Case Summary (G.R. No. 43350)

Juridical Capacity of Corporations

• A transfer made to a corporation that is not yet legally incorporated is invalid.
• The transfer in question occurred on May 31, 1930, while the actual incorporation of the Cagayan Fishing Development Co., Inc. took place on October 22, 1930.
• The contract referred to the plaintiff as "una sociedad en vias de incorporacion," indicating it was not yet a legal entity.
• A corporation must be duly organized and possess juridical capacity to enter into contracts.

Legal Existence and Formation of Corporations

• Corporations are created by law and must follow prescribed legal procedures for formation.
• Conditions precedent must be met for a corporation to acquire legal existence.
• A corporation must be fully organized before it can engage in contracts or business transactions.
• The absence of legal existence means that promoters cannot act as agents for the corporation.

Ratification of Acts by Promoters

• A corporation has no faculties or legal existence until it is organized.
• While there are exceptions where acts of promoters may be ratified, such ratification should not lead to injustice or fraud.
• The court declined to extend the doctrine of ratification in this case due to the specific circumstances involved.

Background of the Case

• Manuel Tabora was the registered owner of four parcels of land, which he mortgaged to secure loans.
• The plaintiff company was formed by Tabora and others, with Tabora holding a significant portion of the capital stock.
• The lands remained registered in Tabora's name, and he was treated as the owner by all parties involved, including the Philippine National Bank.

Transactions and Legal Implications

• The plaintiff company attempted to sell the land to Teodoro Sandiko, but the transfer was invalid due to the corporation's non-existence at the time of the sale.
• The promissory note was structured to protect the plaintiff from Tabora's creditors, but this did not confer legal rights ...continue reading

Case Syllabus (G.R. No. 43350)

Case Overview

• This case involves an appeal by Cagayan Fishing Development Co., Inc. against Teodoro Sandiko, following a judgment from the Court of First Instance of Manila that absolved Sandiko from the plaintiff's complaint.
• The appeal centers on the validity of a contract of sale executed by the plaintiff, which was purportedly entered into before the plaintiff corporation was legally organized.

Parties Involved

• Plaintiff and Appellant: Cagayan Fishing Development Co., Inc.
• Defendant and Appellee: Teodoro Sandiko
• Third Party: Manuel Tabora, the registered owner of the parcels of land in question.

Background Facts

• Manuel Tabora owned four parcels of land in Aparri, Cagayan, which he mortgaged to the Philippine National Bank to secure loans of P8,000 and P7,000.
• A third mortgage was executed in favor of Severina Buzon for P2,900.
• On May 31, 1930, Tabora executed a document to sell the land to the Cagayan Fishing Development Co., Inc. (then in the process of incorporation) for P1, with the condition that the title would not be transferred until Tabora's debts to the bank were paid.
• The corporation was officially registe...continue reading