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MATLING INDUSTRIAL v. RICARDO R. COROS

FACTS:

The case centers on a jurisdictional dispute over the handling of a complaint for illegal dismissal. Ricardo Coros, the Vice President for Finance and Administration of Matling Industrial and Commercial Corporation (Matling), was dismissed and subsequently filed a complaint for illegal suspension and illegal dismissal. The petitioners argued that the complaint should be handled by the Securities and Exchange Commission (SEC) as it involves an intra-corporate dispute, considering Coros' position as a member of Matling's Board of Directors. Coros, on the other hand, contended that his status as a board member was doubtful and that his removal was as Vice President for Finance and Administration, not as a Director.

The Labor Arbiter (LA) granted the petitioners' motion to dismiss, ruling that Coros was a corporate officer and concluding that the case fell under the jurisdiction of the SEC. Coros appealed to the National Labor Relations Commission (NLRC), which set aside the dismissal and remanded the case to the LA, stating that Coros was not a corporate officer according to Matling's Constitution and By-Laws.

The petitioners sought reconsideration, but the NLRC denied their motion. They then filed a petition for certiorari with the Court of Appeals (CA), contesting the NLRC's ruling. The CA dismissed the petition and affirmed the NLRC's decision, prompting the petitioners to file a petition for review on certiorari before the Supreme Court. The determination of whether Coros was a corporate officer or not is a crucial factor in determining the appropriate jurisdiction for his complaint of illegal dismissal.

ISSUES:

  1. Whether the position of Vice President for Finance and Administration is a corporate office.

  2. Whether the dismissal of the respondent by the Board of Directors rendered the matter an intra-corporate dispute cognizable by the RTC pursuant to RA No. 8799.

  3. Whether the creation of the position of Vice President for Finance and Administration by the President of Matling constitutes an exercise of a valid corporate power.

  4. Whether the dismissal of the respondent, who was a Director and stockholder of Matling, constitutes an intra-corporate dispute.

  5. Does the Securities and Exchange Commission (SEC) have jurisdiction over every conflict between a corporation and its stockholders?

  6. Does the dismissal of the respondent in this case constitute an intra-corporate controversy or a labor termination dispute?

  7. Whether or not the petitioner is a regular employee entitled to security of tenure

RULING:

  1. The position of Vice President for Finance and Administration is not a corporate office. The Court held that in order for a position to be considered as a corporate office, it must be expressly mentioned in the By-Laws. While the President has the power to create new offices and appoint officers, such creation is not enough to make a position a corporate office. In this case, the By-Laws of the corporation only listed four corporate officers, and the position of the respondent was not among them. Therefore, the position of Vice President for Finance and Administration is not a corporate office.

  2. The dismissal of the respondent by the Board of Directors did not render the matter an intra-corporate dispute cognizable by the RTC. Since the position of the respondent was not a corporate office, he was considered an employee rather than a corporate officer. Therefore, the jurisdiction over the case was properly with the NLRC, not the SEC (now the RTC).

  3. The creation of the position of Vice President for Finance and Administration by the President of Matling does not constitute an exercise of a valid corporate power. The power to create new offices and the power to appoint officers are vested exclusively in the Board of Directors, as mandated by Section 25 of the Corporation Code. The President cannot delegate this power to create a corporate office, as it is a discretionary power reserved for the Board. Therefore, the position created is an ordinary office, not a corporate one.

  4. The dismissal of the respondent, who was a Director and stockholder of Matling, does not automatically convert the dispute into an intra-corporate matter. In order to determine whether a dispute constitutes an intra-corporate controversy or not, the court considers the status or relationship of the parties and the nature of the question that is the subject of their controversy. In this case, the position of the respondent was not expressly mentioned in the By-Laws, and he was not elected by the Board of Directors but appointed by the President. Therefore, his dismissal does not fall under the jurisdiction of the Securities and Exchange Commission (SEC).

  5. Not every conflict between a corporation and its stockholders falls under the jurisdiction of the SEC. The SEC's jurisdiction should be determined by considering the status or relationship of the parties involved and the nature of the question in dispute. The SEC's jurisdiction is not absolute and should not necessarily exclude regular courts.

  6. The dismissal of the respondent in this case constitutes a labor termination dispute. The respondent's appointment and subsequent dismissal as Vice President for Finance and Administration were based on his length of quality service as an employee. His status as a Director and stockholder had no relation to his promotion and was unaffected by his dismissal. Therefore, the dispute does not fall within the jurisdiction of the SEC.

  7. The Court affirmed the decision of the Court of Appeals. The petitioner, as an Assistant Vice-President of the Foreign Department of the Bank, performed tasks integral to the operations of the bank and had a length of service totaling 28 years. Therefore, she was considered a regular employee entitled to security of tenure.

PRINCIPLES:

  • A position must be expressly mentioned in the By-Laws to be considered a corporate office.

  • The creation of an office pursuant to or under a By-Law enabling provision is not enough to make a position a corporate office.

  • The only officers of a corporation are those given that character either by the Corporation Code or by the By-Laws; other positions may be considered as employees or subordinate officials.

  • The determination of whether a position is a corporate office or an employee position depends on how the position was created and the authority of the person who appointed the individual to assume the position.

  • The power to create new offices and appoint officers is vested exclusively in the Board of Directors, as mandated by Section 25 of the Corporation Code.

  • The power to create a corporate office cannot be delegated by the Board of Directors to subordinate officers or agents.

  • An intra-corporate dispute arises between a stockholder and the corporation and is determined by the status or relationship of the parties and the nature of the question that is the subject of their controversy.

  • Not every conflict between a corporation and its stockholders falls under the jurisdiction of the SEC.

  • The jurisdiction of the SEC should be determined by considering the status or relationship of the parties involved and the nature of the question in dispute.

  • The dismissal of an employee should be determined based on the manner of creation of their office, rather than the nature of the services performed.

  • The length of service and nature of work can determine whether an employee is considered a regular employee or not.

  • The primary standard for determining regular employment is the reasonable connection between the particular activity performed by the employee and the usual trade or business of the employer.

  • An employee is considered regular because of the nature of work and the length of service, not because of the mode or reason for hiring.

  • A regular employee is entitled to security of tenure and may only be terminated for a just or authorized cause.