Barba vs. Liceo de Cagayan University

A position must be expressly mentioned in the corporation's bylaws to be considered a corporate office under Section 25 of the Corporation Code; positions created by board resolution or administrative manual without corresponding bylaw amendment do not qualify as corporate offices. The approval by the board of directors of an appointment to a non-corporate position does not transform the appointee into a corporate officer, and labor tribunals retain jurisdiction over termination disputes involving such positions.

The case arose from the closure of the College of Physical Therapy at Liceo de Cagayan University due to declining enrollment. Petitioner, who served as Dean under a fixed-term appointment and was bound by a scholarship contract to serve the university, was reassigned to the College of Nursing as a faculty member. When she refused the assignment and claimed constructive dismissal, the university raised the jurisdictional defense that she was a corporate officer, rendering the labor tribunals without authority to hear the case.

• Petitioner Dr. Ma. Mercedes L. Barba was employed by respondent Liceo de Cagayan University, a private educational institution.
• Petitioner started as medical officer/school physician on July 8, 1993, and in July 1994 received a scholarship grant for residency training in Rehabilitation Medicine under a contract requiring her to serve the school for at least ten years after completion.
• After finishing training in June 1997, petitioner was appointed Acting Dean of the College of Physical Therapy and Doctor-In-Charge of the Rehabilitation Clinic.
• On June 19, 2002, petitioner was re-appointed Dean for a fixed period of three years effective July 1, 2002, with the appointment letter stating it was subject to the Labor Code and could be revoked for valid cause.
• Due to declining enrollment (from 1,121 students in 1995-1996 to only 20 students in 2004-2005), respondent decided to freeze the operation of the College of Physical Therapy indefinitely.
• On March 16, 2005, respondent's President informed petitioner that her services as Dean would end at the close of the school year, and the College ceased operations on March 31, 2005.
• Petitioner was directed to report to the Acting Dean of the College of Nursing on June 1, 2005, to receive teaching assignments as a full-time faculty member for the school year 2005-2006.
• Petitioner refused the assignment, claiming she had not committed to teach in the College of Nursing and requesting separation benefits instead.
• Respondent insisted she report for work, citing her obligation under the Scholarship Contract to serve until 2007, and sent a notice terminating her services for abandonment on June 28, 2005, after she failed to report.
• Respondent's bylaws provided for corporate officers consisting of a President, Vice President, and Secretary-Treasurer (Article IV), and for other appointive officials including a "College Director" and "heads of departments" whose appointments would be determined by the Board of Directors (Article V), but made no mention of "College Dean."
• The board resolutions appointing petitioner as Dean cited Article III, Section 3 and Article V, Section 1 of the bylaws, and indicated she was appointed upon the President's recommendation with board approval for a three-year term with an honorarium.
• No one had ever been appointed as "College Director" under the bylaws, and numerous persons were simultaneously appointed as Deans, whereas the bylaws authorized only one College Director.

• Petitioner argued that the Court of Appeals erred in ruling she was a corporate officer, asserting that the appellate court's original finding that she was an employee was more in accord with law and jurisprudence.
• Petitioner contended that the labor tribunals had jurisdiction over her illegal dismissal complaint because she was an employee, not a corporate officer.
• Petitioner faulted the CA for allowing respondent to raise the issue of jurisdiction in a Supplemental Petition after actively participating in proceedings before the Labor Arbiter and NLRC without questioning jurisdiction.
• Petitioner asserted that the CA erred in denying her motion for reconsideration from the Amended Decision on the ground that it was a prohibited second motion for reconsideration.
• Petitioner claimed respondent violated the rule against forum shopping by failing to inform the CA of a pending civil case for breach of contract filed against her before the Regional Trial Court.
• Petitioner maintained that her transfer to the College of Nursing as a faculty member constituted constructive dismissal as it was a demotion from her position as Dean.

• Respondent argued that the petition was filed out of time and that petitioner's motion for reconsideration from the Amended Decision was a prohibited pleading since she had already filed a motion for reconsideration from the original CA decision.
• Respondent maintained that an Amended Decision is merely a modification of a prior decision, not a new decision, thus a second motion for reconsideration is prohibited.
• Respondent insisted that petitioner was a corporate officer because her appointment as Dean was approved by the board of directors, and the position was created under the bylaws.
• Respondent argued that the "College Director" mentioned in the bylaws was synonymous with "College Dean," and since the bylaws authorized the Board to appoint a College Director, petitioner was a corporate officer.
• Respondent contended that the Labor Arbiter and NLRC had no jurisdiction over the case because jurisdiction over corporate officers lies with regular courts, not labor tribunals.
• Respondent asserted that no constructive dismissal occurred because petitioner was never demoted; her appointment as Dean merely expired, and the assignment to teach was without loss of seniority or diminution of pay.

• Procedural Issues:
  • Whether the petition for review was filed out of time considering the petitioner filed a motion for reconsideration from the original CA decision and subsequently from the Amended Decision.
  • Whether respondent was guilty of forum shopping for failing to disclose a pending civil case for breach of contract.
  • Whether respondent was estopped from raising the issue of jurisdiction after actively participating in proceedings before the labor tribunals.
• Substantive Issues:
  • Whether petitioner, as Dean of the College of Physical Therapy, was a corporate officer or an employee of respondent university.
  • Whether the Labor Arbiter and NLRC had jurisdiction over petitioner's complaint for constructive dismissal.
  • Whether petitioner was constructively dismissed when reassigned to the College of Nursing as a faculty member after the closure of the College of Physical Therapy.

• Procedural:
  • The Supreme Court held that the petition was filed on time. Section 2, Rule 52 of the 1997 Rules of Civil Procedure prohibits a second motion for reconsideration of the same judgment or final resolution by the same party. However, where the CA renders an Amended Decision totally reversing and setting aside its previous ruling, the motion for reconsideration filed after the Amended Decision is not a prohibited second motion. The period to appeal should be reckoned from the denial of the motion for reconsideration from the Amended Decision, not the original decision.
  • The Court ruled that respondent was not guilty of forum shopping. While there was identity of parties between the illegal dismissal case and the civil case for breach of contract, the causes of action and reliefs sought were different. The former involved constructive dismissal, while the latter involved breach of the scholarship contract. The elements of litis pendentia were not present.
  • The Court held that respondent was estopped from questioning the jurisdiction of the labor tribunals. While jurisdiction may be assailed at any stage, a party's active participation in the proceedings estops such party from belatedly assailing jurisdiction. Respondent filed position papers and actively participated before the Labor Arbiter and NLRC without raising the jurisdictional issue, only raising it for the first time in a Supplemental Petition before the CA.
• Substantive:
  • The Court ruled that petitioner was an employee, not a corporate officer. Under Section 25 of the Corporation Code, corporate officers are the president, secretary, treasurer, and such other officers as may be provided for in the bylaws. Conformably with this provision, a position must be expressly mentioned in the bylaws to be considered a corporate office. The creation of an office pursuant to a bylaw enabling provision is insufficient.
  • The Court analyzed respondent's bylaws and found that Article IV listed only President, Vice President, and Secretary-Treasurer as corporate officers. Article V mentioned a "College Director" and "heads of departments" as appointive officials, but nowhere were "College Deans" mentioned as corporate officers.
  • The Court distinguished between "College Director" and "College Dean": (1) the bylaws authorized only one College Director but numerous Deans were appointed; (2) a College Director is directly appointed by the Board, while a Dean is appointed by the President upon recommendation and merely approved by the Board; (3) no one had ever been appointed as College Director.
  • The Court held that the approval by the board of directors of petitioner's appointment as Dean did not make her a corporate officer. The board may create appointive positions other than corporate officers, but persons occupying such positions are not corporate officers under Section 25 of the Corporation Code.
  • Applying the four-fold test (selection and engagement, payment of wages, power of dismissal, power of control), the Court found an employer-employee relationship existed. Petitioner was appointed by the President, paid a salary and transportation allowance, and subject to the university's control.
  • The Court held that no constructive dismissal occurred. Petitioner's appointment was for a fixed term of three years until July 1, 2005, and was validly revoked when the College of Physical Therapy closed due to business necessity. The reassignment to the College of Nursing was justified by the Scholarship Contract and did not involve demotion in rank or diminution of pay, but was a valid exercise of management prerogative to accommodate her after the closure of her college.

• Express Mention in Bylaws Requirement — Conformably with Section 25 of the Corporation Code, a position must be expressly mentioned in the bylaws in order to be considered a corporate office. The creation of an office pursuant to or under a bylaw enabling provision is not sufficient to make a position a corporate office.
• Distinction Between Corporate Officers and Employees — Corporate officers are elected or appointed by directors or stockholders and given that character by the Corporation Code or bylaws; employees occupy no office and are generally employed by the managing officer who determines their compensation. Board approval of appointments to non-corporate positions does not transform the appointee into a corporate officer.
• Active Participation as Estoppel — While jurisdiction may be assailed at any stage, a party's active participation in proceedings before a tribunal without raising jurisdictional objections estops such party from belatedly questioning jurisdiction. It is an undesirable practice to participate in proceedings and accept the judgment only if favorable, then attack it for lack of jurisdiction when adverse.
• Fixed-Term Appointments in Educational Institutions — Appointments to administrative positions such as dean in educational institutions may be for a fixed term, which is a necessity to enable reasonable rotation among faculty members. The expiration of such fixed-term appointment does not constitute dismissal.
• Constructive Dismissal — Constructive dismissal occurs when an employer's act results in a demotion in rank or diminution of salary, or when transfer is unreasonable, inconvenient, or prejudicial. The employer has the burden of proving that transfer is for valid grounds such as genuine business necessity. Transfer without loss of seniority or diminution of pay to an equivalent position does not constitute constructive dismissal.

• "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."
• "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."
• "Thus, pursuant to the above provision (Section 25 of the Corporation Code), whoever are the corporate officers enumerated in the by-laws are the exclusive Officers of the corporation and the Board has no power to create other Offices without amending first the corporate By-laws. However, the Board may create appointive positions other than the positions of corporate Officers, but the persons occupying such positions are not considered as corporate officers within the meaning of Section 25 of the Corporation Code and are not empowered to exercise the functions of the corporate Officers, except those functions lawfully delegated to them."
• "It is an undesirable practice of a party participating in the proceedings and submitting his case for decision and then accepting the judgment, only if favorable, and attacking it for lack of jurisdiction, when adverse."
• "Some familiar examples may be cited of employment contracts which may be neither for seasonal work nor for specific projects, but to which a fixed term is an essential and natural appurtenance: x x x appointments to the positions of dean, assistant dean, college secretary, principal, and other administrative offices in educational institutions, which are by practice or tradition rotated among the faculty members, and where fixed terms are a necessity without which no reasonable rotation would be possible."

• Matling Industrial and Commercial Corporation v. Coros — Cited for the principle that a position must be expressly mentioned in the bylaws to be considered a corporate office, and for the SEC Opinion clarifying that the Board may create appointive positions other than corporate officers, but persons occupying such positions are not corporate officers under Section 25 of the Corporation Code.
• Guerrea v. Lezama — Cited as the first ruling establishing that the only officers of a corporation are those given that character either by the Corporation Code or by the bylaws; the rest are considered employees or subordinate officials.
• Easycall Communications Phils., Inc. v. King — Cited for the distinction between an office (created by charter, officer elected by directors/stockholders) and an employee (occupies no office, employed by managing officer).
• Gomez v. PNOC Development and Management Corporation (PDMC) — Cited for the definition of corporate officers as those elected or appointed by directors or stockholders and given that character by the Corporation Code or bylaws.
• Brent School, Inc. v. Zamora — Cited for the doctrine that fixed-term appointments for deans and other administrative positions in educational institutions are valid and necessary to enable rotation among faculty members.
• Philippine Veterans Bank v. National Labor Relations Commission — Cited for the doctrine that active participation in proceedings estops a party from later questioning jurisdiction.
• Julie's Bakeshop v. Arnaiz — Cited for the rule that in constructive dismissal cases, the employer has the burden of proving that transfer is for valid and legitimate grounds such as genuine business necessity.
• Uy v. Centro Ceramica Corporation — Cited for the general rule that only questions of law may be allowed in a petition for review on certiorari.

• Section 25 of the Corporation Code (B.P. Blg. 68) — Defines corporate officers as the president, secretary, treasurer, and such other officers as may be provided for in the bylaws; basis for the requirement that a position must be expressly mentioned in bylaws to be a corporate office.
• Article 217 of the Labor Code — Grants Labor Arbiters and the NLRC original and exclusive jurisdiction over termination disputes and claims arising from employer-employee relations.
• Section 2, Rule 52 of the 1997 Rules of Civil Procedure — Governs motions for reconsideration and the prohibition against second motions for reconsideration of the same judgment by the same party.
• Section 6, Rule 10 of the 1997 Rules of Civil Procedure — Governs supplemental pleadings; provides that courts may admit supplemental pleadings but admission remains in the sound discretion of the court.