G.R. No.

L-27972 June 30, 1970

CENTRAL COOPERATIVE EXCHANGE, INC., petitioner,

vs.
CONCORDIO TIBE, SR. and THE HONORABLE COURT OF APPEALS, respondents.

Faustino, Peralta and Estacio for petitioner.

Generoso Casimpan for respondents.

REYES, J.B.L., J.:

Review, on certiorari, of a decision of the Court of Appeals (in its Case No. 36202-R), affirming the
decision of the Court of First Instance of Manila (in its Civil Case No. 44536) dismissing after trial a
complaint filed by herein petitioner, Central Cooperative Exchange, Inc. (CCE for short), against
herein respondent, Concordio Tibe, Sr., for the refund of certain amounts received by the latter from
the corporation, while he served as a member of the board of directors of the Exchange.

The petitioner is a national federation of farmers' cooperative marketing associations, or FACOMAS,

scattered throughout the country; its single majority stockholder is the former Agricultural Credit and
Cooperative Financing Administration (ACCFA), now Agricultural Credit Administration (ACA). As a
member of the petitioner's board of directors from 23 May 1958 to 26 May 1960, representing
FACOMAS in Eastern Visayas, respondent Concordio Tibe, Sr. drew and collected from petitioner
CCE cash advances amounting to P5,668.00; of this sum, respondent had, admittedly, already
liquidated P3,317.25, leaving the sum of P2,350.75 still to be accounted for. By admission of the
petitioner the sum of P2,350.75 has been further reduced to P2,133.45 as of 31 January 1963 on
account of partial payments made after suit was filed (Petitioner's Brief, page 17). Respondent Tibe
had also drawn several sums, amounting to P14,436.95, representing commutable per diems for
attending meetings of the Board of Directors in Manila, per diems and transportation expenses for
FACOMA visitations, representation expenses and cummutable discretionary funds. All these sums
were disbursed with the approval of general manager, treasurer and auditor of CCE.

The main issue is whether or not the board of directors of the CCE had the power and authority to
adopt various resolutions which appropriated the funds of the corporation for the above-enumerated
expenses for the members of the said board.

Section 8 of the By-Laws of petitioner federation provides:

The compensation, if any, and the per diems for attendance at meetings of the
members of the Board of Directors shall be determined by the members at any
annual meeting or special meeting of the Exchange called for the purpose.

In the annual meeting of the stockholders, held in Manila on 31 January 1956, it was resolved that:

The members of the Board of Directors attending the CCE board meetings be
entitled to actual transportation expenses plus the per diems of P30.00 and actual
expenses while waiting. <äre||anº•1àw>
 The resolutions of the Board of Directors under which respondent Tibe drew and
collected the sums of money sought to be recovered, and which petitioner claims are
invalid resolutions, are the following:

(a) Res. No. 55, May 5, 1957, authorizing:

1. Visitation of FACOMAS, in order to be official, must be with prior

sanction or authority of the board, except when it is urgent, in which
case Board confirmation is needed;

2. Per diem of P10.00 is authorized for visitations outside the place of

residence of the director concerned;

3. Actual transportation expenses allowed for all visitations

sanctioned or authorized by the board.

(b) Res. No. 52, July 8, 1958, appropriating P10,000.00 as discretionary fund of the
board of directors, disbursement from which will be made upon authorization of the
board chairman and for which no supporting receipts need be presented,

(c) Res. No. 49, July 10, 1958, granting monthly commutable allowance of P200.00
to each director starting from July 1, 1958, in lieu of the regular waiting time per
diems and transportation expenses while in the City of Manila attending Board and
committee meetings.

(d) Res. No. 57, July 24, 1958, amending Res. No. 49 by adding P20.00 to the
P200.00 as commutable transportation allowances while attending meetings in
Manila.

(e) Res. No. 35, June 11, 1959, increasing the monthly commutable allowance for
each director from P300.00 to P500.00 per month effective June 1, 1959.

(f) Res. No. 87, October 9, 1959, appropriating P10,000.00 as commutable

discretionary fund of the board of directors.

We agree with the petitioner that the questioned resolutions are contrary to the By-Laws of the
federation and, therefore, are not within the power of the board of directors to enact. The By-Laws, in
the aforequoted Section 8, explicitly reserved unto the stockholders the power to determine the
compensation of members of the board of directors, and the stockholders did restrict such
compensation to "actual transportation expenses plus the per diems of P30.00 and actual expenses
while waiting." Even without the express reservation of said power, the directors are not entitled to
compensation, for —

... The law is well-settled that directors of corporations presumptively serve without
compensation and in the absence of an express agreement or a resolution in relation
thereto, no claim can be asserted therefor (Sec. 2110, 5 Fletcher 375-376). Thus it
has been held that there can be no recovery of compensation, unless expressly
provided for, when a director serves as president or vice president, as secretary, as
treasurer or cashier, as a member of an executive committee, as chairman of a
building committee, or similar offices (Sec. 2112, 5, Fletcher 381-382). (Alvendia,
The Law of Private Corporations in the Philippines, pages 275-276)
 Thus, the directors, in assigning themselves additional duties, such as the visitation
of FACOMAS, acted within their power, but, by voting for themselves compensation
for such additional duties, they acted in excess of their authority, as expressed in the
By-Laws.

Nor may the directors rely on Section 28 of the Corporation Law, giving the exercise of corporate
powers and the control of the corporation's business and property to the board of directors, or on
Section 1 of Article VI of the By-Laws, empowering the board with "general supervision and control
of the affairs and property of the Exchange," as justifications for the adoption of the questioned
resolutions, because these provisions of the law and the By-Laws pertain to the board's general
powers merely and do not extend to giving the members of the said board the compensations stated
in the resolution, as the matter of providing for their compensations are specifically withheld from the
board of directors, and reserved to the stockholders.

It is vain for the respondent to rely on the good intentions of the board, that the board, for reasons of
expediency and economy", cancelled the per diems and actual transportation and waiting expenses
provided by the stockholders and substituted these by monthly commutable allowances of P200.00
(per Resolution No. 49) because the court is not concerned with the propriety or wisdom of the
measure of compensation already fixed by stockholders, but which the directors wanted to correct by
increase thereof (Government of P.I. vs. El Hogar Filipino, 50 Phil. 399).

As stated earlier, respondent Tibe was a director of the corporation from May, 1958 to May, 1960.
During his term, he collected the sums of money appropriated in and pursuant to the board
resolutions. Suit was filed against respondent on 22 October 1960. One of the grounds of the
appealed decision in finding for the respondent is that the petitioner's claim is barred by laches. We
do not agree. The board of directors, under the By-Laws of the corporation, had the control of the
affairs of the corporation and it is not to be expected that the board would sue its members to
recover the sums of money voted by and for themselves. We think that, under the circumstances,
where the corporation was virtually immobilized from commencing suit against its directors, laches
does not begin to attach against the corporation until the directors cease to be such (Cf. Bates Street
Shirt Co. v. Waite, 156 Atl. 293, 297, and cases cited therein). From May, 1960, when respondent
ceased to be a director, to October, 1960, when action was filed, is too short a time for the claim to
be considered stale.

The Court of Appeals plainly erred in not granting petitioner's claim on the cash advances. In the
course of the trial, respondent admitted liability therefor (T.s.n., 4 March 1965, pages 7-8). Having
admitted liability for the cash advances, respondent waived all defenses thereto, including laches,
and there was nothing left for the court to have done but to order payment. The appellate court
argued that it would not be easy for the respondent to produce the disbursement receipts covering
the cash advances. This is certainly no reason for disapproving petitioner's claim; those receipts are
no longer necessary, for the liability was admitted.

FOR THE FOREGOING REASONS, the decision under review is hereby reversed, and another one
entered ordering the respondent to pay unto the petitioner the sums of P1,730.35 and P14,436.95,
with legal interests on both sums from 22 October 1960 until fully paid. Costs against the
respondent.

Concepcion, C.J., Dizon, Makalintal, Zaldivar, Castro and Barredo, JJ., concur. Fernando and
Teehankee, JJ., concur in the result.

Villamor, J., took no part.