Austria vs NLRC
Sideo
312 S 410
FACTS:
Pastor Dionisio V. Austria worked with the Seventh-
Day Adventists (SDA) for twenty eight (28) years from
1963 to 1991. He started as a literature evangelist and
worked his way up until he became District Pastor of
the Negros Mission of the SDA. In January 1991,
Austria was transferred to Bacolod City. He held the
position of District Pastor until his services were
terminated on October 31, 1991. Before his
termination, Austria had received communications
from Mr. Eufronio Ibesate, the treasurer of the Negros
Mission, asking Austria to admit accountability and
responsibility for the church tithes and offerings
collected by his wife, Mrs. Thelma Austria, in his
district which amounted to P15,078.10, and to remit
the same to the Negros Mission. Austria reasoned in
his written explanation dated October 11, 1991 that he
should not be made accountable for the unremitted
collections since it was Pastor Gideon Buhat and Mr.
Eufronio Ibesate who authorized his wife to collect the
tithes and offerings since Pastor Austria was very sick
to do the collecting at that time. On October 16, 1991,
Austria went to the office of Pastor Buhat, who was the
president of the Negros Mission, to persuade Buhat to
convene the Executive Committee to settle a dispute
between Pastor Austria and Pastor David Rodrigo. But
that meeting ended in a heated altercation between
Austria and Buhat. The next day, the Austria couple
received an invitation to attend the Executive
Committee meeting on October 21, 1991 to discuss
the non-remittance of the church collection and the
events that transpired on October 16, 1991. A fact-
finding committee was created to investigate Austria.
Sensing that the investigation would be one-sided,
Pastor Austria wrote to Pastor Rueben Moralde,
president of the SDA and chairman of the fact-finding
committee, to request that certain members of the
fact-finding committee be excluded in the investigation
and resolution of the case. Out of the six (6) members
requested to inhibit, only two (2) were actually
excluded, namely: Pastor Buhat and Pastor Rodrigo.
On October 29, 1991, Austria received a letter of
dismissal citing misappropriation of denominational
funds, willful breach of trust, serious misconduct, gross
and habitual neglect of duties, and commission of an
offense against the person of employer’s duly
authorized representative as grounds for the
termination of his services. Austria filed a complaint on
November 14, 1991 before the Labor Arbiter for illegal
dismissal against the SDA and its officers and prayed
for reinstatement with back wages and benefits, moral
and exemplary damages and other labor law benefits.
On February 15, 1993, Labor Arbiter Cesar D.
rendered a decision in favor of the petitioner. The SDA
appealed the decision of the Labor Arbiter to the NLRC
which vacated the findings of the Labor Arbiter on
August 26,1994 and dismissed the case for lack of
merit. Austria filed a motion for reconsideration but the
NLRC issued a Resolution reversing its original
decision. The SDA filed a motion for reconsideration
saying that the Labor Arbiter had no jurisdiction over
the complaint due to the constitutional provision on the
separation of church and state since the case allegedly
involved an ecclesiastical affair to which the State
cannot interfere. The NLRC, without ruling on the
merits of the case, reversed itself once again,
sustained the argument posed by SDA and,
accordingly, dismissed the complaint of Austria. The
Office of the Solicitor General (OSG) filed a
manifestation and motion saying it cannot sustain the
resolution of the NLRC and submitting that the
termination of petitioner of his employment may be
questioned before the NLRC as the same is secular in
nature, not ecclesiastical.
ISSUE:
Was the termination of Pastor Austria’s services an
ecclesiastical affair and, as such, involved the
separation of church and state?
HELD:
No. An ecclesiastical affair involves the relationship
between the church and its members and relates to
matters of faith, religious doctrines, worship and
governance of the congregation. Examples of so-called
ecclesiastical affairs to which the State cannot meddle
are proceedings for excommunication, ordinations of
religious ministers, and administration of sacraments.
While the matter at hand relates to the church and its
religious minister, it does not give the case a religious
significance. What is involved is the relationship of the
church as an employer and the minister as an
employee. It is purely secular and has no relation
whatsoever with the practice of faith, worship or
doctrines of the church. Pastor Austria was not
excommunicated or expelled from the membership of
the SDA but was terminated from employment. As
pointed out by the OSG in its memorandum, the
grounds invoked for Austria’s dismissal are all based
on Article 282 of the Labor Code which enumerates the
just causes for termination of employment. It is
palpable by this alone that the reason for Austria’s
dismissal from the service is not religious in nature.
Coupled with this is the act of the SDA in furnishing
NLRC with a copy of Austria’s letter of termination
which again is an eloquent admission by the SDA that
NLRC has jurisdiction over the case. Aside from these,
SDA admitted in a certification issued by Mr. Ibesate
that Austria has been its employee for twenty-eight
(28) years. SDA even registered petitioner with the
Social Security System (SSS) as its employee. As a
matter of fact, the worker’s records of Austria have
been submitted by SDA as part of their exhibits. It is
clear from all of these that when the SDA terminated
the services of Austria, it was merely exercising its
management prerogative to fire an employee which it
believes to be unfit for the job. As such, the State,
through the Labor Arbiter and the NLRC, has the right
to take cognizance of the case and to determine
whether the SDA, as employer, rightfully exercised its
management prerogative to dismiss an employee. This
is in consonance with the mandate of the Constitution
to afford full protection to labor.
DY et AL vs NLRC
Petitioners assail in this Court the resolution of the
National Labor Relations Commission (NLRC)
dismissing their appeal from the decision of the
Executive Labor Arbiter 1 in Cebu City which found
private respondent to have been illegally dismissed by
them.
Said private respondent, Carlito H. Vailoces, was the
manager of the Rural Bank of Ayungon (Negros
Oriental), a banking institution duly organized under
Philippine laws. He was also a director and stockholder
of the bank.
On June 4, 1983, a special stockholders' meeting was
called for the purpose of electing the members of the
bank's Board of Directors. Immediately after the
election the new Board proceeded to elect the bank's
executive officers.
Pursuant to Article IV of the bank's by-laws, 2
providing for the election by the entire membership of
the Board of the executive officers of the bank, i.e.,
the president, vice-president, secretary, cashier and
bank manager, in that board meeting of June 4, 1983,
petitioners Lorenzo Dy, William Ibero and Ricardo
Garcia were elected president, vice-president and
corporate secretary, respectively. Vailoces was not re-
elected as bank manager, 3 Because of this
development, the Board, on July 2, 1983, passed
Resolution No. 5, series of 1983, relieving him as bank
manager.
On August 3, 1983, Vailoces filed a complaint for illegal
dismissal and damages with the Ministry of Labor and
Employment against Lorenzo Dy and Zosimo Dy, Sr.
The complaint was amended on September 22, 1983
to include additional respondents-William Ibero,
Ricardo Garcia and the Rural Bank of Ayungon, and
additional causes of action for underpayment of salary
and non-payment of living allowance.
In his complaint and position paper, Vailoces asserted
that Lorenzo Dy, after obtaining control of the majority
stock of the bank by buying the shares of Marcelino
Maximo, called an illegal stockholders' meeting and
elected a Board of Directors controlled by him; that
after its illegal constitution, said Board convened on
July 2, 1983 and passed a resolution dismissing him as
manager, without giving him the opportunity to be
heard first; that his dismissal was motivated by
Lorenzo Dy's desire to take over the management and
control of the bank, not to mention the fact that he
(Dy) harbored ill feelings against Vailoces on account
of the latter's filing of a complaint for violation of the
corporation code against him and another complaint
for compulsory recognition of natural child with
damages against Zosimo Dy, Sr.
In their answer, Lorenzo Dy, et al. denied the charge
of illegal dismissal. They pointed out that Vailoces'
position was an elective one, and he was not re-
elected as bank manager because of the Board's loss
of confidence in him brought about by his absenteeism
and negligence in the performance of his duties; and
that the Board's action was taken to protect the
interest of the bank and was "designed as an internal
control measure to secure the check and balance of
authority within the organization."
The Executive Labor Arbiter found that Vailoces was:
(a) Illegally dismissed, first not because of
absenteeism and negligence, but of the resentment of
petitioners against Vailoces which arose from the
latter's filing of the cases for recognition as natural
child against Zosimo Dy, Sr. and for violation of the
corporation code against Lorenzo Dy; and second,
because he was not afforded the due process of law
when he was dismissed during the Board meeting of
July 2, 1983 the validity of which is seriously doubted;
(b) Not paid his cost of living allowance; and
(c) Underpaid with only P500 monthly salary,
and consequently ordered the individual petitioners —
Lorenzo Dy and Zosimo Dy-but not the Bank itself, to:
(a) Pay Vailoces jointly and severally, the sum of
P111,480.60 representing his salary differentials, cost
of living allowances, back wages from date of dismissal
up to the date of the decision (November 29, 1983),
moral and exemplary damages, and attorney's fees;
and
(b) Reinstate Vailoces to his position as bank
manager, with additional backwages from December 1,
1983 on the adjusted salary rate of P620.00 r month
until he is actually reinstated, plus cost-of-living
allowance.
Lorenzo Dy, et al. appealed to the NLRC, assigning decision from Atty. Zerna. On the merits, they assert
error to the decision of the Labor Arbiter on various that the Arbiter's finding of illegal dismissal was
grounds, among them: that Vailoces was not entitled without evidentiary basis, that it was error to impose
to notice of the Board meeting of July 2, 1983 which the obligation to pay damages upon the individual
decreed his relief because he was no longer a member petitioners, instead of the Rural Bank of Ayungon,
of the Board on said date; that he nonetheless had the which was Vailoces' real employer, and that the
opportunity to refute the charges against him and seek damages awarded are exorbitant and oppressive.
a formal investigation because he received a copy of
the minutes of said meeting while he was still the bank While the comment of Vailoces traverses the
manager (his removal was to take effect only on averments of the petition, that of the Solicitor General
August 15, 1983), instead of which he simply on behalf of public respondents perceives the matter
abandoned the work he was supposed to perform up to as an intracorporate controversy of the class described
the effective date of his relief; and that the matter of in Section 5, par. (c), of Presidential Decree No. 902-A,
his relief was within the adjudicatory powers of the namely:
Securities and Exchange Commission.
(c) Controversies in the election or appointments
The NLRC, however bypassed the issues raised and of directors, trustees, officers or managers of such
simply dismissed the appeal for having been filed late. corporations, partnerships or associations.
It ruled that:
explicitly declared to be within the original and
The record shows that a copy of the decision sent by exclusive jurisdiction of the Securities and Exchange
registered mail to respondents' counsel, Atty. Edmund Commission, and recommends that the questioned
Tubio, was received on January 11, 1984 by a certain resolution of the NLRC as well as the decision of the
Atty. Ramon Elesteria, a law office partner of Atty. Labor Arbiter be set aside as null and void.
Tubio. ... This fact is corroborated by the certification
In truth, the issue of jurisdiction is decisive and
issued by the Postmaster of Dumaguete City...
renders unnecessary consideration of the other
Moreover, the same is admitted by no less than Atty.
questions raised.
Ramon Elesteria himself in his affidavit. It further
appears in the record that on January 30, 1984 a
There is no dispute that the position from which
certain Atty. Francisco Zerna, a new lawyer engaged
private respondent Vailoces claims to have been
by the respondents for the appeal, received a copy of
illegally dismissed is an elective corporate office. He
the decision in this case as certified by Julia Pepito in
himself acquired that position through election by the
an affidavit subscribed before the Senior Labor
bank's Board of Directors at the organizational meeting
Arbitration Specialist. The appeal was filed only on
of November 17, 1979. 10 He lost that position
February 17, 1984.
because the Board that was elected in the special
stockholders' meeting of June 4, 1983 did not re-elect
Considering that it was a law partner of the
him. And when Vailoces, in his position paper
respondents' counsel who received on January 11,
submitted to the Labor Arbiter, impugned said
1984 the registered letter, his actual receipt thereof
stockholders' meeting as illegally convoked and the
completes the service. ... And even assuming that such
Board of Directors thereby elected as illegally
was not a valid service, since the respondents received
constituted, 11 he made it clear that at the heart of
another copy of the decision on January 30, 1984,
the matter was the validity of the directors' meeting of
through their newly engaged counsel, it is therefore
June 4, 1983 which, by not re-electing him to the
our opinion that the appeal herein was filed out of
position of manager, in effect caused termination of his
time, whether the time is reckoned from the receipt by
services.
Atty. Elesteria or Atty. Zerna, and, for this reason, we
can not give due course to his appeal.
The case thus falls squarely within the purview of
Section 5, par. (c), No. 902-A just cited. In PSBA vs.
In this Court, petitioners assail said ruling as an
Leaño, 12 this Court, confronted with a similar
arbitrary deprivation of their right to appeal through
controversy, ruled that the Securities and Exchange
unreasonable adherence to procedural technicality.
Commission, not the NLRC, has jurisdiction:
They argue that they should not be bound by the
service of the Labor Arbiter's decision by Atty. Elesteria
It was at a Board regular monthly meeting held on
on January 11, 1984 or by Atty. Zerna on January 30,
August 1, 1981, that three directors were elected to fill
1984, because neither lawyer was authorized to accept
vacancies. And, it was at the regular Board meeting of
service for their counsel Atty. Tubio, and that their 10
September 5, 1981 that all corporate positions were
day period of appeal should be counted from February
declared vacant in order to effect a reorganization, and
10, 1984 when they actually received the copy of the
at the ensuing election of officers, Tan was not re-
elected as Executive Vice-President.
Basically, therefore, the question is whether the
election of directors on August 1, 1981 and the
election of officers on September 5, 1981, which
resulted in Tan's failure to be re-elected, were validly
held. This is the crux of the question that Tan has
raised before the SEC. Even in his position paper
before the NLRC, Tan alleged that the election on
August 1, 1981 of the three directors was in
contravention of the PSBA By-Laws providing that any
vacancy in the Board shall be filled by a majority vote
of the stockholders at a meeting specially called for the
purpose. Thus, he concludes, the Board meeting on
September 5, 1981 was tainted with irregularity on
account of the presence of illegally elected directors
without whom the results could have been different.
Tan invoked the same allegations in his complaint filed
with the SEC. So much so, that on December 17,
1981, the SEC (Case No. 2145) rendered a Partial
Decision annulling the election of the three directors
and ordered the convening of a stockholders' meeting
for the purpose of electing new members of the Board.
The correctness of d conclusion is not for us to pass
upon in this case. Tan was present at said meeting and
again sought the issuance of injunctive relief from the
SEC.
The foregoing indubitably show that, fundamentally,
the controversy is intra-corporate in nature. It revolves
around the election of directors, officers or managers
of the PSBA, the relation between and among its
stockholders, and between them and the corporation.
Private respondent also contends that his "ouster" was
a scheme to intimidate him into selling his shares and
to deprive him of his just and fair return on his
investment as a stockholder received through his
salary and allowances as Executive Vice-President. Vis-
a-vis the NLRC, these matters fall within the
jurisdiction of the SEC. Presidential Decree No. 902-A
vests in the Securities and Exchange Commission:
... Original and exclusive jurisdiction to hear and
decide cases involving:
a) Devices or schemes employed by or any acts,
of the board of directors, business associates, its
officers or partners, amounting to fraud and
misrepresentation) which may be detrimental to the
interest of the public and/or of the stockholders,
partners, members of associations or organizations
registered with the Commission.
b) Controversies arising out of intracorporate or
partnership relations, between and among
stockholders, members or associates; between any of
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 it concerns their individual franchise or right
to exist as such entity;
c) Controversies in the election or appointments
of directors, trustees, officers or managers of such
corporations, partnership or associations.
This is not a case of dismissal. The situation is that of a
corporate office having been declared vacant, and of
Tan's not having been elected thereafter. The matter
of whom to elect is a prerogative that belongs to the
Board, and involves the exercise of deliberate choice
and the faculty of discriminative selection. Generally
speaking, the relationship of a person to corporation,
whether as officer or as agent or employee, is not
determined by the nature of the services performed,
but by the incidents of the relationship as they actually
exist.
Respondent Vailoces' invocation of estoppel as against
petitioners with respect to the issue of jurisdiction is
unavailing. In the first place, it is not quite correct to
state that petitioners did not raise the point in the
lower tribunal. Although rather off handedly, in their
appeal to the NLRC they called attention to the Labor
Arbiter's lack of jurisdiction to rule on the validity of
the meeting of July 2, 1983, but the dismissal of the
appeal for alleged tardiness effectively precluded
consideration of that or any other question raised in
the appeal. More importantly, estoppel cannot be
invoked to prevent this Court from taking up the
question of jurisdiction, which has been apparent on
the face of the pleadings since the start of litigation
before the Labor Arbiter. It is well settled that the
decision of a tribunal not vested with appropriate
jurisdiction is null and void. Thus, in Calimlim vs.
Ramirez, 13 this Court held:
A rule that had been settled by unquestioned
acceptance and upheld in decisions so numerous to
cite is that the jurisdiction of a court over the subject
matter of the action is a matter of law and may not be
conferred by consent or agreement of the parties. The
lack of jurisdiction of a court may be raised at any
stage of the proceedings, even on appeal. This doctrine
has been qualified by recent pronouncements which
stemmed principally from the ruling in the cited case of
Sibonghanoy. It is to be regretted, however, that the
holding in said case had been applied to situations
which were obviously not contemplated therein. The
exceptional circumstances involved in Sibonghanoy
which justified the departure from the accepted
concept of non-waivability of objection to jurisdiction
has been ignored and, instead a blanket doctrine had
been repeatedly upheld that rendered the supposed
ruling in Sibonghanoy not as the exception, but rather
the general rule, virtually overthrowing altogether the
time-honored principle that the issue of jurisdiction is
not lost by waiver or by estoppel.
xxx xxx xxx
It is neither fair nor legal to bind a party by the result
of a suit or proceeding which was taken cognizance of
in a court which lacks jurisdiction over the same
irrespective of the attendant circumstances. The
equitable defense of estoppel requires knowledge or
consciousness of the facts upon which it is based . The
same thing is true with estoppel by conduct which may
be asserted only when it is shown, among others, that
the representation must have been made with
knowledge of the facts and that the party to whom it
was made is ignorant of the truth of the matter (De
Castro vs. Gineta, 27 SCRA 623). The filing of an
action or suit in a court that does not possess
jurisdiction to entertain the same may not be
presumed to be deliberate and intended to secure a
ruling which could later be annulled if not favorable to
the party who filed such suit or proceeding in a court
that lacks jurisdiction to take cognizance of the same,
such act may not at once be deemed sufficient basis of
estoppel. It could have been the result of an honest
mistake or of divergent interpretation of doubtful legal
provisions. If any fault is to be imputed to a party
taking such course of action, part of the blame should
be placed on the court which shall entertain the suit,
thereby lulling the parties into believing that they
pursued their remedies in the correct forum. Under the
rules, it is the duty of the court to dismiss an action
'whenever it appears that court has no jurisdiction over
the subject matter.' (Section 2, Rule 9, Rules of Court)
Should the Court render a judgment without
jurisdiction, such judgment may be impeached or
annulled for lack of jurisdiction (Sec. 30, Rule 132,
Ibid), within ten (10) years from the finality of the
same (Art. 1144, par. 3, Civil Code).
To be sure, petitioners failed to raise the issue of
jurisdiction in their petition before this Court. But this,
too, is no hindrance to the Court's considering said
issue.
The failure of the appellees to invoke anew the
aforementioned solid ground of want of jurisdiction of
the lower court in this appeal should not prevent this
Tribunal to take up that issue as the lack of jurisdiction
of the lower court is apparent upon the face of the
record and it is fundamental that a court of justice
could only validly act upon a cause of action or subject
matter of a case over which it has jurisdiction and said
jurisdiction is one conferred only by law; and cannot
be acquired through, or waived by, any act or omission
of the parties (Lagman vs. CA, 44 SCRA 234 [1972]);
hence may be considered by this court motu proprio
(Gov't. vs. American Surety Co., 11 Phil. 203
[1908])...
These considerations make inevitable the conclusion
that the judgment of the Labor Arbiter and the
resolution of the NLRC are void for lack of cause of
jurisdiction, and this Court must set matters aright in
the exercise of its judicial power. It is of no moment
that Vailoces, in his amended complaint, seeks other
relief which would seemingly fan under the jurisdiction
of the Labor Arbiter, because a closer look at these-
underpayment of salary and non-payment of living
allowance-shows that they are actually part of the
perquisites of his elective position, hence, intimately
linked with his relations with the corporation. The
question of remuneration, involving as it does, a
person who is not a mere employee but a stockholder
and officer, an integral part, it might be said, of the
corporation, is not a simple labor problem but a matter
that comes within the area of corporate affairs and
management, and is in fact a corporate controversy in
contemplation of the Corporation Code.
WHEREFORE, the questioned decision of the Labor
Arbiter and the Resolution of the NLRC dismissing
petitioners' appeal from said decision are hereby set
aside because rendered without jurisdiction. The
amended complaint for illegal dismissal, etc., basis of
said decision and Resolution, is ordered dismissed,
without prejudice to private respondent's seeking
recourse in the appropriate forum.
SO ORDERED.
FORTUNE CEMENT CORP vs NLRC
This is a petition for certiorari with prayer to annul the
resolution dated May 29, 1987 of respondent National
Labor Relations Commission (NLRC) reversing the
order dated December 3, 1985 of the Labor Arbiter
which dismissed private respondent Antonio M.
Lagdameo's (Lagdameo for brevity) complaint for
Illegal Dismissal (NLRC NCR Case No. 1-228-85)
against petitioner Fortune Cement Corporation (FCC
for brevity) for lack of jurisdiction.
Lagdameo is a registered stockholder of FCC.
On October 14, 1975, at the FCC Board of Directors'
regular monthly meeting, he was elected Executive
Vice-President of FCC effective November 1, 1975 (p.
3, Rollo).
Some eight (8) years later, or on February 10, 1983,
during a regular meeting, the FCC Board resolved that
all of its incumbent corporate officers, including
Lagdameo, would be "deemed" retained in their
respective positions without necessity of yearly
reappointments, unless they resigned or were
terminated by the Board (p. 4, Rollo).
At subsequent regular meetings held on June 14 and
21, 1983, the FCC Board approved and adopted a
resolution dismissing Lagdameo as Executive Vice-
President of the company, effective immediately, for
loss of trust and confidence (p. 4, Rollo).
On June 21, 1983, Lagdameo filed with the National
Labor Relations Commission (NLRC), National Capital
Region, a complaint for illegal dismissal against FCC
(NLRC-NCR Case No. 1-228-85) alleging that his
dismissal was done without a formal hearing and
investigation and, therefore, without due process (p.
63, Rollo).
On August 5, 1985, FCC moved to dismiss Lagdameo's
complaint on the ground that his dismiss as a
corporate officer is a purely intra-corporate
controversy over which the Securities and Exchange
Commission (SEC) has original and exclusive
jurisdiction.
The Labor Arbiter granted the motion to dismiss (p.
22, Rollo). On appeal, however, the NLRC set aside the
Labor Arbiter's order and remanded the case to the
Arbitration Branch "for appropriate proceedings" (NLRC
Resolution dated April 30, 1987). The NLRC denied
FCC's motion for reconsideration (p. 5, Rollo).
Dissatisfied, FCC filed this petition for certiorari.
We find merit in the petition.
The sole issue to be resolved is whether or not the
NLRC has jurisdiction over a complaint filed by a
corporate executive vice-president for illegal dismissal,
resulting from a board resolution dismissing him as
such officer.
Section 5 of Presidential Decree No. 902-A vests in the
SEC original and exclusive jurisdiction over this
controversy:
Sec. 5. In addition to the regulatory and adjudicative
functions of the Securities and Exchange Commission
over corporations, partnerships and other forms of
associations registered with it as expressly granted
under existing laws and decrees, it shall have original
and exclusive jurisdiction to hear and decide cases
involving:
a) Devices and schemes employed by or any acts,
of the board of directors, business associates, its
officers or partners, amounting to fraud and
misrepresentation which may be detrimental to the
interest of the public and/or stockholders, partners,
members of associations or organization registered
with the Commission;
b) Controversies arising out of intra-corporate or
partnership relations, between and among
stockholders, members, or associates; 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 it concerns their individual franchise or right
to exist as such entity;
c) Controversies in the election or appointments
of directors, trustees, officers or managers of such
corporations, partnership or associations." (Section 5,
P.D. 902-A; Emphasis supplied.)
In reversing the decision of Labor Arbiter Porfirio E.
Villanueva, respondent NLRC held:
. . . . It is not disputed that complainant Lagdameo
was an employee of respondent Fortune Cement
Corporation, being then the Executive Vice-President.
For having been dismissed for alleged loss of trust and
confidence, complainant questioned his dismissal on
such ground and the manner in which he was
dismissed, claiming that no investigation was
conducted, hence, there was and is denial of due
process. Predicated on the above facts, it is clear to Us
that a labor dispute had arisen between the appellant
and the respondent corporation, a dispute which falls
within the original and exclusive jurisdiction of the
NLRC. A labor dispute as defined in the Labor Code
includes any controversy or matter concerning terms
or conditions of employment or the association or
representation of persons in negotiating, fixing,
maintaining, changing or arranging the terms and
conditions of employment regardless of whether or not
the disputants stand in the proximate relations of
employers and employees." (pp. 16-17, Rollo).
The Solicitor General, declining to defend public
respondent in its pleading entitled "Manifestation in
Lieu of Comment," aptly observed:
The position of "Executive Vice-President," from which
private respondent Lagdameo claims to have been
illegally dismissed, is an elective corporate office. He
himself acquired that position through election by the
corporation's Board of Directors, although he also lost
the same as a consequence of the latter's resolution.
Indeed the election, appointment and/or removal of an
executive vice-president is a prerogative vested upon a
corporate board.
And it must be, not only because it is a practice
observed in petitioner Fortune Cement Corporation,
but more so, because of an express mandate of law.
(p. 65, Rollo.)
The Solicitor General pointed out that "a corporate
officer's dismissal is always a corporate act and/or
intra-corporate controversy and that nature is not
altered by the reason or wisdom which the Board of
Directors may have in taking such action." The dispute
between petitioner and Lagdameo is of the class
described in Section 5, par. (c) of Presidential Decree
No. 902-A, hence, within the original and exclusive
jurisdiction of the SEC. The Solicitor General
recommended that the petition be granted and NLRC-
NCR Case No. 1-228-85 be dismissed by respondent
NLRC for lack of jurisdiction (p. 95, Rollo).
In PSBA vs. Leaño (127 SCRA 778), this Court,
confronted with a similar controversy, ruled that the
SEC, not the NLRC, has jurisdiction:
This is not a case of dismissal. The situation is that of a
corporate office having been declared vacant, and of
Tan's not having been elected thereafter. The matter
of whom to elect is a prerogative that belongs to the
Board, and involves the exercise of deliberate choice
and the faculty of discriminative selection. Generally
speaking, the relationship of a person to a corporation,
whether as officer or as agent or employee is not
determined by the nature of the services performed,
but by the incidents of the relationship as they actually
exist.
Lagdameo claims that his dismissal was wrongful,
illegal, and arbitrary, because the "irregularities"
charged against him were not investigated (p. 85,
Rollo); that the case of PSBA vs. Leaño (supra) cited
by the Labor Arbiter finds no application to his case
because it is not a matter of corporate office having
been declared vacant but one where a corporate officer
was dismissed without legal and factual basis and
without due process; that the power of dismissal
should not be confused with the manner of exercising
the same; that even a corporate officer enjoys security
of tenure regardless of his rank (p. 97, Rollo); and that
the SEC is without power to grant the reliefs prayed for
in his complaint (p. 106, Rollo).
The issue of the SEC's power or jurisdiction is decisive
and renders unnecessary a consideration of the other
questions raised by Lagdameo. Thus did this Court rule
in the case of Dy vs. National Labor Relations
Commission (145 SCRA 211) which involved a similar
situation:
It is of no moment that Vailoces, in his amended
complaint, seeks other reliefs which would seemingly
fall under the jurisdiction of the Labor Arbiter, because
a closer look at these — underpayment of salary and
on-payment of living allowance — shows that they are
actually part of the perquisites of his elective position,
hence, intimately linked with his relations with the
corporation.1âwphi1 The question of remuneration,
involving as it does, a person who is not a mere
employee but a stockholder and officer, an integral
part, it might be said, of the corporation, is not a
simple labor problem but a matter that comes within
the area of corporate affairs and management, and is
in fact a corporate controversy in contemplation of the
Corporation Code.
WHEREFORE, the questioned Resolution of the NLRC
reversing the decision of the Labor Arbiter, having
been rendered without jurisdiction, is hereby reversed
and set aside. The decision of the Labor Arbiter dated
December 3, 1985 dismissing NLRC-NCR Case No. 1-
228-85 is affirmed, without prejudice to private
respondent Antonio M. Lagdameo's seeking recourse in
the appropriate forum. No costs.
SO ORDERED.
MAINLAND CONSTRUCTION vs MOVILLA
Petitioners urge this Court to set aside the Decision of
the National Labor Relations Commission (NLRC),
dated May 30, 1994, in NLRC-CA No. M-000949-92 for
having been rendered with grave abuse of discretion
amounting to lack of jurisdiction. This reversed the
decision of the Labor Arbiter in Case No. RAB-11-10-
99883-91. Petitioners' motion for reconsideration of
the NLRC decision was denied in a Resolution, dated
August 31, 1994.
Mainland Construction Co., Inc. is a domestic
corporation, duly organized and existing under
Philippine laws, having been issued a certificate of
registration by the Securities and Exchange
Commission (SEC) on July 26, 1977, under Registry
Number 74691. Its principal line of business is the
general construction of roads and bridges and the
operation of a service shop for the maintenance of
equipment. Respondents on the other hand, are the
surviving heirs of complainant, Ernesto Movilla, who
died during the pendency of the action with the Labor
Arbiter.
Records show that Ernesto Movilla, who was a Certified
Public Accountant during his lifetime, was hired as
such by Mainland in 1977. Thereafter, he was
promoted to the position of Administrative Officer with
a monthly salary of P4,700.00.
Ernesto Movilla, recorded as receiving a fixed salary of
P4,700.00 a month, was registered with the Social
Security System (SSS) as an employee of petitioner
corporation. His contributions to the SSS, Medicare
and Employees Compensation Commission (ECC) were
deducted from his monthly earnings by his said
employer.
On April 12, 1987, during petitioner corporation's
annual meeting of stockholders, the following were
elected members of the Board of Directors, viz:
Robert L. Carabuena, Ellen L. Carabuena, Lucita Lu
Carabuena, Martin G. Lu and Ernesto L. Movilla.
On the same day, an organizational meeting was held
and the Board of Directors elected Ernesto Movilla as
Administrative Manager. He occupied the said position
up to the time of his death.
On April 2, 1991, the Department of Labor and
Employment (DOLE) conducted a routine inspection on
petitioner corporation and found that it committed
such irregularities in the conduct of its business as:
"1. Underpayment of wages under R.A. 6727 and
RTWPB-XI-01;
2. Non-implementation of Wage Order No. RTWPB-XI-
02;
3. Unpaid wages for 1989 and 1990;
4. Non-payment of holiday pay and service incentive
leave pay; and
5. Unpaid 13th month pay (remaining balance for
"1990."
On the basis of this finding, petitioner corporation was
ordered by DOLE to pay to its thirteen employees,
which included Movilla, the total amount of
P309,435.89, representing their salaries, holiday pay,
service incentive leave pay differentials, unpaid wages
and 13th month pay.
All the employees listed in the DOLE's order were paid
by petitioner corporation, except Ernesto Movilla.
On October 8, 1991, Ernesto Movilla filed a case
against petitioner corporation and/or Lucita, Robert,
and Ellen, all surnamed Carabuena, for unpaid wages,
separation pay and attorney's fees, with the
Department of Labor and Employment, Regional
Arbitration, Branch XI, Davao City.
On February 29, 1992, Ernesto Movilla died while the
case was being tried by the Labor Arbiter and was
promptly substituted by his heirs, private respondents
herein, with the consent of the Labor Arbiter.
The Labor Arbiter rendered judgment on June 26,
1992, dismissing the complaint on the ground of lack
of jurisdiction. Specifically, the Labor Arbiter made the
following ratiocination:
"It is clear that in the case at bar, the controversy
presented by complainant is intra-corporate in nature
and is within the jurisdiction of the Securities and
Exchange Commission, pursuant to P.D. 902-A (Phil.
School of Business Administration, et al. v. Leano, G.R.
No. L--58468, February 24, 1984; Dy et al. v. NLRC, et
al., G.R. No. L-68544, October 27, 1986). What
Movilla is claiming against respondents are his alleged
unpaid salaries and separation pay as Administrative
Manager of the corporation for which position he was
appointed by the Board of Directors. His claims
therefore fall under the jurisdiction of the Securities
and Exchange Commission because this is not a simple
labor problem; but a matter that comes within the
area of corporate affairs and management, and is in
fact a corporate controversy in contemplation of the
Corporation Code. (Fortune Cement Corporation v.
NLRC, et al., G.R No. 79762, January 24, 1991)."
Aggrieved by this decision, respondents appealed to
the National Labor Relations Commission (NLRC). The
NLRC ruled that the issue in the case was one which
involved a labor dispute between an employee and
petitioner corporation and, thus, the NLRC had
jurisdiction to resolve the case. The dispositive portion
of the NLRC decision reads:
"WHEREFORE, the assailed decision is Reversed and
Set Aside. Respondents are ordered to pay the heirs
of complainant the following:
1. Unpaid salaries from January 1989 to September
1991 in the sum of P155,100.00;
2. Separation pay in the sum of P65,800.00;
3. Moral damages in the sum of P10,000.00;.
4. Indemnity in the sum of P3,000.00; and,
5. Attorney's fees equivalent to 10% of the total
award."
The pivotal issue in this case is which of the two
agencies of the government - the NLRC or the SEC -
has jurisdiction over the controversy.
As we stated earlier, it is of course the contention of
petitioners that the NLRC committed grave abuse of
discretion when it nullified the decision of the Labor
Arbiter which dismissed the complaint of Movilla for
unpaid wages, separation pay and attorney's fees on
the ground of lack of jurisdiction. Petitioners take the
position that, since Ernesto Movilla was a corporate
officer, the controversy as to his compensation is
within the jurisdiction of the SEC as mandated by P.D.
902-A and not with the NLRC.
We find for the respondents, it appearing that
petitioners' contention is bereft of merit.
In order that the SEC 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 stockholders, partners,
members or officers;
c. between the corporation, partnership or
association and the State as far as its
franchise, permit or license to operate is
concerned; and
d. among the stockholders, partners or associates
themselves.
The fact that the parties involved in the controversy
are all stockholders or that the parties involved are the
stockholders and the corporation does not necessarily
place the dispute within the ambit of the jurisdiction of
SEC. The better policy to be followed in determining
jurisdiction over a case should be to consider
concurrent factors such as the status or relationship of
the parties or the nature of the question that is the
subject of their controversy.[8] In the absence of any
one of these factors, the SEC will not have jurisdiction.
Furthermore, it does not necessarily follow that every
conflict between the corporation and its stockholders
would involve such corporate matters as only the SEC
can resolve in the exercise of its adjudicatory or quasi-
judicial powers.
In the case at bench, the claim for unpaid wages and
separation pay filed by the complainant against
petitioner corporation involves a labor dispute. It does
not involve an intra-corporate matter, even when it is
between a stockholder and a corporation. It relates to
an employer-employee relationship which is distinct
from the corporate relationship of one with the other.
Moreover, there was no showing of any change in the
duties being performed by complainant as an
Administrative Officer and as an Administrative
Manager after his election by the Board of Directors.
What comes to the fore is whether there was a change
in the nature of his functions and not merely the
nomenclature or title given to his job.
Indeed, Ernesto Movilla worked as an administrative
officer of the company for several years and was given
a fixed salary every month. To further sustain this
assertion Movilla also submitted a joint affidavit
executed by Juanito S. Malubay and Delia S. Luciano,
Project Engineer and Personnel-In-Charge,
respectively, of petitioner corporation, attesting that
they personally knew Movilla and that he was
employed in the company. A Premium Certification
issued by an authorized representative of petitioners
was also presented to show his actual monthly
earnings as well as his monthly contributions to the
SSS, Medicare and ECC. Movilla's registration in the
SSS by petitioner corporation added strength to the
conclusion that he was petitioner corporation's
employee as coverage by the said law is predicated on
the existence of an employer-employee relationship.
Furthermore, petitioner corporation failed to present
evidence which showed that, after his election as
Administrative Manager, he was excluded from the
coverage of the SSS, Medicare and ECC.
He also presented, appearing to be relevant to the
issue, the result of the investigation conducted by
DOLE which found that petitioner corporation has
transgressed several labor standard laws against its
employees.
As correctly ruled by the NLRC:
"The claims for unpaid salaries/monetary benefits and
separation pay are not a corporate conflict as
respondents presented them to be. If complainant is
not an employee, respondent should have contested
the DOLE inspection report. What they did was to
exclude complainant from the order of payment x x x
and worse, he was not both given responsibilities and
paid his salaries for the succeeding months x x x. This
is a clear case of constructive dismissal without due
process x x x."
The existence of an employer-employee relationship is
a factual question and public respondent's findings are
accorded great weight and respect as the same are
supported by substantial evidence.[13] Hence, we
uphold the conclusion of public respondent that
Ernesto Movilla was an employee of petitioner
corporation.
It is pertinent to note that petitioner corporation is not
prohibited from hiring its corporate officers to perform
services under a circumstance which will make him an
employee. Moreover, although a director of a
corporation is not, merely by virtue of his position, its
employee, said director may act as an employee or
accept duties that make him also an employee.
Since Ernesto Movilla's complaint involves a labor
dispute, it is the NLRC, under Article 217 of the Labor
Code of the Philippines, which has jurisdiction over the
case at bench.
WHEREFORE, the petition is DISMISSED for lack of
showing of any grave abuse of discretion on the part of
public respondent NLRC. The assailed decision of
public respondent is thus AFFIRMED. SO ORDERED.