CENTRAL COOPERATIVE EXCHANGE, INC., PETITIONER, VS. CONCORDIO TIBE, SR., AND THE HONORABLE COURT OF APPEALS, RESPONDENTS.

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 commutable discretionary funds.  All these sums were disbursed with the
approval of the 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.”

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 of 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 afore-quoted 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
resolutions, 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 interest 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., in the result.

Villamor, J., took no part.