Title
Cagayan Fishing Development Co., Inc. vs. Sandiko
Case
G.R. No. 43350
Decision Date
Dec 23, 1937
Manuel Tabora sold mortgaged land to a non-existent corporation, which later sold it to Teodoro Sandiko. SC ruled the transfer void due to the corporation's lack of incorporation, absolving Sandiko.
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Case Digest (G.R. No. 43350)

Facts:

  1. Ownership and Mortgages of the Land

    • Manuel Tabora was the registered owner of four parcels of land in Linao, Aparri, Cagayan, as evidenced by Transfer Certificate of Title No. 217.
    • On August 14, 1929, Tabora executed a first mortgage on the land in favor of the Philippine National Bank (PNB) to secure a loan of P8,000.
    • In April 1930, Tabora executed a second mortgage on the same land in favor of PNB for another loan of P7,000.
    • On April 16, 1930, Tabora executed a third mortgage on the land in favor of Severina Buzon to secure a debt of P2,900.
    • All mortgages were registered and annotated on the back of the title.
  2. Transfer of Land to the Plaintiff Company

    • On May 31, 1930, Tabora executed a public document titled "Escritura de Traspaso de Propiedad Inmueble" (Exhibit A), selling the four parcels of land to the Cagayan Fishing Development Co., Inc. (plaintiff), which was still in the process of incorporation, for P1.
    • The sale was subject to the existing mortgages and the condition that the title would not be transferred to the plaintiff until Tabora's debts to PNB were fully paid.
    • The plaintiff company was officially incorporated on October 22, 1930.
  3. Sale of Land to the Defendant

    • On October 28, 1931, the plaintiff's board of directors authorized the sale of the land to Teodoro Sandiko (defendant) for P42,000.
    • On February 15, 1932, the plaintiff executed a deed of sale (Exhibit B) transferring the land to Sandiko for P25,300, with Sandiko assuming the three mortgages.
    • Sandiko executed a promissory note (Exhibit C) for P25,300 and a mortgage deed (Exhibit D) securing the note with the land.
  4. Failure to Pay and Filing of the Complaint

    • Sandiko failed to pay the promissory note, prompting the plaintiff to file a complaint on January 25, 1934, seeking payment of P25,300 with interest and costs.
    • The trial court absolved Sandiko, ruling that Exhibit B was invalid due to vice in consent and repugnancy to law.
  5. Appeal and Key Arguments

    • The plaintiff appealed, arguing that the transfer of land from Tabora to the plaintiff was valid and that the sale to Sandiko was enforceable.
    • The Supreme Court found that the plaintiff was not yet incorporated at the time of the transfer from Tabora, rendering the transfer null and void.

Issue:

  1. Whether the transfer of land from Manuel Tabora to the Cagayan Fishing Development Co., Inc. was valid, given that the plaintiff was not yet incorporated at the time of the transfer.
  2. Whether the subsequent sale of the land by the plaintiff to Teodoro Sandiko was enforceable.
  3. Whether the condition precedent (payment of Tabora's debt to PNB) affected the validity of the transfer.

Ruling:

  • (Subscriber-Only)

Ratio:

  • (Subscriber-Only)


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