Corporate Law Case Write-up
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I. Facts of the case
In 1981, Enrique Salafranca worked with Philimalife Village
Homeowners Association as administrative officer for a period
of six months and was thereafter reappointed to his position
three more times. After Salafranca’s term of employment
expired on 1983, he still continued to work in the same
capacity, albeit, without the benefit of a renewed contract. In
1987, Philamlife decided to amend its by-laws. Included
therein was a provision regarding officers, specially, the
position of administrative officer under which said officer shall
hold office at the pleasure of the Board of Directors. In view of
this development, Philamlife informed Salafranca that his
term of office shall be coterminus with the Board of Directors
which appointed him to his position. Furthermore, until he
submits a medical certificate showing his state of health, his
employment shall be on a month-to-month basis.
Nothwithstanding the failure of Salafranca to submit his
medical certificate, he continued working until his termination
in 1992. Claiming that his service had been unlawfully and
unceremoniously dispensed with, Salafranca filed a complaint
for illegal dismissal with money claims and for damages.
Philamlife, in an effort to validate the dismissal of Salafranca,
posits the theory that Salafranca’s postion is coterminus with
that of the Village’s Board of Directors, as provided for in its
amended by-laws.
II. Issue/s
Whether or not Philamlife’s amended by laws is a valid basis
to hold Salafranca’s dismissal to be valid?
G.R. NO: 177056
ARTICLE; TOPIC OF CASE: Eminent domain, taking
VOL XX [X X X]
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III. Held
NO. Admittedly, the right to amend the by-laws lies solely in
the discretion of the employer, this being in the exercise of
management prerogative or business judgment. However this
right, extensive as it may be, cannot impair the obligation of
existing contracts or rights.
Prescinding from these premises, private respondent’s
insistence that it can legally dismiss Salafranca on the ground
that his tenure has expired is untenable. To reiterate,
Salafranca, being a regular employee, is entitled to security of
tenure; hence, his services may only be terminated for causes
provided by law. A contrary interpretation would not find
justification in the laws or the Constitution. To rule otherwise
would enable an employer to remove any employee from his
employment by the simple expediency of amending its by-
laws and providing that his/her position shall cease to exist
upon the occurrence of a specified event.
If Philamlife wanted to make the Salafranca’s position co-
terminus with that of the Board of Directors, then the
amendment must be effective after Salafranca’s stay with
Philamlife, not during his term. Obviously, the meaure taken
by the 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 guranteed by the
Labor Code.
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,
PONENTE: Chico Nazario, J
DIGEST MAKER: Ash
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the only amendments introduced by the Revised Corporation

Code concern mere 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 effecively said that the
teniency 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
guranteed 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: 177056 PONENTE: Chico Nazario, J

ARTICLE; TOPIC OF CASE: Eminent domain, taking DIGEST MAKER: Ash