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A benevolent giver

The Holy Sisters of Nuestra Señora is a religious and charitable group established under the patronage of the Roman Catholic Bishop of the South.

Salvacion, a spinster, is a land owner. Salvacion, 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 Holy Sisters by giving support to the community and its works.

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Upon learning that she has cancer, Salvacion sent Mother Superior Consuela her handwritten letter where she donated her house and lot to the Holy Sister through Mother Superior Consuela. On the same occasion, Salvacion introduced Mother Superior Concepcion to her nephew and niece.

At the time of the donation, the Holy Sisters has not yet been duly incorporated. Few days after the donation, the Holy Sisters, through Mother Superior Consuela, filed with the Securities and Exchange Commission (SEC) the corresponding registration application.

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A day after Mother Superior filed the congregation’s SEC application, Salvacion executed a Deed of Donation Inter Vivas (Deed) in favor of the Holy Sisters of Nuestra Señora. The Deed was notarized and witnessed by Salvacion’s nephews and grandnephew. The donation was accepted on even date by Mother Consuela for and in behalf of the congregation. Thereafter, Mother Superior filed an application before the Bureau of Internal Revenue (BIR) that the congregation be exempted from donor’s tax as a religious organization. The application was granted by the BIR.

The brother of Salvacion, however, caused the notices of an adverse claim on the donated properties. He claimed that the donation is void.

Our good Lord soon called Salvacion to His side. Salvacion died without any issue, and survived only by her brother, who nonetheless died and survived by his legal heirs.

Q; What are the elements of a valid donation of an immovable property?

A: For a donation of an immovable property to 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.

Q: Was the donation made by Salvacion valid?

A: Yes, there is no question that the true intent of Salvacion, the donor and the owner of the properties in question, was to give, out of liberality the subject house and lot, which she owned, to the Holy Sisters. This act, was then contained in a public document, the deed having been acknowledged before a notary public. The acceptance of the donation is made on the same date that the donation was made and contained in the same instrument as manifested by Mother Superior Consuela’s signature, and of the capacity of the donee to accept the donation.

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Q: Did the Holy Sisters of Nuestra Señora have the capacity, as donee, to accept the donation?

A: Yes, 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.

For the purpose of accepting the donation, the congregation is deemed vested with personality to accept, and Mother Superior Consuela is clothed with authority to act on the latter’s behalf.

Q: Was the congregation a de facto corporation at the time it accepted the donation?

A: No. The 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.

Q: What kind of a corporation was the congregation as of the time of the donation?

A: It is a corporation by estoppel. 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 leading out of or involving such contract or dealing.

While the doctrine is generally applied to protect the sanctity of dealings with the public, nothing prevents its application in the reverse. In fact the very wording of the law which sets forth the doctrine of corporation by estoppel permits such interpretation. Such that a person who has assumed an obligation in favor of a non-existent corporation, having transacted with the latter as if it was duly incorporated, is prevented from denying the existence of the latter to avoid the enforcement of the contract.

(Source: The Missionary Sisters of Our Lady of Fatima vs. Alzona, G.R. No. 224307, Aug. 6, 2018)

The author is Dean, Lyceum of the Philippines University; Trustee, Philippine Association of Law Schools; and founder, Mawis Law Office

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