When is a donation valid?

In 1959, the spouses Cos donated a piece of land to the Philippine Mission Church Southern Phils, Inc. (“Southern Church Inc.” for brevity). The donation was allegedly accepted by one Rato Ray, an elder of the Church, on behalf of the donee.

Twenty-one years later, however, the same parcel of land was sold by the spouses Cos to the Philippine Mission Church Northern Mindanao Mission (“Northern Church Inc.” for brevity). A new transfer certificate of title was issued in the name of Northern Church.

Claiming to be the alleged donee’s successors-in-interest, the Southern Church, represented by its officers and members, asserted ownership over the property. This was opposed by Northern Church, who argued that at the time of the donation, the Southern Church could not have been a donee legally because it had not been duly incorporated, and therefore had no juridical personality to accept the donation as a corporation. Neither were the members of the local church then, hence the donation could not have been made particularly to them.

Q: What is the nature of a donation?

A: Donation is an act of liberality whereby a person disposes gratuitously of a thing or right in favor of another person who accepts it. Donation is undeniably one of the modes of acquiring ownership of real property. Likewise, ownership of a property may be transferred by tradition as a consequence of a sale.

Q: Was the donation made in favor of the Southern Church, Inc. valid or void?

A: The alleged donation made to Southern Church is void. The donation could not have been made in favor of an entity which was not yet in existence at the time it was made, nor could it have been accepted, as there was yet no one to accept it.

The deed of donation was not in favor of any informal group of the Southern Church members but of a supposed Southern Church which, at the time, had neither juridical personality nor capacity to accept such gift.

Q: Can the Southern Church, Inc. validly claim that, at the time the donation was made, it was a de facto corporation and therefore could benefit from said gratuitous conveyance?

A: There are stringent requirements before one can qualify as a de facto corporation: (a) the existence of a valid law under which it may be incorporated; (b) an attempt in good faith to incorporate; and (c) assumption of corporate powers.

While there existed the old Corporation Law (Act 1459), a law under which the local Southern Church could have been organized, there is no proof that there was an attempt to incorporate at that time. The filing of articles of incorporation and the issuance of the certificate of incorporation are essential for the existence of a de facto corporation.

Thus, it has been said that an organization not registered with the Securities and Exchange Commission (SEC) cannot be considered a corporation in any concept, not even as a corporation de facto.

In fact, the members of the Southern Church admitted that at the time of the donation, they were not registered with the SEC. They did not even attempt to organize to comply with legal requirements.

It should be noted that corporate existence begins only from the moment a certificate of incorporation is issued. No such certificate was ever issued to Southern Church or its supposed predecessor-in-interest at the time of the donation.

Hence, neither Southern Church nor its members could claim succession to an entity that never came to exist. Neither could the principle of separate juridical personality apply since there was never any corporation to speak of. In fact, the members of the current Southern Church were not even members of the local church then. Thus, they could not even claim that the donation was particularly for them.

Q: What is the value of a certificate of title?

A: A certificate of title is generally conclusive evidence of ownership of the land. There is that strong and solid presumption that titles are legally issued and that they are valid.

It is irrevocable and indefeasible and the duty of the court is to see to it that the title is maintained and respected unless challenged in a direct proceeding. xxx The title shall be received as evidence in all the courts and shall be conclusive as to all matters contained therein.

(Source: Seventh Day Adventist Church of Southern Philippines, Inc. vs. Northeastern Mindanao Mission of Seventh Day Adventists, Inc., G.R. No. 150416, July 21, 2006. J. Corona, Second Division)

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