45.

Missionary Sisters of Our Lady of Fatima

vs.
Alzona
876 SCRA 309 (2018)
FACTS:
The Missionary Sisters of Our Lady of Fatima (petitioner), is a religious and charitable group.
Mother Ma. Concepcion R. Realon is the petitioner's Superior General. The respondents, on the
other hand, are the legal heirs of the late Purificacion Y. Alzona, a spinster and the registered
owner of parcels of land and a co-owner of another property located in Calamba City, Laguna.
Purificacion through Mother Concepcion, donating to the petitioner her house and lot at F.
Mercado Street and the riceland at Banlic, both at Calamba, Laguna. On the same occasion,
Purificacion introduced Mother Concepcion to her nephew, Francisco Del Mundo, and niece,
Ma. Lourdes Alzona Aguto-Africa. 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.
At the request of Purificacion, Mother Concepcion went to see Atty. Nonato Arcillas. During their
meeting, Atty. Arcillas asked Mother Concepcion whether their group is registered with the SEC,
to which the latter replied in the negative. Acting on the advice given by Atty. Arcillas, Mother
Concepcion went to SEC and filed the corresponding registration application on August 28,
2001.
On August 29, 2001, a day after Mother Concepcion filed the registration with SEC, 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. Thereafter, Mother Concepcion filed an application before the BIR
that the petitioner be exempted from donor's tax as a religious organization to which the BIR
granted.
Subsequently, the Deed, together with the owner's duplicate copies and the exemption letter
from the BIR was presented for registration. The Register of Deeds, however, denied the
registration on account of the Affidavit of Adverse Claim filed by the brother of Purificacion,
respondent Amando Y. Alzona.
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. RTC dismissed the petition. However, on appeal, the CA modified the
lower court’s decision and declared the donation void.
Issue: WoN the Deed executed by Purificacion in favor of the petitioner is valid and binding.
Ruling: Yes. Article 737 of the Civil Code provides that "the donor's capacity shall be
determined as of the time of the making of the donation." While Article 738, in relation to Article
745, states 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. Thus, 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.
However, the CA correctly pointed out that the RTC erred in holding that the petitioner is a de
facto corporation. Jurisprudence settled that "the filing of articles of incorporation and the
issuance of the certificate of incorporation are essential for the existence of a de facto
corporation." Therefore, 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. Since the Certificate
of Incorporation was issued on August 31, 2001, or two (2) days after Purificacion executed a
Deed of Donation. Clearly, at the time the donation was made, the Petitioner cannot be
considered a corporation de facto.
Nevertheless, 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.
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. Moreover, 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. In which case, the person who has contracted or otherwise dealt with the non-
existent corporation is estopped to deny the latter's legal existence in any action involving such
contract or dealing.
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. It 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.
In this controversy, Purificacion dealt with the petitioner as if it were a corporation. 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. 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." Therefore, under the premises, past services constitutes consideration,
which in turn 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.
Precisely, the existence of the petitioner as a corporate entity is upheld in this case for the
purpose of validating the Deed to ensure that the primary objective for which the donation was
intended is achieved, that is, to convey the property for the purpose of aiding the petitioner in
the pursuit of its charitable objectives.