Nacpil vs.
Intercontinental Broadcasting Corporation The Court has consistently held that there are two elements
GR No. 144767 | March 21, 2002 to be considered in determining whether the SEC has
jurisdiction over the controversy, to wit: (1) the status or
FACTS: Petitioner Dily Dany Nacpil was then assistant relationship of the parties; and (2) the nature of the question
general manager and comptroller of respondent that is the subject of their controversy.
Intercontinental Broadcasting Corporation (IBC). According
to Nacpil, when Emilio Templo was appointed to replace the Even assuming that Nacpil was in fact appointed by the
current IBC president, the former told the Board of Directors General Manager, such appointment was subsequently
that he would terminate the services of Nacpil as soon as he approved by the Board of Directors of the IBC. That the
assumes the IBC presidency. Upon Templo’s assumption of position of comptroller is not expressly mentioned among the
the IBC presidency, he allegedly harassed, insulted, officers of the IBC in the By-Laws is of no moment, because
humiliated, and pressured Nacpil into resigning until the latter the IBC’s Board of Directors is empowered under Section 25
was forced to retire. However, Templo also refused to pay of the Corporation Code and under the corporation’s By-Laws
Nacpil’s retirement benefits because he had not yet secured to appoint such other officers as it may deem necessary. The
the clearances from the PCGG and the COA. Furthermore, By-Laws of the IBC categorically provides:
Templo refused to recognize Nacpil’s employment claiming
that he was not the assistant general manager/comptroller of XII. OFFICERS
IBC but merely usurped the comptroller’s powers. The officers of the corporation shall consist of a
President, a Vice-President, a Secretary-Treasurer, a
In 1997, Nacpil filed with the Labor Arbiter a complaint for General Manager, and such other officers as the
illegal dismissal and non-payment of benefits. Board of Directors may from time to time does fit to
provide for. Said officers shall be elected by a
IBC filed a motion to dismiss, alleging that the Labor Arbiter majority vote of the Board of Directors and shall
has no jurisdiction over the case. It contended that Nacpil was have such powers and duties as shall hereinafter
a corporate officer whom the Board duly elected. Hence, the provide.
case is an intra-corporate dispute falling within the Security
and Exchange Commission’s (SEC) jurisdiction. The Court has held that in most cases, the “by-laws may and
usually do provide for such other officers,” and that where a
On the other hand, Nacpil argued he is not a corporate officer corporate office is not specifically indicated in the roster of
of the IBC but an employee thereof since he had not been corporate offices in the by-laws of a corporation, the Board of
elected nor appointed as comptroller and assistant manager directors may also be empowered under the by-laws to
by the IBC’s Board of Directors. He points out that he had create additional officers as may be necessary.
been appointed as such on January 11, 1995, by the IBC’s
General Manager, Ceferino Basilio. In support of his In Nacpil v. Intercontinental Broadcasting
argument, Nacpil underscores that the IBC’s By-Laws does not Corporation, which may be the more appropriate
even include the position of comptroller in its roster of ruling, the position subject of the controversy was not
corporate officers. He, therefore, contends that his dismissal expressly mentioned in the By-Laws, but was created
is a controversy falling within the jurisdiction of the labor pursuant to a By-Law enabling provision
courts. authorizing the Board of Directors to create
other offices that the Board of Directors might
The Labor Arbiter ruled that Nacpil had been illegally
see fit to create.
dismissed. IBC appealed to the NLRC, but the same was
In the present case, since Nacpil’s appointment was approved
dismissed in a Resolution. With this, IBC filed with the CA a
unanimously by the corporation’s Board of Directors, he is
petition for certiorari which was granted. Nacpil then filed a
therefore considered a corporate officer. His claim of illegal
motion for reconsideration, which the CA denied. Hence, this
dismissal is a controversy that falls under the jurisdiction of
petition.
the SEC as contemplated by Section 5 of P.D. 902-A. The rule
is that dismissal or nonappointment of a corporate officer is
ISSUE: Whether the Labor Arbiter has jurisdiction over the
clearly an intra-corporate matter, and jurisdiction over the
case for illegal dismissal and non-payment of benefits filed by
case properly belongs to the SEC, not to the NLRC.
Nacpil. NO.
As to Nacpil’s argument that the nature of his functions is
RULING: The Court finds that the Labor Arbiter had no
recommendatory, thereby making him a mere managerial
jurisdiction.
officer, the Court has previously held that the relationship of
a person to a corporation, whether as officer or agent or
employee, is not determined by the nature of the services organize by the election of a president, who shall be a
performed, but instead by the incidents of the relationship as director, a treasurer who may or may not be a director, a
they exist. secretary who shall be a resident and citizen of the
Philippines, and such other officers as may be provided for in
It is likewise of no consequence that petitioner’s complaint the by-laws. Any two (2) or more positions may be held
for illegal dismissal includes money claims, for such claims are concurrently by the same person, except that no one shall act
part of the perquisites of his position in, and therefore linked as president and secretary or as president and treasurer at
with his relations with, the corporation. The inclusion of such the same time.
money claims does not convert the issue into a simple labor
problem. Clearly, the issues raised by Nacpil against the IBC The directors or trustees and officers to be elected shall
are matters that come within the area of corporate affairs perform the duties enjoined on them by law and the by-laws
and management and constitute a corporate controversy in of the corporation. Unless the articles of incorporation or the
contemplation of the Corporation Code. by-laws provide for a greater majority, a majority of the
number of directors or trustees as fixed in the articles of
Take Note: Under Section 5.2 of the Securities Regulation incorporation shall constitute a quorum for the transaction of
Code (R.A. 8799), which was signed into law on July 19, 2000, corporate business, and every decision of at least a majority
the SEC’s jurisdiction over all cases enumerated in P.D.902-A of the directors or trustees present at a meeting at which
has been transferred to the courts of general jurisdiction or there is a quorum shall be valid as a corporate act, except for
the appropriate Regional Trial Courts. the election of officers which shall require the vote of a
majority of all the members of the board.
Petitioner further argues that the IBC failed to perfect its
appeal from the Labor Arbiter's Decision for its non-payment PD 902-A
of the appeal bond as required under Article 223 of the Labor Section 5. In addition to the regulatory and adjudicative
Code, since compliance with the requirement of posting of a functions of the Securities and Exchange Commission over
cash or surety bond in an amount equivalent to the monetary corporations, partnerships and other forms of associations
award in the judgment appealed from has been held to be registered with it as expressly granted under existing laws and
both mandatory and jurisdictional.22 Hence, the Decision of decrees, it shall have original and exclusive jurisdiction to
the Labor Arbiter had long become final and executory and hear and decide cases involving.
thus, the Court of Appeals acted with grave abuse of
discretion amounting to lack or excess of jurisdiction in giving a) Devices or schemes employed by or any acts, of the board
due course to the IBC's petition for certiorari, and in deciding of directors, business associates, its officers or partnership,
the case on the merits. amounting to fraud and misrepresentation which may be
detrimental to the interest of the public and/or of the
The IBC's failure to post an appeal bond within the period stockholder, partners, members of associations or
mandated under Article 223 of the Labor Code has been organizations registered with the Commission.
rendered immaterial by the fact that the Labor Arbiter did
not have jurisdiction over the case since as stated earlier, b) Controversies arising out of intra-corporate or partnership
the same is in the nature of an intra-corporate controversy. relations, between and among stockholders, members, or
The Court has consistently held that where there is a finding associates; between any or all of them and the corporation,
that any decision was rendered without jurisdiction, the partnership or association of which they are stockholders,
action shall be dismissed. Such defense can be interposed at members or associates, respectively; and between such
any time, during appeal or even after final judgment.23 It is a corporation, partnership or association and the state insofar
well-settled rule that jurisdiction is conferred only by the as it concerns their individual franchise or right to exist as
Constitution or by law. It cannot be fixed by the will of the such entity;
parties; it cannot be acquired through, enlarged or
diminished by, any act or omission of the parties. c) Controversies in the election or appointments of directors,
trustees, officers or managers of such corporations,
partnerships or associations.
Therefore, the Court dismissed the petition. 5.2. The Commission’s jurisdiction over all cases enumerated
CORPORATION CODE under section 5 of Presidential Decree No. 902-A is hereby
Sec. 25. Corporate officers, quorum. - Immediately after their transferred to the Courts of general jurisdiction or the
election, the directors of a corporation must formally appropriate Regional Trial Court: Provided, That the Supreme
Court in the exercise of its authority may designate the Facts: Ricardo Coros, was a former Vice President for Finance
Regional Trial Court branches that shall exercise jurisdiction and Administration of Matling. He filed a complaint for illegal
over the cases. The Commission shall retain jurisdiction over suspension and illegal dismissal against Matling before the
pending cases involving intra-corporate disputes submitted National Labor Relations Commission. Matling et al moved to
for final resolution which should be resolved within one (1) dismiss the complaint, contending that the complaint
year from the enactment of this Code. The Commission shall pertained to the jurisdiction of the Securities and Exchange
Commission (SEC) due to the controversy being intra-
retain jurisdiction over pending suspension of
corporate because Coros was a member of the Board of
payment/rehabilitation cases filed as of 30 June 2000 until
Directors aside from being its Vice-President for Finance and
finally disposed. Administration prior to his termination.
However, this changed with Section 5.2 of the Securities
LA: Granted the Mantling’s motion to dismiss, ruling that the
Regulation Code (SRC) wherein all cases enumerated under
Coros was a corporate officer and the controversy resulting
Section 5 of PD 902-A were transferred to courts of general
jurisdiction, or the appropriate Regional Trial Court (RTC), as from such removal was under the jurisdiction of the SEC,
may be designated by the Supreme Court. The reason for that pursuant to Section 5, paragraph (c) of Presidential Decree
transfer was to allow the SEC focus on its capital market No. 902.
regulatory functions. Whether or not that was a correct policy
decision on the part of the legislative is not a topic for this NLRC: Set aside the dismissal, concluding that the Coros’
article though. It is what it is now. complaint for illegal dismissal was properly cognizable by the
LA, not by the SEC, because he was not a corporate officer by
virtue of his position in Matling, albeit high ranking and
But this unique situation has caused some confusion even after managerial, not being among the positions listed in Matling’s
many years after the passage of that law transferring such Constitution and By-Laws.
jurisdiction from the SEC to the courts. Did this mean that the
SEC no longer has any teeth? Did this mean the SEC can be
CA: Held that despite its nomenclature, Coros’ position was
divested of authority once a case involved an intra-corporate
an ordinary office in the corporation. Therefore, the
controversy?
complaint for illegal dismissal is within the jurisdiction of the
labor arbiter.
But more importantly, the Supreme Court said in the Roman
case that: Roman Jr. vs Securities and Exchange Commission Issue: Whether or not the Coros is a corporate officer within
(G.R. 196329, June 1, 2016). the jurisdiction of the regular courts. No.
“Beyond doubt, therefore, is the authority of the SEC to hear Held:
cases regardless of whether an action involves issues The Law on Jurisdiction in Dismissal Cases.
cognizable by the RTC, provided that the SEC could only act As a rule, the illegal dismissal of an officer or other employee
upon those which are merely administrative and regulatory in of a private employer is properly cognizable by the LA. This is
character. In other words, the SEC was never dispossessed of pursuant to Article 217 (a) 2 of the Labor Code. Where the
the power to assume jurisdiction over complaints, even if these complaint for illegal dismissal concerns a corporate officer,
are riddled with intra-corporate allegations, if their invocation the controversy falls under the jurisdiction of the Securities
of authority is confined only to the extent of ensuring and Exchange Commission (SEC).
compliance with the law and the rules, as well as to impose
fines and penalties for violation thereof; and to investigate Effective on August 8, 2000, upon the passage of Republic Act
even motu proprio whether corporations comply with the No. 8799, the Securities Regulation Code, the SEC’s
Corporation Code, the SRC and the implementing rules and jurisdiction over all intra-corporate disputes was transferred
regulations (underscoring ours).” to the RTC, pursuant to Section 5.2 of RA No. 8799.
Thus, lawyers cannot simply invoke “intra-corporate” Considering that the Coros’ complaint for illegal dismissal was
controversy to divest the SEC of jurisdiction in pending cases commenced on August 10, 2000, it might come under the
before the commission. As explained by no less than the coverage of Section 5.2 of Securities Regulation Code RA No.
Supreme Court, the SEC still has jurisdiction over matters 8799, supra, should it turn out that the he was a corporate,
concerning its expansive supervisory, administrative and not a regular, officer of Matling.
regulatory functions.
Coros’s Position is Not a Corporate Office?
Conformably with Section 25 of the Corporation Code, a
position must be expressly mentioned in the By-Laws in order
Matling Industrial and Commercial Corp. v. Coros to be considered as a corporate office. Thus, the creation of
G.R. No. 157802, October 13, 2010 an office pursuant to or under a By-Law enabling provision is
not enough to make a position a corporate office.
In this case, Coros was appointed vice president for
nationwide expansion by Malonzo, Matling’s general
manager, not by the board of directors of petitioner. It was
also Malonzo who determined the compensation package of
respondent. Thus, respondent was an employee, not a
"corporate officer." The CA was therefore correct in ruling
that jurisdiction over the case was properly with the NLRC,
not the SEC (now the RTC).
Did Respondent’s Status as Director and
Stockholder Automatically Convert his Dismissal
into an Intra-Corporate Dispute? NO.
Yet, the petitioners insist that because the respondent was a
Director/stockholder of Matling, and relying on Paguio v.
National Labor Relations Commission24 and Ongkingko v.
National Labor Relations Commission,25 the NLRC had no
jurisdiction over his complaint, considering that any case for
illegal dismissal brought by a stockholder/officer against the
corporation was an intra-corporate matter that must fall
under the jurisdiction of the SEC conformably with the
context of PD No. 902-A.
The fact that the parties involved in the controversy are all
stockholders or that the parties involved are the stockholders
and the corporation does not necessarily place the dispute
within the ambit of the jurisdiction of SEC. The better policy
to be followed in determining jurisdiction over a case should
be to consider concurrent factors such as the status or
relationship of the parties or the nature of the question that
is the subject of their controversy. In the absence of any one
of these factors, the SEC will not have jurisdiction.
Furthermore, it does not necessarily follow that every conflict
between the corporation and its stockholders would involve
such corporate matters as only the SEC can resolve in the
exercise of its adjudicatory or quasi-judicial powers.29
The criteria for distinguishing between corporate officers who
may be ousted from office at will, on one hand, and ordinary
corporate employees who may only be terminated for just
cause, on the other hand, do not depend on the nature of the
services performed, but on the manner of creation of the
office. In the respondent’s case, he was supposedly at once
an employee, a stockholder, and a Director of Matling. The
circumstances surrounding his appointment to office must be
fully considered to determine whether the dismissal
constituted an intra-corporate controversy or a labor
termination dispute. We must also consider whether his
status as Director and stockholder had any relation at all to
his appointment and subsequent dismissal as Vice President
for Finance and Administration.
e bank’s contention that she merely holds an
elective position and that in effect she is not a
regular employee is belied by the nature of her
work and her length of service with the Bank.
