216 Supreme Court Reports Annotated: Western Institute of Technology, Inc. vs. Salas

5/5/2017 SUPREME COURT REPORTS ANNOTATED VOLUME 278
216 SUPREME COURT REPORTS ANNOTATED

Western Institute of Technology, Inc. vs. Salas
*
G.R. No. 113032. August 21, 1997.
WESTERN INSTITUTE OF TECHNOLOGY, INC.,

HOMERO L. VILLASIS, DIMAS ENRIQUEZ, PRESTON
F. VILLASIS & REGINALD F. VILLASIS, petitioners, vs.
RICARDO T. SALAS, SALVADOR T. SALAS, SOLEDAD
SALASTUBILLEJA, ANTONIO S. SALAS, RICHARD S.
SALAS & HON. JUDGE PORFIRIO PARIAN, respondents.
Corporation Law; Two ways by which members of the board

can be granted compensation apart from reasonable per diems.—
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. 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 bylaws 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.
Same; 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.—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: “x x x
[T]he directors shall not receive any compensation, as such
directors, x x x.” 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
http://central.com.ph/sfsreader/session/0000015bd8e9e86c0a3cd12f003600fb002c009e/t/?o=False 1/16
corporation in a capacity other than as directors/trustees. In the

case at bench, Resolution No. 48, s. 1986 granted monthly
compensation to private respondents not in
_________________
* FIRST DIVISION.
217
VOL. 278, AUGUST 21, 1997 217
Western Institute of Technology vs. Salas
their capacity as members of the board, but rather as officers of

the corporation, more particularly as Chairman, ViceChairman,
Treasurer and Secretary of Western Institute of Technology.
Same; Remedial Law; Action; Meaning of Derivative Suit; For

a derivative suit to prosper, it is required 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.—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. It is a remedy designed by
equity and has been the principal defense of the minority
shareholders against abuses by the majority. 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. 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 quasijudicial
body concerned over the subject matter and nature of the action.
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” 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.
Criminal Law; Civil Liability; 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.—The acquittal in Criminal Cases Nos. 37097
and 37098 is not merely based on reasonable doubt but rather on
a finding that the accusedprivate respondents did not commit the
criminal acts complained of. Thus, pursuant to the above rule and
settled juris
218
prudence, 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.
PETITION for review on certiorari of a decision of the

Court of Appeals.
The facts are stated in the opinion of the Court.

Quisumbing, Torres & Evangelista for Western
Institute of Technology.
Tranquilino R. Gale for petitioners.
Teodulfo L.C. Castro for private 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 SalasTubilleja, 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:
219
VOL. 278, AUGUST 21, 1997 219

“Possible implementation of Art. III, Sec. 6 of the Amended

ByLaws of Western Institute of Technology,
1
Inc. on compensation
of all officers of the corporation.”
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 percentum 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. SALAS2

Corporate Secretary”
A few years later, that is, on March 13, 1991, petitioners

Homero Villasis, Preston Villasis, Reginald Villasis and
Dimas Enriquez filed an affidavitcomplaint 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
_____________
1 Annex “E”; Rollo, p. 92.

2 Annex “F”; Rollo, p. 93.
220

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 19851986 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 19851986 (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 SALASTUBILLEJA,
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
abovenamed accused, being then the Chairman, ViceChairman,
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 19851986, 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 cor
221
VOL. 278, AUGUST 21, 1997 221

poration’s fiscal year 19851986 (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. 3
Iloilo City, Philippines, November 22, 1991.” [Italics ours].
The Information, on the other hand, for estafa reads:
“The undersigned City Prosecutor accuses RICARDO SALAS,

SALVADOR T. SALAS, SOLEDAD SALASTUBILLEJA,
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
abovenamed accused, being then the Chairman, ViceChairman,
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 violate 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.
_______________
3 Annex “V”; Rollo, p. 237.
222

CONTRARY TO LAW. 4
Iloilo City, Philippines, November 22, 1991.” [Italics ours]
Thereafter, trial for the two criminal cases, docketed as

Criminal Cases Nos. 37097 and 37098, was consolidated.
After a fullblown hearing, Judge Porfirio Parian 5 handed
down a verdict of acquittal on both counts dated
September 6, 1993 without imposing any civil liability
against the accused therein. 6
Petitioners filed a Motion for Reconsideration of the
civil aspect of the RTC Decision which was, 7
however,
denied in an Order dated November 23, 1993.
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. The8 Motion for
Intervention was granted on January 16, 1995.
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
________________
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.
223
VOL. 278, AUGUST 21, 1997 223

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 bylaws 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.” [Italics ours]
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
9
the motives for service, without
compensation. 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 bylaws 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: “x x x [T]he directors shall not
receive any compensa
_________________
9 Agbayani, Aguedo F., Commentaries and Jurisprudence on the

Commercial Laws of the Philippines, Vol. 3, 1988 ed., p. 259.
224

tion, as such directors, x x x.” 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 10corporation in a
capacity other than as directors/trustees. 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 percentum 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) ANTONIO11
S. SALAS
Corporate Secretary” [Italics ours]
_________________
10 Ibid.
11 Annex “F”; Rollo, p. 93.
225
VOL. 278, AUGUST 21, 1997 225

Clearly, therefore, the prohibition with respect to granting

compensation to corporate directors/trustees as such under
Section 30 is not violated in this particular case.
Consequently, the last sentence of Section 30 which
provides:
“x x x x x x. 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.” [Italics 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
12
against it, for
which the directors refuse to sue. It is a remedy designed
by equity and has been the principal defense of the 13
minority shareholders against abuses by the majority.
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 all14 other shareholders
similarly situated who wish to join. 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
___________________
12 Agbayani, supra., p. 540.

13 Commart (Phils.) Inc. v. Securities & Exchange Commission, 198
SCRA 73, 80 [1991].
14 Agbayani, supra., p. 543.
226

or quasijudicial body concerned

15
over the subject matter
and nature of the action. 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
16
RTC decision
in Criminal Cases Nos. 37097 and 37098” 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 case 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. 902A:
“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:
x x x x x x x x x
b) Controversies arising out of intracorporate 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;
x x x x x x x x x.” [Italics ours]
___________________
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.
227
VOL. 278, AUGUST 21, 1997 227

Once the case is decided by the SEC, the losing party may
file a petition for review before the Court of Appeals raising
questions
17
of fact, of law, or mixed questions of fact and
law. 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
18
under Rule 45 raising only pure questions of
law. Petitioners, in pleading that we treat the instant
petition as a derivative suit, are trying to shortcircuit 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. ‘1E1’) 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. ‘1E1’)
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
_________________
17 Sections 1 & 3, Circular No. 191; Sections 1 & 3, Revised Administrative

Circular No. 195; Now incorporated in Sections 1 & 3, Rule 43 of the 1997 Rules of
Civil Procedure.
18 Section 1, Rule 45.
228

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. ‘3D1’)
of the Articles of Incorporation (Exh. ‘3B’) 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 ByLaws of the Corporation (Exh. ‘4A’) which was
adopted on May 31, 1957. According to Sec. 6, Art. III of the same
ByLaws, 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 ByLaws of the corporation. To
state otherwise is to depart from the clear terms of the said
articles and bylaws. 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.
x x x x x x x x x
x x x [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 ByLaws 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.
229
VOL. 278, AUGUST 21, 1997 229

19
x x x x x x x x x.” [Italics ours]
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.
x x x x x x x x x
(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.”
[Italics ours]
Likewise, the last paragraph of Section 2, Rule 120 reads:
“SEC. 2. Form and contents of judgment.

x x x x x x x x x
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.” [Italics ours]
The acquittal in Criminal Cases Nos. 37097 and 37098 is

not merely based on reasonable doubt but rather on a
finding that the accusedprivate 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 accused20
did not commit the
criminal acts imputed to them.
WHEREFORE, the instant petition is hereby DENIED
with costs against petitioners.
_________________
19 Decision, pp.911; Rollo, pp. 6264.

20 Regalado, Florenz D., Remedial Law Compendium, Vol. II, 1995 ed.,
p. 287, citing Tan v. Standard Vacuum Oil Co., 91 Phil. 672.
230

People vs. Chavez
SO ORDERED.
Padilla (Chairman), Bellosillo, Vitug and Kapunan,

JJ., concur.
Petition denied.
Note.—Providing gratuity pay for its employees is one

of the express powers of the corporation under the
Corporation Code. (Lopez Realty Inc. vs. Fontecha, 247
SCRA 183 [1995])
——o0o——
© Copyright 2017 Central Book Supply, Inc. All rights reserved.

216 Supreme Court Reports Annotated: Western Institute of Technology, Inc. vs. Salas

Uploaded by

Copyright:

Available Formats

216 Supreme Court Reports Annotated: Western Institute of Technology, Inc. vs. Salas

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

216 Supreme Court Reports Annotated: Western Institute of Technology, Inc. vs. Salas

Uploaded by

Copyright:

Available Formats

5/5/2017 SUPREME COURT REPORTS ANNOTATED VOLUME 278

216 SUPREME COURT REPORTS ANNOTATED

WESTERN INSTITUTE OF TECHNOLOGY, INC.,

Corporation Law; Two ways by which members of the board

Same; Members of the board may receive compensation, in

corporation in a capacity other than as directors/trustees. In the

VOL. 278, AUGUST 21, 1997 217

Western Institute of Technology vs. Salas

their capacity as members of the board, but rather as officers of

Same; Remedial Law; Action; Meaning of Derivative Suit; For

Criminal Law; Civil Liability; Acquittal in a criminal action

218 SUPREME COURT REPORTS ANNOTATED

Western Institute of Technology, Inc. vs. Salas

prudence, any civil action ex delicto cannot prosper. Acquittal in a

PETITION for review on certiorari of a decision of the

The facts are stated in the opinion of the Court.

HERMOSISIMA, JR., J.:

Up for review on certiorari are: (1) the Decision dated

controlling members of the Board of Trustees of Western

VOL. 278, AUGUST 21, 1997 219

“Possible implementation of Art. III, Sec. 6 of the Amended

In said meeting, the Board of Trustees passed Resolution

“Resolution No. 48 s. 1986

On the motion of Mr. Richard Salas (accused), duly seconded by

‘The Officers of the Corporation be granted monthly compensation for

There were no other business.

(Sgd) ANTONIO S. SALAS2

A few years later, that is, on March 13, 1991, petitioners

1 Annex “E”; Rollo, p. 92.

220 SUPREME COURT REPORTS ANNOTATED

“The undersigned City Prosecutor accuses RICARDO T. SALAS,

Technology, Inc., a corporation duly organized and existing under the

VOL. 278, AUGUST 21, 1997 221

The Information, on the other hand, for estafa reads:

“The undersigned City Prosecutor accuses RICARDO SALAS,

3 Annex “V”; Rollo, p. 237.

222 SUPREME COURT REPORTS ANNOTATED

Thereafter, trial for the two criminal cases, docketed as

P1,453,970.79 for the subsequent collective salaries of

4 Annex “U”; Rollo, p. 233.

VOL. 278, AUGUST 21, 1997 223

the month until the filing of the criminal complaints

“Sec. 30. Compensation of directors.—In the absence of any

There is no argument that directors or trustees, as the case

compensation; and (2) when the stockholders representing

9 Agbayani, Aguedo F., Commentaries and Jurisprudence on the

224 SUPREME COURT REPORTS ANNOTATED

tion, as such directors, x x x.” The phrase as such directors

“Resolution No. 48 s. 1986

On the motion of Mr. Richard Salas (accused), duly seconded by

‘The Officers of the Corporation be granted monthly compensation for

There were no other business.

VOL. 278, AUGUST 21, 1997 225

Clearly, therefore, the prohibition with respect to granting

“x x x x x x. In no case shall the total yearly compensation of

does not likewise find application in this case since the

minority shareholder who is suing for and on behalf of the

12 Agbayani, supra., p. 540.

226 SUPREME COURT REPORTS ANNOTATED

or quasijudicial body concerned

17 Sections 1 & 3, Circular No. 191; Sections 1 & 3, Revised Administrative

ByLaws, all officers shall receive such compensation as may be

19 Decision, pp.911; Rollo, pp. 6264.