Gomez vs. PDMC

The determination of whether a person is a corporate officer or a regular employee depends on the actual incidents of the relationship as they exist, not merely on the nature of services performed. Where an administrator is appointed solely by the corporate president, receives compensation determined by the president, is not designated as a corporate officer in the company by-laws, and is enrolled in SSS, Medicare, Pag-Ibig, and other employee benefit programs, such person is a regular employee under the jurisdiction of the National Labor Relations Commission, notwithstanding the performance of high-level managerial functions.

The dispute arose during the privatization of government-owned oil corporations. Petitioner Gomez, formerly a manager at Petron Corporation, was engaged by Filoil Refinery Corporation (later reorganized as FDMC and eventually renamed respondent PDMC) to facilitate asset documentation and transition management. The controversy centered on whether her subsequent appointment as administrator created a corporate officer relationship subject to intra-corporate dispute resolution, or a regular employment relationship cognizable by labor tribunals.

• Petitioner Gomez served as Manager of the Legal Department at Petron Corporation until her early retirement on April 30, 1994, following Petron's privatization.
• On May 1, 1994, Filoil Refinery Corporation (a government-owned corporation later reorganized as FDMC and renamed PDMC) appointed her as corporate secretary and legal counsel with the same managerial rank and compensation she held at Petron.
• When Filoil was identified for privatization, the board created a five-member task force headed by Gomez as administrator to document corporate assets; she discovered unbooked properties and advised suspending privatization.
• Following reorganization into FDMC (later PDMC), the task force was abolished and termination notices were issued to members on March 5, 1996, though Gomez continued serving as corporate secretary.
• On September 23, 1996, the PDMC president re-hired Gomez as administrator and legal counsel, crediting her prior service years under company guidelines.
• On May 24, 1998, the PDMC president extended her term as administrator beyond retirement age (August 11, 1998 to August 11, 2004) pursuant to his authority under the PDMC Approvals Manual.
• A new board of directors took over and removed Gomez as corporate secretary on March 29, 1999; on October 21, 1999, the board questioned her continued employment as administrator.
• The PDMC legal department opined that the term extension was an ultra vires act requiring board approval, while the Office of the Government Corporate Counsel held that the position creation was ratified but the extension needed board approval.
• The board withheld Gomez's wages from November 16 to 30, 1999, and on December 29, 1999, resolved to terminate her services retroactive to August 11, 1998.
• PDMC treated Gomez as a regular employee: enrolled her in SSS, Medicare, and Pag-Ibig; issued certifications declaring her a permanent employee; included her in the savings and provident plan, retirement plan, and group hospitalization insurance for managers; conducted performance appraisals; allowed employee stock option plan purchases; granted vacation and emergency leaves; and withheld taxes on her salary declaring her as an employee in BIR forms.
• The PDMC by-laws listed corporate officers as chairman, president, executive vice-president, vice-president, general manager, treasurer, and secretary; the position of administrator was not included.

• Gomez conceded that as corporate secretary, she served as a corporate officer, but argued that as administrator, she became a regular managerial employee whose appointment did not require board approval.
• She contended that her appointment as administrator was made by the company president alone, and her compensation was determined by the president, not the board, indicating a regular employment relationship.
• She argued that respondent PDMC treated her as a regular employee for years, enrolling her in employee benefit programs and treating her as part of the managerial staff, and was now estopped from claiming she was a corporate officer merely to defeat labor jurisdiction.
• She maintained that the Labor Arbiter had jurisdiction over her claims for illegal dismissal and non-payment of wages.

• PDMC argued that Gomez was a corporate officer because she performed functions similar to those of a vice-president or general manager, being third in the line of command and empowered to make major decisions.
• It contended that since the board had the power under the by-laws to create additional corporate offices, the president's creation of the administrator position should be deemed ratified by the board, making her a corporate officer.
• It asserted that because her position was functionally equivalent to vice-president or general manager, her term extension required board approval under the by-laws, and the president's unilateral extension was void.
• It claimed that the controversy involved an intra-corporate dispute under Section 5(c) of Presidential Decree No. 902-A, placing jurisdiction with the Regional Trial Court, not the Labor Arbiter.

• Procedural:
  • Whether the Labor Arbiter had jurisdiction over Gomez's complaint for illegal dismissal and money claims, or if the case constituted an intra-corporate dispute falling under the jurisdiction of the Regional Trial Court pursuant to Presidential Decree No. 902-A, as amended by Republic Act No. 8799.
• Substantive Issues:
  • Whether petitioner Gomez, in her capacity as administrator of PDMC, was a corporate officer or a regular managerial employee.

• Procedural:
  • The Labor Arbiter has jurisdiction over the case. The Supreme Court held that Gomez was a regular employee, not a corporate officer; therefore, her complaint for illegal dismissal and non-payment of wages did not involve an intra-corporate controversy. The jurisdiction over intra-corporate disputes under P.D. 902-A, as transferred to the Regional Trial Courts by R.A. 8799, applies only to controversies involving corporate officers, not regular employees.
• Substantive:
  • Gomez was a regular employee, not a corporate officer. The Court ruled that corporate officers are elected or appointed by the directors or stockholders and are given that character either by the Corporation Code or by the corporation's by-laws, whereas ordinary employees are employed by the managing officer who also determines their compensation.
  • Here, the PDMC president (not the board) appointed Gomez as administrator and determined her compensation. The position of administrator was not among the corporate officers listed in the PDMC by-laws (which only included chairman, president, executive vice-president, vice-president, general manager, treasurer, and secretary).
  • While the by-laws allowed the board to create additional offices, the Court found no intent to create a corporate office: the president hired her without board approval in 1994 and 1996, and extended her term in 1998 without board approval, demonstrating the company's mindset that she was not a corporate officer.
  • The nature of services performed does not determine the relationship; rather, the actual incidents of the relationship control. PDMC treated Gomez as a regular employee through SSS, Medicare, and Pag-Ibig enrollment; certifications of permanent employment; inclusion in retirement and provident plans; group insurance for managers; performance appraisals; employee stock options; leave benefits; and tax treatment as an employee.
  • Under the principle of estoppel, PDMC is barred from denying Gomez's employment status after treating her as a regular employee for years.
  • The fact that Gomez concurrently served as corporate secretary (a corporate officer) is immaterial, as a corporation may hire a corporate officer to perform services as an employee, and one may have a dual role.

• Determination of Employment Relationship — The relationship of a person to a corporation, whether as officer, agent, or employee, is determined by the incidents of the relationship as they actually exist, not merely by the nature of the services performed.
• Corporate Officer vs. Regular Employee — Corporate officers are elected or appointed by the directors or stockholders and derive their character from the Corporation Code or corporate by-laws; ordinary employees are employed by the managing officer who determines their compensation.
• Estoppel in Corporate Context — A corporation is estopped from denying the employment status of a person when it has previously treated that person as a regular employee through its acts and representations, to the prejudice of the employee who relied on such treatment.
• Dual Capacity Doctrine — A corporation is not prohibited from hiring a corporate officer to perform services under circumstances creating an employer-employee relationship; one may simultaneously hold the dual roles of corporate officer and regular employee, with labor tribunals having jurisdiction over claims arising from the employment capacity.

• "The relationship of a person to a corporation, whether as officer or agent or employee, is not determined by the nature of the services he performs but by the incidents of his relationship with the corporation as they actually exist."
• "Estoppel, an equitable principle rooted on natural justice, prevents a person from rejecting his previous acts and representations to the prejudice of others who have relied on them. This principle of law applies to corporations as well."

• Easycall Communications Phils., Inc. v. King — Cited for the distinction that ordinary employees are employed by the managing officer who determines compensation, while corporate officers are elected or appointed by directors or stockholders.
• Nacpil v. International Broadcasting Corporation — Cited for the principle that the relationship of a person to a corporation is determined by the actual incidents of the relationship, not the nature of services performed.
• Elleccion Vda. De Lecciones v. National Labor Relations Commission — Cited for the doctrine that one may serve both as corporate secretary (officer) and administrator (employee), and that the NLRC has jurisdiction over money claims made in the capacity as employee.
• Rural Bank of Coron (Palawan), Inc. v. Cortes — Cited for the principle that a corporation may hire a corporate officer to perform services creating an employer-employee relationship.
• Philippine National Bank v. Palma — Cited for the application of estoppel against a corporation that seeks to deny the employment status of a person it previously treated as an employee.

• Presidential Decree No. 902-A, Section 5(c) — Provided that controversies in the election or appointment of directors, trustees, officers, or managers of corporations fall under the exclusive jurisdiction of the Securities and Exchange Commission.
• Republic Act No. 8799 (Securities Regulation Code), Section 5.2 — Transferred the jurisdiction of the SEC over cases enumerated under Section 5 of P.D. 902-A to the Regional Trial Courts.