Loreche-Amit vs. Cagayan de Oro Medical Center

A person appointed by a corporation's Board of Directors is not necessarily a corporate officer unless the position is provided in the Corporation Code or the corporation's by-laws; however, the absence of corporate-officer status does not automatically make the appointee an employee, as the existence of an employer-employee relationship must still be established through the four-fold test, with the control test being the most significant determinant.

Dr. Mary Jean P. Loreche-Amit was engaged by the late Dr. Jose N. Gaerlan as Associate Pathologist in the Department of Laboratories of Cagayan de Oro Medical Center, Inc. (CDMC) sometime in May 1996. Upon Dr. Gaerlan's death, CDMC's Board of Directors formally appointed her as Chief Pathologist for a five-year term ending May 15, 2011. The dispute arose from the Board's recall of that appointment on June 13, 2007, which petitioner attributed to her refusal to assist Dr. Hernando Emano's daughter in qualifying as a pathologist. The jurisdictional question—whether labor tribunals or the RTC had cognizance over her illegal dismissal complaint—hinged on whether she was a corporate officer under Section 25 of the Corporation Code and Section 5.2 of R.A. No. 8799 (The Securities Regulation Code of the Philippines).

Dr. Mary Jean P. Loreche-Amit began working at Cagayan de Oro Medical Center, Inc. (CDMC) sometime in May 1996, when she was engaged by the late Dr. Jose N. Gaerlan as Associate Pathologist in the Department of Laboratories. Upon Dr. Gaerlan's demise, CDMC's Board of Directors formally appointed her as Chief Pathologist for a term of five years, or until May 15, 2011. Her compensation was set at 4% of the gross receipts of the Clinical Section of the laboratory.

The friction leading to her removal began when Dr. Hernando Emano, one of the respondents, asked petitioner to assist his daughter, Dr. Helga Emano-Bleza, in qualifying as a pathologist, petitioner being one of six members of the Board of Governors accredited by the Professional Regulation Commission. Petitioner refused, citing Dr. Emano-Bleza's failure to qualify in the clinical pathology examination. Petitioner attributed the subsequent efforts to remove her to this refusal.

Thereafter, Dr. Francisco Oh issued an Inter-Office Memorandum to all laboratory personnel stating that working in and out of the building without proper permission would be treated as absence without official leave, and that payment for printing duplicate copies not endorsed to the hospital constituted a form of stealing. Petitioner reacted by slamming the Memorandum against the wall and calling Dr. Oh an irrational man. She then received another Inter-Office Memorandum from Dr. Oh charging her with conduct unbecoming and insubordination, requiring her to explain why her appointment should not be revoked. Eventually, a Memorandum recalling her appointment was issued by the Board of Directors on June 13, 2007.

Petitioner filed a complaint for illegal dismissal, asserting she was terminated without just cause and due process. Respondents countered that petitioner was not hired by them but merely assisted Dr. Gaerlan in operating the hospital's laboratory, and that she concurrently worked as pathologist at Capitol College Hospital and J.R. Borja Memorial Hospital, which was not prohibited. The Labor Arbiter, NLRC, and CA all found that petitioner was a corporate officer whose dismissal constituted an intra-corporate controversy outside labor tribunals' jurisdiction. The Supreme Court agreed that no illegal dismissal was proven, but on the different ground that petitioner was neither a corporate officer nor an employee of CDMC.

• Not a Corporate Officer: Petitioner argued that she was not a corporate officer because her position as Pathologist was not among those included in the by-laws of CDMC.
• Illegal Dismissal: Petitioner contended that she was dismissed by CDMC from her work without just cause and due process, and that the recall of her appointment was a retaliatory act stemming from her refusal to assist Dr. Emano-Bleza in qualifying as a pathologist.

• Not Hired by Respondents: Respondents averred that petitioner was not hired by them but merely assisted Dr. Gaerlan in operating the hospital's laboratory.
• Concurrent Employment: Respondents maintained that petitioner worked simultaneously as pathologist in Capitol College Hospital and J.R. Borja Memorial Hospital, and that she was not prohibited from doing so.

• Jurisdiction: Whether labor tribunals have jurisdiction over the complaint for illegal dismissal filed by petitioner.
• Corporate Officer Status: Whether petitioner's appointment as Chief Pathologist by the Board of Directors made her a corporate officer.
• Employer-Employee Relationship: Whether an employer-employee relationship existed between petitioner and CDMC.

• Jurisdiction: No. Labor tribunals did not have jurisdiction, but neither did the RTC on the ground of intra-corporate controversy; the complaint was properly dismissed because no employer-employee relationship was established.
• Corporate Officer Status: No. Petitioner was not a corporate officer because her position as Pathologist was not provided in the Corporation Code or in the by-laws of CDMC, which were absent from the records.
• Employer-Employee Relationship: No. The four-fold test was not satisfied, the control test being the most significant element; CDMC did not exercise control over the manner and method of petitioner's work, and the economic reality test showed she was not economically dependent on CDMC.

• Jurisdiction: Jurisdiction over the complaint depended on whether the controversy was intra-corporate, which in turn depended on whether petitioner was a corporate officer. Since she was not, the RTC had no jurisdiction under the intra-corporate controversy framework. However, because no employer-employee relationship was established, labor tribunals likewise had no basis to entertain the illegal dismissal complaint. The lower tribunals' dismissal was thus affirmed, albeit on a different ground than the one they relied upon.

• Corporate Officer Status: Under Section 25 of the Corporation Code, corporate officers are the president, secretary, treasurer, and such other officers as may be provided in the by-laws. An appointment through a Board resolution alone does not confer corporate-officer status; the position must be provided in the Corporation Code or the by-laws. Nowhere in the records could the by-laws of CDMC be found, and the position of Pathologist was not among the officers enumerated in the Corporation Code. Following WPP Marketing Communications, Inc. vs. Galera and Marc II Marketing, Inc. vs. Joson, where the Court held that respondents were not corporate officers because neither the Corporation Code nor the by-laws so provided, petitioner could not be deemed a corporate officer.

• Employer-Employee Relationship: The four-fold test—(1) selection and engagement, (2) payment of wages, (3) power of dismissal, and (4) power of control—must be satisfied. CDMC exercised the power to select and supervise petitioner, appointed her for a fixed term, and paid her compensation at 4% of the Clinical Section's gross receipts. However, the control test, the most significant determinant, was not met. Petitioner concurrently worked for two other hospitals and catered to additional hospitals as needed, demonstrating that she controlled her working hours. She admitted receiving her full 4% share regardless of the number of hours worked, indicating she managed her method and hours of work. The economic reality test, which examines economic dependence, further supported the conclusion that petitioner was not wholly dependent on CDMC. The Inter-Office Memorandum issued by Dr. Oh regarding petitioner's behavior was administrative in character and did not pertain to the manner and method of her work, thus insufficient to establish control. Where a person performs work at his own pleasure, in the manner he sees fit, not subject to definite hours or conditions, and is compensated by results rather than time, no employer-employee relationship exists.

• Corporate Officer Doctrine — Corporate officers are those given such character either by the Corporation Code or by the corporation's by-laws. Under Section 25 of the Corporation Code, the corporate officers are the president, secretary, treasurer, and such other officers as may be provided in the by-laws. A Board resolution appointing a person to a position does not, by itself, make the appointee a corporate officer; the position must be expressly provided in the Corporation Code or the by-laws. The Court applied this doctrine to hold that petitioner, appointed as Chief Pathologist by CDMC's Board, was not a corporate officer because the by-laws were absent from the records and the position was not enumerated in the Corporation Code.

• Four-Fold Test of Employer-Employee Relationship — The existence of an employer-employee relationship is determined by: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power of control over the employee's conduct. The control test is the most significant determinant, premised on whether the employer reserves the right to control both the end achieved and the manner and means used to achieve that end. The Court found that while the first, second, and third elements were arguably present, the control test was not satisfied because petitioner managed her own hours and methods, worked for multiple hospitals, and received compensation based on results rather than time worked.

• Economic Reality Test — Under this test, the economic realities prevailing within the activity or between the parties are examined, considering the totality of circumstances surrounding the true nature of the relationship. The benchmark is the economic dependence of the worker on the employer. The Court applied this test to reinforce the conclusion that petitioner was not an employee, as her concurrent work for other hospitals demonstrated she was not economically dependent on CDMC.

• "Corporate officers are given such character either by the Corporation Code or by the corporation's by-laws. Under Section 25 of the Corporation Code, the corporate officers are the president, secretary, treasurer and such other officers as may be provided in the by-laws." — This passage articulates the controlling rule for determining corporate-officer status, distinguishing it from mere appointment by the Board of Directors.

• "The power to control the work of the employee is considered the most significant determinant of the existence of an employer-employee relationship. This test is premised on whether the person for whom the services are performed reserves the right to control both the end achieved and the manner and means used to achieve that end." — This passage states the canonical formulation of the control test, the most critical element of the four-fold test for employer-employee relationship.

• "The rule is that where a person who works for another performs his job more or less at his own pleasure, in the manner he sees fit, not subject to definite hours or conditions of work, and is compensated according to the result of his efforts and not the amount thereof, no employer-employee relationship exists." — This passage defines the negative formulation of the control test, frequently cited to exclude independent contractor or fee-based arrangements from the ambit of employer-employee relationships.

• WPP Marketing Communications, Inc. vs. Galera, 630 Phil. 410 (2010) — Followed. The Court relied on this case for the proposition that a person is not a corporate officer unless the position is provided in the Corporation Code or the by-laws, and cited it to support the conclusion that petitioner was not a corporate officer.

• Marc II Marketing, Inc. vs. Joson, 678 Phil. 232 (2011) — Followed. The Court cited this case alongside WPP for the same corporate-officer rule, noting that in Marc II, the respondent whose position was not mentioned in the Corporation Code or the by-laws was treated as an employee rather than a corporate officer.

• Marsman & Company, Inc. vs. Sta. Rita, G.R. No. 194765, April 23, 2018 — Cited as authority for the four-fold test of employer-employee relationship.

• Reyes vs. Glaucoma Research Foundation, Inc., 760 Phil. 779 (2015) — Cited for the definition of the control test as the most significant determinant of employer-employee relationship, and for the rule that no employer-employee relationship exists where a person works at his own pleasure and is compensated by results.

• Orozco vs. The Fifth Division of the Honorable Court of Appeals, 584 Phil. 35 (2008) — Cited for the economic reality test, which examines economic dependence as the benchmark in analyzing employment relationships.

• Section 25, Corporation Code — Provides that the corporate officers are the president, secretary, treasurer, and such other officers as may be provided in the by-laws. Applied to determine that petitioner's position as Pathologist was not a corporate office, as it was not enumerated in the Corporation Code and the by-laws of CDMC were absent from the records.

• Section 5.2, Republic Act No. 8799 (The Securities Regulation Code of the Philippines) — vests jurisdiction over intra-corporate controversies, including the election or appointment of directors, trustees, officers, or managers of corporations, upon the Regional Trial Courts. The Court found this provision inapplicable because petitioner was not a corporate officer and thus no intra-corporate controversy existed.

Carpio (Chairperson), Perlas-Bernabe, and Lazaro-Javier, JJ., concurred. Caguioa, J., was on wellness leave.