RESEARCH MEMORANDUM RE: WILLY CO

Facts:
1. Allied Banking Corporation (ABC) is a duly registered Banking Entity
in the Philippines engaged in the Business of Commercial Banking,
trust functions, and other similar activities as the Bangko Sentral ng
Pilipinas (BSP) may declare appropriate. The Bank was
incorporated on Aprill 11, 1977.
2. Mr. Willy Co (Mr. Co) is one of the incorporators and founding
members of ABC. Mr. Co had substantial ownership in ABC, having
been subscribed to 38,768 common shares, representing 1.174%
ownership in the bank.
3. Mr. Co was also a member of the Board of Directors, and sat as
Vice Chairman of the Board since August 15, 2001. The Vice
Chairman of the Board is one of the offices created by the By-Laws
of ABC, who performs the functions of the Chairman of the Board in
the latters absence and other duties and powers as may be
prescribed by the Board.
4. Mr. Co seeks to avail of the retirement benefits pursuant to ABCs
retirement plan. However, the Human Resources Division intimated
to him that he is not entitled to the same.
Issues:
1. Is Mr. Co an employee or a corporate officer?
2. Can Mr. Co avail of the retirement benefits and provided for in the
Retirement Plan of ABC?
3. What are the remedies Mr. Co may pursue?
Answers and Discussion:
Willy Co is a Corporate Officer and Generally Not Covered by Labor Laws
Corporate Officers in the context of Presidential Decree 902-A are
those officers of the corporation who are given that character by the
Corporation Code or by the corporations by-laws (Garcia v. Eastern
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Telecommunications Phil., Inc., et al., G.R. Nos. 173115 & 173163-64,

April 16, 2009).
Mr. Co cannot be considered a corporate officer for the reason that
an office is created by the charter of the corporation and the officer is
elected by the directors or stockholders, while an employee usually
occupies no office and generally is employed not by 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. (Okol v.
Slimmers World International, 608 SCRA 97).
There are stark differences which may distinguish an employee from
a corporate officer. Ordinary company employees are generally employed
not by action of the directors and stockholders but by that of the
management officer of the corporation who also determines the
compensation to be paid such employees. Corporate officers, on the other
hand, are elected or appointed by the directors or stockholders, and are
those who are given that character either by the Corporation Code or by
the corporations by-laws. (Gomez v. PNOC Dev. and Management Corp.,
606 SCRA 187).
For indeed, in determining whether a given set of circumstances
constitute or exhibit an employer-employee relationship, the accepted rule
is that the elements or circumstances relating to the following matters shall
be examined and considered:
1.
2.
3.
4.

The selection and engagement of the employees;

The payment of wages;
The power of dismissal; and
The power to control the employees conduct.

The abovementioned elements are clearly not present in this case. Mr.
Co has sub
Willy Co is Nevertheless Entitled to Retirement Benefits, Having been
Treated as a Member of the Plan
While Mr. Co cannot be considered an employee of the corporation,
he is nevertheless entitled to the retirement benefits provided for under
ABCs retirement plan.
The Retirement Plan defines an employee as any full time
employee holding a permanent and regular position/employment in the
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Company and excludes casual, contractual, emergency, and substitute

employees.
Sec. 1 of Article IV of the Retirement Plan provides that
Membership in the Plan shall be automatic for all full time regular and
permanent employees of the Company.
Mr. Co has been Vice Chairman of ABC since 2001. As such, he has
performed various functions in such capacity with the Bank. As a matter of
fact, the Position of the Vice President of the Chairman of the Board
requires the performance of certain duties similar to that of an employee:
Section 6. VICE-CHAIRMAN OF THE BOARD.
The Vice-Chairman of the Board shall, in the
absence of the Board Chairman, perform the
functions of the latter and such other powers
and duties as may be prescribed by the board.
x x x(emphasis supplied).
It is therefore clear that Mr. Cos duties and services have always
been subject to the close supervision and control of the Board of Directors.
Having served in the position for more than 10 years as Vice Chairman of
the Board, his functions are usually necessary and desirable to the usual
trade and business of the Company. He must therefore be considered to
be part of the manpower of ABC.
While indeed Mr. Co was elected to the position of Vice-Chairman by
the Board of Directors, this does not negate the fact that he is performing
the functions of a regular employee (Prudential Bank and Trust Company
v. Reyes, G.R. No. 141093, 20 February 2001).
In any case, ABC cannot deny the fact that Mr. Co is entitled to the
benefits under the Retirement Plan. From the records Mr. Co submitted, he
has been contributing under the Employees Investment Plan (EIP) a
program which allows members to invest a percentage of their monthly
salary to ABC in return for greater sums upon the memberss death,
retirement, disability or termination. The said plan only applies to
Member-Employees of ABC. Had ABC not treated Mr. Co an employee
for purposes of the Retirement Plan, they would have not allowed him to
invest in the EIP.
Estoppel by Deed clearly attaches in this case. ABC, being a party to
the deed, is precluded from denying any material fact stated in the said
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deed as against the other party and his privies in this case, the treatment
given to Mr. Co as a member of the Retirement Plan (Spouses Chien vs.
Sta. Lucia Realty, G.R. No. 162090, 31 January 2007). ABC is therefore
estopped from denying Mr. Cos status as an employee.
Legal Remedies and Steps Willy Co May Undertake
As an initial course of action, it would be more prudent for Mr. Co to
settle this question within the bounds of ABC. A formal demand is thus
necessary, citing jurisprudence and other legal provisions of the law,
including those cited in this research. Nevertheless, should his right to the
retirement benefits be denied by ABC, Mr. Co can initiate a complaint for
sum of money with a prayer to enforce the provisions of the retirement plan
in favor of Mr. Co with the Regional Trial Court considering the issue is
between an officer of the Corporation and one of its Corporate Officers. It
partakes the nature of an intra-corporate controversy.

/ipl