Case Digest: Seventh Day Adventist Conference Church of Southern Phils., Inc. v. Northeastern Mindanao Mission of Seventh Day Adventist, Inc., G.R. No. 150416, July 21, 2006

 Corporation Law | De Facto Corporation

  • In 1959, Spouses Felix Cosio and Felisa Cuysona donated a 1,069 sq. m. lot covered by TCT No. 4468 to South Philippine Union Mission of Seventh Day Adventist Church of Bayugan Esperanza, Agusan (SPUM-SDA Bayugan) for Church Site purposes, as reflected in the deed of donation.
  • However, 21 years later, in 1980, the same lot was sold by the spouses to Seventh Day Adventist Church of Northeastern Mindanao Mission (SDA-NEMM), and TCT No. 4468 was issued in SDA-NEMM's name.
  • Petitioners, claiming to be the successors-in-interest of the alleged donee, contested ownership, arguing that the donation should prevail.
  • RTC: Upheld the sale in favor of respondents.
  • CA: Affirmed the decision.

WoN the SDA-NEMM’s ownership of the lot covered by TCT No. 4468 be upheld. YES

The deed of donation was not in favor of any informal group of SDA members but a supposed SPUM-SDA Bayugan (the local church) which, at the time, had neither juridical personality nor capacity to accept such gift.

Declaring themselves a de facto corporation, petitioners allege that they should benefit from the donation.

But 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 SPUM-SDA Bayugan 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. We have held 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. Petitioners themselves admitted that at the time of the donation, they were not registered with the SEC, nor did they even attempt to organize to comply with legal requirements.

Corporate existence begins only from the moment a certificate of incorporation is issued. No such certificate was ever issued to petitioners or their supposed predecessor-in-interest at the time of the donation. Petitioners obviously could not have claimed 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. And, as already stated, some of the representatives of petitioner Seventh Day Adventist Conference Church of Southern Philippines, Inc. were not even members of the local church then, thus, they could not even claim that the donation was particularly for them.

"The de facto doctrine thus effects a compromise between two conflicting public interest[s]—the one opposed to an unauthorized assumption of corporate privileges; the other in favor of doing justice to the parties and of establishing a general assurance of security in business dealing with corporations."

Generally, the doctrine exists to protect the public dealing with supposed corporate entities, not to favor the defective or non-existent corporation.

In view of the foregoing, petitioners’ arguments anchored on their supposed de facto status hold no water. We are convinced that there was no donation to petitioners or their supposed predecessor-in-interest.

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