GR 37640; (December, 1933) (Digest)
G.R. No. 37640, December 21, 1933
THE GOVERNMENT OF THE PHILIPPINE ISLANDS, plaintiff-appellee, vs. EL AHORRO INSULAR, defendant-appellant.
FACTS
The Government instituted quo warranto proceedings against El Ahorro Insular, a mutual building and loan association, seeking its dissolution for alleged violations. The trial court ordered the corporation to comply with the Bank Commissioner’s instructions or face dissolution. The defendant appealed, assigning errors only regarding the court’s rulings on: (1) the prohibition against paying compensation to incorporators; (2) the order to demand payment of loans on “fundadores” shares; (3) the alleged holding that maintaining a proportion between shares by closing issuance was illegal; and (4) the denial of a new trial.
ISSUE
1. Whether the trial court erred in prohibiting the defendant from paying compensation to its incorporators.
2. Whether the trial court erred in ordering the defendant to demand payment of loans on “fundadores” shares.
3. Whether the trial court erred in holding it illegal to maintain a proportion between shares by closing issuance.
4. Whether the trial court erred in denying the motion for a new trial.
RULING
1. No. The compensation resolutions were illegal and void. Following precedents (Barretto cases), such compensations violate the mutuality principle of mutual building and loan associations and lack valid consideration. The incorporators were not necessary parties to the quo warranto suit, which tested the validity of corporate resolutions. The case of El Hogar Filipino is distinguishable due to the existence of a valid contract with valuable consideration there.
2. The issue is moot. A separate case involving the same transaction (G.R. No. 35982) had already been decided with finality, rendering the question academic for this appeal.
3. The issue is imaginary. The trial court did not rule on the legality of maintaining share proportions. Its decision only declared certain prospectus tables promising fixed dividends to be illegal and misleading, as such results were beyond the corporation’s control.
4. No. This assignment, being a corollary to the others, merits no further consideration.
The appealed judgment is AFFIRMED.
AI Generated by Armztrong.