Ellao vs. BATELEC I

The dismissal of a General Manager of an electric cooperative, where such position is expressly provided for in the cooperative's By-laws as a corporate office, constitutes an intra-cooperative controversy within the exclusive jurisdiction of the Regional Trial Courts pursuant to Republic Act No. 8799 (transferring jurisdiction over intra-corporate disputes from the Securities and Exchange Commission to the regular courts), and not the labor tribunals.

The case involves the jurisdictional delineation between labor tribunals (Labor Arbiter and NLRC) and regular courts (Regional Trial Courts) regarding termination disputes involving electric cooperatives organized under Presidential Decree No. 269. These cooperatives are non-stock, non-profit entities vested with corporate powers. The controversy centers on whether the dismissal of a cooperative's General Manager is a labor dispute or an intra-corporate controversy, particularly in light of the transfer of jurisdiction over intra-corporate disputes from the Securities and Exchange Commission to the Regional Trial Courts under Republic Act No. 8799.

• BATELEC I is an electric cooperative organized and existing under Presidential Decree No. 269, engaged in distributing electric power in Batangas province.
• Petitioner Demetrio Ellao was initially employed as Office Supplies and Equipment Control Officer on January 4, 1982, and was appointed as General Manager on June 1, 2006 by virtue of a Board Resolution duly approved by the National Electrification Administration (NEA).
• On February 12, 2009, a complaint was filed against Ellao charging him with irregularities in the discharge of his functions, including entering into contracts without public bidding and implementing programs without Board approval.
• Ellao was placed under preventive suspension, and a fact-finding body was created to investigate the charges.
• Although Ellao submitted his explanation and a hearing was scheduled, it was postponed at his instance and eventually did not push through; the fact-finding body instead issued a report recommending termination.
• On March 13, 2009, the Board of Directors adopted Board Resolution No. 24-09 terminating Ellao as General Manager on grounds of gross and habitual neglect of duties and willful disobedience.
• On October 2, 2009, Ellao was formally informed of his dismissal effective October 1, 2009.
• On December 9, 2009, the NEA confirmed Board Resolution No. 24-09 and approved Ellao's termination.
• Article VI, Section 10 of BATELEC I's By-laws expressly provides for the position of General Manager, stating that the management of the Cooperative shall be vested in a General Manager appointed by the Board, and that the appointment and dismissal shall require approval of NEA.
• Ellao filed his complaint for illegal dismissal on February 23, 2011, after the passage of Republic Act No. 8799 (July 19, 2000), which transferred jurisdiction over intra-corporate disputes from the SEC to the Regional Trial Courts.

• BATELEC I is not a corporation registered with the Securities and Exchange Commission (SEC), but was formed and organized pursuant to Presidential Decree No. 269; therefore, the jurisdiction of the SEC (now RTC) over intra-corporate controversies does not apply.
• Ellao is not a corporate officer but a mere employee, as his relationship with BATELEC I is governed by the Labor Code; thus, labor tribunals have jurisdiction over his illegal dismissal complaint.
• The Court of Appeals erred in finding that he is a corporate officer and that the controversy involves an intra-corporate dispute.
• The charges against him were unsubstantiated, and he was denied procedural due process as he was not afforded the opportunity to explain and there was no written notice of termination specifying the grounds.

• Ellao, as General Manager, is a corporate officer appointed by the Board of Directors pursuant to the By-laws of BATELEC I, and his appointment was approved by the NEA Administrator.
• The position of General Manager is specifically provided for under BATELEC I's By-laws as a corporate office; therefore, his dismissal is an intra-corporate controversy.
• Jurisdiction over intra-corporate disputes belongs to the Regional Trial Courts pursuant to Presidential Decree No. 902-A as amended by Republic Act No. 8799 and Administrative Matter No. 00-11-03-SC, and not to the labor tribunals.
• Alternatively, the National Electrification Administration (NEA) has jurisdiction over the complaint under Presidential Decree No. 279 as amended by Presidential Decree No. 1645, which grants NEA the power to suspend or dismiss employees of electric cooperatives.
• In any event, Ellao was validly dismissed for cause.

• Procedural:
  • Whether the Court of Appeals correctly assumed jurisdiction via certiorari to resolve the jurisdictional conflict between the labor tribunals and the regional trial courts.
• Substantive Issues:
  • Whether the dismissal of the petitioner as General Manager of an electric cooperative constitutes an intra-corporate (intra-cooperative) controversy within the jurisdiction of the Regional Trial Courts, or a labor dispute within the jurisdiction of the labor tribunals.

• Procedural:
  • The Court of Appeals correctly exercised its jurisdiction under Rule 65 of the Rules of Court to annul the decisions of the Labor Arbiter and the NLRC that erroneously assumed jurisdiction over an intra-cooperative controversy.
  • The issue of jurisdiction may be raised at any stage of the proceedings, and the Court of Appeals properly resolved the same in favor of the Regional Trial Courts.
• Substantive:
  • Electric cooperatives organized under Presidential Decree No. 269 are vested with juridical personality and corporate powers akin to corporations; registration with the SEC is not the operative factor in determining jurisdiction over intra-corporate disputes.
  • Under the Matling doctrine, a position must be expressly mentioned in the By-laws to be considered a corporate office. Here, the General Manager position is expressly provided for in Article VI, Section 10 of BATELEC I's By-laws, making it a corporate office.
  • Applying the distinction in Tabang v. NLRC, Ellao is a corporate officer (elected/appointed by the Board under the By-laws) and not a mere employee (employed by a managing officer).
  • The dismissal of a corporate officer is an intra-cooperative controversy involving the conduct and management of the affairs of the cooperative, which falls under the jurisdiction of the Regional Trial Courts pursuant to Section 5.2 of Republic Act No. 8799 (transferring jurisdiction from the SEC under Section 5 of P.D. 902-A).
  • The Labor Arbiter and NLRC were without jurisdiction to take cognizance of the complaint; consequently, their rulings are void.

• Tabang Doctrine (Officer vs. Employee Distinction) — Distinguishes corporate officers, who are created by the charter or By-laws and elected/appointed by directors or stockholders, from employees, who occupy no office and are employed by the managing officer. Applied to determine that Ellao, as General Manager appointed by the Board under the By-laws, is a corporate officer subject to intra-corporate jurisdiction.
• Matling Doctrine (Creation of Corporate Office) — Establishes that a position must be expressly mentioned in the By-laws to be considered a corporate office; creation pursuant to a By-law enabling provision is insufficient. Applied to confirm that the General Manager position, expressly listed in BATELEC I's By-laws, constitutes a corporate office.
• Intra-Corporate Controversy Jurisdiction (Transfer to RTCs) — Under Republic Act No. 8799 (Securities Regulation Code), jurisdiction over intra-corporate disputes, including those involving the election or appointment of officers, was transferred from the Securities and Exchange Commission to the Regional Trial Courts. Applied to hold that Ellao's dismissal as a cooperative officer is an intra-cooperative controversy for RTCs, not a labor dispute.

• "Registration with the SEC, however, is not the operative factor in determining whether or not the latter enjoys jurisdiction over a certain dispute or controversy." — Emphasizes that electric cooperatives organized under P.D. 269 possess corporate powers regardless of SEC registration.
• "Thus, organization under P.D. 269 sufficiently vests upon electric cooperatives' juridical personality enjoying corporate powers." — Establishes the corporate nature of electric cooperatives.
• "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' usually occupies no office and generally is employed not by 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." — Cites the Tabang distinction between officers and employees.
• "a position must be expressly mentioned in the By-Laws in order to be considered as a corporate office." — Cites the Matling requirement for corporate office creation.
• "Even so, we hold that an officer's dismissal is a matter that comes with the conduct and management of the affairs of a cooperative and/or an intra-cooperative controversy, and that nature is not altered by reason or wisdom that the Board of Directors may have in taking such action." — Affirms that the nature of dismissal of a corporate officer remains an intra-cooperative controversy regardless of the validity of the Board's reasons.

• Tabang v. National Labor Relations Commission — Cited for the controlling precedent distinguishing corporate officers from employees to determine jurisdictional competence between labor tribunals and regular courts.
• Matling Industrial and Commercial Corporation v. Ricardo Coros — Cited for the rule that a position must be expressly mentioned in the By-Laws to be considered a corporate office, and that creation under an enabling provision is insufficient.
• Guerrea v. Lezama — Cited to support the principle that only officers given that character by the Corporation Code or By-Laws are corporate officers; the rest are employees or subordinate officials.
• Celso F. Pascual, Sr. and Serafin Terencio v. Caniogan Credit and Development Cooperative — Cited to affirm that the dismissal of cooperative officers is an intra-cooperative controversy within the jurisdiction of the Regional Trial Court, not a labor dispute.

• Presidential Decree No. 269 (National Electrification Administration Decree), Sections 3(b), 15, and 16 — Defines electric cooperatives as non-stock, non-profit corporations vested with corporate powers and necessary corporate authority.
• Presidential Decree No. 902-A, Section 5 — Originally granted the Securities and Exchange Commission jurisdiction over intra-corporate disputes, including controversies involving the election or appointment of officers.
• Republic Act No. 8799 (Securities Regulation Code), Section 5.2 — Transferred jurisdiction over all intra-corporate disputes from the SEC to the Regional Trial Courts; the operative provision determining the proper forum for Ellao's complaint filed in 2011.
• Labor Code, Article 217 — Grants Labor Arbiters original and exclusive jurisdiction over termination disputes; distinguished from intra-corporate controversies involving corporate officers.
• Corporation Code, Section 25 — Provides that corporate officers include those expressly provided for in the By-Laws; cited in conjunction with the Matling doctrine.