Atty. Jose Ma. Nieto

May 27, 1991 Atty. Jose Ma. Nieto 3rd Floor, La Paz Centre Salcedo cor. Herrera Sts. Legaspi Village, Makati Metro Manila S i r : This refers to your letter of February 11, 1991, requesting clarification on the following query: prcd "May the positions of President and Treasurer of a domestic corporation be occupied by non-residents. Otherwise stated, regardless of being a "good corporate practice",would it be a violation of law, rules and regulations or policies to elect a President and/or Treasurer who are non-residents." The Treasurer of a corporation is ordinarily the custodian of its funds with authority to disburse them in proper cases, this power he has by virtue of his office. He is the proper officer, in the absence of an express provision to the contrary, authorized to receive, issue receipts, and keep the money of the corporation. Taking into consideration the nature of the functions of the Treasurer, there is more reason for him to also possess the same qualifications as the Secretary who, under the Corporation Code, is required to be a resident of the Philippines. Thus, the Commission, in its meeting of May 23, 1991, resolved to adopt as a matter of policy to require the Treasurer of a private corporation to be a resident of the Philippines. This policy would prevent the possibility on the part of a non-resident treasurer to transfer corporate funds out of the country who, because of his status as non-resident, can easily flee and escape. The residency requirement will not pose a big problem to foreign investors. The Commission, in order to promote foreign investments, recently adopted a liberal construction of what constitutes a "resident" of the Philippines. For as long as the foreigner who is a grantee of an investors visa or retirement visa possesses the essential elements of physical presence in the Philippines and intends to remain therein, he may be considered a resident of the Philippines for qualification purposes of an incorporator, director or officer. As a matter of policy, the holders of the following documents may also be considered "residents" for purposes of complying with the residency requirement under the Corporation Code: 1. Immigrant Certificate of Registration 2. Special Investors Resident Visa 3. Student Visa Other proofs of residency, like alien certificate of registration and multiple-entry visa given to foreign nationals, which is valid for a period of at least one (1) year, may also be accepted. LexLib As regard the President, the requirement is not mandatory provided there is a Vice-President who would act as President in his absence. The concept and nature of the functions of a President as an executive vary so widely in different companies as to be indefinable. The usual executive duty of the President is to act as general manager or chief executive officer of the corporation. He is frequently designated as the chief administrator or chief operating officer giving him the general supervision over the management of the corporation. In such a given situation, his presence in the Philippines appears to be necessary in order to effectively manage the corporation. However, it may be considered only a "sound corporate practice" and should not be imposed as a requirement taking into consideration that with the present modern and advanced communication and transportation facilities, continuous stay in the business area is not necessary in the management of the business, although the management thereof is not as effective as when one is physically present. It has to be emphasized, however, that in firms engaged in wholly or partially nationalized activities, foreigners, regardless of whether they are residents or non-residents are banned from being elected or appointed to management positions as President, Vice-President, Treasurer, Auditor, etc. of said companies pursuant to the ruling of the Department of Justice, although they can be elected directors in proportion to their allowable participation or share in the capital of such activities in accordance with the Anti-Dummy Law, as amended by Presidential Decree No. 715. Please be advised accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman