized that corporations must act through legitimate boards and that substantial asset sales require proper member approval, protecting corporate integrity against unauthorized transactions by illegitimate corporate representatives.