Matling Industrial and Commercial Corporation vs. Ricardo R. Coros

A corporate office must be expressly provided for in the Articles of Incorporation or By-Laws, or specifically designated by the Corporation Code. The creation of a position pursuant to a By-Law provision authorizing the President to create new offices does not make such position a corporate office; rather, it remains an ordinary office occupied by an employee. Thus, the power to create corporate offices is non-delegable and must be exercised by the Board of Directors.

The case arises from the termination of Ricardo R. Coros from his position as Vice President for Finance and Administration at Matling Industrial and Commercial Corporation after 33 years of service. The dispute centers on whether his dismissal constituted an intra-corporate controversy (jurisdiction of the Regional Trial Court) or a labor dispute (jurisdiction of the Labor Arbiter), hinging on whether Coros was a corporate officer or a regular employee.

• Ricardo R. Coros was employed by Matling Industrial and Commercial Corporation starting September 8, 1966 as a bookkeeper, and gradually rose through the ranks to become Vice President for Finance and Administration in 1987.
• Coros was dismissed from his position on April 17, 2000, and on April 10, 2000, he received a notice of termination.
• On August 10, 2000, Coros filed a complaint for illegal suspension and illegal dismissal with the NLRC against Matling and its corporate officers.
• Matling's By-Law No. III listed only four corporate officers: President, Executive Vice President, Secretary, and Treasurer, and provided that officers shall be designated by stockholders at the time they elect the Board of Directors.
• Matling's By-Law No. V provided that the President shall have full power to create new offices and appoint officers thereto as he may deem proper and necessary in the operations of the corporation.
• The position of Vice President for Finance and Administration was not expressly listed in the By-Laws; Coros was appointed to this position by the President, not by the Board of Directors or stockholders.
• Petitioners claimed Coros was also a member of the Board of Directors and a stockholder since 1992, allegedly making the dismissal an intra-corporate matter.
• Coros countered that he was not formally elected as Director, did not own shares (having signed a blank endorsement of the stock certificate), and that his removal was as Vice President (an employment position), not as Director.

• Coros was a corporate officer because he held the position of Vice President for Finance and Administration and was allegedly a member of the Board of Directors and stockholder of Matling.
• The position of Vice President for Finance and Administration was a corporate office created pursuant to By-Law No. V, which authorized the President to create new offices and appoint officers thereto, effectively delegating the Board's power to the President.
• Citing Tabang v. National Labor Relations Commission, offices created pursuant to By-Law enabling provisions are corporate offices, making the dismissal an intra-corporate dispute cognizable by the SEC (now RTC) under Section 5 of PD 902-A.
• As a Director/stockholder, any conflict regarding his dismissal automatically constituted an intra-corporate relationship under the broad definition in Tabang, falling within the jurisdiction of the regular courts.

• He was not a corporate officer because the position of Vice President for Finance and Administration was not expressly listed in the By-Laws as required by Section 25 of the Corporation Code.
• By-Law No. V only authorized the President to create ordinary offices occupied by employees, not corporate offices; the power to create corporate offices cannot be delegated to the President.
• He was appointed by the President, not elected by the Board of Directors or stockholders, and his compensation was determined by the managing officer, indicating an employer-employee relationship.
• His status as Director/stockholder was doubtful and unrelated to his employment; he was dismissed as Vice President, not as Director, making the dispute a labor termination case within the jurisdiction of the Labor Arbiter.

• Procedural Issues:
  • Whether the Labor Arbiter had jurisdiction over the complaint for illegal dismissal, or whether jurisdiction lay with the Regional Trial Court as an intra-corporate controversy.
• Substantive Issues:
  • Whether the respondent's position as Vice President for Finance and Administration constituted a corporate office under Section 25 of the Corporation Code.
  • Whether the Board of Directors could validly delegate the power to create corporate offices to the President through By-Law No. V.
  • Whether the respondent's status as Director and stockholder automatically converted his dismissal into an intra-corporate dispute cognizable by the RTC.

• Procedural:
  • The Labor Arbiter had jurisdiction over the complaint. The dismissal was a termination dispute under Article 217 of the Labor Code, not an intra-corporate controversy under Section 5 of PD 902-A (as transferred to RTC by RA 8799), because the respondent was a regular employee, not a corporate officer.
• Substantive:
  • The position of Vice President for Finance and Administration was not a corporate office because it was not expressly mentioned in the By-Laws. Section 25 of the Corporation Code requires corporate officers to be expressly provided for in the By-Laws or designated by the Code itself; the creation of an office pursuant to a By-Law enabling provision is insufficient to make it a corporate office.
  • The power to create corporate offices is a discretionary power exclusively vested in the Board of Directors by Section 25 of the Corporation Code and cannot be delegated to subordinate officers or agents such as the President. By-Law No. V only authorized the creation of ordinary offices occupied by employees.
  • Not every conflict between a stockholder and corporation is an intra-corporate dispute. The nature of the controversy must be considered alongside the status of the parties. Here, the dismissal was employment-related (removal from managerial position), not concerning corporate governance or the election/appointment of directors, thus falling under labor jurisdiction.

• Corporate Officer vs. Employee Distinction — Corporate officers are those designated by the Corporation Code or expressly named in the By-Laws, elected by the Board or stockholders. Employees occupy no office and are hired by managing officers who determine their compensation. Applied here to determine that Coros was an employee, not a corporate officer.
• Non-delegability of Power to Create Corporate Offices — The power to elect or create corporate officers is vested exclusively in the Board of Directors by operation of law and cannot be delegated to the President or other subordinate officers through By-Law provisions.
• Two-Element Test for Intra-Corporate Disputes — Jurisdiction depends on concurrent factors: (a) the status or relationship of the parties, and (b) the nature of the question that is the subject of their controversy. Both elements must be satisfied for RTC jurisdiction; the mere fact that parties are stockholders and corporation does not automatically confer jurisdiction on the SEC/RTC.

• "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."
• "Conformably with Section 25, 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."
• "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."
• "A different interpretation can easily leave the way open for the Board of Directors to circumvent the constitutionally guaranteed security of tenure of the employee by the expedient inclusion in the By-Laws of an enabling clause on the creation of just any corporate officer position."

• Tabang v. National Labor Relations Commission — Distinguished; the Court held that its statement regarding creation of offices under enabling provisions was obiter dictum and its unsoundness showed it should no longer be controlling.
• Guerrea v. Lezama — Followed; held that only officers given that character by the Corporation Code or By-Laws are corporate officers, the rest being employees or subordinate officials.
• Easycall Communications Phils., Inc. v. King — Followed; reiterated the distinction between corporate officers and employees based on manner of creation and election.
• Nacpil v. Intercontinental Broadcasting Corporation — Criticized; held its reliance on Tabang was misplaced and should no longer be controlling.
• Viray v. Court of Appeals — Followed; established the two-element test considering both relationship of parties and nature of controversy to determine jurisdiction.
• Mainland Construction Co., Inc. v. Movilla — Followed; reiterated that not every conflict between corporation and stockholders involves corporate matters resolvable only by SEC/RTC.
• Prudential Bank and Trust Company v. Reyes — Followed; held that employees rising from the ranks are regular employees entitled to security of tenure regardless of high position or title.
• Paguio v. National Labor Relations Commission — Distinguished; complainant was expressly named corporate officer in the By-Laws and elected by the Board.
• Ongkingco v. National Labor Relations Commission — Distinguished; complainant was expressly named corporate officer in the By-Laws and elected by the Board.

• Article 217 of the Labor Code — Grants Labor Arbiters original and exclusive jurisdiction over termination disputes and claims arising from employer-employee relations.
• Section 25 of the Corporation Code — Defines corporate officers as President, Secretary, Treasurer, and such other officers as may be provided for in the By-Laws; requires Board election of officers.
• Section 5 of Presidential Decree No. 902-A — Granted SEC jurisdiction over intra-corporate disputes involving election or appointment of directors, trustees, or officers.
• Section 5.2 of Republic Act No. 8799 (Securities Regulation Code) — Transferred SEC jurisdiction over intra-corporate disputes to Regional Trial Courts.