The Revised Corporation Code of the Philippines
Republic Act No. 11232, otherwise known as the Revised Corporation Code of the Philippines (“Revised Corporation Code”) is the law which provides for the formation, organization, or regulation of private corporations in the Philippines. The Revised Corporation Code fixes the duties and liabilities of directors, trustees, as well as corporate officers.
Who are corporate officers?
The corporate officers are those charged with the mandate to execute the decisions of the board of directors (BOD) of a corporation and who, oftentimes, determine the best manner by which the business is to be run. They are the ones tasked to carry out the policies laid down by the BOD, the Articles of Incorporation, and the by-laws. They shall manage the corporation and perform such duties as may be provided in the bylaws and/or as resolved by the board of director A corporation can only act through its directors and officers.
How are corporate officers elected?
In stock corporations, corporate officers are elected by the Board of Directors. In non-stock corporations, corporate officers are elected by the members of the non-stock corporation, unless otherwise provided by the Articles of Incorporation or By-Laws of the corporation.
The power to elect corporate officers is a power that is to be exercised by the BOD and this power cannot be delegated.
Section 24 of the Revised corporation code provides for the election of corporate officers, to wit:
“SEC. 24. Corporate Officers. – Immediately after their election, the directors of a corporation must formally organize and elect: (a) a president, who must be a director; (b) a treasurer, who must be a resident; (c) a secretary, who must be a citizen and resident of the Philippines; and (d) such other officers as may be provided in the bylaws. If the corporation is vested with public interest, the board shall also elect a compliance officer. The same person may hold two (2) or more positions concurrently, except that no one shall act as president and secretary or as president and treasurer at the same time, unless otherwise allowed in this Code. The officers shall manage the corporation and perform such duties as may be provided in the bylaws and/or as resolved by the board of director.” Under the Revised corporation code, immediately after the election of the BOD, they must formally organize by the election of corporate officers.
Who are the corporate officers and what are their qualifications?
President
The President must be a director. As a director, he must own at least 1 share or at least it should be listed in his name as owner, and if it is a non-stock corporation, he must be a member thereof. Every director/trustee must continuously own at least a share during his term or be a member. He must not have been convicted by final judgment of an offense punishable by a period in excess of six (6) years or a violation of the Revised corporation code, committed within a period of five (5) years prior to the date of election. He must be a Filipino citizen in the instances required by law. Finally, he must possess such other qualifications as may be prescribed in the by-laws of the corporation.
Treasurer
The treasurer may or may not be a director, but he/she must be a resident of the Philippines. He/she must not be the president of the corporation. The president cannot be a treasurer and president at the same time.
Secretary
The secretary must be a resident and citizen of the Philippines. He/she must not be the president of the corporation because the president cannot be a secretary at the same time.
Compliance Officer
The Revised corporation code also provides that if the corporation is vested with public interest, the board shall also elect a compliance officer.
Other officers may be provided in the By-Laws
Other officers may be provided for in the by-laws such as, but not limited to, the vice-president, cashier, auditor or general manager. The number of corporate officers is thus limited by law and by the corporation’s by-laws.
Take note that an appointive or elected public official cannot serve as a corporate officer of any private bank except when the service is incidental to the financial assistance provided by the government or a Government-Owned and Controlled Corporations to the bank or unless otherwise provided.
The BOD may, from time to time, appoint such other officers as it may determine to be necessary or proper. Any two (2) or more compatible positions may be held concurrently by the same person, except that no one shall act as President and Treasurer or Secretary at the same time.
After Election of Corporate Officers
Within thirty (30) days after the election of the officers of the corporation, the secretary, or any other officer of the corporation, shall submit to the Securities and Exchange Commission (SEC), the names, nationalities, shareholdings, and residence addresses of the officers elected.
The non-holding of elections and the reasons therefor shall be reported to the SEC within thirty (30) days from the date of the scheduled election. The report shall specify a new date for the election, which shall not be later than sixty (60) days from the scheduled date. If no new date has been designated, or if the rescheduled election is likewise not held, the SEC may, upon the application of a stockholder, member, director or trustee, and after verification of the unjustified non-holding of the election, summarily order that an election be held.
Should an officer die, resign or in any manner cease to hold office, the secretary, or the director, trustee or officer of the corporation, shall, within seven (7) days from knowledge thereof, report in writing such fact to the Commission.
Qualification, Rights, and Duties of Corporate Officers
Qualifications of corporate officers are imposed in the by-laws of the corporation. The function of by-laws is to define the rights and duties of corporate officers and directors or trustees, and of stockholders or members towards the corporation and among themselves with reference to the management of corporate affairs and to regulate transaction of the business of the corporation in a particular way. The by-laws contain, among others, the qualifications, duties and compensation of officers, the manner of election or appointment and the terms of office of corporate officers, and such other matters as may be necessary for the proper conduct or convenient transaction of its corporate business and affairs.
Rules on Removal of Officers
When the position occupied by the corporate officer is a position provided under the by-laws of the corporation, he can be removed by the BOD. The removal shall be considered as an intra-corporate dispute, which shall be under the jurisdiction of the Regional Trial Court designated as special commercial court.
Otherwise, if not stated in the by-laws, the corporate officer shall be subject to the rules on regular employees and shall be under the jurisdiction of the National Labor Relation Commission.
In the case of Renato Real vs. Sangu Philippines, Inc, G.R. No. 168757, 19 January 2011, the High Court happened to define corporate officers, to wit:
“‘Corporate officers’ in the context of Presidential Decree No. 902-A are those officers of the corporation who are given that character by the corporation code or by the corporation’s by-laws. There are three specific officers whom a corporation must have under Section 25 of the corporation code. These are the president, secretary and the treasurer. The number of officers is not limited to these three. A corporation may have such other officers as may be provided for by its by-laws like, but not limited to, the vice-president, cashier, auditor or general manager. The number of corporate officers is thus limited by law and by the corporation’s by-laws.”
About Nicolas and De Vega Law Offices
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