CASE DIGEST: FPHC v. TMEE (G.R. No. 179505)
FIRST PHILIPPINE HOLDINGS CORPORATION, Petitioner,
vs.
TRANS MIDDLE EAST (PHILS.) EQUITIES INC., Respondent.
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FPHC filed a motion for reconsideration, maintaining that the sale of PCIB shares was void ab initio, since the said transaction was allegedly approved by the dummy board and signed by the dummy officers of FPHC, which was denied.
Issue: Is the sale of shares valid, void or voidable, considering the alleged “dummy board” of directors of FPHC and the question on its legal capacity to enter into a contract with third persons?
Held: Even assuming the allegations are true, the sale is only voidable, not void.
A sale obtained through fraud is voidable, not void. Hence, it can be ratified and it can only be questioned within four years from perfection. Moreover, a corporation can only act through its board of directors by either ratifying or reversing its decision.
The mere allegation of FPHC that the contract was entered into by mere dummies does not even make the contract void, even if true. Hence, it is now too late to question the fraud element of the contract and, therefore, the sale cannot be nullified.