[G.R. No. 34719. December 8, 1932. ]
ALBERTO BARRETTO, ET AL., Plaintiffs-Appellees, v. LA PREVISORA FILIPINA, Defendant-Appellant.
Romualdez Brothers and Harvey & O’Brien for Appellant.
Joaquin Ramirez for Appellees.
1. BUILDING AND LOAN ASSOCIATIONS; "ULTRA VIRES" AND VOID CONTRACT OR BY-LAW. — Building and loan associations are peculiar and special corporations. They are founded upon principles of strict mutuality and equality of benefits and obligations, and the trend of the more recent decisions is that any contract made or by-law provision adopted by such association in contravention of the statute is ultra vires and void.
2. ID.; ID. — Article 68-A of the amended by-laws of the defendant corporation upon which the action is based, does not under the law as applied to the express provisions thereof create any legal obligation on its part to pay to the persons named therein, including the plaintiffs, a life gratuity or pension out of its net profits.
3. ID.; ID. — While building and loan associations are expressly authorized by the Corporation Law to adopt by-laws for their government, section 20 of that Act, as construed by this court in the case of Fleischer v. Botica Nolasco Co. (47 Phil., 583), expressly limits such authority to the adoption of by-laws which are not inconsistent with the provisions of the law.
4. ID.; ID.; CONTRACTS BETWEEN A CORPORATION AND THIRD PERSONS. — The law is settled that contracts between a corporation and third persons must be made by or under the authority of its board of directors and not by its stockholders. Hence, the action of the stockholders in such matters is only advisory and not in any wise binding on the corporation.
D E C I S I O N
This is an appeal from a decision rendered by the Court of First Instance of Manila, ordering the defendant corporation to pay to each of the three plaintiffs the amount of P507.02 1/2, including interest thereon from May 2, 1930, to date of payment, with costs.
The action which gave rise to this appeal was brought by Alberto Barretto, Jose de Amusategui, and Jose Barretto, who had been directors of the defendant corporation from its incorporation up to the month of March, 1929, to recover from the defendant, La Previsora Filipina, a mutual building and loan association, 1 per cent to each of the plaintiffs of the net profits of said corporation for the year 1929, which amount to P50,727.53, under and in accordance with the following amendment to the by-laws of the defendant corporation, which was made at a general meeting of the stockholders thereof on February 23, 1929, to wit:jgc:chanrobles.com.ph