G.R. No. 43350 , December 23, 1937
CAGAYAN FISHING DEVELOPMENT CO., INC., plaintiff-appellant, vs. TEODORO SANDIKO, defendant-appellee.

FACTS

Manuel Tabora was the registered owner of four parcels of land mortgaged to the Philippine National Bank and Severina Buzon. On May 31, 1930, Tabora executed a deed selling the lands to the Cagayan Fishing Development Co., Inc. for a nominal sum, subject to existing mortgages and a condition that the title would not be transferred until the mortgage debts were paid. The plaintiff corporation was not yet incorporated at the time of the sale; its articles of incorporation were filed on October 22, 1930. Later, the corporation’s board authorized the sale of the lands to defendant Teodoro Sandiko. A deed of sale, a promissory note, and a mortgage were executed in February 1932. When Sandiko failed to pay the note, the corporation sued to recover the amount.

ISSUE

Whether the Cagayan Fishing Development Co., Inc. validly acquired title to the lands from Tabora, thereby conferring upon it the right to subsequently sell the lands to Sandiko.

RULING

No. The Supreme Court affirmed the dismissal of the complaint. The contract of sale between Tabora and the corporation was null and void because the corporation had no legal existence at the time the contract was executed. A corporation acquires juridical capacity only upon its incorporation. Since the corporation did not validly acquire the lands, it had no right to sell them to Sandiko. The Court declined to apply the doctrine of ratification by the later-formed corporation under the circumstances, as it would result in injustice. Consequently, the corporation’s action to enforce the promissory note from the subsequent sale failed.

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