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    Western Institute of Technology Vs Salas (1997)

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    Torrecampo Yvette
    The board of directors of Western Institute of Technology amended the company bylaws to provide compensation to board members in the form of 10% of net profits being distributed equally among the 10 board members. A few years later, the board members were charged with falsifying public documents and estafa. The court found the board members not guilty. The issue was whether the board compensation violated corporate law. The court held that compensation did not violate the law as the bylaws explicitly provided for such compensation, which is allowed as long as it is included in the bylaws or approved by shareholders. The compensation was granted to the board members in their roles as officers rather than solely as board members.

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    Western Institute of Technology Vs Salas (1997)

    Uploaded by

    Torrecampo Yvette
    62 views2 pages
    The board of directors of Western Institute of Technology amended the company bylaws to provide compensation to board members in the form of 10% of net profits being distributed equally among the 10 board members. A few years later, the board members were charged with falsifying public documents and estafa. The court found the board members not guilty. The issue was whether the board compensation violated corporate law. The court held that compensation did not violate the law as the bylaws explicitly provided for such compensation, which is allowed as long as it is included in the bylaws or approved by shareholders. The compensation was granted to the board members in their roles as officers rather than solely as board members.

    Original Description:

    western institute vs salas

    Original Title

    Wit vs Salas

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    The board of directors of Western Institute of Technology amended the company bylaws to provide compensation to board members in the form of 10% of net profits being distributed equally among the 10 board members. A few years later, the board members were charged with falsifying public documents and estafa. The court found the board members not guilty. The issue was whether the board compensation violated corporate law. The court held that compensation did not violate the law as the bylaws explicitly provided for such compensation, which is allowed as long as it is included in the bylaws or approved by shareholders. The compensation was granted to the board members in their roles as officers rather than solely as board members.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    62 views2 pages

    Western Institute of Technology Vs Salas (1997)

    Uploaded by

    Torrecampo Yvette
    The board of directors of Western Institute of Technology amended the company bylaws to provide compensation to board members in the form of 10% of net profits being distributed equally among the 10 board members. A few years later, the board members were charged with falsifying public documents and estafa. The court found the board members not guilty. The issue was whether the board compensation violated corporate law. The court held that compensation did not violate the law as the bylaws explicitly provided for such compensation, which is allowed as long as it is included in the bylaws or approved by shareholders. The compensation was granted to the board members in their roles as officers rather than solely as board members.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Western Institute of Technology vs

    Salas (1997)
    Facts: Private respondents are the majority and controlling members
    of the Board of Trustees of Western Institute of Technology, Inc. a
    stock corporation engaged in the operation, among others, of an
    educational institution. Then, the board of directors amended their by
    laws giving the members of board of directors a compensation. The
    ten per centum of the net profits shall be distributed equally among
    the ten members of the Board of Trustees. Few years later, the private
    respondents were charged of falsification of public documents and
    estafa. The charge for falsification of public document was anchored
    on the private respondents submission of WITs income statement for
    the fiscal year 1985-1986 with the Securities and Exchange
    Commission (SEC) reflecting therein the disbursement of corporate
    funds 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 corporations fiscal year 1985-1986.
    After a full-blown hearing TC handed down a verdict of acquittal on
    both counts without imposing any civil liability against the accused
    therein.

    Issue: WON the compensation of the board of directors as stated in


    their by laws violates the corporation code?

    Held: NO. 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 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. 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, ViceChairman, Treasurer and Secretary of Western Institute of
    Technology. 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.

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