Introduction

In the realm of corporate governance in the Philippines, the dynamics between a board of directors and the corporate president are governed by a framework designed to ensure efficient management while protecting the interests of shareholders and stakeholders. The term "impeachment" is not typically used in corporate contexts, as it is more commonly associated with the removal of public officials under constitutional law. Instead, Philippine corporate law refers to the "removal" or "dismissal" of corporate officers, including the president. This article explores whether board members can effect such a removal during an organizational meeting without conducting a prior investigation, focusing exclusively on the Philippine legal context. It examines the relevant statutes, jurisprudence, and practical considerations, providing a comprehensive analysis of the topic.

The discussion is rooted in the Revised Corporation Code of the Philippines (Republic Act No. 11232, or RCC), which modernized the earlier Corporation Code (Batas Pambansa Blg. 68). Organizational meetings, in this context, refer to board meetings or special meetings where corporate affairs are deliberated, including the election and removal of officers. The key question hinges on the board's authority, the necessity of due process, and any procedural prerequisites like investigations.

Legal Framework Under the Revised Corporation Code

The RCC establishes the board of directors as the supreme governing body of a corporation, vested with the power to manage its affairs. Section 22 of the RCC states that the board exercises corporate powers, conducts business, and controls properties, unless otherwise provided by law or the articles of incorporation.

Election and Tenure of the President

The corporate president is an officer elected by the board, as outlined in Section 24 of the RCC: "Immediately after their election, the directors of a corporation must formally organize and elect: (a) a president, who must be a director; (b) a treasurer, who must be a resident; (c) a secretary, who must be a citizen and resident of the Philippines; and such other officers as may be provided in the bylaws." The president serves at the pleasure of the board, meaning their tenure is not fixed unless specified in the bylaws or employment contracts.

This "at pleasure" doctrine implies that the board can remove the president at any time, subject to certain limitations. Organizational meetings, which include regular or special board meetings (Sections 48-52 of the RCC), provide the venue for such actions. These meetings require a quorum (majority of directors) and proper notice, but the RCC does not explicitly mandate a prior investigation for officer removal.

Removal Provisions

Section 24 further implies the board's removal power by stating that officers hold office "until their successors are elected and qualified." Philippine jurisprudence interprets this broadly, allowing removal without cause unless the bylaws restrict it. The RCC does not impose a statutory requirement for a prior investigation in routine removals. However, if the removal is for cause—such as breach of fiduciary duties under Sections 30-33 (e.g., self-dealing, gross negligence, or disloyalty)—the board may need to substantiate the grounds to avoid liability.

In non-stock corporations or special entities like cooperatives (governed by Republic Act No. 9520, the Philippine Cooperative Code), removal procedures might differ. For instance, cooperative bylaws often require investigations for misconduct, but even there, the board can act summarily if the bylaws permit.

Due Process Considerations in Removal

Constitutional and Statutory Due Process

The Philippine Constitution (Article III, Section 1) guarantees due process, but this applies primarily to governmental actions depriving life, liberty, or property. In private corporate settings, due process is not constitutionally mandated for officer removals, as corporate officers are not public officials. However, if the president is also an employee (distinct from their officer role), labor laws under the Labor Code (Presidential Decree No. 442) may apply, requiring notice and hearing for terminations involving just causes (Article 297).

Jurisprudence distinguishes between corporate officers and regular employees. In cases like Matling Industrial and Commercial Corporation v. Ricarfort (G.R. No. 155074, 2010), the Supreme Court held that corporate officers are elected by the board and their removal is an intra-corporate matter under the RCC, not labor law. Thus, no prior investigation is required unless the bylaws or articles of incorporation stipulate it.

Bylaws and Articles of Incorporation

Corporate autonomy allows customization of removal procedures. Bylaws may require a prior investigation, committee review, or supermajority vote for removals. For example, if bylaws mandate a "for cause" removal with an investigative process, the board cannot bypass it without risking invalidation. In the absence of such provisions, the board can remove the president in a duly convened organizational meeting without investigation, provided the action is in good faith and not abusive.

Section 46 of the RCC requires bylaws to be consistent with law, and any removal must align with fiduciary duties. Abusive removals could lead to derivative suits under Section 35, where shareholders challenge board actions.

Jurisprudential Insights

Philippine case law provides clarity on the board's broad discretion.

Gokongwei v. Securities and Exchange Commission (G.R. No. L-45911, 1979): The Supreme Court affirmed the board's authority to manage officers, emphasizing that officers serve at the board's discretion. No mention of mandatory investigations.
Valle Verde Country Club, Inc. v. Africa (G.R. No. 151969, 2009): This case involved the removal of directors, but by analogy, it underscores that elections and removals in meetings must follow procedural rules like quorum and voting. It does not require investigations for officer actions.
Western Institute of Technology v. Salas (G.R. No. 113032, 1997): Reiterated that corporate officers can be removed without cause, distinguishing from employee dismissals needing due process.

In contrast, for public corporations or those with public accountability (e.g., under the Securities Regulation Code, Republic Act No. 8799), additional oversight from the Securities and Exchange Commission (SEC) applies. SEC opinions often recommend investigations for transparency, but they are not binding requirements for private removals.

For non-corporate organizations, such as homeowners' associations under Republic Act No. 9904, removal of officers requires majority vote in meetings, but again, no statutory prior investigation unless in bylaws.

Practical Implications and Limitations

When Investigation is Advisable

Even without a legal mandate, a prior investigation is prudent to mitigate risks:

Liability Avoidance: Unsubstantiated removals could expose directors to damages for breach of duty (Section 30).
Shareholder Relations: Investigations foster trust, especially in closely held corporations.
Contractual Obligations: If the president has an employment contract specifying due process, bypassing investigation could breach it, leading to civil claims.

Procedural Steps in Organizational Meetings

To remove without investigation:

Convene a meeting with notice (Section 52: at least two days for special meetings).
Achieve quorum.
Propose removal via resolution.
Vote (majority suffices unless bylaws require more).

If challenged, courts review for abuse under the business judgment rule, which protects board decisions made in good faith.

Special Contexts

One-Person Corporations: Under Section 117 of the RCC, the sole shareholder acts as president and board, making "impeachment" irrelevant.
Non-Stock/Non-Profit: Section 90 allows removal by members or trustees, often requiring cause and process per bylaws.
Cooperatives: Article 46 of RA 9520 permits removal for cause after hearing, implying investigation.

Conclusion

Under Philippine law, board members can generally remove a corporate president without a prior investigation during an organizational meeting, as the RCC grants the board plenary authority over officers. This power is tempered by bylaws, fiduciary duties, and potential contractual or labor implications. While investigations are not statutorily required, they are recommended for contentious removals to ensure fairness and legality. Stakeholders should review specific corporate documents to confirm procedures, as deviations can lead to disputes resolvable through intra-corporate remedies under the RCC and SEC jurisdiction. This framework balances efficiency with accountability, reflecting the Philippines' commitment to robust corporate governance.