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CENTRAL COOPERATIVE V.

TIBE
J. Reyes, JBL; June 30, 1970

Facts:

Petitioner CCE is the national federation of farmers' cooperative marketing associations


(FACOMAS). Its single majority stockholder is the Agricultural Credit Administration (ACA). In the
annual meeting of stockholders on January 1956, several resolutions were passed authorizing
Concordio Tibe, Sr., a member of CCE’s Board, to obtain several amounts from CCE. Such amounts
were with the approval of the Manager, Treasurer, and Auditor:

 cash advances amounting to P5,668.00


 sum of P14,436.95,representing commutable per diems for attending meetings of the Board in
Manila
 transportation expenses for FACOMA visitations
 representation expenses
 commutable discretionary funds.

Petitioner CCE now sues Tibe for the refund of said amounts. It maintains that the BOD had no
power to issue said Resolutions.

Tibe et. al. argue for the validity of the resolutions, stating that these are manifestations of the good
intentions of the board (e.g. economic considerations). The suit was also barred by laches.

During the course of the suit, Tibe admitted liability and made partial payments for the refund of said
amounts.

Issue:

(1) WON the BOD had the power and authority to adopt various resolutions appropriating
corporate funds for the expenses of a Member of the Board? NO.
(2) WON the suit is barred by laches? NO.

Held:

(1) 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.

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.

Under Sec. 8 of the Corporation Code, it explicitly reserved unto the stockholders the
power to determine the compensation of members of the BOD. 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 therefore.
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.

Moreover, what the stockholders authorized were compensations to "actual transportation


expenses plus the per diems of P30.00 and actual expenses while waiting” only.

The BOD also cannot 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 BOD), 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) because these related only to the BOD’s
general powers. Granting of compensations is a matter specifically withheld from the board of
directors under its By-Laws, and reserved to the stockholders.

(2) There could be no laches considering that Tibe served as director of CCE from May 1958 to May
1960, and suit was filed on October 1960, or merely five months after.

The BOD, having control of the affairs of the corporation, is not expected to sue its members to
recover sums of money voted by and for themselves. Under these 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),

Moreover, by admitting liability and making payments, Tibe waived all defenses thereto, including
laches, and there was nothing left for the court to have done but to order payment.