Corporate Law Case Write-up 300 SCRA 469
Salafranca v Philamlife Village Homeowners December 23, 1998
I. Facts of the case II. Issue/s
In 1981, Enrique Salafranca worked with Philamlife Village Whether or not Philamlife’s amended by-laws is a valid basis
Homeowners Association as administrative officer for a period to hold Salafranca’s dismissal to be valid?
of six months and was thereafter reappointed to his position
three more times. After Salafranca’s term of employment III. Held
expired in 1983, he still continued to work in the same
capacity, albeit, without the benefit of a renewed contract. NO. Admittedly, the right to amend the by-laws lies solely in
the discretion of the employer, this being in the exercise of
In 1987, Philamlife decided to amend its by-laws. Included management prerogative or business judgment. However this
therein was a provision regarding officers, specially, the right, extensive as it may be, cannot impair the obligation of
position of administrative officer under which said officer shall existing contracts or rights.
hold office at the pleasure of the Board of Directors. In view of Prescinding from these premises, Philamlife’s insistence that it
this development, Philamlife informed Salafranca that his can legally dismiss Salafranca on the ground that his tenure
term of office shall be coterminous with the Board of has expired is untenable. To reiterate, Salafranca, being a
Directors which appointed him to his position. Furthermore, regular employee, is entitled to security of tenure; hence, his
until he submits a medical certificate showing his state of services may only be terminated for causes provided by law. A
health, his employment shall be on a month-to-month basis. contrary interpretation would not find justification in the laws
or the Constitution. To rule otherwise would enable an
Notwithstanding the failure of Salafranca to submit his employer to remove any employee from his employment by
medical certificate, he continued working until his termination the simple expediency of amending its by-laws and providing
in 1992. Claiming that his service had been unlawfully and that his/her position shall cease to exist upon the occurrence
unceremoniously dispensed with, Salafranca filed a complaint of a specified event.
for illegal dismissal with money claims and for damages. If Philamlife wanted to make Salafranca's position
Philamlife, in an effort to validate the dismissal of Salafranca, coterminous with that of the Board of Directors, then the
posits the theory that Salafranca’s position is coterminous amendment must be effective after Salafranca’s stay with
with that of the Village’s Board of Directors, as provided for in Philamlife, not during his term. Obviously, the measure taken
its amended by-laws. by Philamlife in amending its by-laws is nothing but a devious,
but crude, attempt to circumvent Salafranca’s right to security
of tenure as a regular employee guaranteed by the Labor
Code.
G.R. NO: 121791 PONENTE: Romero, J
ARTICLE; TOPIC OF CASE: Common Law Limitations on By-Laws
Corporate Law Case Write-up 300 SCRA 469
Salafranca v Philamlife Village Homeowners December 23, 1998
IV. Critic
The doctrine that “by-laws cannot be contrary to law, public
policy or the charter” that has been consistently held in
jurisprudence remains to be true. With regard the by-laws,
the only amendments introduced by the Revised Corporation
Code concern the adoption and contents of the by-laws.
Therefore, there is no amendment under the Revised
Corporation Code which overturned such doctrine. With that
said, if this case would be decided under the Revised
Corporation Code, the Supreme Court would have the same
ruling, that is, the amendment made by Philamlife to its by-
laws which effectively said that the tenureship of its
administrative officer would be co-terminus with the Board
which appointed him/her, cannot overcome Salafranca’s right
to security of tenure as a regular employee guaranteed by the
Labor Code. The by-laws should not be used as a tool to
circumvent the law. As such, the Supreme Court’s ruling that
Salafranca’s termination is tantamount to illegal dismissal still
stands.
G.R. NO: 121791 PONENTE: Romero, J
ARTICLE; TOPIC OF CASE: Common Law Limitations on By-Laws
