Matling Industrial v.
Coros (Lindon) aside from being its Vice-President for Finance and Administration prior to
Oct. 13, 2010 | Bersamin, J. | Employment Relations
PETITIONER: Matling Industrial and Commercial Corporation, and corporate
officers,
RESPONDENTS: Ricardo Coros
SUMMARY: Coros was dismissed by Matling as its VP for Finance and
Administration. Coros then filed a complaint for illegal dismissal against Matling
and some of the corporate officers before the NLRC. Matling moved to dismiss,
arguing that the present case is intra-corporate, and SEC has jurisdiction, while
Coros opposed since his appointment as VP was doubtful and he had not been
elected in such nor was he a stockholder of Matling. LA granted the MTD. NLRC
reversed the dismissal. Upon appeal to the CA, CA dismissed the same and affirmed
NLRC decision. Hence, Matling filed a rule 45 petition before the SC.
N.B. Coros became a stockholder in 1992, he was employed as bookkeeper 1966.
His ‘promotions’ are listed in the last page of this digest
DOCTRINE: SC ruling: Section 25 of the Corporation Code treats as a corporate
officer only those positions expressly provided for by the company’s by-laws.
Though it recognizes that appointive offices may be created by virtue of the same
provision, the said offices are not corporate positions.
Not every conflict between a corporation and its stockholders involves corporate
matters that only the SEC can resolve in the exercise of its adjudicatory or quasi-
judicial powers. Coros despite being a VP for finance and admin as listed in the by-
laws, 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. In this case, 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.
FACTS:
1. After his dismissal by Matling (Petitioner) as its Vice President for Finance
and Administration, Coros (Respondent) filed on August 10, 2000 a
complaint for illegal suspension and illegal dismissal against Matling and
some of its corporate officers in the NLRC
2. The petitioners 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 the respondent was a member of Matling’s Board of Directors
his termination.
3. The respondent opposed the petitioners’ 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.
LA Ruling
4. The LA granted the petitioners’ motion to dismiss, ruling that the
respondent 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 Ruling
5. The NLRC set aside the dismissal, concluding that the respondent’s
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.
6. Remand was ordered. MR was interposed by Petitioner. NLRC denied.
Petitioner filed a petition for certiorari before the CA.
CA Ruling
7. The CA dismissed the petition for certiorari, explaining that for a position to
be considered as a corporate office, or, for that matter, for one to be
considered as a corporate officer, the position must, if not listed in the by-
laws, have been created by the corporation's board of directors, and the
occupant thereof appointed or elected by the same board of directors or
stockholders.
8. Still aggrieved, Petitioner filed a petition for review on certiorari before the
Supreme Court.
Matling’s contentions before the SC
 9. The petitioners contend that the position of Vice President for Finance and
Administration was a corporate office, having been created by Matling’s
President pursuant to By-Law No. V.
10. The petitioners argue that the power to create corporate offices and to
appoint the individuals to assume the offices was delegated by Matling’s
Board of Directors to its President through By-Law No. V, as amended; and
that any office the President created, like the position of the respondent, was
as valid and effective a creation as that made by the Board of Directors,
making the office a corporate office
Coros’ contentions before the SC
11. The respondent counters that Matling’s By-Laws did not list his position as
Vice President for Finance and Administration as one of the corporate
offices; that Matling’s By-Law No. III listed only four corporate officers,
namely: President, Executive Vice President, Secretary, and Treasurer; that
the corporate offices contemplated in the phrase "and such other officers as
may be provided for in the by-laws" found in Section 25 of the Corporation
Code should be clearly and expressly stated in the By-Laws
N.B. Coros became a stockholder in 1992, he was employed as bookkeeper 1966.
His ‘promotions’ are listed in the last page of this digest.
ISSUE/s:
2. Whether Coros is a corporate officer or an employee. – Employee, since
Coros’ position is not expressly provided for in the by-laws and not every
conflict involving a corporation is an intra-corporate dispute cognizable by
SEC.
RULING: WHEREFORE, we deny the petition for review on certiorari, and affirm
the decision of the Court of Appeals.
RATIO:
1. 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.
2. 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.14 Such
controversy, among others, is known as an intra-corporate dispute.
Coverage of Section 25 of BP 68
3. Section 25 of the Corporation Code provides:
Section 25. Corporate officers, quorum.--Immediately after
their election, the directors of a corporation must formally
organize by the election of a president, who shall be a director,
a treasurer who may or may not be a director, a secretary who
shall be a resident and citizen of the Philippines, and such
other officers as may be provided for in the by-laws. Any
two (2) or more positions may be held concurrently by the
same person, except that no one shall act as president and
secretary or as president and treasurer at the same time. Xx
4. Pursuant to the above provision (Section 25 of the Corporation Code),
whoever are the corporate officers enumerated in the by-laws are the
exclusive Officers of the corporation and the Board has no power to create
other Offices without amending first the corporate By-laws. However, the
Board may create appointive positions other than the positions of
corporate Officers, but the persons occupying such positions are not
considered as corporate officers within the meaning of Section 25 of the
Corporation Code and are not empowered to exercise the functions of
the corporate Officers, except those functions lawfully delegated to
them. Their functions and duties are to be determined by the Board of
Directors/Trustees.
Coros’ alleged status as director
and/or stockholder will not work
to confer jurisdiction with SEC
5. Not every conflict between a corporation and its stockholders involves
corporate matters that only the SEC can resolve in the exercise of its
adjudicatory or quasi-judicial powers. If, for example, a person leases an
apartment owned by a corporation of which he is a stockholder, there
should be no question that a complaint for his ejectment for non-payment of
rentals would still come under the jurisdiction of the regular courts and not
of the SEC. By the same token, if one person injures another in a vehicular
accident, the complaint for damages filed by the victim will not come under
the jurisdiction of the SEC simply because of the happenstance that both
parties are stockholders of the same corporation.
6. In Mainland v. Movilla, it was held:
In order that the SEC (now the regular courts) can take
cognizance of a case, the controversy must pertain to any of
the following relationships:

a) between the corporation, partnership or association and the

public;

b) between the corporation, partnership or association and its

Just in case Atty. Filray asks about Coros’ employment journey
stockholders, partners, members or officers;

c) between the corporation, partnership or association and the 1966 – Bookkeeper

State as far as its franchise, permit or license to operate is
concerned; and 1968 – Senior Accountant

d) among the stockholders, partners or associates themselves. 1969 – Chief Accountant

7. The circumstances surrounding his appointment to office must be fully 1972 – Office Supervisor
considered to determine whether the dismissal constituted an intra-corporate
controversy or a labor termination dispute. We must also consider whether
1973 – Assistant Treasurer
his status as Director and stockholder had any relation at all to his
appointment and subsequent dismissal as Vice President for Finance and
Administration. 1978 – Special Assistant for Finance

8. The respondent was not appointed as Vice President for Finance and 1980 – Assistant Comptroller
Administration because of his being a stockholder or Director of Matling.
He had started working for Matling on September 8, 1966, and had been 1983 – Finance and Administrative Manager
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 1985 – Asst. Vice President for Finance and Administration
President for Finance and Administration had been gradual but steady.

9. Even though he might have become a stockholder of Matling in 1992, his 1987 to April 17, 2000 – Vice President for Finance and Administration
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.