Western Institute of Technology, Inc. vs. Salas, 278 SCRA 216, G.R. No. 113032, August 21, 1997
WESTERN INSTITUTE OF TECHNOLOGY, INC., HOMERO L. VILLASIS, DIMAS ENRIQUEZ, PRESTON F. VILLASIS & REGINALD F. VILLASIS, petitioner,
vs.
RICARDO T. SALAS, SALVADOR T. SALAS, SOLEDAD SALAS-TUBILLEJA, ANTONIO S. SALAS, RICHARD S. SALAS & HON. JUDGE PORFIRIO PARIAN, respondents.
HERMOSISIMA, JR., J.:
Up for review on certiorari are: (1) the Decision dated September 6,
1993 and (2) the Order dated November 23, 1993 of Branch 33 of the Regional
Trial Court of Iloilo City in Criminal Cases Nos. 37097 and 37098 for estafa
and falsification of a public document, respectively. The judgment acquitted
the private respondents of both charges, but petitioners seek to hold them
civilly liable.
Private respondents Ricardo T. Salas, Salvador T.
Salas, Soledad Salas-Tubilleja, Antonio S. Salas, and Richard S. Salas,
belonging to the same family, are the majority and controlling members of the
Board of Trustees of Western Institute of Technology, Inc. (WIT, for short), a
stock corporation engaged in the operation, among others, of an educational
institution. According to petitioners, the minority stockholders of WIT,
sometime on June 1, 1986 in the principal office of WIT at La Paz, Iloilo City,
a Special Board Meeting was held. In attendance were other members of the Board
including one of the petitioners Reginald Villasis. Prior to aforesaid Special
Board Meeting, copies of notice thereof, dated May 24, 1986, were distributed
to all Board Members. The notice allegedly indicated that the meeting to be
held on June 1, 1986 included Item No. 6 which states:
Possible
implementation of Art. III, Sec. 6 of the Amended By-Laws of Western Institute
of Technology, Inc. on compensation of all officers of the corporation. 1
In said meeting, the Board of Trustees passed
Resolution No. 48, s. 1986, granting monthly compensation to the private
respondents as corporate officers retroactive June 1, 1985, viz.:
Resolution No. 48 s. 1986
On the motion of
Mr. Richard Salas (accused), duly seconded by Mrs. Soledad Tubilleja (accused),
it was unanimously resolved that:
The Officers of
the Corporation be granted monthly compensation for services rendered as
follows: Chairman — P9,000.00/month, Vice Chairman — P3,500.00/month, Corporate
Treasurer — P3,500.00/month and Corporate Secretary — P3,500.00/month,
retroactive June 1, 1985 and the ten per centum of the
net profits shall be distributed equally among the ten members of the Board of
Trustees. This shall amend and superceed (sic) any previous resolution.
There were no
other business.
The Chairman
declared the meeting adjourned at 5:11 P.M.
This is to certify
that the foregoing minutes of the regular meeting of the Board of Trustees of
Western Institute of Technology, Inc. held on March 30, 1986 is true and
correct to the best of my knowledge and belief.
(Sgd) ANTONIO S.
SALAS
Corporate Secretary 2
Corporate Secretary 2
A few years later, that is, on March 13, 1991,
petitioners Homero Villasis, Prestod Villasis, Reginald Villasis and Dimas
Enriquez filed an affidavit-complaint against private respondents before the
Office of the City Prosecutor of Iloilo, as a result of which two (2) separate
criminal informations, one for falsification of a public document under Article
171 of the Revised Penal Code and the other for estafa under Article 315, par.
1(b) of the RPC, were filed before Branch 33 of the Regional Trial Court of
Iloilo City. The charge for falsification of public document was anchored on
the private respondents' submission of WIT's income statement for the fiscal
year 1985-1986 with the Securities and Exchange Commission (SEC) reflecting
therein the disbursement of corporate funds for the compensation of private
respondents based on Resolution No. 4, series of 1986, making it appear that
the same was passed by the board on March 30, 1986, when in truth, the same was
actually passed on June 1, 1986, a date not covered by the corporation's fiscal
year 1985-1986 (beginning May 1, 1985 and ending April 30, 1986). The
Information for falsification of a public document states:
The undersigned
City Prosecutor accuses RICARDO T. SALAS, SALVADOR T. SALAS, SOLEDAD
SALAS-TUBILLEJA, ANTONIO S. SALAS and RICHARD S. SALAS (whose dates and places
of birth cannot be ascertained) of the crime of FALSIFICATION OF A PUBLIC
DOCUMENT, Art. 171 of the Revised Penal Code, committed as follows:
That on or about
the 10th day of June, 1986, in the City of Iloilo, Philippines and within the jurisdiction
of this Honorable Court, the above-named accused, being then the Chairman,
Vice-Chairman, Treasurer, Secretary, and Trustee (who later became Secretary),
respectively, of the board of trustees of the Western Institute of Technology,
Inc., a corporation duly organized and existing under the laws of the Republic
of the Philippines, conspiring and confederating together and mutually helping
one another, to better realized (sic)
their purpose, did then and there wilfully, unlawfully and criminally prepare
and execute and subsequently cause to be submitted to the Securities and
Exchange Commission an income statement of the corporation for the fiscal year
1985-1986, the same being required to be submitted every end of the corporation
fiscal year by the aforesaid Commission, and therefore, a public document,
including therein the disbursement of the retroactive compensation of accused
corporate officers in the amount of P186,470.70, by then and there making it
appear that the basis thereof Resolution No. 4, Series of 1986 was passed by
the board of trustees on March 30, 1986, a date covered by the corporation's
fiscal year 1985-1986 (i.e., from May 1, 1985 to April 30,
1986), when in truth and in fact, as said accused well knew, no such Resolution
No. 48, Series of 1986 was passed on March 30, 1986.
CONTRARY TO LAW.
Iloilo City,
Philippines, November 22, 1991. 3
The Information, on the other hand, for estafa reads:
The undersigned
City Prosecutor accuses RICARDO SALAS, SALVADOR T. SALAS, SOLEDAD
SALAS-TUBILLEJA, ANTONIO S. SALAS, RICHARD S. SALAS (whose dates and places of
birth cannot be ascertained) of the crime of ESTAFA, Art. 315, par. 1 (b) of
the Revised Penal Code, committed as follows:
That on or about
the 1st day of June, 1986, in the City of Iloilo, Philippines, and within the
jurisdiction of this Honorable Court, the above-named accused, being then the
Chairman, Vice-Chairman, Treasurer, Secretary, and Trustee (who later became
Secretary), respectively; of the Board of Trustees of Western Institute of
Technology, Inc., a corporation duly organized and existing under the laws of
the Republic of the Philippines, conspiring and confederating together and
mutually helping one another to better realize their purpose, did then and there
wilfully, unlawfully and feloniously defraud the said corporation (and its
stockholders) in the following manner, to wit: herein accused, knowing fully
well that they have no sufficient, lawful authority to disburse — let alone
violation of applicable laws and jurisprudence, disbursed the funds of the
corporation by effecting payment of their retroactive salaries in the amount of
P186,470.00 and subsequently paying themselves every 15th and 30th of the month
starting June 15, 1986 until the present, in the amount of P19,500.00 per
month, as if the same were their own, and when herein accused were informed of
the illegality of these disbursements by the minority stockholders by way of
objections made in an annual stockholders' meeting held on June 14, 1986 and
every year thereafter, they refused, and still refuse, to rectify the same to
the damage and prejudice of the corporation (and its stockholders) in the total
sum of P1,453,970.79 as of November 15, 1991.
CONTRARY TO LAW.
Iloilo City,
Philippines, November 22, 1991. 4
Thereafter, trial for the two criminal cases, docketed as Criminal Cases Nos. 37097 and 37098, was consolidated. After a full-blown hearing, Judge Porfirio Parian handed down a verdict of acquittal on both counts 5 dated September 6, 1993 without imposing any civil liability against the accused therein.
Petitioners filed a Motion for Reconsideration 6 of the civil aspect of the RTC Decision which was, however, denied in an Order dated November 23, 1993. 7
Hence, the instant petition.
Significantly on December 8, 1994, a Motion for Intervention, dated
December 2, 1994, was filed before this Court by Western Institute of
Technology, Inc., supposedly one of the petitioners herein, disowning its
inclusion in the petition and submitting that Atty. Tranquilino R. Gale,
counsel for the other petitioners, had no authority whatsoever to represent the
corporation in filing the petition. Intervenor likewise prayed for the
dismissal of the petition for being utterly without merit. The Motion for
Intervention was granted on January 16, 1995. 8
Petitioners would like us to hold private respondents civilly liable despite their acquittal in Criminal Cases Nos. 37097 and 37098. They base their claim on the alleged illegal issuance by private respondents of Resolution No. 48, series of 1986 ordering the disbursement of corporate funds in the amount of P186,470.70 representing retroactive compensation as of June 1, 1985 in favor of private respondents, board members of WIT, plus P1,453,970.79 for the subsequent collective salaries of private respondents every 15th and 30th of the month until the filing of the criminal complaints against them on March 1991. Petitioners maintain that this grant of compensation to private respondents is proscribed under Section 30 of the Corporation Code. Thus, private respondents are obliged to return these amounts to the corporation with interest.
We cannot sustain the petitioners. The pertinent section of the Corporation Code provides:
Sec. 30. Compensation of directors — In the absence of any provision in
the by-laws fixing their compensation, the directors shall not receive any
compensation, as such directors, except for
reasonable per diems: Provided, however, That any such
compensation (other than per diems) may be granted to directors by the vote of
the stockholders representing at least a majority of the outstanding capital
stock at a regular or special stockholders' meeting. In no case shall the total
yearly compensation of directors, as such directors, exceed ten (10%)
percent of the net income before income tax of the corporation during the
preceding year.
There is no argument that directors or trustees, as the case may be, are not entitled to salary or other compensation when they perform nothing more than the usual and ordinary duties of their office. This rule is founded upon a presumption that directors/trustees render service gratuitously, and that the return upon their shares adequately furnishes the motives for service, without compensation. 9 Under the foregoing section, there are only two (2) ways by which members of the board can be granted compensation apart from reasonable per diems: (1) when there is a provision in the by-laws fixing their compensation; and (2) when the stockholders representing a majority of the outstanding capital stock at a regular or special stockholders' meeting agree to give it to them.
This proscription, however, against granting compensation to
directors/trustees of a corporation is not a sweeping rule. Worthy of note is
the clear phraseology of Section 30 which states: ". . . [T]he directors
shall not receive any compensation, as such directors, . . . ." The
phrase as such directors is
not without significance for it delimits the scope of the prohibition to compensation
given to them for services performed purely in their capacity as directors or
trustees. The unambiguous implication is that members of the board may receive
compensation, in addition to reasonable per diems, when they render services to
the corporation in a capacity other than as directors/trustees.10 In the case at bench, Resolution No.
48, s. 1986 granted monthly compensation to private respondents not in their
capacity as members of the board, but rather as officers of the corporation,
more particularly as Chairman, Vice-Chairman, Treasurer and Secretary of
Western Institute of Technology. We quote once more Resolution No. 48, s. 1986
for easy reference, viz.:
Resolution No. 48 s. 1986
On the motion of
Mr. Richard Salas (accused), duly seconded by Mrs. Soledad Tubilleja (accused),
it was unanimously resolved that:
The Officers of
the Corporation be granted monthly compensation for services rendered as
follows: Chairman — P9,000.00/month, Vice Chairman — P3,500.00/month, Corporate
Treasurer — P3,500.00/month and Corporate Secretary — P3,500.00/month,
retroactive June 1, 1985 and the ten per centum of the
net profits shall be distributed equally among the ten members of the Board of
Trustees. This shall amend and superceed (sic) any previous resolution.
There were no
other business.
The Chairman
declared the meeting adjourned at 5:11 P.M.
This is to certify
that the foregoing minutes of the regular meeting of the Board of Trustees of
Western Institute of Technology, Inc. held on March 30, 1986 is true and
correct to the best of my knowledge and belief.
(Sgd) ANTONIO S.
SALAS
Corporate Secretary 11
Corporate Secretary 11
Clearly, therefore, the prohibition with respect to
granting compensation to corporate directors/trustees as
suchunder Section 30 is not violated in this particular case.
Consequently, the last sentence of Section 30 which provides:
. . . . . . . In
no case shall the total yearly compensation of directors, as
such directors, exceed ten (10%) percent of the net income before
income tax of the
corporation during the preceding year. (Emphasis ours]
does not likewise find application in this case since
the compensation is being given to private respondents in their capacity as
officers of WIT and not as board members.
Petitioners assert that the instant case is a
derivative suit brought by them as minority shareholders of WIT for and on
behalf of the corporation to annul Resolution No. 48, s. 1986 which is
prejudicial to the corporation.
We are unpersuaded. A derivative suit is an action brought by minority
shareholders in the name of the corporation to redress wrongs committed against
it, for which the directors refuse to sue. 12 It is a remedy designed by equity and
has been the principal defense of the minority shareholders against abuses by
the majority. 13 Here, however, the case is not a
derivative suit but is merely an appeal on the civil aspect of Criminal Cases
Nos. 37097 and 37098 filed with the RTC of Iloilo for estafa and falsification
of public document. Among the basic requirements for a derivative suit to
prosper is that the minority shareholder who is suing for and on behalf of the
corporation must allege in his complaint before the proper forum that he is
suing on a derivative cause of action on behalf of the corporation and all other
shareholders similarly situated who wish to join. 14 This is necessary to vest jurisdiction
upon the tribunal in line with the rule that it is the allegations in the
complaint that vests jurisdiction upon the court or quasi-judicial body
concerned over the subject matter and nature of the action.15 This was not complied with by the
petitioners either in their complaint before the court a
quo nor in the instant
petition which, in part, merely states that "this is a petition for review
on certiorari on pure
questions of law to set aside a portion of the RTC decision in Criminal Cases
Nos. 37097 and 37098" 16 since the trial court's judgment of
acquittal failed to impose any civil liability against the private respondents.
By no amount of equity considerations, if at all deserved, can a mere appeal on
the civil aspect of a criminal case be treated as a derivative suit.
Granting, for purposes of discussion, that this is a
derivative suit as insisted by petitioners, which it is not, the same is
outrightly dismissible for having been wrongfully filed in the regular court
devoid of any jurisdiction to entertain the complaint. The ease should have
been filed with the Securities and Exchange Commission (SEC) which exercises
original and exclusive jurisdiction over derivative suits, they being
intra-corporate disputes, per Section 5 (b) of P.D. No. 902-A:
In addition to the
regulatory and adjudicative functions of the Securities and Exchange Commission
over corporations, partnerships and other forms of associations registered with
it as expressly granted under existing laws and decrees, it shall have original
and exclusive jurisdiction to hear and decide cases involving:
xxx xxx xxx
b) Controversies arising out of intra-corporate or partnership relations,
between and among stockholders, members, or associates; between
any or all of them and the corporation, partnership or association of
which they are stockholders, members or associates, respectively; and between
such corporation, partnership or association and the State insofar as it
concerns their individual franchise or right to exist as such entity;
xxx xxx xxx
Once the case is decided by the SEC, the losing party may file a
petition for review before the Court of Appeals raising questions of fact, of
law, or mixed questions of fact and law. 17 It is only after the case has ran this
course, and not earlier, can it be brought to us via a petition for review on certiorari under Rule 45 raising only pure
questions of law. 18 Petitioners, in pleading that we treat
the instant petition as a derivative suit, are trying to short-circuit the
entire process which we cannot here sanction.
As an appeal on the civil aspect of Criminal Cases Nos.
37097 and 37098 for falsification of public document and estafa, which this
petition truly is, we have to deny the petition just the same. It will be well
to quote the respondent court's ratiocinations acquitting the private
respondents on both counts:
The prosecution
wants this Court to believe and agree that there is falsification of public
document because, as claimed by the prosecution, Resolution No. 48, Series of
1986 (Exh. "1-E-1") was not taken up and passed during the Regular
Meeting of the Board of Trustees of the Western Institute of Technology (WIT),
Inc. on March 30, 1986, but on June 1, 1986 special meeting of the same board
of trustees.
This Court is
reluctant to accept this claim of falsification. The prosecution omitted to
submit the complete minutes of the regular meeting of the Board of Trustees on
March 30, 1986. It only presented in evidence Exh. "C", which is page
5 or the last page of the said minutes. Had the complete minutes (Exh.
"1") consisting of five (5) pages, been submitted, it can be readily
seen and understood that Resolution No. 48, Series of 1986 (Exh.
"1-E-1") giving compensation to corporate officers, was indeed
included in Other Business, No. 6 of the Agenda, and was taken up and passed on
March 30, 1986. The mere fact of existence of Exh. "C" also proves
that it was passed on March 30, 1986 for Exh. "C" is part and parcel
of the whole minutes of the Board of Trustees Regular Meeting on March 30,
1986. No better and more credible proof can be considered other than the
Minutes (Exh. "1") itself of the Regular Meeting of the Board of
Trustees on March 30, 1986. The imputation that said Resolution No. 48 was
neither taken up nor passed on March 30, 1986 because the matter regarding
compensation was not specifically stated or written in the Agenda and
that the words "possible implementation of said Resolution No. 48, was expressly written in the Agenda for
the Special Meeting of the Board on June 1, 1986, is simply an implication.
This evidence by implication to the mind of the court cannot prevail over the
Minutes (Exh. "1") and cannot ripen into proof beyond reasonable
doubt which is demanded in all criminal prosecutions.
This Court finds
that under the Eleventh Article (Exh. "3-D-1") of the Articles of
Incorporation (Exh. "3-B") of the Panay Educational Institution,
Inc., now the Western Institute of Technology, Inc., the officers of the
corporation shall receive such compensation as the Board of Directors may
provide. These Articles of Incorporation was adopted on May 17, 1957 (Exh.
"3-E"). The Officers of the corporation and their corresponding
duties are enumerated and stated in Sections 1, 2, 3 and 4 of Art. III of the
Amended By-Laws of the Corporation (Exh. "4-A") which was adopted on
May 31, 1957. According to Sec. 6, Art. III of the same By-Laws, all officers
shall receive such compensation as may be fixed by the Board of Directors.
It is the
perception of this Court that the grant of compensation or salary to the
accused in their capacity as officers of the corporation, through Resolution
No. 48, enacted on March 30, 1986 by the Board of Trustees, is authorized by
both the Articles of Incorporation and the By-Laws of the corporation. To state
otherwise is to depart from the clear terms of the said articles and by-laws.
In their defense the accused have properly and rightly asserted that the grant
of salary is not for directors, but for their being officers of the corporation
who oversee the day to day activities and operations of the school.
xxx xxx xxx
. . .[O]n the
question of whether or not the accused can be held liable for estafa under Sec.
1 (b) of Art. 315 of the Revised Penal Code, it is perceived by this Court that
the receipt and the holding of the money by the accused as salary on basis of
the authority granted by the Articles and By-Laws of the corporation are not
tainted with abuse of confidence. The money they received belongs to them and
cannot be said to have been converted and/or misappropriated by them.
xxx xxx xxx 19
From the foregoing factual findings, which we find to
be amply substantiated by the records, it is evident that there is simply no
basis to hold the accused, private respondents herein, civilly liable. Section
2(b) of Rule 111 on the New Rules on Criminal Procedure provides:
Sec. 2.
Institution of separate civil action.
xxx xxx xxx
(b) Extinction of
the penal action does not carry with it extinction of the civil, unless the
extinction proceeds from a declaration in a final judgment that the fact from
which the civil might arise did not exist.
Likewise, the last paragraph of Section 2, Rule 120
reads:
Sec. 2. Form and
contents of judgment.
xxx xxx xxx
In case of
acquittal, unless there is a clear showing that the act
from which the civil liability might arise did not exist, the judgment
shall make a finding on the civil liability of the accused in favor of the
offended party.
The acquittal in Criminal Cases Nos. 37097 and 37098 is not merely based on reasonable doubt but rather on a finding that the accused-private respondents did not commit the criminal acts complained of. Thus, pursuant to the above rule and settled jurisprudence, any civil action ex delicto cannot prosper. Acquittal in a criminal action bars the civil action arising therefrom where the judgment of acquittal holds that the accused did not commit the criminal acts imputed to them. 20
WHEREFORE, the instant petition is hereby DENIED with costs against petitioners.
SO ORDERED.
Padilla, Bellosillo, Vitug
and Kapunan, JJ., concur.
Footnotes
1 Annex
"E"; Rollo, p. 92.
2 Annex
"F"; Rollo, p. 93.
3 Annex "V"; Rollo,
p. 237.
4 Annex
"U"; Rollo, p. 233.
5 Decision, p. 11; Rollo,
p. 64.
6 Annex
"B"; Rollo, p. 66.
7 Rollo, p. 87.
8 Rollo, p. 403.
9 Agbayani, Aguedo
F., Commentaries and Jurisprudence on the Commercial Laws of the Philippines,
Vol. 3, 1988 ed., p. 259.
10 Ibid.
11 Annex
"F"; Rollo, p. 93.
12 Agbayani, supra.,
p. 540.
13 Commart
(Phils.) Inc. v. Securities & Exchange Commission, 198 SCRA 73, 80 [1991].
14 Agbayani, supra.,
p. 543.
15 See Sarmiento
v. Court of Appeals, 250 SCRA 108 [1995]; De leon v. Court of Appeals, 245 SCRA
166 [1995]; Alleje v. Court of Appeals, 240 SCRA 495 [1995].
16 Petition, p. 6; Rollo,
p. 13.17 Sections 1 & 3, Circular No. 1-91; Sections
1 & 3, Revised Administrative Circular No. 1-95; Now incorporated in
Sections 1 & 3, Rule 43 of the 1997 Rules of Civil Procedure.
18 Section I, Rule
45.
19 Decision, pp.
9-11; Rollo, pp. 62-64.
20 Regalado,
Florenz D., Remedial Law Compendium, Vol. II, 1995 ed., p. 287, citing Tan v. Standard Vacuum Oil Co., 91
Phil. 672.
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