Philippine Long Distance Telephone Co., Inc. v. Torres

FIRST DIVISION

[G.R. No. 169439. August 3, 2016.]

PHILIPPINE LONG DISTANCE TELEPHONE CO., INC., petitioner, vs. CYNTHIA N. TORRES, respondent.

[G.R. No. 182402. August 3, 2016.]

PHILIPPINE LONG DISTANCE TELEPHONE CO., petitioner, vs. CYNTHIA N. TORRES, respondent.

[G.R. No. 182598. August 3, 2016.]

CYNTHIA N. TORRES, petitioner, vs. PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, ET AL., respondents.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, First Division, issued a Resolution dated August 3, 2016 which reads as follows:

"G.R. No. 169439 (Philippine Long Distance Telephone Co., Inc. v. Cynthia N. Torres); G.R. No. 182402 (Philippine Long Distance Telephone Co. v. Cynthia N. Torres); G.R. No. 182598 (Cynthia N. Torres v. Philippine Long Distance Telephone Company, et al.). — This case is a consolidation of three separate actions that stem from the same set of facts, disputes, and circumstances.

G.R. No. 169439

This is a petition for review filed by the Philippine Long Distance Company (PLDT) under Rule 45 of the Rules of Court assailing the Decision and Resolution of the Court of Appeals (CA) in CA. G.R. SP No. 86721 dated 26 January 2005 and 10 May 2005 respectively. The Decision and Resolution of the CA in this case affirmed the 25 June 2004 Decision and 26 July 2004 Resolution of the National Labor Relations Commission (NLRC) in NLRC NCR CA No. 028059-01. The NLRC Decision granted the appeal of then-complainant Cynthia N. Torres (Torres) and reversed the ruling of Labor Arbiter Aliman D. Mangandog, 1 finding that the arbiter erred in dismissing the complaint for lack of merit and thus ruled that Torres was illegally dismissed. 2

G.R. No. 182402

This is a petition for review also filed by petitioner PLDT under Rule 45 of the Rules of Court assailing the Decision and Resolution of the CA in CA. G.R. SP No. 86636 dated 4 January 2008 and 26 March 2008 respectively, partially granting the petition of Torres on the prayer for payment of backwages and all other benefits against petitioner PLDT, but affirming the rest of the 25 June 2004 Decision and 26 July 2004 Resolution of the NLRC that ruled now-respondent Torres as illegally dismissed, but denied her reinstatement due to strained relations. The partial grant also modified the NLRC award of backwages by ruling that its computation should be from the date of her illegal dismissal on 21 June 2000 until the date of the NLRC Decision. CAIHTE

G.R. No. 182598

This is a petition for review filed by Torres under Rule 45 of the Rules of Court assailing the Decision and Resolution of the CA in CA. G.R. SP No. 86636 dated 4 January 2008 and 26 March 2008 respectively. In this petition, Torres disagrees with the CA Decision and Resolution on the matter of non-reinstatement due to strained relations, computation of backwages and other benefits, and the denial of the claim for moral damages, exemplary damages, and attorney's fees.

All three cases before this Court stem from two sets of CA Decisions and Resolutions, the facts of which are quoted below.

CA G.R. SP No. 86721

In this case, the CA through Justice Eugenio S. Labitoria of the Third Division 3 summarized the facts as follows:

The instant petition seeks to set aside the Decision rendered by the National Labor Relations Commission (NLRC for brevity) on June 25, 2004 which dispositively ruled that:

WHEREFORE, the decision dated 7 February 2001 is VACATED and SET ASIDE. Respondent PLDT is found to have illegally dismissed the complainant and is hereby directed to pay complainant the following:

1.	Backwages
	Monthly Salary	-	P135,000 x 7 1/2 mos.	=	P1,012,500.00
	Rice Subsidy	-	1,000 x 7 1/2 mos.	=	7,500.00
	Presidential Bonus	-		=	6,000.00
	Mid-year Bonus	-	135,000/12 x 7 1/2	=	84,375.00
	13th Month Pay			=	84,375.00
	X'mas Bonus			=	84,375.00
					–––––––––––––
				=	P1,279,125.00
					===========
2.	Separation Pay = two months
	P135,000 x 2 = 270,000				P270,000.00
					––––––––––––
	TOTAL			=	P1,549,125.00
					==========

 

The other claims are dismissed.

SO ORDERED.

Likewise sought to nullify is NLRC's Resolution issued on July 26, 2004 denying petitioner's motion for reconsideration.

Private respondent Cynthia N. Torres was hired by petitioner on July 16, 1999 as Head of the Sales Administration Center with the rank of Vice President. Said office is under the Corporate Services Sector. Corollarily, on September 29, 1999, private respondent was appointed Vice-President.

On June 21, 2000, private respondent was informed that she was not re-appointed as Vice President, that consequently resulted to her being terminated as Head of the Sales Administration Center. On even date of June 21, 2000, a memorandum was issued informing private respondent of the termination of her services. DETACa

On October 4, 2000, private respondent filed a complaint for illegal dismissal, reinstatement, recovery of backwages, damages and attorney's fees with the Arbitration Branch and the same was handled by Labor Arbiter Aliman D. Mangandog, who rendered his Decision dismissing the complaint of private respondent for lack of merit. 4

The NLRC reversed the labor arbiter and found jurisdiction over the complaint, and ruled that PLDT illegally dismissed Torres. Hence, PLDT appealed the NLRC's ruling to the CA. The CA affirmed the NLRC Decision and Resolution.

CA G.R. SP No. 86636

In this case, the CA through Justice Sesinando E. Villon of the Fifth Division 5 summarized the facts as follows:

Petitioner Cynthia N. Torres, by way of this special civil action for Certiorari, seeks to partially set aside the Decision dated June 25, 2004 and Resolution dated July 26, 2004 of public respondent National Labor Relations Commission ("NLRC") Third Division in NLRC NCR CA No. 028059-01 which vacated and set aside the Decision dated February 7, 2001 of Labor Arbiter Aliman D. Mangandog in NLRC Case No. 30-10-03951-00 dismissing the complaint for illegal dismissal.

The factual and procedural antecedents are as follows:

Cynthia N. Torres ("Torres") occupies the position of Head, Sales Administration Center ("SAC") of respondent Philippine Long Distance Telephone Company ("PLDT"). Her appointment was relayed to the officers, executives and employees of PLDT through Administrative Order No. 1250-99 dated July 16, 1999, issued by the President of PLDT. The SAC is tasked to provide support to the various sales centers and divisions of PLDT for the purpose of enhancing the latter's overall sales performance through their respective heads; the herein respondents, PLDT First Vice President Alfredo S. Panlilio ("Panlilio"), Head of the Corporate Business Group that includes the SAC, Senior Vice President Victorico P. Vargas ("Vargas"), the Group Head, Human Resources and Vice President Emiliano R. Tanchico ("Tanchico"), the Head of Personnel Management and Development Center.

Subsequently, Administrative Order No. 1239-99 dated September 29, 1999 was issued by the President of PLDT announcing the appointment of Torres as one of the Vice-Presidents of the company. The Administrative Order reads:

I am pleased to announce that at the regular meeting of the Board held today, the following were promoted and appointed to the positions as indicated:

xxx xxx xxx

Appointment

Ms. Cynthia N. Torres — Vice President

They will continue to head their respective offices. Please extend your usual cooperation and support to them.

(Sgd.) Manuel V. Pangilinan

Later on, working relations between Torres on one hand and Panlilio, Vargas and Tanchico on the other hand, went sour in view of the alleged inability of Torres to perform the duties appurtenant to her position and to work as a member of the team. Torres countered, claiming that she was subjected to humiliation, harassment and embarrassment, particularly by Panlilio who openly humiliated her before her peers, subordinates and even before the representatives of PLDT's sister companies, all calculated to ease her out of her position and eventually out of the company. The matter of separation package was subsequently discussed between Tanchico and Torres should the latter voluntarily resign from the company. Tanchico informed Torres of the "redundancy package" through an inter-office memo dated June 8, 2000, detailing the computation of the financial package she would receive should she be placed on a redundancy status. aDSIHc

The PLDT Board of Directors at its annual meeting on June 15, 2000 decided not to renew the appointment of Torres as Vice President of PLDT. Panlilio thereafter issued a notice of separation dated June 21, 2000 informing Torres of the action of the Board of Directors and that her services as Vice President and Head of SAC will be terminated at the close of business hours of June 21, 2000.

More than three months thereafter or on October 4, 2000, Torres filed her complaint for illegal dismissal against the respondents before the Labor Arbitration Branch, NLRC National Capital Region.

After the filing of the parties' respective position paper, the case was submitted for decision.

On February 7, 2001, Labor Arbiter Aliman D. Mangandog rendered a decision, the pertinent portion of which reads:

There is, therefore, no denying that complainant was a corporate officer elected to her position by the Board of Directors of PLDT. Immediately prior to the filing of this Complaint, her election as a corporate officer was merely not renewed.

Thus, the issue relating to the validity of her alleged dismissal therefrom should be taken as an intra-corporate controversy that comes within the original and exclusive jurisdiction of the Securities and Exchange Commission (SEC), falling as it does, under the class described in Section 5, par. c of P.D. No. 902-A, which provides:

Sec. 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 an decide cases involving:

xxx xxx xxx

(b) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations, partnerships or associations.

With the passage of Republic Act No. 8799 or the Securities Regulation Code, the jurisdiction of the SEC on this subject matter is now properly with the Regional Trial Court.

xxx xxx xxx

It is well-settled that this Office cannot replace the wisdom of the Board of Directors of PLDT in not re-electing complainant as a corporate officer who is to hold critical and sensitive posts such as that of a Sales Head. At any rate, the environmental facts of the case show that complainant was not dismissed from employment. Her term merely expired when the appointing body did not re-appoint her to her previous position. (LOPEZ, The Corporation Code of the Philippines, at 443, citing Fletcher Cyc. Corp.) As there was no dismissal to speak of, complainant's complaint of illegal dismissal must perforce fail. ETHIDa

With the foregoing dispositions, this Office sees no need to discuss the other peripheral issues raised by complainant which have squarely been refuted by the affidavits of respondents.

All told, complainant's claim of illegal dismissal, indemnification for alleged damage and attorney's fees have no legal to stand on.

WHEREFORE, premises considered, the instant complaint is hereby DISMISSED for lack of merit.

SO ORDERED.

Torres appealed to the NLRC, which, on June 25, 2004 promulgated a Decision ruling that the Commission has jurisdiction over the complaint for illegal dismissal, and disposed of the case as follows:

WHEREFORE, the decision dated 7 February 2001 is VACATED and SET ASIDE. Respondent PLDT is found to have illegally dismissed the complainant is hereby directed to pay complainant the following:

3.	Backwages
	Monthly Salary	-	P135,000 x 7 1/2 mos.	=	P1,012,500.00
	Rice Subsidy	-	1,000 x 7 1/2 mos.	=	7,500.00
	Presidential Bonus	-		=	6,000.00
	Mid-year Bonus	-	135,000/12 x 7 1/2	=	84,375.00
	13th Month Pay			=	84,375.00
	X'mas Bonus			=	84,375.00
					––––––––––––
				=	P1,279,125.00
					===========
4.	Separation Pay = two months
	P135,000 x 2 = 270,000				P270,000.00
					––––––––––––
	TOTAL			=	P1,542,125.00
					===========

The other claims are dismissed.

SO ORDERED.

Torres filed a motion for partial reconsideration contesting the NLRC's finding of the existence of "strained relations" between her and the private respondents as well as the alleged incorrect and grossly deficient monetary award. In a Resolution dated July 26, 2004, the NLRC denied the motion. 6

The case was brought to the CA by Torres. As stated previously, the appellate court partially granted the petition, and ruled that Torres was entitled to payment of backwages and all other benefits in her remuneration package, computed from the date of her illegal dismissal up to the promulgation of the NLRC Decision dated 25 June 2004. 7 cSEDTC

The facts of the consolidated cases

The essential facts, undisputed by both parties, can be simplified based on the CA Decisions as follows:

Respondent Torres was appointed sometime in July 1999 8 as Head of the Sales Administration Center (SAC) of petitioner's Corporate Service Sector. 9 Later in September, she was appointed one of the Vice Presidents of PLDT by the Board of Directors. 10 On 21 July 2000, respondent Torres was informed by petitioner that the Board of Directors had not re-elected respondent, which effectively separated her from her duties as Head of the SAC. 11 Three months later, respondent filed a complaint against petitioner before the NLRC Arbitration Branch. 12

The Petitions before this Court

The three petitions, while sharing the same set of facts, touch upon different legal facets of the NLRC rulings.

In G.R. No. 169439, petitioner argued that the CA in CA G.R. SP No. 86721 erred in upholding the NLRC's Decision and Resolution, since both had been issued without jurisdiction. 13 Its principal argument is that the appointment or non-appointment of the respondent as Vice-President was an intra-corporate dispute subject to the Regional Trial Court's jurisdiction. 14 To substantiate the argument, petitioner cited Section 1, Article VI of its by-laws:

The executive officers of the corporation shall be a President, a Senior Executive President, one or more Executive Vice Presidents, one or more Senior Vice President, one or more First Vice Presidents, one or more Vice Presidents, a Treasurer, one or more Assistant Treasurers, a Secretary, one or more Assistant Secretaries, a Controller, one or more Assistant Controllers, all of whom shall be elected by the Board of Directors. 15

Petitioner likewise claimed that the CA contravened jurisprudence when it ruled that respondent was not a corporate officer despite the ruling of this Court in Dily Dany Nacpil v. Intercontinental Broadcasting Corporation that an appointment with approval and formal action of the Board of Directors, coupled with by-law provisions authorizing the Board to create additional officer positions, involves an intra-corporate dispute. 16

Thus petitioner prayed for the annulment of the CA Decision and Resolution in CA G.R. SP No. 86721, as well as a temporary restraining order on the execution thereof. 17

Respondent submitted her Comment, 18 and argued that the CA correctly ruled that she was a high ranking employee but not a corporate officer since she was appointed the Head of the SAC, which did not appear in the enumerated officers of PLDT's by-laws or in the Corporation Code. 19 Moreover, her election as Vice President a mere two months from her initial appointment was merely nominal because the Board allegedly confirmed that she was to continue handling the office she was currently assigned and retained all functions of the Head of the SAC with no additional functions given to her as a purported Vice President. 20 She also differentiated her situation with that of the case of Dily Dany Nacpil v. Intercontinental Broadcasting Corporation because her appointment as Head of the SAC was without board action. 21 Finally, she argued that her claim for illegal dismissal was based upon her contract with PLDT as Head of the SAC, which was not extinguished by her nominal appointment as Vice President. 22 SDAaTC

In G.R. No. 182402, petitioner decried the Decision and Resolution of the CA in CA G.R. SP No. 86636 as having pre-empted this Court in the previous case docketed as G.R. No. 169439. That particular case was prompted by respondent Torres' petition against the NLRC rulings in respect of non-reinstatement despite a finding of illegal dismissal and computation of backwages. It claimed that the matter of validity of respondent's separation was already within the cognizance of this Court, and that the CA should not have passed upon the issue in CA G.R. SP No. 86636. 23 In essence, petitioner assailed the CA award of backwages and separation pay despite the ongoing petition for review in G.R. No. 169439. 24 Again, petitioner asked for a temporary restraining order and/or writ of preliminary injunction against the execution of the award. 25

Finally, G.R. No. 182598 involved respondent Torres' petition against the Decision and Resolution of the CA in CA G.R. SP No. 86636 involving the above-stated issues on non-reinstatement and computation of backwages. 26 Specifically, respondent attributed error to the CA's finding of strained relations despite no evidence showing the fact, contrary to jurisprudence from this Court. 27 She likewise claimed that even the abolition of her former position did not moot her reinstatement, but required petitioner PLDT to reinstate her to a substantially equivalent position. 28 Additionally, respondent alleged that the appellate court erred in computing her backwages, since the computation should be from the time of the illegal dismissal up to the finality of judgment or reinstatement. 29 Finally, she claimed error when the CA denied her claims for moral damages, exemplary damages, and attorney's fees since there was bad faith or fraud that attended her dismissal. 30

The various decisions on jurisdiction

The various decisions contested in this case vary in the treatment of jurisdiction.

In the original complaint, the Labor Arbiter ruled that the jurisdiction of the complaint fell within the bounds of the jurisdiction of the Securities and Exchange Commission on intra-corporate disputes (now with the Regional Trial Court). 31 He reasoned that respondent had ceased being a regular employee when she was elevated to the position of Vice-President. 32 He reasoned moreover that her position as Sales Head was inextricably linked to her becoming a corporate officer since only a corporate officer could hold that position, 33 and thus the non-renewal of her appointment as a corporate officer came within the purview of P.D. No. 902-A which gave the Securities and Exchange Commission original and exclusive jurisdiction to hear and decide cases involving controversies in the appointment of directors, trustees, officers, or managers of corporations. 34

The NLRC reversed this ruling on appeal. It found no evidence that being Sales Head required appointment as a corporate officer, except for the bare allegation of petitioner's witness. 35 Additionally, the chronology of events demonstrated that respondent was not originally a corporate officer, in that respondent's appointment as Sales Head came two months before her appointment as Vice-President. 36 It was on account of losing the position of Sales Head that, according to the commission, was the basis for her complaint, and not on her non-reappointment as Vice-President. 37 The NLRC likewise took cognizance of the admission made by petitioners that respondent's replacement was not appointed as a Vice-President, and thus the position of Sales Head did not require the appointee to be a corporate officer. 38 Finally, when respondent refused to resign, the Board of Directors stepped in and acted by not re-electing her as a corporate officer. 39 The commission determined that taken as a whole, the circumstances evinced intent to dismiss complainant. 40 Hence, jurisdiction over the case properly fell within the parameters of the Labor Arbiter's jurisdiction as a complaint for illegal dismissal. 41 acEHCD

On appeal by the petitioner, the CA in CA-G.R. SP No. 86721 agreed with the decision of the NLRC in respect of its jurisdictional conclusions. It opined that the appointment of respondent as Vice-President had no significance in the present controversy, since there was no connection between her hiring as Sales Head to her appointment as Vice-President. 42 The CA ruled that before she was elected as Vice-President, she was hired as Sales Head and offered a corresponding compensation package. 43 More importantly, she was hired through an administrative order and not by any action of the directors or the stockholders. 44 On the strength of these reasons, the CA ruled that jurisdiction was aptly vested in and exercised by the NLRC as a labor dispute. 45

The CA in CA-G.R. SP No. 86636 which involved the appeal by respondent on grounds of non-reinstatement, miscomputation of backwages and separation pay, and the absence of any award on moral and exemplary damages, attorney's fees, litigation expenses, and costs of the suit likewise sustained the NLRC's findings that the complaint involved a labor dispute within the jurisdiction of the Labor Arbiter and NLRC. 46 The CA in fact found that the Comment of petitioner did not dispute the jurisdiction of the NLRC. 47

These jurisdictional questions are at the center of this case.

Petitioner in G.R. No. 169439 assails the finding that the NLRC had jurisdiction over the dispute. Its position has remained constant throughout the various fora: that the complaint of respondent involves an intra-corporate dispute, specifically a dispute about the election of a corporate officer, and therefore jurisdiction over the dispute lies with the Securities and Exchange Commission, and by virtue of the Securities Regulation Code, the Regional Trial Court. 48

We disagree with this position.

The original complaint-affidavit was based specifically on respondent's appointment as Head of Sales, for which she was initially appointed on 16 July 1999 by Administrative Order No. 1250-99 issued solely by the President of PLDT. 49 Despite her later appointment as Vice-President by the Board of Directors on 29 September 1999 through Administrative Order No. 1239-99, respondent's original position was explicitly retained:

Appointment

Ms. Cynthia N. Torres — Vice President

They will continue to head their respective offices. Please extend your usual cooperation and support to them.

(Sgd.) Manuel V. Pangilinan 50

Thus when she was not re-elected by the board, she lost her status as Vice-President but did not lose her office as Head of Sales. This much is clear when she was given a notice of separation which informed her on 21 June 2000 of the action of the Board of Directors, and that "her services as Vice President of Sales Administration Center will be terminated at the close of business hours of June 21, 2000[,]" 51 implying a separation of the two positions as Vice-President and as Head of SAC. Petitioner argues that being the Head of SAC requires one to be a corporate officer. 52 Yet it is strange that it never presented evidence of this claim, whether through by-law provisions or an action of the Board of Directors. In fact, the original Administrative Order No. 1250-99 appointing her as Head of Sales Administration Center does not at all specify that she was a corporate officer. 53 The only evidence is the letter appointment which designates her compensation package in the following manner: SDHTEC

Below is the executive compensation package that you will be entitled to as Center Head with the rank of Vice-President. 54

It is clear from the words of the appointment that while her compensation package was that of a Vice-President, she was not appointed as such. In fact, this was confirmed by the actions of petitioner itself when it later on appointed her to the position of Vice-President through Board action. The initial appointment of respondent was therefore not to a corporate office.

The case of Real v. Sangu is instructive:

Petitioner negates his status as a corporate officer by pointing out that although he was removed as Manager through a board resolution, he was never elected to said position nor was he appointed thereto by the Board of Directors. While the By-Laws of respondent corporation provides that the Board may from time to time appoint such officers as it may deem necessary or proper, he avers that respondents failed to present any board resolution that he was appointed pursuant to said By-Laws. He instead alleges that he was hired as Manager of respondent corporation solely by respondent Abe. For these reasons, petitioner claims to be a mere employee of respondent corporation rather than as a corporate officer.

We find merit in petitioner's contention.

"Corporate officers" in the context of Presidential Decree No. 902-A are those officers of the corporation who are given that character by the Corporation Code or by the corporation's by-laws. There are three specific officers whom a corporation must have under Section 25 of the Corporation Code. These are the president, secretary and the treasurer. The number of officers is not limited to these three. A corporation may have such other officers as may be provided for by its by-laws like, but not limited to, the vice-president, cashier, auditor or general manager. The number of corporate officers is thus limited by law and by the corporation's by-laws. 55

Based on this, the test for determining the status of a corporate officer under the law is an appointment to the office pursuant to a corporation's by-laws, by the Board of Directors. HSAcaE

While respondents repeatedly claim that petitioner was appointed as Manager pursuant to the corporation's By-Laws, the above-quoted inconsistencies in their allegations as to how petitioner was placed in said position, coupled by the fact that they failed to produce any documentary evidence to prove that petitioner was appointed thereto by action or with approval of the board, only leads this Court to believe otherwise. It has been consistently held that "[a]n 'office' is created by the charter of the corporation and the officer is elected (or appointed) by the directors or stockholders." Clearly here, respondents failed to prove that petitioner was appointed by the board of directors. Thus, we cannot subscribe to their claim that petitioner is a corporate officer. Having said this, we find that there is no intra-corporate relationship between the parties insofar as petitioner's complaint for illegal dismissal is concerned and that same does not satisfy the relationship test. 56

Petitioner likewise claims that the position of Head of the Sales Administration Center requires the appointee to be a corporate officer. Again, it did not provide evidentiary proof, such as a secretary's certification that the position is a corporate office in the by-laws, 57 that respondent was a corporate officer before she was appointed to this position. On the contrary, petitioner's evidence clearly shows that her appointment as Vice-President came after the appointment as Head of the Sales Administration Center.

In Matling Industrial and Commercial Corporation v. Coros, we further explained that even the creation of an office under a by-law enabling provision is not enough to make the position one for a corporate officer, to wit:

Conformably with Section 25, a position must be expressly mentioned in the By-Laws in order to be considered as a corporate office. Thus, the creation of an office pursuant to or under a By-Law enabling provision is not enough to make a position a corporate office. Guerrea v. Lezama, the first ruling on the matter, held that the only officers of a corporation were those given that character either by the Corporation Code or by the By-Laws; the rest of the corporate officers could be considered only as employees or subordinate officials. Thus, it was held in Easycall Communications Phils., Inc. v. King:

An "office" is created by the charter of the corporation and the officer is elected by the directors or stockholders. On the other hand, 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.

In this case, respondent was appointed vice president for nationwide expansion by Malonzo, petitioner's general manager, not by the board of directors of petitioner. It was also Malonzo who determined the compensation package of respondent. Thus, respondent was an employee, not a "corporate officer." The CA was therefore correct in ruling that jurisdiction over the case was properly with the NLRC, not the SEC (now the RTC).

This interpretation is the correct application of Section 25 of the Corporation Code, which plainly states that the corporate officers are the President, Secretary, Treasurer and such other officers as may be provided for in the By-Laws. Accordingly, the corporate officers in the context of PD No. 902-A are exclusively those who are given that character either by the Corporation Code or by the corporation's By-Laws.

A different interpretation can easily leave the way open for the Board of Directors to circumvent the constitutionally guaranteed security of tenure of the employee by the expedient inclusion in the By-Laws of an enabling clause on the creation of just any corporate officer position. 58 (Emphases supplied)

Again, there is a dearth of evidence that explicitly states the Head of the Sales Administration Center is a corporate officer in the by-laws of petitioner. Not even the action of the Board apparently approving her removal as a corporate officer can change the nature of her initial appointment. To quote further: HESIcT

A careful perusal of petitioner corporation's by-laws, particularly paragraph 1, Section 1, Article IV, 37 would explicitly reveal that its corporate officers are composed only of: (1) Chairman; (2) President; (3) one or more Vice-President; (4) Treasurer; and (5) Secretary. The position of General Manager was not among those enumerated.

Paragraph 2, Section 1, Article IV of petitioner corporation's by-laws, empowered its Board of Directors to appoint such other officers as it may determine necessary or proper. It is by virtue of this enabling provision that petitioner corporation's Board of Directors allegedly approved a resolution to make the position of General Manager a corporate office, and, thereafter, appointed respondent thereto making him one of its corporate officers. All of these acts were done without first amending its by-laws so as to include the General Manager in its roster of corporate officers.

With the given circumstances and in conformity with Matling Industrial and Commercial Corporation v. Coros, this Court rules that respondent was not a corporate officer of petitioner corporation because his position as General Manager was not specifically mentioned in the roster of corporate officers in its corporate by-laws. The enabling clause in petitioner corporation's by-laws empowering its Board of Directors to create additional officers, i.e., General Manager, and the alleged subsequent passage of a board resolution to that effect cannot make such position a corporate office. Matling clearly enunciated that the board of directors has no power to create other corporate offices without first amending the corporate by-laws so as to include therein the newly created corporate office. Though the board of directors may create appointive positions other than the positions of corporate officers, the persons occupying such positions cannot be viewed as corporate officers under Section 25 of the Corporation Code. In view thereof, this Court holds that unless and until petitioner corporation's by-laws is amended for the inclusion of General Manager in the list of its corporate officers, such position cannot be considered as a corporate office within the realm of Section 25 of the Corporation Code.

Moreover, the nature of the controversy cannot be cured by subsequent Board actions specifying the office as a corporate office. Only a legitimate amendment of the By-Laws can convert an office into a corporate office for purposes of jurisdiction, as we stated previously. 59

To recall, respondent's complaint before the NLRC was based on her removal as Head of the Sales Administrative Center. 60 Her engagement was as Head of Sales Administration Center, which was distinct from her later appointment as Vice-President. This latter appointment, which petitioners harp on, is wholly inconsequential to the question of jurisdiction because it is a distinct position to that of Head of Sales. Her employment contract does not in any way require her appointment as Vice-President, as ruled upon by the NLRC:

Contrary to respondents' allegations, there is no evidence on record that would support their claim that there was a previous arrangement by the contending parties that complainant would be elected company vice-president. Respondents had averred that the position of Head of Sales Administration center [sic] is assigned to and occupied by a corporate officer. However, except for its bare allegations as contained in Mr. Emiliano R. Tanchico's affidavit, respondent failed to prove that complainant's position as Head of Sales Administration Center is held by a corporate officer.

xxx xxx xxx

Respondents in their position paper, had admitted that while complainant's problem remained unresolved, Mr. Alfredo Asunto was brought in directly to help the Corporate Group Head Mr. Alfred Panlilio. They averred that said move was a good one although Mr. Asunto did not formally assume responsibility for the complainant's duties until 21 July 2000, or a month after the complainant's relationship with the company was terminated on 21 June 2000. Respondents further alleged that Mr. Asunto's duties were vastly expanded responsibilities that were far beyond the duties assigned to the complainant. However, we have taken note of the fact that despite Mr. Asunto's fully assuming complainant's functions/duties, respondents never alleged herein that Mr. Asunto was also appointed as a PLDT vice-president. If respondents' averments that the position of Head of Sales Administration Center is a position that is assigned to and occupied by a corporate officer, Mr. Asunto should then be appointed as vice-president after assuming complainant's functions/duties. 61 caITAC

Hence, the NLRC and the CA correctly ruled that this case is one involving illegal dismissal and is not an intra-corporate dispute, and the dispute thereof falls within the NLRC's jurisdiction.

Since the NLRC has jurisdiction, it follows that the commission correctly ruled that there was illegal dismissal. The facts have clearly indicated that respondent Torres was not confronted with any of the charges imputed against her. 62 Even if PLDT had cause to dismiss her for lack of confidence or insubordination, this prerogative of management must be made without abuse of discretion, for we have previously stated that "what is at stake is not only the private respondent's position but also his means of livelihood . . . the rules of fairness and due process still apply." 63

On the issue of backwages and reinstatement, we fully side with the CA in CA-G.R. SP No. 86636.

The CA correctly ruled that respondent could no longer be reinstated to her former position as Head of the SAC in view of the strained relations between her and the ranking officers of petitioner, as well as the dissolution of the office and the transfer of its functions to different units of the company. 64 In lieu thereof, separation pay may be awarded in her favor. 65

The grant of backwages and separation pay in exchange for reinstatement has been comprehensively dealt with by this Court in Santos v. NLRC, wherein Justice Florentino P. Feliciano described the intent of the remedies as separate and distinct remedies in favor of the employee illegally dismissed:

The normal consequences of a finding that an employee has been illegally dismissed are, firstly, that the employee becomes entitled to reinstatement to his former position without loss of seniority rights and, secondly, the payment of backwages corresponding to the period from his illegal dismissal up to actual reinstatement. The statutory intent on this matter is clearly discernible. Reinstatement restores the employee who was unjustly dismissed to the position from which he was removed, that is, to his status quo ante dismissal, while the grant of backwages allows the same employee to recover from the employer that which he had lost by way of wages as a result of his dismissal. These twin remedies — reinstatement and payment of backwages — make the dismissed employee whole who can then look forward to continued employment. Thus do these two remedies give meaning and substance to the constitutional right of labor to security of tenure. The two forms of relief are distinct and separate, one from the other. Though the grant of reinstatement commonly carries with it an award of backwages, the inappropriateness or non-availability of one does not carry with it the inappropriateness or non-availability of the other. Separation pay was awarded in favor of petitioner Lydia Santos because the NLRC found that her reinstatement was no longer feasible or appropriate. As the term suggests, separation pay is the amount that an employee receives at the time of his severance from the service and, as correctly noted by the Solicitor General in his Comment, is designed to provide the employee with "the wherewithal during the period that he is looking for another employment." In the instant case, the grant of separation pay was a substitute for immediate and continued re-employment with the private respondent Bank. The grant of separation pay did not redress the injury that is intended to be relieved by the second remedy of backwages, that is, the loss of earnings that would have accrued to the dismissed employee during the period between dismissal and reinstatement. Put a little differently, payment of backwages is a form of relief that restores the income that was lost by reason of unlawful dismissal; separation pay, in contrast, is oriented towards the immediate future, the transitional period the dismissed employee must undergo before locating a replacement job. It was grievous error amounting to grave abuse of discretion on the part of the NLRC to have considered an award of separation pay as equivalent to the aggregate relief constituted by reinstatement plus payment of backwages under Article 280 of the Labor Code. The grant of separation pay was a proper substitute only for reinstatement; it could not be an adequate substitute both for reinstatement and for backwages. 66 ICHDca

The CA likewise correctly modified the NLRC decision when it computed the backwages from the time of illegal dismissal up to 25 June 2004, when the NLRC declared that reinstatement was not feasible and appropriate, 67 since that was the material point in time when the possibility of reinstatement ended and the obligation of providing separation pay in lieu thereof began as provided by this Court in Santos.

This finding of illegal dismissal does not give rise to an award for moral and exemplary damages simply because these are only recoverable in clearly demonstrable instances of bad faith, which does not attend here. The company in fact demonstrated its attempts to integrate respondent with its other ranking members. Although these attempts failed, there was never an attempt to oppress or defraud respondent, or to deal with her in bad faith. Against these facts, she simply alleged harassment and malicious treatment, with the effect of social humiliation, besmirched reputation, mental anguish, serious anxiety, wounded feelings, and sleepless nights without any supporting evidence. 68 There is thus no reason to grant moral and exemplary damages.

However, we disagree with the CA that the claims for attorney's fees, litigation expenses, and costs must fail due to the lack of substantiation of these expenses by respondent. 69 Article 2208 of the Civil Code enumerates the instances when attorney's fees and expenses of litigation are appropriate:

(1) When exemplary damages are awarded;

(2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest;

(3) In criminal cases of malicious prosecution against the plaintiff;

(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;

(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly valid, just and demandable claim;

(6) In actions for legal support;

(7) In actions for the recovery of wages of household helpers, laborers and skilled workers;

(8) In actions for indemnity under workmen's compensation and employer's liability laws;

(9) In a separate civil action to recover civil liability arising from a crime;

(10) When at least double judicial costs are awarded;

(11) In any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be recovered.

In all cases, the attorney's fees and expenses of litigation must be reasonable. 70

This provision outlines the exception to the general rule that there is no premium to the right to litigate. 71 While the general rule is that it is necessary for the trial court to make findings of facts in order to justify an award of attorney's fees, we have found that a case involving illegal dismissal necessarily carries with it the burden to litigate for proper compensation, such that the civil code provision applies despite the absence of bad faith.

To clarify, while attorney's fees in the ordinary sense of compensation for legal services need to be proven as a fact, attorney's fees in the extraordinary sense under the labor code need not be proven as they are considered indemnity for damages, specifically in actions to recover wages, viz.:

Article 111 of the Labor Code, as amended, governs the grant of attorney's fees in labor cases:

'Art. 111. Attorney's fees. — (a) In cases of unlawful withholding of wages, the culpable party may be assessed attorney's fees equivalent to ten percent of the amount of wages recovered.

(b) It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings for the recovery of wages, attorney's fees which exceed ten percent of the amount of wages recovered.'

Section 8, Rule VIII, Book III of its Implementing Rules also provides, viz.: TCAScE

'Section 8. Attorney's fees. — Attorney's fees in any judicial or administrative proceedings for the recovery of wages shall not exceed 10% of the amount awarded. The fees may be deducted from the total amount due the winning party.'

We explained in PCL Shipping Philippines, Inc. v. National Labor Relations Commission that there are two commonly accepted concepts of attorney's fees — the ordinary and extraordinary. In its ordinary concept, an attorney's fee is the reasonable compensation paid to a lawyer by his client for the legal services the former renders; compensation is paid for the cost and/or results of legal services per agreement or as may be assessed. In its extraordinary concept, attorney's fees are deemed indemnity for damages ordered by the court to be paid by the losing party to the winning party. The instances when these may be awarded are enumerated in Article 2208 of the Civil Code, specifically in its paragraph 7 on actions for recovery of wages, and is payable not to the lawyer but to the client, unless the client and his lawyer have agreed that the award shall accrue to the lawyer as additional or part of compensation.

We also held in PCL Shipping that Article 111 of the Labor Code, as amended, contemplates the extraordinary concept of attorney's fees and that Article 111 is an exception to the declared policy of strict construction in the award of attorney's fees. Although an express finding of facts and law is still necessary to prove the merit of the award, there need not be any showing that the employer acted maliciously or in bad faith when it withheld the wages. In carrying out and interpreting the Labor Code's provisions and implementing regulations, the employee's welfare should be the primary and paramount consideration. This kind of interpretation gives meaning and substance to the liberal and compassionate spirit of the law as embodied in Article 4 of the Labor Code (which provides that "[a]ll doubts in the implementation and interpretation of the provisions of [the Labor Code], including its implementing rules and regulations, shall be resolved in favor of labor") and Article 1702 of the Civil Code (which provides that "[i]n case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer").

We similarly so ruled in RTG Construction, Inc. v. Facto and in Ortiz v. San Miguel Corporation. In RTG Construction, we specifically stated:

'Settled is the rule that in actions for recovery of wages, or where an employee was forced to litigate and, thus, incur expenses to protect his rights and interests, a monetary award by way of attorney's fees is justifiable under Article 111 of the Labor Code; Section 8, Rule VIII, Book III of its Implementing Rules; and paragraph 7, Article 2208 of the Civil Code. The award of attorney's fees is proper, and there need not be any showing that the employer acted maliciously or in bad faith when it withheld the wages. There need only be a showing that the lawful wages were not paid accordingly.'

In PCL Shipping, we found the award of attorney's fees due and appropriate since the respondent therein incurred legal expenses after he was forced to file an action for recovery of his lawful wages and other benefits to protect his rights. From this perspective and the above precedents, we conclude that the CA erred in ruling that a finding of the employer's malice or bad faith in withholding wages must precede an award of attorney's fees under Article 111 of the Labor Code. To reiterate, a plain showing that the lawful wages were not paid without justification is sufficient. 72 (Emphases supplied)

Previously, we have allowed the award of attorney's fees in instances where employees were dismissed even without findings of bad faith. 73 On the other hand, we have likewise ruled that attorney's fees are not recoverable absent any sufficient evidence of bad faith on the part of the employer. 74

As the more current jurisprudence emphasizes, attorney's fees in the extraordinary concept of indemnity for damages are recoverable despite the absence of bad faith.

From this perspective and the above precedents, we conclude that the CA erred in ruling that a finding of the employer's malice or bad faith in withholding wages must precede an award of attorney's fees under Article 111 of the Labor Code. To reiterate, a plain showing that the lawful wages were not paid without justification is sufficient. 75

Therefore we deem it apt to award 10% of the total monetary award to respondent Torres as attorney's fees, computed based on the CA's computation of backwages and separation pay in its C.A.-G.R. SP No. 86636 Decision, which modified the NLRC's computation. 76

WHEREFORE, the petitions in G.R. Nos. 169439, 182402, & 182598 are DISMISSED. The Decision and Resolution of the Court of Appeals in CA. G.R. SP No. 86721 dated 26 January 2005 and 10 May 2005 respectively, and the Decision and Resolution of the CA in CA G.R. SP No. 86636 dated 4 January 2008 and 26 March 2008 respectively, are AFFIRMED WITH MODIFICATION. Attorney's fees worth 10% of the total monetary award based on the Decision in C.A.-G.R. SP No. 86636 is AWARDED.

SO ORDERED." cTDaEH

Very truly yours,

 

(SGD.) EDGAR O. ARICHETADivision Clerk of Court

Footnotes

1. Rollo (G.R. No. 169439), pp. 184-194.

2. Id., at 102-111. Decision penned by Pres. Comm. Lourdes C. Javier, and concurred in by Comm. Tito F. Genilo with Comm. Ernesto C. Verceles on leave.

3. With now Supreme Court Associate Justice Bienvenido L. Reyes and Justice Rosalinda Asuncion-Vicente concurring.

4. Rollo, (G.R. No. 169439), pp. 53-56.

5. With now Supreme Court Associate Justice Martin S. Villarama, Jr. and Justice Noel G. Tijam concurring.

6. Rollo (G.R. No. 182598), pp. 35-43.

7. Id., at 45.

8. Based on their petitions, there are two dates involved: petitioner claims the appointment was effective 19 July 1999, while respondent claims it effective on 16 July 1999; Rollo, p. 13, (G.R. No. 169439); Rollo, p. 11, (G.R. No. 182402); Rollo, p. 17, (G.R. No. 182598).

9. Id.

10. Id.

11. Rollo (G.R. No. 169439), p. 19.

12. Id. at 20; Case No. 30-10-03951-00, raffled to Labor Arbiter Aliman D. Mangandog.

13. Id. at 23-34.

14. Id. at 25-26.

15. Id. at 30.

16. Id. at 34-36.

17. Id. at 44.

18. Id. at 410-443.

19. Id. at 424.

20. Id. at 425.

21. Id. at 426.

22. Id. at 437.

23. Rollo (G.R. No. 182402), pp. 17-20.

24. Id. at 20.

25. Id. at 22-23.

26. Rollo (G.R. No. 182598), p. 21.

27. Id. at 24.

28. Id. at 25.

29. Id. at 26-27.

30. Id. at 28-30.

31. Rollo (G.R. No. 169439), pp. 248-258.

32. Id. at 252-258.

33. Id. at 253.

34. Id. at 254.

35. Id. at 106.

36. Id. at 106.

37. Id. at 107.

38. Id. at 108-109.

39. Id. at 109.

40. Id.

41. Id.

42. Id. at 57.

43. Id. at 57-58.

44. Id.

45. Id. at 59.

46. Rollo (G.R. No. 182402), p. 38.

47. Id.

48. Rollo (G.R. No. 169439), pp. 25-32.

49. Rollo (G.R. No. 182402), p. 33.

50. Id.

51. Id. at 34.

52. Id. at 14.

53. Id. at 132.

54. Id. at 29.

55. 655 Phil. 68-92 (2011).

56. Id.

57. Union Motors Corp. v. National Labor Relations Commission, 373 Phil. 310-322 (2009).

58. 647 Phil. 324-350 (2010).

59. Marc II Marketing, Inc. v. Joson, 678 Phil. 232-265 (2011).

60. Rollo (G.R. No. 169439), pp. 191-211 and 225-227.

61. Id. at 466-468.

62. Id., at 109.

63. D.M. Consunji, Inc. v. National Labor Relations Commission, 227 PHIL. 192-199 (1986).

64. Rollo, (G.R. No. 182598) p. 43.

65. Id. at 44.

66. Santos v. National Labor Relations Commission, G.R. No. 76721, 21 September 1987.

67. Rollo, (G.R. No. 182598), p. 44.

68. Id. at 29.

69. Id. at 45.

70. Civil Code of the Philippines, REPUBLIC ACT NO. 386, [June 18, 1949].

71. Frias v. San Diego-Sison, 549 PHIL. 49-65 (2007).

72. Kaisahan ng mga Manggagawa at Kawani sa MWC-East Zone Union v. Manila Water Company, Inc., 676 PHIL. 262-279 (2011).

73. D.M. Consunji, Inc. v. National Labor Relations Commission, 227 PHIL. 192-199) (1986). See also RTG Construction, Inc. v. Facto, 623 PHIL. 511-522 (2009); Baron Republic Theatrical v. Peralta, 617 PHIL. 464-475 (2009).

74. LBC Domestic Franchise Co. v. Florido, 557 PHIL. 363-377 (2007); Lopez v. National Labor Relations Commission, 358 PHIL. 141-154 (1998).

75. Kaisahan ng mga Manggagawa at Kawani sa MWC-East Zone Union v. Manila Water Company, Inc., 676 PHIL. 262-279 (2011); Tangga-an v. Philippine Transmarine Carriers, Inc., 706 PHIL. 339-354 (2013).

76. Rollo, (G.R. No. 182598) pp. 45-46.