SECOND DIVISION

[G.R. No. 224307. August 6, 2018.]

THE MISSIONARY SISTERS OF OUR LADY OF FATIMA (PEACH
SISTERS OF LAGUNA), represented by Rev. Mother Ma. Concepcion
R. Realon, et al., petitioners, vs. AMANDO V. ALZONA, et al. ,
respondents.

Facts:

- The petitioner here is a religious congregation of consecrated women called The

Missionary Sisters of Our Lady of Fatima under the patronage of the Bishop of
the Diocese of San Pablo City, Laguna. The superior or head of this
congregation is Mother Ma. Concepcion Realon.
- The subject properties was originally owned by Purificacion Alzona.
- Having chosen the life a single blessed, Purificacion decided to become a
benefactress and a lay collaborator of the Peach Sisters.
- Sometime in 1997, Purificacion found out that she had lung cancer. Upon her
request, Mo. Concepcion took care of her and attended to her needs.
- In October 1999, Purificacion handed a letter to Mo. Concepcion. Purificacion
informed Mo. Concepcion that she was donating to the congregation her riceland
and house and lot in Calamba City, Laguna.
- The lawyer who facilitated the donation advised Mo. Concepcion that they should
register with SEC. Thus, on August 28, 2001, Mo. Concepcion went to the SEC
to file the registration application.
- The Deed of Donation was executed on August 29, 2001 and it was
subsequently accepted by the congregation through Mo. Concepcion on the
same day.

- However, Amando Alzona, the brother in full blood of Purificacion filed in the
ROD an affidavit of adverse claim on the subject properties in September 2001.
Hence, Mo. Concepcion failed to register them in the name of the Congregation.

- Moreover, Amando filed a Complaint before the RTC, seeking to annul the Deed
of Donation executed between Purificacion and the congregation, 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, ruled in favor of the congregation mainly because:

a. All the elements of a valid donation are present

b. The congregation has the capacity to be a donee because during the time of
the donation it was a de facto corporation.

- CA reversed the ruling of RTC reasoning that:

 a. petitioner cannot be considered as a de facto corporation considering that at
the time of the donation, there was no bona fide attempt on its part to
incorporate.
b. As an unregistered corporation, the CA concluded that the petitioner cannot
exercise the powers, rights, and privileges granted by the Corporation Code
including to enter into a contract of Donation with Purificacion.

ISSUE: W/N the Congregation had the legal capacity to accept donation,
notwithstanding the fact that it did not have the required approval from SEC during the
time that the donation was executed? YES.

The Court noted that all the elements of a valid donation as prescribed by the Civil Code
are present in this case. The only issue to be resolved is the capacity of the
congregation as donee to accept the donation, and the authority of Mother Concepcion
to act on its behalf for this purpose.

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

But unlike the RTC, the Court reached this conclusion not via the doctrine of de facto
corporation.
- The Court does not find that the congregation is a de facto corporation.
- This is because during the time that the donation was executed, the congregation
is not yet a registered corporation at the SEC.

Instead, the Court anchored its ruling in the doctrine of corporation by estoppel.
- While the doctrine is generally applied to protect the sanctity of dealings with the
public, the Court said that it can also be used to prevent a person who has
assumed an obligation in favor of a nonexistent corporation, having transacted
with the latter as if it was duly incorporated, from denying the existence of the
latter to avoid the enforcement of the contract.
- 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 and not thereafter.
- According to the Court, the rationale of 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, the Court affords upon the unorganized entity a juridical personality for the
sole purpose of upholding the contract or transaction.

In this case, 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 congregation.
Furthermore, benefit has already accrued on the part of Purificacion. This is because,
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
- The Court noted that the subject properties were given by Purificacion, as a
token of appreciation for the services rendered to her during her illness.

In other words, the subject deed of donation 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."

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.

The Court also pointed out that while the initial conveyance is defective, the subsequent
act by Purificacion of reconveying the property in favor of the petitioner is a ratification
by conduct of the otherwise defective donation.

Also, while the petitioner is yet to be incorporated at the time of the donation, it cannot
be said that the initial conveyance was tainted with fraud or misrepresentation.
- Purificacion acted with full knowledge of the fact that it was not yet incorporated.
- 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 further strengthen its ratio, the Court also mentioned that the subsequent
incorporation of the congregation and its affirmation of Mother Concepcion's authority to
accept donation on its behalf cured whatever defect that may have attended the
acceptance of the donation.

On the issue of authority of Mother Concepcion to act as representative in behalf of the

congregation, the Court similarly upholds the same.
- Foremost, the authority of Mother Concepcion was never questioned by the
congregation.
- Furthermore, the congregation’s recognition of Mother Concepcion's authority
after their SEC registration is a ratification of the latter's authority to accept the
subject donation as the its representative.

Based on these reasonings, the Court reversed the decision of CA and upheld the
donation of Purificacion to the Missionary Sisters of Our Lady of Fatima.