Atty. Tomas M. Guno

August 16, 1996 Atty. Tomas M. Guno Berenguer Guno & Raz Law Firm Suite 605, 6/F I-CARE Bldg. 167 Legaspi cor. Dela Rosa Sts., Legaspi Village, 1229 Makati City S i r : This refers to your letter dated June 2, 1996 requesting opinion on the following queries which we answer in the order they are presented: 1. May a " non-resident " alien be elected " treasurer " in a 100% foreign owned domestic company registered with the Philippine Economic Zone Authority? The treasurer of a corporation is ordinarily the custodian of its funds with authority to disburse them in proper cases, which 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 leave the country. (SEC Opinion addressed to Atty. Jose Ma. Nieto dtd. 5-27-91) 2. May a non-resident alien , without electing him to any treasury position ,be instead authorized to designate bank depositories, account signatories and to perform allied powers? It is well-settled that the Board of Directors is the governing body of the corporation with whom the management of the corporate affairs is vested. (Section 23 of the Corporation Code) Since the authority to designate bank depositories and account signatories partakes of a management function, such power belongs to the Board of Directors. Hence, it calls for a Board decision. As to whether such power can be delegated ,while it may be stated that the Board of Directors may delegate its powers, such rule recognizing the power of the Board to delegate its authority is not without limitation .The power to delegate is merely implied from necessity inasmuch as the directors cannot attend to the details and current business of the corporation. In the present situation, it cannot be said that the Board cannot attend to it. The designation of bank depositories and account signatories is a sensitive management function in a sense that involves corporate funds which require the exercise of best judgment which should be decided by the Board of Directors to whom the stockholders, by election, entrusted the responsibilities to manage the corporate affairs. Therefore, we believe that said power cannot be delegated, more so, if the person to whom the power is delegated is not an officer of the corporation and is a non-resident alien . llcd 3. Under PD 175, an alien may sit in the board of a corporation engaged in wholly or partially nationalized activities in proportion to his share in the capital. May an alien director, whether resident or not, be elected treasurer of the " landholding " company? The Commission, on several occasions, has ruled that in firms engaged in wholly or partially nationalized activities, foreigners, regardless of whether they are residents or non-residents, are barred from being appointed or elected to management positions as president, vice-president, treasurer, auditor, etc, of said companies pursuant to the ruling of the Department of Justice Re: Opinion No. 37, Series 1976 (a xerox copy is herewith attached for ready reference), although they can be elected directors in proportion to their allowable participation or share in the capital of such activities in accordance with Commonwealth Act No. 108, as amended by PD 715, otherwise known as the Anti-Dummy Law. 4. May the Board of Directors in a partially nationalized ( landholding company ) activity empower an ALIEN director ,without electing him to any treasury position, to designate bank depositories, account signatories and to perform allied powers instead? As earlier mentioned, in a nationalized business activity, the intervention by a foreigner in the management thereof as an officer is prohibited under the Anti-Dummy Law. Furthermore, as opined in No. 2 query, the power to designate bank depositories and signatories partakes of a management function, which power rests in the Directors acting as a " body ",not as an " individual " director. Accordingly, it cannot be delegated to just one director, more so, if he is a foreigner. LexLib Very truly yours, (SGD.) FE ELOISA C. GLORIA Associate Commissioner