GR 44451; (December, 1938) (Digest)
G.R. No. 44451 , December 16, 1938
VICENTE L. LEGARDA, plaintiff-appellant, vs. LA PREVISORA FILIPINA, A Mutual building and Loan Association, defendant-appellant.
FACTS
Vicente L. Legarda filed a complaint against La Previsora Filipina, a mutual building and loan association, for various claims. These included damages for alleged wrongful cancellation of his management contract (Exhibit C) and discharge as manager, suppression of his position as consulting architect, discharge as president of the appraisal committee, and retention of payment for inspection work. He also sought delivery or payment for thirty shares of stock. The defendant corporation denied the claims, asserting that the contract was unauthorized, fraudulent, illegal, and void, and that Legarda breached his trust. It counterclaimed for the refund of salaries paid under the void contract and for damages. The trial court dismissed Legarda’s first three causes of action (related to the management contract and other positions) but ordered the corporation to reimburse him for the retained inspection fee (P230.41) and to deliver the shares or pay their value. It also dismissed the corporation’s counterclaim. Both parties appealed.
ISSUE
The main issues were: (1) Whether the contract Exhibit C (management contract) was valid and binding; (2) Whether Legarda was entitled to his claims for damages arising from the cancellation of said contract and the suppression of his other positions; and (3) Whether the corporation was entitled to its counterclaim for refund of salaries and damages.
RULING
The Supreme Court affirmed the trial court’s decision. It held that the contract Exhibit C was ultra vires and void. The Board of Directors had no authority to bind the corporation to a management contract for a term extending beyond their own tenure of office. The approval of a corporate budget that included Legarda’s salary as consulting architect did not constitute a binding contract of employment for a fixed term, as a budget is merely a guide subject to modification. Consequently, Legarda’s claims for damages based on the cancellation of the void contract and the suppression of the other positions were properly dismissed. However, the corporation was ordered to reimburse Legarda for the wrongfully retained inspection fee and to deliver the shares or pay their value, as these were separate obligations. The corporation’s counterclaim for refund of salaries was denied because Legarda rendered actual and successful services, and the salaries were just and reasonable. The claim for damages was also denied for being speculative and unproven. Costs were imposed on Legarda.
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