corpo digest 11

8/9/2019 Corpo Digest 11

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Complaints91" transactions and agreements entered into = *7 supported by any bond and+orstockholders? resolution

@" se)eral cash ad)ances be made = without any board or stockholders?resolution, nor any document or contract which would legally authorize suchtransactions"

/he .:C dismissed the deri)ati)e suit" 4itong appealed to .:C en banc, whichre)ersed the decisionThe C ho$ever reversed the said decision! on the round that petitioner iscould not file the instant action! not bein an o$ners of any share of stoc"in the Company.

Issue:%hether petitioner is an owner of shares of stock in the Company to allow her to

file a deri)ati)e suit"

Held: )o.6iton 3 %' bona fide stoc"holder of the Company at the time the actscomplained of $ere carried out by the postols. true party in interest was actually J2E2 * from whom petitioner ac3uired hershares of stock

2lthough her buying of the shares were recorded in the .tock and /ransfer4ook of the corporation = this provision is not conclusive even aainst thecorporation but are prima facie evidence only.

the pro)ision en)isions a formal certificate of stock which can be issued onlyupon compliance with certain re3uisites9

1" certificates must be signed by the president or )ice president, countersigned bythe secretary or assistant secretary, and sealed with the seal of the corporation

FF 2 mere typewritten statement ad)ising a stockholder of the extent of hisownership in a corporation without3ualification and+or authentication cannot beconsidered as a formal certificate of stock@" deli)ery of the certificate

B" the par )alue, as to par )alue shares, or the full subscription as to no par )alueshares, must be first fully paid

G" the original certificate must be surrendered where the person re3uesting theissuance of a certificate is a transferee from a stockholder

0<(E 3 stoc" issued $ithout authority and in violation of the la$ is voidand confers no rihts on the person to $hom it is issued and sub>ects himto no liabilities

Supplementary Notes: %here there is an inherent lack of power in the corporation to issue the stock,neither the corporation nor the person to whom the stock is issued is estopped to3uestion its )alidity since an estoppel cannot operate to create stock which underthe law cannot ha)e existence"

Certificate of stock itself, once issued, is a continuing affirmation orrepresentation that the stock described therein is )alid and genuine and is at leastprima facie e)idence that it was legally issued in the absence of e)idence to thecontrary

40: 6oo"s and records of a corporation 3 best evidence of corporateacts and proceedins

Exception: PAROL EVIDENCE may REFUTE the ecods

San Miuel Corp. v. ?han

'eptunia Corporation bought the shares BBE .MC shares = made downpaymentthe BBE .MC shares were se3uestered by the PC;; = ;round9FF that the stock belonged to Couangco and that the sale thereof )iolated :&1and :& @"orbade .MC secretary = to register any transfer or encumbrance of any of thestock without the PC;;?s prior written appro)al"PC44 then directed SMC to issue ,2ualifyin shares- to individuals 3includin 1e los neles.MC decided to assume the loans incurred by 'eptunia for the downpayment 2t a meeting, de los 2ngeles *one of the 3uestioned the said resolution">e los 2ngeles * PC;; representati)es in the .MC board = filed a deri)ati)e

suit in behalf of .MC= 3uestioned the resolutionEhan mo)ed to dismiss the case = ground9FF de los 2ngeles has no legal standing to bring a minority deri)ati)e suit"

Issue:%&' de los 2ngeles has personality to bring suit in behalf of the corporation(

Held: YESThere is no la$ that re2uires for a stoc"holder! to be considered as 2ualifiedto brin a derivative suit! must hold substantial or sinificant bloc" of stoc".The bona fide o$nership by a stoc"holder of stoc" in his o$n riht sufficesto invest him $ith standin to brin a derivative action for the benefit of thecorporation. /he number of his shares is immaterial since he is not suing in his own behalf

for the protection or )indication of his own particular right

/he theory that since de los 2ngles? @H shares *owned by him since 1IIrepresent only H"HHHH1GGK of the total number of outstanding shares then hecannot be deemed to fairly represent the interest of the minority stockholderscannot be sustained"Supplementary Notes: /he re3uisites for a deri)ati)e suit are9

1" the party bringing suit should be a shareholder as of the time of the act ortransaction complained of, the number of his shares not being materialL

@" the has tried to exhaust intraAcorporate remedies, i"e", has made a demand onthe board of directors for the appropriate relief but the latter has failed or refusedto heed to his pleaL and

B" the cause of action actually de)ol)es on the corporation, the wrongdoing orharm ha)ing been, or being caused to the corporation and not to the particularstockholder bringing the suit"

Pascual v. *ro5co

Pascual became a stockholder of 4anco :spanolAilipinoPascual filed this instant petition = alleged the illegal acts of the defendants andtheir immediate predecessors in office *without knowledge and consent of thestockholders= deducted their respective compensation from the ross income instead ofrom the net profits of the ban"

Issue:%hether or not Pascual ha)e a standing in the first cause of action"%hether or not Pascual can maintain a suit against the defendants? immediatepredecessor"%hether or not Pascual can institue the present case e)en without theauthorization by the 4oard of >irectors"

Held:8. YES. Pascual has an interest and could 3uestion the legality of the defendants?

right to take such salary = the act $ould affect his share in the dividends.

9. )*. Pascual has no right to maintain this second cause of action 3 he $as notin>ured or affected in any manner by the transactions since he $as not yet astoc"holder at that time.

5e ought to take things as he found them when he )oluntarily ac3uired his tenshares"

0f he was defrauded in the purchase of these shares he should sue his )endor"

@. YES. the uilty party themselves controlled the directors and also ama>ority of the stoc"! the minority is $ithout remedy $hen they are beindefrauded of their rihts.

Evanelista vs. Santos

6afael .antos = the president, manager, and treasurer of 8itali= negligently allowed its lumber concession to lapse causing the complete ruin ofthe corporation and total depreciation of its stocks:)angelista et al = minority stockholders of 8itali $umber Company= prays for udgment re3uiring .antos91" to render an account of his administration of the corporate affairs and assets

@" to pay )alue of their respecti)e participation in said assets on the basis of the)alue of the stocks held by each of them

ISS<E:%&' the plaintiffAstockholders has the right to bring suit in their benefit(HE(1: )*.1" /he inury complained of is thus primarily to the corporation = so that the suitfor the damages claimed should be by the corporation rather than by thestockholders"

9. derivative suit is brouht by a stoc"holder as the nominal party plaintiffor the benefit of the corporation! $hich is the real property in interest.

*7 >eri)ati)e suit because = brought the action not for the benefit of thecorporation but for their own benefit

ask that .antos to pay for the )alue of their respecti)e participation in the

corporate assets on the basis of their respecti)e holdings 0ule 3 T0<ST &<)1 1*CT0I)E PP(IES

complaint shows no cause of action in their fa)or

Supplementary Notes:<'o shall corporation shall make or declare any stock or bond di)idend or anydi)idend whatsoe)er from the profits arising from its business, or di)ide ordistribute its capital stock or property other than actual profits among its membersor stockholders until after the payment of its debts and the termination of itsexistence by limitation or lawful dissolution"< 777 1*ES )*T PP(Y6-$: = /he stockholders may not directly claim those damages for themsel)esfor that would result in the appropriation by and the distribution among them ofpart of the corporate assets before the dissolution of the corporation and theli3uidation of its debts and liabilities something which cannot be legally done"

0epublic 6an" v. Cuaderno



.oriano, Jr" while representing other corporations entered into managementcontracts with .an Miguel

B0*)4 3 2uestioned amendment ave the 6oard itself the preroativeof determinin $hether they or other persons are enaed in competitive or antaonistic business

portion of the amended byAlaws which states that in determining whether or nota person is engaged in competiti)e business, the 4oard may consider suchfactors as business and family relationship, is unreasonable and oppressi)e and,therefore, )oid

G" the corporation has been in)esting corporate funds in other corporations andbusinesses outside of the primary purpose clause of the corporation

0ssue91" %&' the corporation has the power to pro)ide for the *additional 3ualifications

of its directors(@" %&' the dis3ualification of a competitor from being elected to the 4oard of>irectors is a reasonable exercise of corporate authority(

B" %&' the .:C gra)ely abused its discretion in denying ;okongweis re3uest for an examination of the records of .an Miguel 0nternational, 0nc", a fully ownedsubsidiary of .an Miguel Corporation(

G" %&' the .:C gra)ely abused its discretion in allowing the stockholders of .anMiguel Corporation to ratify the in)estment of corporate funds in a foreigncorporation(

Held:1" YES. corporation may prescribe in its by7la$s #the 2ualifications! dutiesand compensation of directors! officers and employees.# AA Corporation $aw

6-$: = 2ny person <who buys stock in a corporation does so $ith the"no$lede that its affairs are dominated by a ma>ority of the stoc"holdersand that he impliedly contracts that the $ill of the ma>ority shall overn in allmatters within the limits of the act of incorporation and lawfully enacted byAlawsand not forbidden by law"<

.5 = parted with his personal right or pri)ilege to regulate his in)estment to thewill of the maority of his fellow incorporators the owners of the maority of the subscribed capital stock may amend or repealany byAlaw or adopt new byAlaws

;okongwei has '& 8:./:> 60;5/ to be elected director = 4yAlaws is.-4J:C/ /& C52';:

@" YES. #they occupy a fiduciary relation! and in this sense the relation isone of trust.#

>irectors = agents entrusted with the management of the corporation for thecollecti)e benefit of the stockholders

5e who is in such fiduciary position cannot ser)e himself first and his cestuissecond"

doctrine of "corporate opportunity" = the fiduciary standards could notbe upheld where the fiduciary was acting for two entities with competinginterests.

FF based fundamentally on the unfairness officer or director taking ad)antage ofan opportunity for his own personal profit when the interest of the corporation

ustly calls for protection 2mendment = ob)iously to pre)ent the creation of an opportunity for an officerof a competing corporation from taking ad)antage of the information which heac3uires as director to promote his indi)idual or corporate interests

B" )*. This riht is predicated upon the necessity of self7protection.

where the right is granted by statute to the stockholder = it is gi)en to him withrespect to his interest as a stockholder

has to be proper and la$ful in character and not inimical to the interest of the corporation

G" )*. If the investment is made in pursuance of the corporate purpose! itdoes not need the approval of the stoc"holders.

the purchase of beer manufacturing facilities by .MC was an in)estment in thesame business stated as its main purpose in its 2rticles of 0ncorporation

Purpose = manufacture and market beer

2ssuming arguendo 'o authority = there is no 2uestion that a corporation!li"e an individual! may ratify and thereby render bindin upon it theoriinally unauthori5ed acts of its officers or other aents.

/his is true because the 3uestioned in)estment is neither contrary to law,morals, public order or public policy"

The mere fact that the corporation submitted the assailed investment tothe stockholders for ratification at the annual meeting cannot be construedas an admission that the corporation had committed an ultra vires act

1etective and protective bureau vs Cloribel

doctrine 9 6-$: is absolute e)ery d needs to be a .5 2lberto was Managing director from *1#@A1G&n Jan 1B at a .5 meeting , alberto was remo)ed by .5 and elected someoneelse *delarosa>elarosa is not .5 2lberto illegally seized and took conrol of all the assets and books of C ,concealed them illegally and did not allow any member of C to examine it" 2lberto refused to )acate office

C filed a complaint and asked for inunction for alberto to stop exercising hisformer functionsC0 granted inunction but lifted it af ter filing counterbond 2$4:6/& refused to )acate because >elarosa is not a .5"

Issue:%&' being is .5 is needed(%&' he can be a M>(%&' alberto may be compelled to )acate(

0ulin:yes it is needed /here is in the record no showing that de la 6osa owned ashareof stock in the C"0f he did not own any share of stock,certainly he could not be a1 pursuant to the mandatory provision of C(6uling9 'o he may not, 0f he could not be a >, then he could also not be a

M>pursuant to the 4A$sN/he manager shall be elected by the 4&> from among itsmembers"<'o he may not, 0f the M>Aelect was not 3ualified to becomeM>,respondent2lberto could not be compelledto )acate his office and cede thesameto the M>Aelect because the4A$s pro)ide that9<>s shall ser)e until the election and 3ualification of their duly 3ualifiedsuccessor"O

40CE CH0ISTI) HS /S C;race is an educ facility in C, grace )illage assoc inc is a homeownersassociation" 0n an annual .5 meeting an amendment was made in the by lawsstating that grace Christian 5. representati)e is a permanent director

Issue:%on schools representati)e should be mandatory elected to ha)e a sit in 4&> ofgrace home owners association(

0ulin:

)o ! corporation byla$s is invalid and it canAt be $aived even throuhconstant practice and lapse of time! )o reason to ive a seat to the board0t is actually QQ@! and @ of the Corporation $aw R Q 9@ of the present la$L notQ@ of the present law or Q@ of the former one R which re2uire members ofthe boards of directors of corporations to be elected. The board of directorsof corporations must be elected from amon the stoc"holders or members./here may be corporations in which there are unelected members in the boardbut it is clear that in the examples cited by the school, the unelected members sitas ex officio members, i"e", by )irtue of and for as long as they hold a particularoffice" 4ut in the case of the school itself, there is no reason at all for itsrepresentati)e to be gi)en a seat in the board" 'or does the school claim a right tosuch seat by )irtue of an office held" 0n fact it was not gi)en such seat in thebeginning" 0t was only in 1I# that a proposed amendment to the byAlaws soughtto gi)e it one" Since the provision in 2uestion is contrary to la$! the fact thatfor 8 years it has not been 2uestioned or challened but! on the contrary!appears to have been implemented by the members of the associationcannot forestall a later challene to its validity" 'either can it attain )aliditythrough ac3uiescence because, if it is contrary to law, it is beyond the power ofthe members of the association to wai)e its in)alidity" or that matter the

members of the association may ha)e formally adopted the pro)ision in 3uestion,but their action would be of no a)ail because no pro)ision of the byAlaws can beadopted if it is contrary to law" 0t is probable that, in allowing the schoolsrepresentati)e to sit on the board, the members of the association were not awarethat this was contrary to law" 0t should be noted that they did not actuallyimplement the pro)ision in 3uestion except perhaps insofar as it increased thenumber of directors from 11 to 1#, but certainly not the allowance of the schoolsrepresentati)e as an unelected member of the board of directors" 0t is moreaccurate to say that the members merely tolerated the schools representati)eand tolerance cannot be considered ratification" 'or can the school claim a )estedright to sit in the board on the basis of <practice"< Practice, no matter how longcontinued, cannot gi)e rise to any )ested right if it is contrary to law" :)en lesstenable is the schools claim that its right is <coterminus with the existence of theassociation"<

P*)CE %6*1' et al vs Encarnacion %larest SH'in 1G a meeting was conducted for the 8&$-'/26 >0..&$-/0&' ofdaguhoy enterprises/o this end, a NPetition for 8oluntary >issolutionO was drafted and sent to and

signed by Petitioner Ponce*4&> Chairman0nstead of filing the Petition, 6espondent .5 ;apol chaned his mind and filed aComplaint in C0 Manila to compelPetitioners Ponce et al" to *inter alia render an accounting of the corporate fundsand assets"B Jan #@A6espondent ;apol filed a Petition praying for an &rder directing him to call a.5?s Meeting and to preside in it *in accordance w+then .ec" @ of C$# JanACourt *@ days after Petition filed9 granted &rder as prayed for *w+o notice toPetitioners Ponce et al" and other 4&> members@I ebAPetitioners Ponce et al" only knew of the Court &rder when a 4ankrefused to recognize the new 4&>s elected and returned the check drawn upon itby new 4&>s

ISS<E:%&' the court may issue the said &rder%&' they ha)e right to continue as >irectorts(



5:$> 19:., the Court can issue the &rderS 6espondent Court was satisfied thatthere was a showing of Ngood causeO for authorizing 6espondent ;apol to call a.5?s Meeting to elect the 4&>s as re3uired and pro)ided for in the 4A$because the 4&> Chairman called upon to do so had failed, neglected or refusedto perform his duty"

5:$> @9Petitioners ha)e no right to continue as >irectors of the C unless reAelected by the.5s in a meeting called for that purpose e)ery e)en year"/hey had no right to a holdAo)er brought about by the failure to perform the dutyincumbent upon one of them"

0*S %member of votin trust' vs 1ela 0osa

doctrine: The law contemplates and intends that there shall be one set ofdirectors at a time and that new directors shall be elected only as vacanciesoccur in the directorate by death resignation removal or otherwise.4inalbagan estate inc" formed a )oting trust composed of B members.5 assign shares to trustees of company, represent maority of )oting shares *not@+Bthe annual meeting was conducted mr heilborn *)oting trust representati)e by)irtue of controlling the maority of the shares was able to nominate and elect a4&>s to his own liking, without opposition from the minority" 2t present time roxas et al" Constitute membership of )oting trust 2lthough the 4&>s of 40'2$42;2' :./2/:, 0'C" were elected by therepresentati)e of the )oting trust, the present trustees are apparently desirous ofoustin said officers! $Do a$aitin the termination of their official term atthe e+piration of one year from the date of their election.Members of the )oting trust caused the secretary to issue a special meeting forthe :lection of 4&> and amendment of 4ylawscoruna *member of board and ledesma *.5 filed for inunctioncfi granted

Issue:

0ulin:-nder the law the directors of a corporation can only be removed from officeby a vote of the stoc"holders representin at least9D@ of the subscribedcapital stoc" entitled to vote %ct )o. 8F! sec.@'G$hile vacancies in the board! $hen they e+ist! can be filled by mere ma>orityvote%ct )o. 8F! sec. 9'" Moreo)er, the law re3uires that when action is to betaken at a special meeting to remo)e the directors, such purpose shall beindicated in the call *2ct 'o" 1G#, sec"BG%hile the )oting trust controls a ma>ority of the stoc"! it does not have a clear 9D@ ma>ority.0t was therefore impolitic for the petitioners, in forcing the call for the meeting of 2ugust 1, to come out frankly and say in the notice that one of the purposes ofthe meeting was to remo)e the directors of the corporation from office" 0nstead,the call was limited to the election of the board of directors, it being the e)identintention of the )oting trust to elect a new board as if the directorate had been

then )acant"0'J-'C/0&' 0. 82$0> 4:C2-.: @ elections were conducted"

E+pert travel and tours inc %ETI' vs Cdoctrine9Eoran air filed a complaint against :/0 " >uring the suit :/0 stated that the E2$lawyer is not authorized to execute certificate of non forum shopping" E2$answered that the lawyer was their company secretary and registered agent" 2tty aguinaldo *E2$ stated that a resolution of E2$ 4&> through a Nspecialteleconference Nwas conducted/C denied :/0 claim C2 affirmed

issue:%&' court can take udicial notice of teleconference

rulin:Thins of ,common "no$ledeO of which courts take udicial matters coming tothe knowledge of men generally in the course of the ordinary experiences of life,or they may be matters which are generally accepted by mankind as true and are

capable of ready and un3uestionable determination" 2s the common knowledgeof man ranges far and wide, a wide )ariety of particular facts ha)e been udiciallynoticed as being matters of common knowledge" 4ut a court cannot take udicialnotice of any fact which, in part, is dependent on the existence or nonAexistenceof a fact of which the court has no constructi)e knowledge"0n this age of modern technology, the courts may take udicial notice that businesstransactions may be made by indi)iduals through teleconferencing"/eleconferencing is interacti)e group communication through an electronicmedium, bringing people together under one roof e)en though they are separatedby hundreds of miles"0n the Philippines, teleconferencing and )ideoconferencing of members of theboard of directors of pri)ate corporation is is a reality, in light of 62 !I@" TheSEC issued SEC memorandum Circular )o. 8! on )ovember @! 98!providin the uidelines to be complied $ith related to such conferences.The Court is not convinced that one $as conductedG even if there had beenone! the Court is not inclined to believe that a board resolution $as duly

passed specifically authori5in tty. uinaldo to file the complaint ande+ecute the re2uired certification aainst non forum shoppin.Petition granted"

BESTE0) I)STIT<TE *& TECH)*(*4Y /S S(S

.alas are the maority controlling members of board of trustees of %0/" &n aspecial board meeting a resolution was made granting compensation to all theofficers of the corporation which applies retroacti)ely monthly pay plus 1HK netprofit e3ually distributed among thema few years later 8illasis filed a case against .alas for falsification and estafa".alas making it clear that the board resolution was passed the pre)ious year andnot the current year" .alas was ac3uitted".ignificantly o a Motion for 0nter)ention was filed before this Court by %estern0nstitute of /echnology, 0nc", disowning its inclusion in the petition and submitting

that 2tty" /ran3uilino 6" ;ale, counsel for 8illasis, et" al", had no authoritywhatsoe)er to represent the corporation in f iling the petition" 0nter)enor likewiseprayed for the dismissal of the petition for being utterly without merit" /he Motionfor 0nter)ention was granted on 1 January 1#"

Issue:%hether the grant of compensation to .alas, et" al" is proscribed under .ection BHof the Corporation Code"

Held:1irectors or trustees! as the case may be! are not entitled to salary or othercompensation $hen they perform nothin more than the usual and ordinaryduties of their office. /his rule is founded upon a presumption thatdirectors+trustees render ser)ice gratuitously, and that the return upon theirshares ade3uately furnishes the moti)es for ser)ice, without compensation" -nde.ection BH of the Corporation Code, there are only t$o %9' $ays by $hichmembers of the board can be ranted compensation apart from reasonableper diems: %8' $hen there is a provision in the by7la$s fi+in theircompensationG and %9' $hen the stoc"holders representin a ma>ority of the

outstandin capital stoc" at a reular or special stoc"holders= meetinaree to ive it to them. 2lso, the proscription, howe)er, against grantingcompensation to director+trustees of a corporation is not a sweeping rule" %orthyof note is the clear phraseology of .ection BH which state9 <T/Uhe directors shallnot recei)e any compensation, as such directors"< /he phrase as such directors isnot without significance for it delimits the scope of the prohibition to compensationgi)en to them for ser)ices performed purely in their capacity as directors ortrustees" /he unambiguous implication is that members of the board may recei)ecompensation, in addition to reasonable per diems, when they render ser)ices tothe corporation in a capacity other than as directors+trustees" 5erein, resolutionG!, s" 1! granted monthly compensation to .alas, et" al" not in their capacity asmembers of the board, but rather as officers of the corporation, more particularlyas Chairman, 8iceAChairman, /reasurer and .ecretary of %estern 0nstitute of/echnology" Clearly, therefore, the prohibition with respect to grantingcompensation to corporate directors+trustees as such under .ection BH is not)iolated in this particular case" Conse3uently, the last sentence of .ection BHwhich pro)ides that <0n no case shall the total yearly compensation of directors, assuch directors, exceed ten *1HK percent of the net income before income tax ofthe corporation during the preceding year< does not likewise find application in

this case since the compensation is being gi)en to .alas, et" al" in their capacityas officers of BIT and not as board members.

BESTE0) I)STIT<TE *& TECH)*(*4Y /S S(Sdoctrine

facts 9 .alas are the maority controlling members of board of trustees of %0/" &na special board meeting a resolution was made granting compensation to all theofficers of the corporation which applies retroacti)ely monthly pay plus 1HK netprofit e3ually distributed among thema few years later )illasis filed a case against salas for falsification and estafa".alas making it clear that the board resolution was passed the pre)ious year andnot the current year" .alas was ac3uitted".ignificantly o a Motion for 0nter)ention was filed before this Court by %estern0nstitute of /echnology, 0nc", disowning its inclusion in the petition and submittingthat 2tty" /ran3uilino 6" ;ale, counsel for 8illasis, et" al", had no authority

whatsoe)er to represent the corporation in f iling the petition" 0nter)enor likewiseprayed for the dismissal of the petition for being utterly without merit" /he Motionfor 0nter)ention was granted on 1 January 1#"

0ssue9 %hether the grant of compensation to .alas, et" al" is proscribed under.ection BH of the Corporation Code"

5eld9 1irectors or trustees! as the case may be! are not entitled to salary orother compensation $hen they perform nothin more than the usual andordinary duties of their office. /his rule is founded upon a presumption thatdirectors+trustees render ser)ice gratuitously, and that the return upon theirshares ade3uately furnishes the moti)es for ser)ice, without compensation" -nde.ection BH of the Corporation Code, there are only t$o %9' $ays by $hichmembers of the board can be ranted compensation apart from reasonableper diems: %8' $hen there is a provision in the by7la$s fi+in theircompensationG and %9' $hen the stoc"holders representin a ma>ority of theoutstandin capital stoc" at a reular or special stoc"holders= meetin



aree to ive it to them. 2lso, the proscription, howe)er, against grantingcompensation to director+trustees of a corporation is not a sweeping rule" %orthyof note is the clear phraseology of .ection BH which state9 <T/Uhe directors shallnot recei)e any compensation, as such directors"< /he phrase as such directors isnot without significance for it delimits the scope of the prohibition to compensationgi)en to them for ser)ices performed purely in their capacity as directors ortrustees" /he unambiguous implication is that members of the board may recei)ecompensation, in addition to reasonable per diems, when they render ser)ices tothe corporation in a capacity other than as directors+trustees" 5erein, resolutionG!, s" 1! granted monthly compensation to .alas, et" al" not in their capacity asmembers of the board, but rather as officers of the corporation, more particularlyas Chairman, 8iceAChairman, /reasurer and .ecretary of %estern 0nstitute of/echnology" Clearly, therefore, the prohibition with respect to grantingcompensation to corporate directors+trustees as such under .ection BH is not)iolated in this particular case" Conse3uently, the last sentence of .ection BH

which pro)ides that <0n no case shall the total yearly compensation of directors, assuch directors, exceed ten *1HK percent of the net income before income tax ofthe corporation during the preceding year< does not likewise find application inthis case since the compensation is being gi)en to .alas, et" al" in their capacityas officers of BIT and not as board members.

corpo digest 11

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