Mr. Osmundo B. Lambino

November 25, 1993 Mr. Osmundo B. Lambino Agno Valley College, Inc. Bonifacio St.,Malasiqui Pangasinan S i r : This refers to your letter of October 11, 1993 requesting opinion on the following issues: 1. Legality of having two (2) corporate positions/officers, the "President" and "School Director" with overlapping functions. 2. Legality on the grant of "compensation" to corporate officers aside from "per diems" during board meetings without any Board Resolution. LexLib Relative to the first issue, the pertinent provision of the Corporation Code 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 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. ..." (Emphasis supplied) Thus, pursuant to the above provision, 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 Officers 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. Relative to the second issue, Section 30 of the Corporation Code provides: SECTION 30. Compensation of directors . In the absence of any provision in the by-laws fixing their compensation, the directors shall not receive any compensation, as such directors, except for reasonable per diems: Provided, however, That any compensation (other than per diems) may be granted to directors by the vote of the stockholders representing at least a majority of the outstanding capital stock at a regular or special stockholders' meeting. In no case shall the total yearly compensation of directors, exceed ten (10%) percent of the net income before income tax of the corporation during the preceding year. (Emphasis supplied) It is clear from the above provision that the members of the Board of Directors/Trustees are entitled to compensation only if there is an express authority in the by-laws or stockholders resolution granting the same. Otherwise, they cannot, among themselves award salaries or compensation except for reasonable per diems. The aforecited provision does not expressly provide for the compensation with respect to corporate Officers. However, since the Board of Directors or Trustees elects the corporate Officers, ordinarily then and as manager of the corporate affairs and property, it is within the Board's power to fix the salaries of the Officers. If there is such an authority, a member of the Board who is also an Officer may collect a salary for his services done as an Officer. The reason is that the offices of Directors and Officers have different functions. If a resolution fixing the salaries of Officers is not tainted with irregularity and is not for the purpose of disposing the funds or profits of the Corporation, the only question to be determined is whether the salary fixed is reasonable. prcd Please be guided accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman