Cagayan Fishing Development Co., Inc.

v. Teodoro Sandiko
[G.R. No. L-43350 December 23, 1937]

FACTS:

Manuel Tabora is the registered owner of four parcels of land. To guarantee the payment of a loan in the sum
of P8,000, Manuel Tabora executed in favor of the PNB a mortgage on four parcels of land. A second
mortgage in favor of the same bank was executed by Tabora over the same lands to guarantee the payment of
another loan. A third mortgage on the same lands was executed in favor of Severina Buzon.

Tabora executed a public document by virtue of which the four parcels of land owned by him were sold to the
Cagayan Fishing Co. in consideration of one peso subject to the mortgages in favor of the PNB and Severina
Buzon and, to the condition that the certificate of title to said lands shall not be transferred to the name of the
Cagayan Fishing until the latter has fully and completely paid Tabora's indebtedness to PNB.

The plaintiff company filed its article incorporation with the Bureau of Commerce and Industry. A year later, it
sold the four parcels of lands in question to Teodoro Sandiko. The defendant having failed to pay the sum
stated in the promissory note, plaintiff brought this action in the CFI of Manila praying that judgment be
rendered against the defendant.

ISSUE/s:

1. WON Cagayan Fishing Dev’t. has juridical capacity to enter into the contract.

2. WON promoters of a corporation can act as agents of a corporation.

HELD:

1. NO.

The transfer was made almost five months before the incorporation of the company. Before a corporation may
be said to be lawfully organized, the law requires the filing of articles of incorporation. Although there is a
presumption that all the requirements of law have been complied with, in the case before us it cannot be denied
that the plaintiff was not yet incorporated when it entered into a contract of sale. It was not even a de
facto corporation at the time. Not being in legal existence then, it did not possess juridical capacity to enter into
the contract.

Corporations are creatures of the law, and can only come into existence in the manner prescribed by law. As
has already been stated, general laws authorizing the formation of corporations are general offers to any
persons who may bring themselves within their provisions; and if conditions precedent are prescribed in the
statute, or certain acts are required to be done, they are terms of the offer, and must be complied with
substantially before legal corporate existence can be acquired.”

“That a corporation should have a full and complete organization and existence as an entity before it can enter
into any kind of a contract or transact any business, would seem to be self evident. . . . A corporation, until
organized, has no being, franchises or faculties. Nor do those engaged in bringing it into being have any power
to bind it by contract, unless so authorized by the charter. Until organized as authorized by the charter there is
not a corporation, nor does it possess franchises or faculties for it or others to exercise, until it acquires a
complete existence

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