G.R. No.

157802               October 13, 2010

FACTS: After his dismissal by Matling as its Vice President for Finance and Administration, Ricardo Coros filed on
August 10, 2000 a complaint for illegal suspension and illegal dismissal against Matling and some of its corporate
officers in the NLRC, Sub-Regional Arbitration Branch XII, Iligan City.

The company moved to dismiss the complaint, raising the ground, among others, that the complaint pertained to
the jurisdiction of the Securities and Exchange Commission (SEC) due to the controversy being intra-corporate
inasmuch as Coros was a member of Matling’s Board of Directors aside from being its Vice-President for Finance
and Administration prior to his termination.

Coros opposed the company’s motion to dismiss, insisting that his status as a member of Matling’s Board of
Directors was doubtful, considering that he had not been formally elected as such; that he did not own a single
share of stock in Matling, considering that he had been made to sign in blank an undated indorsement of the
certificate of stock he had been given in 1992; that Matling had taken back and retained the certificate of stock in
its custody; and that even assuming that he had been a Director of Matling, he had been removed as the Vice
President for Finance and Administration, not as a Director, a fact that the notice of his termination dated April
10, 2000 showed.

On October 16, 2000, the LA granted the company’s motion to dismiss, ruling that Coros was a corporate officer
because he was occupying the position of Vice President for Finance and Administration and at the same time
was a Member of the Board of Directors of Matling; and that, consequently, his removal was a corporate act of
Matling and the controversy resulting from such removal was under the jurisdiction of the SEC, pursuant to
Section 5, paragraph (c) of Presidential Decree No. 902.
NLRC- set aside the dismissal, concluding that the Coros’ 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 managerial, not being among the positions listed in Matling’s Constitution and By-Laws.

CA- the petition for certiorari is hereby DISMISSED. Coros’ illegal dismissal is within the jurisdiction of the labor
arbiter.

ISSUE: WON the dismissal of Coros who is the VP for Finance and Administration and a member of the Board of
Directors at the same time, an intra-corporate dispute or a labor termination case?

RULING: As a rule, the illegal dismissal of an officer or other employee of a private employer is properly
cognizable by the LA. This is pursuant to Article 217 (a) 2 of the Labor Code, as amended.

Where the complaint for illegal dismissal concerns a corporate officer, however, the controversy falls under the
jurisdiction of the Securities and Exchange Commission (SEC), because the controversy arises out of intra-
corporate or partnership relations between and among stockholders, members, or associates, or between any or
all of them and the corporation, partnership, or association of which they are stockholders, members, or
associates, respectively; and between such corporation, partnership, or association and the State insofar as the
controversy concerns their individual franchise or right to exist as such entity; or because the controversy
involves the election or appointment of a director, trustee, officer, or manager of such corporation, partnership,
or association. Such controversy, among others, is known as an intra-corporate dispute.

Effective on August 8, 2000, upon the passage of Republic Act No. 8799, otherwise known as The Securities
Regulation Code, the SEC’s jurisdiction over all intra-corporate disputes was transferred to the RTC, pursuant to
Section 5.2 of RA No. 8799.
Was Coros’ Position of Vice President
for Administration and Finance a Corporate Office?

Conformably with Section 25 of the Corporation Code, a position must be expressly mentioned in the By-Laws in
order to be considered as a corporate office. Thus, the creation of an office pursuant to or under a By-Law
enabling provision is not enough to make a position a corporate office. Guerrea v. Lezama, the first ruling on the
matter, held that the only officers of a corporation were those given that character either by the Corporation
Code or by the By-Laws; the rest of the corporate officers could be considered only as employees or subordinate
officials. Thus, it was held in Easycall Communications Phils., Inc. v. King:

An "office" is created by the charter of the corporation and the officer is elected by the directors or stockholders.
On the other hand, an employee occupies no office and generally is employed not by the 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.

In this case, Coros was appointed vice president for nationwide expansion by Malonzo, petitioner’'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).

This interpretation is the correct application of Section 25 of the Corporation Code, which plainly states that the
corporate officers are the President, Secretary, Treasurer and such other officers as may be provided for in the
By-Laws. Accordingly, the corporate officers in the context of PD No. 902-A are exclusively those who are given
that character either by the Corporation Code or by the corporation’s By-Laws.

Did Coros’ Status as Director and

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.

Obviously enough, Coros was not appointed as Vice President for Finance and Administration because of his
being a stockholder or Director of Matling. He had started working for Matling on September 8, 1966, and had
been employed continuously for 33 years until his termination on April 17, 2000, first as a bookkeeper, and his
climb in 1987 to his last position as Vice President for Finance and Administration had been gradual but steady.

Even though he might have become a stockholder of Matling in 1992, his promotion to the position of Vice
President for Finance and Administration in 1987 was by virtue of the length of quality service he had rendered
as an employee of Matling. His subsequent acquisition of the status of Director/stockholder had no relation to
his promotion. Besides, his status of Director/stockholder was unaffected by his dismissal from employment as
Vice President for Finance and Administration.

WHEREFORE, we deny the petition for review on certiorari, and affirm the decision of the Court of Appeals.