Questions:

1. What are the four corporate officers that should be created by the board of directors after
the election and once they formalized the office.

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 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.”

2. Is the president required to be resident of the Philippines?

No. President
The president acts as the signatory on behalf of the corporation. He or she reports to the
board of directors. 
Requirements for the president of a corporation in the Philippines:
 A natural person
 Must be of legal age
 Must be a shareholder and director
There is only one shareholder in a one person corporation. As such, he or she must be the
president of the company.
A foreigner may hold this position provided that he or she meets all other requirements. The
president does not need to be a resident of the Philippines.

3. What are the qualifications of these corporate officers including the compliance officers.

Liability of Shareholders in a Corporation in the Philippines

Shareholders of a corporation in the Philippines have limited liability. As such, they will not be personally
liable for the corporation’s debts. Should the company fail, their personal assets will be safe. The extent
of their liability is the same as the value of their investment.

Directors in Philippine Corporations

The board of directors manages the corporation in accordance with the Corporation Code of the
Philippines. Shareholders vote and elect members of the board of directors. A director holds this
position usually for 1 year or until shareholders elect successors.

Qualifications of Directors

Aside from getting elected by shareholders, directors must also meet the following requirements:
  A natural person

 Must be of legal age

 Must own at least 1 share

 Must not have been convicted of a criminal offense punishable by imprisonment for a period
exceeding 6 years

 Must not have violated the Corporation Code within five years prior to the date of election

Because a director must also be a shareholder, there can be no more than 15 directors in a corporation.
For the same reason, foreign nationals can only hold the director role if the industry allows full or partial
foreign ownership. Note that in industries that only allow partial foreign ownership, the majority of
directors must be Filipino citizens.

Board of Directors’ Roles and Responsibilities

The board of directors can act on behalf of the corporation. They can perform tasks including but not
limited to the following:

 Make strategic decisions in the company;

 Make day-to-day decisions

 Appoint senior management

In line with their roles within the company, the board of directors must always act in good faith. The
board of directors must protect the interests of the corporation and its stockholders. Members of the
board cannot make decisions for their individual benefit. The board of directors must also sure that the
company follows legal and accounting requirements.

Corporate Officers in a Philippine Corporation

All corporations in the Philippines must have the following corporate officers. The board of directors
assigns the corporate officers.

President

The president acts as the signatory on behalf of the corporation. He or she reports to the board of
directors. 

Requirements for the president of a corporation in the Philippines:

 A natural person

 Must be of legal age

  Must be a shareholder and director

There is only one shareholder in a one person corporation. As such, he or she must be the president of
the company.

A foreigner may hold this position provided that he or she meets all other requirements. The president
does not need to be a resident of the Philippines.

Corporate Secretary

The corporate secretary handles all of the corporation’s administrative and informative work.

The requirements for a corporate secretary:

 A natural person

 Must be of legal age

 Must be a Filipino citizen

Many corporate secretarial tasks involve maintaining compliance with local laws. The corporate
secretary is in charge of the following tasks:

 Documenting changes to the company’s share capital;

 Documenting election or resignation of directors;

 Preparing certifications of board resolutions;

 Authorizing documents circulating in the corporation

Your corporate secretary must be someone who is familiar with relevant laws and regulations in the
Philippines. You should not appoint someone just because they meet the citizenship and residency
requirements.

One way to fill this role is by outsourcing your corporate secretary. Our legal team will take care of these
tasks and ensure that you maintain compliance with local laws.

Treasurer

The treasurer takes care of all of the corporation’s financial matters. These include annual statements,
financial reports, funds, and similar valuable effects that belong to the corporation.

The treasurer must meet the following requirements:

 A natural person

 Must be of legal age

  Must be a resident of the Philippines

A foreigner may hold this position as long as he or she is a resident of the Philippines. 

The president of a one person corporation may also be the treasurer. This option is not open to
domestic corporations.

If the president of a one person corporation appoints himself or herself as the treasurer, they must pay
a surety bond. The company’s authorized capital stock serves as the basis for the amount of the bond.

4. What are the requirements for the corporation to create another office. Give the general rule.
And the requisites illustrated in the case of Matling Industrial Case.

FACTS:

After his dismissal by Matling as its Vice President for Finance and Administration, the respondent filed a
complaint for illegal suspension and illegal dismissal against Matling and some of its corporate officers
(petitioners) in the NLRC, Sub-Regional Arbitration Branch XII, Iligan City.

The petitioners moved to dismiss the complaint, raising the ground, among others, that the complaint
pertained to the jurisdiction of the Securities and Exchange Commission (SEC) due to the controversy
being intra-corporate inasmuch as the respondent was a member of Matling’s Board of Directors aside
from being its Vice President for Finance and Administration prior to his termination.

The LA granted the petitioners’ motion to dismiss, ruling that the respondent was a corporate officer
because he was occupying the position of Vice President for Finance and Administration and at the same
time was a Member of the Board of Directors of Matling; and that, consequently, his removal was a
corporate act of Matling and the controversy resulting from such removal was under the jurisdiction of
the SEC.

The NLRC set aside the dismissal, concluding that the respondent’s complaint for illegal dismissal was
properly cognizable by the LA, not by the SEC, because he was not a corporate officer by virtue of his
position in Matling, albeit high ranking and managerial, not being among the positions listed in Matling’s
Constitution and By-Laws.

The petitioners elevated the issue to the CA by petition for certiorari. The CA dismissed the petition for
certiorari explaining that “for a position to be considered as a corporate office, the position must, if not
listed in the by-laws, have been created by the corporation’s board of directors, and the occupant
thereof appointed or elected by the same board of directors or stockholders.”

ISSUE:

Whether or not respondent was a corporate officer

Whether the LA or the RTC has jurisdiction over his complaint for illegal dismissal
RULING:

As a rule, the illegal dismissal of an officer or other employee of a private employer is properly
cognizable by the LA. Where the complaint for illegal dismissal concerns a corporate officer, however,
the controversy falls under the jurisdiction of the Securities and Exchange Commission (SEC), because
the controversy arises out of intra-corporate or partnership relations between and among stockholders,
members, or associates, or 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 the controversy concerns their individual franchise
or right to exist as such entity; or because the controversy involves the election or appointment of a
director, trustee, officer, or manager of such corporation, partnership, or association. Such controversy,
among others, is known as an intra-corporate dispute.

Effective on August 8, 2000, upon the passage of Republic Act No. 8799, otherwise known as The
Securities Regulation Code, the SEC’s jurisdiction over all intra-corporate disputes was transferred to the
RTC.

Under Sec. 25 of the Corporation Code, a position must be expressly mentioned in the By-Laws in
order to be considered as a corporate office. Thus, the creation of an office pursuant to or under a By-
Law enabling provision is not enough to make a position a corporate office.

Here, respondent’s position of Vice President for Finance and Administration was not expressly
mentioned in the By-Laws; neither was the position of Vice President for Finance and Administration
created by Matling’s Board of Directors. Lastly, the President, not the Board of Directors, appointed him.

In order to determine whether a dispute constitutes an intra-corporate controversy or not, the Court
considers two elements instead, namely: (a) the status or relationship of the parties; and (b) the nature
of the question that is the subject of their controversy.

The criteria for distinguishing between corporate officers who may be ousted from office at will, on one
hand, and ordinary corporate employees who may only be terminated for just cause, on the other hand,
do not depend on the nature of the services performed, but on the manner of creation of the office. In
the respondent’s case, he was supposedly at once an employee, a stockholder, and a Director of
Matling. The circumstances surrounding his appointment to office must be fully considered to
determine whether the dismissal constituted an intra-corporate controversy or a labor termination
dispute.

Obviously enough, the respondent was not appointed as Vice President for Finance and Administration
because of his being a stockholder or Director of Matling. He had started working for Matling on
September 8, 1966, and had been employed continuously for 33 years until his termination on April 17,
2000, first as a bookkeeper, and his climb in 1987 to his last position as Vice President for Finance and
Administration had been gradual but steady.
Even though he might have become a stockholder of Matling in 1992, his promotion to the position of
Vice President for Finance and Administration in 1987 was by virtue of the length of quality service he
had rendered as an employee of Matling. His subsequent acquisition of the status of
Director/stockholder had no relation to his promotion. Besides, his status of Director/stockholder was
unaffected by his dismissal from employment as Vice President for Finance and Administration.