G.R. No. L-10556 - Gurrea vs. Lezama

Ricardo Gureba (Plaintiff/Appellant) was the manager of La Paz Ice Plant and Cold Storage Co., Inc.
Jose Manuel Lezama et al. (Defendants/Appellees) moved for Gureba’s removal from the managerial position via Resolution No. 65 of the Board of Directors.
Gureba filed a case in the Court of First Instance (CFI) of Iloilo seeking:

Defendants argued the removal was valid under a duly passed resolution.
Gureba moved for a preliminary injunction to restrain Lezama from managing pending the case, but the court denied it after evidence presentation.
The case was submitted for judgment on the sole legal issue of whether the board alone could remove the manager or if a 2/3 vote of paid-up stockholders was necessary.
Trial court ruled removal legal; case was appealed but the Court of Appeals certified the legal issue to the Supreme Court.

Section 33 of the Corporation Law mandates the election of certain officers (president, secretary/clerk, etc.) post-directors election.
By-laws of the corporation specify four officers in the board: President, Vice-President, Secretary, Treasurer.
Manager was mentioned as vested with administration but not enumerated as an officer in the by-laws.
By-laws prescribe removal or suspension of officers (other than the president) only by affirmative vote of 2/3 of paid-up shares.
Plaintiff manager was appointed by the board of directors.

Majority view was that since the manager is not an officer enumerated by law/by-laws, he is essentially an employee or subordinate official.
Thus, board of directors can remove or suspend the manager under such terms as it sees fit.
Cited American authorities stating general managers are usually not officers unless named in charter/by-laws.
Power to appoint carries the power to remove.
Dissenting judges argued:

Manager is a principal executive officer given legislative recognition by being criminally liable for statutory violations.
By-laws mention the manager as an administrative head.
Manager’s function and authority exceed those of secretary or treasurer, who are recognized officers.
The 2/3 vote removal rule was intended by the stockholders to protect the manager’s position.
The arrangement in stock control between Gurrea and Lezama families implied such security for the manager.

Whether the manager of a corporation, when not enumerated as an officer in the corporation’s charter or by-laws, is considered an officer of the corporation.

Whether the manager can be removed solely by resolution of the board of directors or if removal requires the affirmative vote of two-thirds of the paid-up shares under the corporation’s by-laws.

The legal effect and interpretation of the by-law provision prescribing removal of officers only by a two-thirds vote of the paid-up shares.