1. De Luna v.

Abrigo

FACTS:
 On January 24, 1965, Prudencio de Luna donated a portion of 7,500 square meters to the Luzonian
Colleges, Inc., (now Luzonian University Foundation, Inc., herein referred to as the foundation).
 The donation, embodied in a Deed of Donation Intervivos
(Annex "A" of Petition) was subject to certain terms and conditions and provided for the automatic
reversion to the donor of the donated property in case of violation or noncompliance (pars. 7 and 10 of
Annex "A", p. 20, Rollo).
 The foundation failed to comply with the conditions of the donation.
 On April 9, 1971, Prudencio de Luna "revived" the said donation in favor of the foundation, in a document
entitled "Revival of Donation Intervivos" (Annex "B" of Petition) subject to terms and conditions.
 As in the original deed of donation, the "Revival of Donation Intervivos" also provided for the automatic
reversion to the donor of the donated area in case of violation of the conditions thereof, couched in the
following terms:
xxx xxx xxx
"11. That violation of any of the conditions herein provided shall cause the automatic
reversion of the donated area to the donor, his heirs, assigns and representatives,
without the need of executing any other document for that purpose and without
obligation whatever on the part of the DONOR."
 On September 23, 1980, herein petitioners, Evelyn, Rosalina, Prudencio, Jr., Willard, Antonio and Joselito,
all surnamed de Luna, who claim to be the children and only heirs of the late Prudencio de Luna who died
on August 18, 1980, filed a complaint with the Regional Trial Court alleging that the terms and conditions
of the donation were not complied with by the foundation. Among others, it prayed for the cancellation
of the donation and the reversion of the donated land to the heirs.
 In its answer, respondent foundation claimed that it had partially and substantially complied with the
conditions of the donation and that the donor has granted the foundation an indefinite extension of time
to complete the construction of the chapel. It also invoked the affirmative defense of prescription of
action and prayed for the dismissal of the complaint.

Issue: Whether or not the donation subject of this case is one with an onerous cause?

Ruling: YES
 From the viewpoint of motive, purpose or cause, donations may be 1) simple, 2) remuneratory or 3)
onerous.
 A simple donation is one the cause of which is pure liberality (no strings attached).
 A remuneratory donation is one where the donee gives something to reward past or future services or
because of future charges or burdens, when the value of said services, burdens or charges is less than the
value of the donation.
 An onerous donation is one which is subject to burdens, charges or future services equal (or more) in
value than that of the thing donated.
 It is the finding of the trial court, which is not disputed by the parties, that the donation subject of this
case is one with an onerous cause. It was made subject to the burden requiring the donee to construct a
chapel, a nursery and a kindergarten school in the donated property within five years from execution of
the deed of donation.

Issue: Whether or not donations with an onerous cause are governed by the law on donations or by the rules on
contracts?

Ruling: Rules on Contracts

  It is settled rule that donations with an onerous cause are governed not by the law on donations but by
the rules on contracts, as held in the cases of Carlos v. Ramil, L-6736, September 5, 1911, 20 Phil. 183,
Manalo vs. de Mesa, L-9449, February 12, 1915, 29 Phil. 495.
 On the matter of prescription of actions for the revocation of onerous donation, it was held that the
general rules on prescription applies.
 It is true that Article 764 of the New Civil Code, actions for the revocation of a donation must be brought
within for (4) years from the non-compliance of the conditions of the donation.
 However, it is Our opinion that the said article does not apply to onerous donations in view of the specific
provision of Article 733 providing that onerous donations are governed by the rules on contracts.
 The validity of the stipulation in the contract providing for the automatic reversion of the donated
property to the donor upon non-compliance cannot be doubted.
o It is in the nature of an agreement granting a party the right to rescind a contract unilaterally in
case of breach, without need of going to court.
o Upon the happening of the resolutory condition of non-compliance with the conditions of the
contract, the donation is automatically revoked without need of a judicial declaration to that
effect.
 The trial court was therefore not correct in holding that the complaint in the case at bar is barred by
prescription under Article 764 of the New Civil Code because Article 764 does not apply to onerous
donations.
 As provided in the donation executed on April 9, 1971, compliance with the terms and conditions of the
contract of donation, shall be made within five (5) years from its execution. The complaint which was filed
on September 23, 1980 was then well within the ten (10) year prescriptive period to enforce a written
contract (Article 1144[1], New Civil Code), counted from April 9, 1976.

2. Missionary Sisters of Lady of Fatima v. Alzon

FACTS:
 The Missionary Sisters of Our Lady of Fatima (petitioner), otherwise known as the Peach Sisters of Laguna,
is a religious and charitable group established under the patronage of the Roman Catholic Bishop of San
Pablo on May 30, 1989. Its primary mission is to take care of the abandoned and neglected elderly
persons. Mother Ma. Concepcion R. Realon (Mother Concepcion) is the petitioner's Superior General.
 The respondents, on the other hand, are the legal heirs of the late Purificacion Y. Alzona (Purificacion).
 Purificacion, a spinster, is the registered owner of parcels of land covered by Transfer Certificate of Title
(TCT) Nos. T-57820.
 In 1996, Purificacion, impelled by her unmaterialized desire to be nun, decided to devote the rest of her
life in helping others. In the same year, she then became a benefactor of the petitioner by giving support
to the community and its works.
 In 1997, during a doctor's appointment, Purificacion then accompanied by Mother Concepcion,
discovered that she has been suffering from lung cancer.
 In October 1999, Purificacion called Mother Concepcion and handed her a handwritten letter dated
October 1999. Therein, Purificacion stated that she is donating her house and lot at F. Mercado Street and
Riceland at Banlic, both at Calamba, Laguna, to the petitioner through Mother Concepcion.
 On the same occasion, she introduced Mother Concepcion to her nephew, Francisco Del Mundo
(Francisco), and niece, Ma. Lourdes Alzona Aguto-Africa (Lourdes). Purificacion, instructed Francisco to
give a share of the harvest to Mother Concepcion, and informed Lourdes that she had given her house to
Mother Concepcion.
 On August 29, 2001, Purificacion executed a Deed of Donation Inter Vivos (Deed) in favor of the
petitioner, conveying her properties covered by TCT Nos. T-67820 and T-162375, and her undivided share
in the property covered by TCT No. T-162380. The Deed was notarized by Atty. Arcillas and witnessed by
Purificacion's nephews Francisco and Diosdado Alzona, and grandnephew, Atty. Fernando M. Alonzo.
 The donation was accepted on even date by Mother Concepcion for and in behalf of the petitioner.
  Subsequently, the Deed, together with the owner's duplicate, copies of TCT Nos. T-57820, T-162375, and
T-162380, and the exemption letter from the BIR waspresented for registration. The Register of Deeds,
however, denied the registration on account of the Affidavit of Adverse Claim dated September 26, 2001
filed by the brother of Purificacion, respondent Amando Y. Alzona (Amando).
 On October 30, 2001, Purificacion died without any issue, and survived only by her brother of full blood,
Amando, who nonetheless died during the pendency of this case and is now represented and substituted
by his legal heirs, joined as herein respondents.
 On April 9, 2002, Amando filed a Complaint before the RTC, seeking to annul the Deed executed between
Purificacion and the petitioner, on the ground that at the time the donation was made, the latter was not
registered with the SEC and therefore has no juridical personality and cannot legally accept the donation.

ISSUE: Whether or not there is a valid donation?

RULING: YES
 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.

 The remaining issue to be resolved is the capacity of the petitioner as donee to accept the donation, and
the authority of Mother Concepcion to act on its behalf for this purpose.

 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
disquali􀁁ed 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.

 The Court finds that for the purpose of accepting the donation, the petitioner is deemed vested with
personality to accept, and Mother Concepcion is clothed with authority to act on the latter's behalf.

ISSUE: Whether or not Lady of Fatima is a de facto corporation?

Ruling: No

 At the outset, it must be stated that as correctly pointed out by the CA, the RTC erred in holding that the
petitioner is a de facto corporation.
 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. Petitioner filed its Articles of Incorporation and by-laws on
August 28, 2001. However, the SEC issued the corresponding Certificate of Incorporation only on August
31, 2001, two (2) days after Purificacion executed a Deed of Donation on August 29, 2001. Clearly, at the
time the donation was made, the Petitioner cannot be considered a corporation de facto.
 Rather, a review of the attendant circumstances reveals that it calls for the application of the doctrine of
corporation by estoppel as provided for under Section 21 of the Corporation Code, viz.:
Sec. 21. Corporation by estoppel. — All persons who assume to act as a corporation knowing it to be
without authority to do so shall be liable as general partners for all debts, liabilities and damages
incurred or arising as a result thereof: Provided, however, That when any such ostensible
corporation is sued on any transaction entered by it as a corporation or on any tort committed by it
 as such, it shall not be allowed to use as a defense its lack of corporate personality. One who
assumes an obligation to an ostensible corporation as such, cannot resist performance thereof on
the ground that there was in fact no corporation.

 Jurisprudence dictates that the doctrine of corporation by estoppel applies for as long as there is no fraud
and when the existence of the association is attacked for causes attendant at the time the contract or
dealing sought to be enforced was entered into, and not thereafter.
 In this controversy, 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.

ISSUE: Whether or not the subsequent act by Purificacion of reconveying the property in favor of the petitioner is a
ratification by conduct of the otherwise defective donation?

Ruling: YES
 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.
 In this controversy, while the initial conveyance is defective, the genuine intent of Purificacion to donate
the subject properties in favor of the petitioner is indubitable.
 Also, while the petitioner is yet to be incorporated, it cannot be said that the initial conveyance was
tainted with fraud or misrepresentation. Contrarily, Purificacion acted with full knowledge of
circumstances of the Petitioner. This is evident from Purifiacion's act of referring Mother Concepcion to
Atty. Arcillas, who, in turn, advised the petitioner to apply for registration. Further, with the execution of
two (2) documents of conveyance in favor of the petitioner, it is clear that what Purificacion intended was
for the sisters comprising the petitioner to have ownership of her properties to aid them in the pursuit of
their charitable activities, as a token of appreciation for the services they rendered to her during her
illness.
 To put it differently, the reference to the petitioner was merely a descriptive term used to refer to the
sisters comprising the congregation collectively. Accordingly, the acceptance of Mother Concepcion for
the sisters comprising the congregation is sufficient to perfect the donation and transfer title to the
property to the petitioner. Ultimately, the subsequent incorporation of the petitioner and its affirrmation
of Mother Concepcion's authority to accept on its behalf cured whatever defect that may have attended
the acceptance of the donation.

3. Mindanao Bus Company v. City Assessor

FACTS:

 Respondent City Assessor of Cagayan de Oro City assessed at P4,400 petitioner's above-mentioned
equipment. Petitioner appealed the assessment to the respondent Board of Tax Appeals on the ground
that the same are not realty. The Board of Tax Appeals of the City sustained the city assessor, so
petitioner herein filed with the Court of Tax Appeals a petition for the review of the assessment.

 In the Court of Tax Appeals the parties submitted the following stipulation of facts:

1. That petitioner is a public utility solely engaged in transporting passengers and cargoes by motor trucks,
over its authorized lines in the Island of Mindanao, collecting rates approved by the Public Service
Commission;
 XXX

3. That the machineries sought to be assessed by the respondent as real properties are the following:

(a) Hobart Electric Welder Machine, appearing in the attached photograph, marked Annex "A";
(b) Storm Boring Machine, appearing in the attached photograph, marked Annex "B";(c) Lathe
machine with motor, appearing in the attached photograph, marked Annex "C";(d) Black and
Decker Grinder, appearing in the attached photograph, marked Annex "D";(e) PEMCO Hydraulic
Press, appearing in the attached photograph, marked Annex "E";(f) Battery charger (Tungar
charge machine) appearing in the attached photograph, marked Annex "F"; and(g) D-Engine
Waukesha-M-Fuel, appearing in the attached photograph, marked Annex "G".

4. That these machineries are sitting on cement or wooden platforms as may be seen in the attached
photographs which form part of this agreed stipulation of facts;

5. That petitioner is the owner of the land where it maintains and operates a garage for its TPU motor
trucks; a repair shop; blacksmith and carpentry shops, and with these machineries which are placed
therein, its TPU trucks are made; body constructed; and same are repaired in a condition to be serviceable
in the TPU land transportation business it operates;

6. That these machineries have never been or were never used as industrial equipments to produce
finished products for sale, nor to repair machineries, parts and the like offered to the general public
indiscriminately for business or commercial purposes for which petitioner has never engaged in, to date.

 The Court of Tax Appeals having sustained the respondent city assessor's ruling, and having denied a
motion for reconsideration, petitioner brought the case to this Court.

 Respondents contend that said equipments, tho movable, are immobilized by destination, in accordance
with paragraph 5 of Article 415 of the New Civil Code which provides:

Art. 415. — The following are immovable properties:

xxx     xxx     xxx

(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an
industry or works which may be carried on in a building or on a piece of land, and which tend directly to
meet the needs of the said industry or works. (Emphasis ours.)

ISSUE: Whether or not the movable equipment be considered as immovable property by destination?

RULING: NO

 Note that the stipulation expressly states that the equipment are placed on wooden or cement platforms.
They can be moved around and about in petitioner's repair shop. In the case of B. H. Berkenkotter vs. Cu
Unjieng, 61 Phil. 663, the Supreme Court said:

Article 344 (Now Art. 415), paragraph (5) of the Civil Code, gives the character of real property to
"machinery, liquid containers, instruments or implements intended by the owner of any building or land
for use in connection with any industry or trade being carried on therein and which are expressly adapted
to meet the requirements of such trade or industry."
 If the installation of the machinery and equipment in question in the central of the Mabalacat Sugar Co.,
Inc., in lieu of the other of less capacity existing therein, for its sugar and industry, converted them into
real property by reason of their purpose, it cannot be said that their incorporation therewith was not
permanent in character because, as essential and principle elements of a sugar central, without them the
sugar central would be unable to function or carry on the industrial purpose for which it was established.
Inasmuch as the central is permanent in character, the necessary machinery and equipment installed for
carrying on the sugar industry for which it has been established must necessarily be permanent.
(Emphasis ours.)

 So that movable equipments to be immobilized in contemplation of the law must first be "essential and
principal elements" of an industry or works without which such industry or works would be "unable to
function or carry on the industrial purpose for which it was established."

 We may here distinguish, therefore, those movable which become immobilized by destination because
they are essential and principal elements in the industry for those which may not be so considered
immobilized because they are merely incidental, not essential and principal.

o Thus, cash registers, typewriters, etc., usually found and used in hotels, restaurants, theaters,
etc. are merely incidentals and are not and should not be considered immobilized by destination,
for these businesses can continue or carry on their functions without these equity comments.

o Airline companies use forklifts, jeep-wagons, pressure pumps, IBM machines, etc. which are
incidentals, not essentials, and thus retain their movable nature.

o On the other hand, machineries of breweries used in the manufacture of liquor and soft drinks,
though movable in nature, are immobilized because they are essential to said industries; but the
delivery trucks and adding machines which they usually own and use and are found within their
industrial compounds are merely incidental and retain their movable nature.

 Similarly, the tools and equipments in question in this instant case are, by their nature, not essential
and principle municipal elements of petitioner's business of transporting passengers and cargoes by
motor trucks. They are merely incidentals — acquired as movables and used only for expediency to
facilitate and/or improve its service. Even without such tools and equipments, its business may be
carried on, as petitioner has carried on, without such equipments, before the war. The transportation
business could be carried on without the repair or service shop if its rolling equipment is repaired or
serviced in another shop belonging to another.

 The law that governs the determination of the question at issue is as follows:

Art. 415. The following are immovable property:

xxx     xxx     xxx

(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an
industry or works which may be carried on in a building or on a piece of land, and which tend directly to
meet the needs of the said industry or works; (Civil Code of the Phil.)

 Aside from the element of essentiality the above-quoted provision also requires that the industry or
works be carried on in a building or on a piece of land. Thus in the case of Berkenkotter vs. Cu
Unjieng, supra, the "machinery, liquid containers, and instruments or implements" are found in a building
 constructed on the land. A sawmill would also be installed in a building on land more or less permanently,
and the sawing is conducted in the land or building.

 But in the case at bar the equipments in question are destined only to repair or service the
transportation business, which is not carried on in a building or permanently on a piece of land, as
demanded by the law. Said equipments may not, therefore, be deemed real property.

 Resuming what we have set forth above, we hold that the equipments in question are not absolutely
essential to the petitioner's transportation business, and petitioner's business is not carried on in a
building, tenement or on a specified land, so said equipment may not be considered real estate within the
meaning of Article 415 (c) of the Civil Code.