2. Matling Ind’l and Commercial Corp., et. al. Ricardo R. Coros, G.R. No. 157802 Oct.
13,
2010
Erwin Arbues
Doctrine: The corporate officers enumerated in the by-laws are the exclusive Officers of the
corporation and the Board has no power to create other Offices without amending first the corporate By-
laws. However, the Board may create appointive positions other than the positions of corporate
Officers, but the persons occupying such positions are not considered as corporate officers within
the meaning of Section 25 of the Corporation Code and are not empowered to exercise the functions of
the corporate Officers, except those functions lawfully delegated to them. Their functions and duties are
to be determined by the Board of Directors/Trustees.
Facts:
Respondent was the former VP of Matling but was eventually dismissed. He filed a case for
illegal dismissal and against Matling and its officers. 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 respondent opposed the petitioners’ motion to dismiss, insisting that his status as a member
of Matling’s Board of Directors was doubtful, considering that he had not been formally elected as such.
Also, even assuming that he had been a Director of Matling, he had been removed as the Vice President
for Finance and Administration, not as a Director.
Issue/s:
Whether the respondent was a corporate officer of Matling or not.
Held: No.
Section 25 of the Corporation Code partly provides:
Section 25. Corporate officers, quorum.--Immediately after their election, the directors of a
corporation must formally organize by the election of a president, who shall be a director, a
treasurer who may or may not be a director, a secretary who shall be a resident and citizen of the
Philippines, and such other officers as may be provided for in the by-laws. Any two (2) or more
positions may be held concurrently by the same person, except that no one shall act as president
and secretary or as president and treasurer at the same time.
Conformably with Section 25, 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. Guerrea v. Lezama,19 the first
ruling on the matter, held that the only officers of a corporation were those given that character either by
the Corporation Code or by the By-Laws; the rest of the corporate officers could be considered only as
employees or subordinate officials.
An "office" is created by the charter of the corporation and the officer is elected by the directors
or stockholders. On the other hand, an employee occupies no office and generally is employed not by the
action of the directors or stockholders but by the managing officer of the corporation who also determines
the compensation to be paid to such employee.
Section 25 plainly states that the corporate officers are the President, Secretary, Treasurer and
such other officers as may be provided for in the By-Laws. Accordingly, the corporate officers in the
context of PD No. 902-A are exclusively those who are given that character either by the Corporation
Code or by the corporation’s By-Laws. A different interpretation can easily leave the way open for the
Board of Directors to circumvent the constitutionally guaranteed security of tenure of the employee by the
expedient inclusion in the By-Laws of an enabling clause on the creation of just any corporate officer
position.
Thus, pursuant to Section 25, whoever are the corporate officers enumerated in the by-laws are
the exclusive Officers of the corporation and the Board has no power to create other Offices without
amending first the corporate By-laws. However, the Board may create appointive positions other than the
positions of corporate Officers, but the persons occupying such positions are not considered as corporate
officers within the meaning of Section 25 and are not empowered to exercise the functions of the
corporate Officers, except those functions lawfully delegated to them. Their functions and duties are to be
determined by the Board of Directors/Trustees.
Moreover, the Board of Directors of Matling could not validly delegate the power to create a
corporate office to the President, in light of Section 25 requiring the Board of Directors itself to elect the
corporate officers. Verily, the power to elect the corporate officers was a discretionary power that the law
exclusively vested in the Board of Directors, and could not be delegated to subordinate officers or agents.
The office of Vice President for Finance and Administration created by Matling’s President pursuant to
By Law No. V was an ordinary, not a corporate, office.
