Title
Matling Industrial and Commercial Corporation vs. Coros
Case
G.R. No. 157802
Decision Date
Oct 13, 2010
Dismissal dispute over jurisdiction: whether dismissed VP was a corporate officer (RTC) or regular employee (LA). Court ruled VP not a corporate officer, LA had jurisdiction.
illegal dismissal
jurisdictional dispute
labor arbiter

Case Summary (G.R. No. 157802)

Factual Background

Ricardo R. Coros was dismissed by Matling Industrial and Commercial Corporation from his post as Vice President for Finance and Administration on April 17, 2000. Coros filed a complaint for illegal suspension and illegal dismissal with the NLRC, Sub-Regional Arbitration Branch XII, Iligan City, on August 10, 2000. Coros had begun employment with Matling on September 8, 1966 and progressed through successive positions to become Vice President for Finance and Administration in 1987. He acquired a stock certificate in 1992 and was alleged by petitioners to have been a member of Matling’s Board of Directors. Coros maintained that he had not been formally elected director, did not own shares in fact, and that his appointment and dismissal as vice president were employment matters distinct from any alleged director or stockholder status.

Trial Court Proceedings

The Labor Arbiter granted petitioners’ motion to dismiss on October 16, 2000, ruling that Coros was a corporate officer because he occupied the position of Vice President for Finance and Administration and was a member of the Board of Directors, so that his ouster constituted a corporate act subject to the jurisdiction of the Securities and Exchange Commission under Section 5, paragraph (c) of Presidential Decree No. 902 (PD No. 902-A).

Ruling of the NLRC

On appeal the National Labor Relations Commission (NLRC) set aside the Labor Arbiter’s dismissal order on March 13, 2001. The NLRC concluded that Coros’s position was not a corporate office under Matling’s By-Laws, and that the dispute did not involve an intracorporate matter; jurisdiction therefore lay with the Labor Arbiter. The NLRC remanded the records to the arbitration branch for further proceedings and denied petitioners’ motion for reconsideration on April 30, 2001.

Ruling of the Court of Appeals

The petitioners filed a petition for certiorari with the Court of Appeals. In its decision of September 13, 2002 the CA dismissed the petition for certiorari and sustained the NLRC. The CA held that for a position to be a corporate office it must be created by the board of directors or be expressly provided in the by-laws, and that Matling’s By-Law No. V — which empowered the President to create new offices and appoint officers — did not convert positions created by the President into corporate offices if they were not the product of board or stockholder action. The CA concluded that the Vice President for Finance and Administration was an ordinary corporate office created by the President and occupied by an employee, so that the Labor Arbiter had jurisdiction.

Issue Presented

Whether the position of Vice President for Finance and Administration occupied by Ricardo R. Coros was a corporate office such that his dismissal became an intra-corporate dispute cognizable by the courts of general jurisdiction (formerly the SEC) rather than a termination dispute cognizable by the Labor Arbiter.

The Parties' Contentions

The petitioners contended that the Vice President for Finance and Administration was a corporate officer because Matling’s By-Law No. V authorized the President to create offices and appoint officers, and because Coros was allegedly a stockholder and director; therefore his removal was intra-corporate and outside LA jurisdiction. Coros maintained that the position was not listed among the corporate officers in the By-Laws, that his appointment was made by the President and not by the board or stockholders, that he rose from the ranks over thirty-three years of service, and that his status as stockholder or director did not bear on his appointment or dismissal as vice president.

Supreme Court's Ruling

The appeal failed. The Supreme Court affirmed the rulings below. The Court held that the position of Vice President for Finance and Administration, as created and filled in this case, was not a corporate office under Section 25 of the Corporation Code, and therefore the Labor Arbiter had jurisdiction to hear Coros’s complaint for illegal dismissal. The Court rejected petitioners’ contention that Coros’s alleged status as director and stockholder automatically converted the dismissal into an intra-corporate dispute.

Legal Basis and Reasoning

The Court anchored jurisdictional analysis on Article 217 (a) 2 of the Labor Code, which vests original and exclusive jurisdiction over termination disputes in Labor Arbiters, and on PD No. 902-A and Republic Act No. 8799, which allocate intra-corporate disputes to the SEC or, after RA No. 8799, to the Regional Trial Courts. The Court emphasized the import of Section 25 of the Corporation Code: corporate officers are those enumerated in or provided for by the by-laws and must be elected by the board or stockholders. The Court reasoned that By-Law No. V’s delegation of authority to the President to create offices and appoint officers did not operate to convert every position so created into a corporate office for purposes of PD No. 902-A. The power to elect corporate officers is a discretionary power vested by law in the board of directors and may not be validly delegated so as to defeat the security of tenure of employees. The Court relied on prior precedents holding that an “office” is created by charter or by-laws and that officers must be elected by directors or stockholders, while employees are ordinarily appointed by managing officers. The Court found the CA correctly distinguished dicta in Tabang v. NLRC and subsequent reliance t

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