United Architects of the Philippines

July 4, 1984 United Architects of the Philippines Region Chapter District VII 230 C. M. Recto Street Davao City Attention : Mr . Johnny Sulit Gentlemen : This has reference to your letter dated August 9, 1983, requesting for the opinion of this Commission on the queries posed therein. As a matter of policy, this Commission refrains from giving its opinion on hypothetical cases. However, for purposes of general information only, the following observations pertinent to your queries may be given. It appear therefrom that the United Architects of the Philippines Inc., held in 1979, an annual election for the national officers under the provisions of the old Corporation Law, by corporate voting, under which procedure, the immediate Past President sits in the Board as an Ex-officio officer, a non-elective member of the Board. Under the foregoing circumstances, you now posed the following queries: 1. Can an ex-officio officer of the Board be elected by the same Board of Directors as President for the current year, meaning another term for another year? Sections 23 and 25 of the Corporation Code are quoted hereunder: "SECTION 23. The board of directors or trustees . Unless otherwise provided in this Code, the corporate powers of all corporations formed under this Code shall be exercised, all business conducted and all property of such corporations controlled and held by the Board of Directors or Trustees to be elected from among the holders of stock or where there is no stock, from among the members of the corporation, who shall hold office for one (1) year and until their successors are elected and qualified." (Emphasis supplied) "SECTION 25. Corporate officers, quorum . Immediately after their election, the directors of a corporation must formally organize by the election of president who shall be a director ,a treasurer who may or may not be a director, a secretary who shall be a resident of the Philippines, and such other officers as may be provided for in the by-laws." (Emphasis supplied). From the aforequoted provisions, it is clear that the law requires that the president shall be elected from among the directors themselves who in turn have been elected by the general membership. So that an "ex-officio director" cannot be elected as president inasmuch as the term "ex-officio director" denotes a person who becomes director of the corporation because of his title to an office, and not because of election by the general membership. ( SEC Opinion, cited in Ltr. to Atty. Jacinto dtd. Aug. 24, 1962 ). Furthermore, an examination of your By-laws shows that the same does not contain a provision regarding ex-officio directors. Is it considered in the SEC rules that an outgoing President can still be eligible again for election by the Board as President for another year without being elected by the General Membership as a Director? We need not answer this in view of our reply to Query No. 1. 2. Is it legal for the Board of Directors to elect the President from among themselves and give said President the blanket authority to appoint the respective officers of the Board? No, inasmuch as this would contravene the mandatory provision of Sec. 25, which requires the election by the directors not only of the president but also the treasurer, the secretary and other officers as may be provided in the by-laws. A further examination of your approved by-laws reveals that your by-laws itself provides that "the Board of Directors shall elect from among themselves the officers of the corporation. "(Article IV, Sec. 1, D). 3. If the case on hand has been considered academic and moot, what other course of action can the General Membership take as a redress? Considering that the case occurred in 1979, the same may be considered as moot and academic. Under these circumstances no other course of action is available to the general membership but to elect another set of members of the Board of Directors. However, in the event of repetition of said action of holding the annual election for the national officers by corporate voting wherein the immediate past president sits in the Board as an Ex-officio director the general membership or any member thereof may file a complaint with the Securities Investigation and Clearing Department of this Commission against the Board of Directors pursuant to Sec. 5(c) Presidential Decree No. 902-A quoted hereunder: "SECTION 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations, partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving: a) ... b) ... c) Controversies in the election or appointments of director, trustees, officers or managers of such corporations, partnerships or associations." Please be guided accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Associate Commissioner