Latest Stories

Corporate Securities Info

You’re fired!


Without being blunt about it, that was President Aquino’s message to former National Irrigation Administrator Antonio Nangel when, on the occasion of NIA’s golden anniversary celebration last June 25, he castigated the agency for missing its performance targets.

Within a week, Aquino appointed Claro Maranan as his replacement. There was none of the “show cause” letter and other rituals that usually precede the dismissal of high ranking government officials. The removal was swift and unceremonious.

Nangel could not invoke his right to due process (the standard line of defense of officials who want to cling to their jobs at all costs) because he had a fixed term of office—July 1, 2012 to June 30, 2013.

As a government-owned corporation, NIA is covered by Republic Act 10149, or the Government-Owned and -Controlled Corporations Governance Act of 2011, which provides that directors of GOCCs shall hold office for one year unless earlier removed for cause.

The President simply did not renew Nangel’s appointment (who was concurrently vice chair of NIA’s board of directors) and that was it. No court, not even the Supreme Court, can question the legality or propriety of such action.


Until the enactment of the GOCC law, the suspension, disciplining and removal of incompetent or corrupt GOCC directors and executives were a pain in the neck for the incumbent administration.

Each of the 158 or so GOCCs had its own covering statute which stated, among others, different terms of office for their directors and officers, depending on the political clout of the lawmaker who worked for its creation.

In one sweep, the GOCC law repealed those provisions and made them hold one-year office terms, which the president may renew if they meet the performance standards laid down by the Governance Commission for GOCCs, the body formed to oversee their operation.

The one-year term reflects the practice in the corporate world. Members of board of directors—and the officers they appoint to directly manage the corporation—hold office for one year unless sooner removed for causes provided by law or the company’s bylaws.

The directors’ continued stay in the board depends on the results of the annual stockholders meeting. If the stockholders do not vote them back, they have no choice but accept their fate. As owners of the company, the stockholders have the right to choose the people they want to run it.

Of course, if the spurned directors have reason (and proof) to believe that the selection process violated existing laws or company bylaws, they can go to court to question the results.


The company officers appointed by the board are, as a rule, covered by the same principle that they hold their positions at the pleasure of the appointing power—directly the board, and indirectly the stockholders, who elected the directors.

Unlike the election of directors where grievances should be brought before the regular court, the venue for the resolution of issues relating to suspension, demotion, disciplinary action or removal of officers depends on their standing in the corporate hierarchy.

If the officer concerned is a “corporate officer” as defined under the Corporation Code, any question involving these issues is considered an “intra corporate dispute” that the regular courts are solely authorized to resolve.

In case the officer does not come within the definition of a corporate officer, he is considered a regular employee and therefore the proper venue for his grievances on these issues is the National Labor Relations Commission, not the regular courts.

The code specifically names the following as corporate officers: president, secretary, treasurer and such other officers as may be provided for in the bylaws.

In “Marc II Marketing, Inc. vs Alfredo M. Joson, G.R. No. 171993, dated Dec. 12, 2011,” the Supreme Court ruled that “a position must be expressly mentioned in the bylaws in order to be considered as a corporate officer. Thus, the creation of an office pursuant to or under a bylaw enabling position is not enough to make a position a corporate office.”


Under this ruling, it is not sufficient that the board of directors declare, by way of a resolution or any action, that a person is a corporate officer; or has the rights, authority and privileges of a corporate officer; or holds a position that is equivalent to a corporate office.

It is essential that the position or office sought to be considered a corporate officer (and the person who occupies it treated as a corporate officer) is expressly stated in the bylaws as such.

By itself, a board resolution cannot amend any provision of the bylaws. The procedure on amendment of bylaws, which requires a stockholders meeting for that purpose and the approval of a majority of the directors and stockholders, should be followed.

The tribunal explained that “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.”

The distinction between the two kinds of employment is critical to the protection of the rights of employees.

As a general rule, courts defer to the business judgment of the company in its exercise of disciplinary authority over corporate officers. Since the latter enjoy a high level of trust and confidence (with commensurate compensation), more leeway is given to the company in deciding how it wants to manage their activities.

The rule is different for ordinary employees. The law states that all doubts in labor disputes should be resolved in favor of labor. They are in more need of the protection of the constitutional guarantee of security of tenure.

“You’re fired!” has varying consequences depending on who is at the receiving end.

(For comments, please send your email to rpalabrica@inquirer.com.ph)

Follow Us

Follow us on Facebook Follow on Twitter Follow on Twitter

Recent Stories:

Complete stories on our Digital Edition newsstand for tablets, netbooks and mobile phones; 14-issue free trial. About to step out? Get breaking alerts on your mobile.phone. Text ON INQ BREAKING to 4467, for Globe, Smart and Sun subscribers in the Philippines.

Tags: Antonio nangel , Business , column , gocc law , National Irrigation Administration , raul j. palabrica

  • disqus_EWrSdjV1nv

    pera pera lang yan. cojuangco aquino ang nagutos eh.

  • Weder-Weder Lang

    “You’re fired!” has varying consequences depending on who is at the receiving end.

    Very true. In this case, will PNoy be finally able to build his Balog-Balog Dam by 2016? Just in time for the next gubernatorial election in Tarlac. Just in time for Kris Aquino to run for office. Will the Balog-Balog Dam also include the modifications and cascades demanded by Tessie Aquino-Oreta in order to benefit all of her land? All of that remains to be seen.

    Let’s just hope that the new NIA Chief will be more docile and less independent minded than Nangel.

    • koolkid_inthehouse

      I read that this project was on the drawing board during Noah’s time.

      • Weder-Weder Lang

        No, it’s pre-biblical, that’s why there are so many indigenous peoples roaming around in Balog-Balog about to lose their land to the dam.

      • koolkid_inthehouse

        second deluge is coming

Copyright © 2014, .
To subscribe to the Philippine Daily Inquirer newspaper in the Philippines, call +63 2 896-6000 for Metro Manila and Metro Cebu or email your subscription request here.
Factual errors? Contact the Philippine Daily Inquirer's day desk. Believe this article violates journalistic ethics? Contact the Inquirer's Reader's Advocate. Or write The Readers' Advocate:
c/o Philippine Daily Inquirer Chino Roces Avenue corner Yague and Mascardo Streets, Makati City, Metro Manila, Philippines Or fax nos. +63 2 8974793 to 94


  • Obama due in Seoul as North Korea nuclear test fears grow
  • Hold departure order out vs Corona, Singson
  • Malaysia to release MH370 report–PM
  • Man found dead in Quezon City, alleged victim of summary execution–report
  • Aquino to lead Air Force turnover rites
  • Sports

  • Michael Phelps loses to Lochte in comeback meet
  • Sharapova advances to Stuttgart quarterfinals
  • Galedo caps ride of redemption
  • Beermen, Express dispute second semis slot today
  • Lady Agilas upset Lady Bulldogs in four sets
  • Lifestyle

  • ‘Recovered’ Banksy works on display ahead of sale
  • Marinduque: Visiting the ‘palm of the ocean’
  • First at Vatican in 60 years
  • How Jing Monis Salon gave Krissy the pixie
  • Want to be a supermodel? Work on your inner beauty, says Joey Espino
  • Entertainment

  • Paul McCartney to play at Candlestick concert
  • Kristoffer Martin: from thug to gay teen
  • Has Ai Ai fallen deeply with ‘sireno?’
  • California court won’t review Jackson doctor case
  • Cris Villonco on play adapted from different medium
  • Business

  • PAL hailed for ban on shark fin cargo
  • BSP to change tint of P100 bill
  • Nielsen sees car buying boom in the Philippines
  • How author of best-seller exposed ‘one percent’ economic elite
  • Bangko Sentral readies new bank lending rules
  • Technology

  • Cloud strength helps Microsoft earnings top Street
  • Vatican announces hashtag for April 27 canonizations
  • Enrile in Masters of the Universe, Lord of the Rings?
  • Top Traits of Digital Marketers
  • No truth to viral no-visa ‘chronicles’
  • Opinion

  • Editorial Cartoon, April 25, 2014
  • No deal, Janet
  • Like making Al Capone a witness vs his gang
  • MERS-CoV and mothers
  • A graduation story
  • Global Nation

  • China welcomes PH apology
  • Only 4 Etihad passengers not accounted for
  • Abandoned in Malta,15 PH seamen return
  • Senator hopes PH will also get same vow
  • HK victims to get P115M; traders raised money
  • Marketplace