The Missionary Sisters of Our Lady of Fatima (Peach Sisters of Laguna) represented by Rev. Mother Ma. Concepcion R. Realon, et. al. vs Amando V. Alzona, et. al.
G.R. No. 224307, August 06, 2018
876 SCRA 309
FACTS:
The Missionary Sisters of Our Lady of Fatima is a religious and charitable group whose primary mission is to take care of the abandoned and neglected elderly persons. In October 1999, through a letter, Purificacion, a spinster donated her parcels of land to petitioner Missionary through Mother Concepcion, the petitioner’s Superior General who took care of her during her illness.
In August 2001, Mother Concepcion was advised by a lawyer to register their group to the Securities and Exchange Commission. On August 28, 2001 she applied for the registration of the Missionary. The next day, Purificacion executed a Deed of Donation Intervivos in favor of petitioner conveying her properties. Two days later, the Certificate of Incorporation was issued by the SEC.
ISSUE:
Was the donation valid given that the time the donation was made, the Missionary was not yet registered with the SEC?
RULING:
Yes, the donation was valid and has complied with all the requisites of a valid donation.
Elements of Donation
In order that a donation of an immovable property be valid, the following elements must be present:
(a) the essential reduction of the patrimony of the donor;
(b) the increase in the patrimony of the donee;
(c) the intent to do an act of liberality or animus donandi;
(d) the donation must be contained in a public document; and
(e) that the acceptance thereof be made in the same deed or in a separate public instrument; if acceptance is made in a separate instrument, the donor must be notified thereof in an authentic form, to be noted in both instruments.
In spite of the fact that the Missionary was not yet registered with the SEC when the properties were donated, the donation would still be valid because Purificacion, applying the doctrine of corporation by estoppel, was aware that the Missionary was not yet incorporated and registered with the SEC. Purificacion dealt with the petitioner as if it were a corporation. This is evident from the fact that Purificacion executed two (2) documents conveying her properties in favor of the petitioner – first, on October 11, 1999 via handwritten letter, and second, on August 29, 2001 through a Deed; the latter having been executed the day after the petitioner filed its application for registration with the SEC. She is estopped to deny the Missionary’s legal existence in any action involving the transfer of her property by way of donation. She has assumed an obligation in favor of a non-existent corporation, having transacted with the latter as if it was duly incorporated. The doctrine of corporation by estoppel is founded on principles of equity and is designed to prevent injustice and unfairness. It applies when a non-existent corporation enters into contracts or dealings with third persons.The doctrine of corporation by estoppel applies for as long as there is no fraud
The doctrine of corporation by estoppel rests on the idea that if the Court were to disregard the existence of an entity which entered into a transaction with a third party, unjust enrichment would result as some form of benefit have already accrued on the part of one of the parties. Thus, in that instance, the Court affords upon the unorganized entity corporate fiction and juridical personality for the sole purpose of upholding the contract or transaction.
In this case, while the underlying contract which is sought to be enforced is that of a donation, and thus rooted on liberality, it cannot be said that Purificacion, as the donor failed to acquire any benefit therefrom so as to prevent the application of the doctrine of corporation by estoppel. To recall, the subject properties were given by Purificacion, as a token of appreciation for the services rendered to her during her illness.[46] In fine, the subject deed partakes of the nature of a remuneratory or compensatory donation, having been made “for the purpose of rewarding the donee for past services, which services do not amount to a demandable debt.”
NOTES:
Under Article 737 of the Civil Code, “[t]he donor’s capacity shall be determined as of the time of the making of the donation.” By analogy, the legal capacity or the personality of the donee, or the authority of the latter’s representative, in certain cases, is determined at the time of acceptance of the donation.
Article 738, in relation to Article 745, of the Civil Code provides that all those who are not specifically disqualified by law may accept donations either personally or through an authorized representative with a special power of attorney for the purpose or with a general and sufficient power.
Jurisprudence settled that “[t]he filing of articles of incorporation and the issuance of the certificate of incorporation are essential for the existence of a de facto corporation.” In fine, it is the act of registration with SEC through the issuance of a certificate of incorporation that marks the beginning of an entity’s corporate existence.
Donations
Past services constitute considerations
As elucidated by the Court in Pirovano, et al. v. De La Rama Steamship Co.: In donations made to a person for services rendered to the donor, the donor’s will is moved by acts which directly benefit him. The motivating cause is gratitude, acknowledgment of a favor, a desire to compensate. A donation made to one who saved the donor’s life, or a lawyer who renounced his fees for services rendered to the donor, would fall under this class of donations. Therefore, under the premises, past services constitutes consideration, which in tum can be regarded as “benefit” on the part of the donor, consequently, there exists no obstacle to the application of the doctrine of corporation by estoppel; although strictly speaking, the petitioner did not perform these services on the expectation of something in return.
Contracts
Express or implied ratification is recognized by law as a means to validate a defective contract. Ratification cleanses or purges the contract from its defects from constitution or establishment, retroactive to the day of its creation. By ratification, the infirmity of the act is obliterated thereby making it perfectly valid and enforceable.
The principle and essence of implied ratification require that the principal has full knowledge at the time of ratification of all the material facts and circumstances relating to the act sought to be ratified or validated. Also, it is important that the act constituting the ratification is unequivocal in that it is performed without the slightest hint of objection or protest from the donor or the donee, thus producing the inevitable conclusion that the donation and its acceptance were in fact confirmed and ratified by the donor and the donee.
Myline Cordial 
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