Filipinas Port Services v.

Victoriano Go
(creation of new positions and providing for
salaries was within board powers)

Filport (stevedoring company)

Eliodor Cruz was Filport’s President from 1968
until he lost his bid for reelection during the
1991 general stockholder’s meeting.
Cruz wrote a letter to the Corporation’s Board
questioning the board's creation of the following
positions with a monthly remuneration of
P13,050.00 each, and the election thereto of
certain members of the board:
AVP CORPORATE PLANNING
AVP OPERATIONS
AVP FINANCE
AVP ADMINISTRATION
SPECIAL ASSISTANT TO THE CHAIRMAN
SPECIAL ASSISTANT TO THE PRESIDENT
Cruz requested the board to take the necessary
actions to recover from those elected to those
positions the salaries they received
the board met and took up Cruz’s letter, but the
records do not show what actiosn they took
Cruz then filed a “derivative” suit against the
Filport Board, for alleged acts of
mismanagement detrimental to the interest of
the corporation and its shareholders at large
CREATION OF EXECUTIVE COMMITTEE
WITH 7 MEMBERS EACH RECEIVING 500 PER
MEETING, WHICH CRUZ SAYS IS NOT PROVIDED
FOR IN THE BY-LAWS, AND WHOSE FUNCTIONS
MERELY DUPLICATE THOSE OF THE PRESIDENT
AND GENERAL MANAGER
INCREASE IN EMOLUMENTS OF THE
CHAIRMAN, VP, TREASURER AND ASSISTANT GM
RECREATION OF THE AVP POSITIONS
CREATION OF THE SPECIAL ASSISTANTS
TO THE PRESIDENT AND BOARD, WHO DO NOT
DO ANY WORK BUT RECEIVE A MONTHLY
REMUNERATION OF P13,050 EACH
Cruz thus prayed that the respondent members
of the board of directors be made to pay Filport,
jointly and severally, the sums of money variedly
representing the damages incurred as a result of
the creation of the offices/positions complained
of and the aggregate amount of the questioned
increased salaries.

Issue: Did the Filport Board act within its powers

in creating the questioned positions and
providing for their salaries? YES.
The governing body of a corporation is its board
of directors. Section 23 of the Corporation
Code[12] explicitly provides that unless
otherwise provided therein, the corporate
powers of all corporations formed under the
Code shall be exercised, all business conducted
and all property of the corporation shall be
controlled and held by a board of directors.
the concentration in the board of the powers of
control of corporate business and of
appointment of corporate officers and managers
is necessary for efficiency in any large
organization.
In the present case, the board's creation of the
positions of Assistant Vice Presidents for
Corporate Planning, Operations, Finance and
Administration, and those of the Special
Assistants to the President and the Board
Chairman, was in accordance with the regular
business operations of Filport as it is authorized
to do so by the corporation's by-laws, pursuant
to the Corporation Code.
Under Sec. 25, the directors elect such other
officers as may be provided in the by-laws
Under Filport’s by-laws, the directors are allowed
to have such other officers as the Board of
Directors may from time to time provide
The fixing of the corresponding remuneration is
also provided by the by-laws, which also provide
that the Board shall fix the compensation of the
officers and agents of the corporation
the determination of the necessity for additional
offices and/or positions in a corporation is a
management prerogative which courts are not
wont to review in the absence of any proof that
such prerogative was exercised in bad faith or
with malice.
it would be an improper judicial intrusion into
the internal affairs of Filport were the Court to
determine the propriety or impropriety of the
creation of offices therein and the grant of
salary increases to officers thereof. Such are
corporate and/or business decisions which only
the corporation's Board of Directors can
determine.