BELINDA L. TORRES, AND JOCELYN TUMAMBING, PETITIONERS, VS. THE NATIONAL LABOR RELATIONS COMMISSION, EIGHTH (8TH) DIVISION (FORMERLY FIFTH DIVISION), STI COLLEGE, DAVAO AND PETER…
LOPEZ, J.:
The relevant facts:
STI Colleges of Mindanao, Inc. is a corporation organized and existing under Philippine laws with principal office address at Cagayan de Oro City.[4] Sometime in the 1990’s, STI Colleges of Mindanao, Inc. hired the services of petitioners Belinda L. Torres (Torres for brevity) and Jocelyn Tumambing (Tumambing for brevity). Petitioner Torres was then the Channel Manager while petitioner Tumambing was the Administrator for herein private respondent STI College Davao,[5] an educational institution operated by STI Colleges of Mindanao, Inc.[6]
On August 3, 2006, the Board of Directors of STI Colleges of Mindanao, Inc. elected a set of officers for the year until the election and qualification of their successors. As stated in the Minutes[7] of the Organizational Meeting, among the officers elected were herein petitioner Torres as Chief Executive Officer (CEO for brevity) and petitioner Tumambing as Chief Operating Officer (COO for brevity),[8] both for STI College of Davao.
On April 21, 2009 however, private respondent Peter K. Fernandez (Pres. Fernandez for brevity), President of both of STI Colleges of Mindanao, Inc. and STI College Davao issued two Show Cause Memos. One was addressed to petitioner Torres for charges of “Gross and Habitual Neglect of Duties and Violation of Manual of Regulations for Private Schools,”[9] the other to petitioner Tumambing for “Falsification of Commercial Document.”[10] The Memos stated that a disciplinary committee will be convened to investigate the charges and should the same be proven, it constitutes just causes for the termination of petitioners’ employment under Article 282[11] of the Labor Code.
Also on the same day, petitioners were placed under preventive suspension for a period of not exceeding thirty days[12] or until May 20, 2009.[13]
On April 23, 2009 and April 25, 2009, petitioners Torres and Tumambing, respectively submitted their respective reply-letters[14] to the Show Cause Memos, both addressed to private respondent Pres. Fernandez.
On May 20, 2009, private respondent Pres. Fernandez issued two Memos[15] to petitioners extending the period of their preventive suspension to another thirty days from May 21, 2009 per recommendation of the disciplinary committee.
On June 23, 2009, private respondent Pres. Fernandez adopted the recommendation of the disciplinary committee to terminate the employment of petitioners. As regards petitioner Torres, the Notice of Termination[16] found her guilty of gross and habitual neglect of duties, violation of CHED regulations and policies, violation of STI policies, fraud committed against the company and loss of trust and confidence. Petitioner Tumambing, for her part, was found guilty of fraud and dishonesty per Notice of Termination[17] issued on the same day.
Feeling aggrieved, petitioners filed a Complaint for Illegal Dismissal, Damages and Attorney’s Fees[18] against private respondents STI College of Davao and Pres. Fernandez before the NLRC-Regional Arbitration Branch XI, Davao City. The case was docketed as NLRC Case No. RAB-XI-07-00748-09 and heard by Labor Arbiter Henry F. Te (Labor Arbiter Te for brevity).
On September 3, 2009, private respondents filed a Motion to Dismiss[19] the Complaint on the ground of lack of jurisdiction. According to private respondents, petitioners are corporate officers, not mere employees, of STI College of Davao. As shown in the Minutes of the Organizational Meeting of the Board of Directors of STI Colleges of Mindanao, Inc., petitioners Torres and Tumambing were elected as CEO and COO, respectively. Hence, this case is an intra-corporate dispute, exclusive jurisdiction over which is lodged with the Regional Trial Court in accordance with Section 5 paragraph (c)[20] of Presidential Decree No. 902-A[21] in relation to Section 5.2[22] of Republic Act (RA) No. 8799[23] otherwise known as the Securities Regulation Code. Thus, the Complaint should be dismissed because the Regional Arbitration Branch XI has no jurisdiction over the case.
On September 24, 2009, petitioners countered in their Opposition[24] to the Motion to Dismiss that they have always been regarded as employees, not officers, of STI College of Davao. In fact, private respondents were invoking the provisions of the Labor Code to terminate their employment. Petitioners also claimed that their positions as CEO and COO were mere nomenclatures as their duties and functions as employees of STI College of Davao remained the same even after their supposed election as officers. The Motion to Dismiss therefore was filed solely to deprive them of the protection and benefits accorded to employees under the Labor Code.
On December 16, 2009, Labor Arbiter Te issued an Order[25] which granted private respondents’ Motion to Dismiss.
In due time, petitioners appealed[26] the adverse Order to public respondent National Labor Relations Commission, 8th Division, Cagayan de Oro City.
On September 30, 2010, public respondent rendered a Resolution[27] which affirmed Labor Arbiter Te’s Order dated December 16, 2009. The dispositive portion of the Resolution reads:
“IN VIEW OF ALL THE FOREGOING, the Commission deems it unnecessary to discuss other issues the matter being an intra-corporate dispute. Thus, the present appeal is DISMISSED. The appealed decision is hereby AFFIRMED in toto.
SO ORDERED.”[28]
Petitioners subsequently filed a Motion for Reconsideration[29] of the above Resolution which however was denied in public respondent’s second assailed Resolution[30] dated January 31, 2011.
Undaunted, petitioners are now before Us via Petition for Certiorari raising the following issues:
“A. The Respondent NLRC seriously erred and committed grave abuse of discretion in dismissing the Appeal of the Petitioners and their Motion for Reconsideration on the ground that the Petitioners are Corporate Officers and not employees of the Respondent Corporation;
B. The Respondent NLRC seriously erred and committed grave abuse of discretion in relying on the Minutes of the Organizational Meeting of the Board of Directors of STI Colleges of Mindanao, Inc. (attached as Annex ‘X’ hereof) in finding that the Petitioners are Corporate Officers of the Respondent Corporation despite the fact that the said Minutes was not reported to the Securities and Exchange Commission; (and)
C. The Respondent NLRC seriously erred and committed grave abuse of discretion in denying the Monetary Claims of the Petitioners.”[31]
The Petition is partly meritorious.
The resolution of the present Petition hinges on the crucial issue of whether or not petitioners were corporate officers of private respondent STI College of Davao. The answer will necessarily determine which tribunal has jurisdiction to hear the case—the Labor Arbiter or the Regional Trial Court.
Private respondents argue that petitioners were corporate officers. To prove this, private respondents presented the Amended By-Laws[32] of STI Colleges of Mindanao, Inc. which states under Article IV Section 1 thereof that the Board of Directors are empowered to appoint other officers of the corporation as may be necessary and proper. Private respondents also presented the Minutes[33] of the Organizational Meeting of the Board of Directors dated August 6, 2006 to show that indeed petitioners Torres and Tumambing were elected as CEO and COO, respectively.[34]
The argument fails to persuade.
It bears to note that it was private respondents who alleged that petitioners were corporate officers, hence they have the burden to prove the same.[35] We find insufficient the Amended By-Laws of STI Colleges of Mindanao, Inc. to prove that petitioners are corporate officers because the two copies presented to Us lack page nos. 5, 6, 7, 8, 10 and 11 where the supposed Article IV Section 1 was stated. Be that as it may, Article IV Section 1 standing alone does not make petitioners corporate officers as contemplated under Section 25 of the Batas Pambansa Bilang 68[36] otherwise known as the Corporation Code of the Philippines. Section 25 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.
Xxx xxx xxx.” (Emphasis Supplied)
To be considered a “corporate office” therefore, the position must be expressly mentioned as such either by the Corporation Code or the By-Laws of the corporation. The case of Matling Industrial and Commercial Corporation v. Coros[37] is explicit:
“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. 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, respondent 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).’
Xxx xxx xxx
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.
It is relevant to state in this connection that the SEC, the primary agency administering the Corporation Code, adopted a similar interpretation of Section 25 of the Corporation Code in its Opinion dated November 25, 1993, to wit:
Thus, 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.” (Emphasis Supplied)
Here, petitioners’ positions were not among those enumerated in the Corporation Code. Neither was there any allegation nor proof that petitioners’ positions were enumerated in the Amended By-Laws. Hence, it follows that petitioners are not corporate officers. Petitioners’ positions may be considered as corporate offices by the Board of Directors but they are not considered as such under the law. The same conclusion was arrived in the case of Marc II Marketing, Inc. v. Joson[38] where the Supreme Court emphasized:
“Paragraph 2, Section 1, Article IV of petitioner corporation’s by-laws, empowered its Board of Directors to appoint such other officers as it may determine necessary or proper. It is by virtue of this enabling provision that petitioner corporation’s Board of Directors allegedly approved a resolution to make the position of General Manager a corporate office, and, thereafter, appointed respondent thereto making him one of its corporate officers. All of these acts were done without first amending its by-laws so as to include the General Manager in its roster of corporate officers.
With the given circumstances and in conformity with Matling Industrial and Commercial Corporation v. Coros, this Court rules that respondent was not a corporate officer of petitioner-corporation because his position as General Manager was not specifically mentioned in the roster of corporate officers in its corporate by-laws. The enabling clause in petitioner corporation’s by-laws empowering its Board of Directors to create additional officers, i.e., General Manager, and the alleged subsequent passage of a board resolution to that effect cannot make such position a corporate office. Matling clearly enunciated that the board of directors has no power to create other corporate offices without first amending the corporate by-laws so as to include therein the newly created corporate office. Though the board of directors may create appointive positions other than the positions of corporate officers, the persons occupying such positions cannot be viewed as corporate officers under Section 25 of the Corporation Code. In view thereof, this Court holds that unless and until petitioner corporation’s by-laws is amended for the inclusion of General Manager in the list of its corporate officers, such position cannot be considered as a corporate office within the realm of Section 25 of the Corporation Code.
This Court considers that the interpretation of Section 25 of the Corporation Code laid down in Matling safeguards the constitutionally enshrined right of every employee to security of tenure. To allow the creation of a corporate officer position by a simple inclusion in the corporate by-laws of an enabling clause empowering the board of directors to do so can result in the circumvention of that constitutionally well-protected right.” (Emphasis Supplied)
Private respondents however claim that in the cases of Tabang v. National Labor Relations Commission[39] and Nacpil v. International Broadcasting Corporation,[40] the Supreme Court declared that where a corporate office is not specifically indicated in the roster of corporate offices in the by-laws of the corporation, the board of directors may also be empowered to create additional offices as may be necessary.[41]
We remain unconvinced.
The same argument was raised in the case of Matling Industrial and Commercial Corporation and the Supreme Court has already ruled that those pronouncements made in Tabang and Nacpil were plainly obiter dictum and that these cases are no longer controlling. The Supreme Court explained:
“To emphasize, the power to create new offices and the power to appoint the officers to occupy them vested by By-Law No. V merely allowed Matling’s President to create non-corporate offices to be occupied by ordinary employees of Matling. Such powers were incidental to the President’s duties as the executive head of Matling to assist him in the daily operations of the business.
The petitioners’ reliance on Tabang, supra, is misplaced. The statement in Tabang, to the effect that offices not expressly mentioned in the By-Laws but were created pursuant to a By-Law enabling provision were also considered corporate offices, was plainly obiter dictum due to the position subject of the controversy being mentioned in the By-Laws. Thus, the Court held therein that the position was a corporate office, and that the determination of the rights and liabilities arising from the ouster from the position was an intra-corporate controversy within the SEC’s jurisdiction.
In Nacpil v. Intercontinental Broadcasting Corporation, which may be the more appropriate ruling, the position subject of the controversy was not expressly mentioned in the By-Laws, but was created pursuant to a By-Law enabling provision authorizing the Board of Directors to create other offices that the Board of Directors might see fit to create. The Court held there that the position was a corporate office, relying on the obiter dictum in Tabang.
Considering that the observations earlier made herein show that the soundness of their dicta is not unassailable, Tabang and Nacpil should no longer be controlling.” (Emphasis Supplied)
Moreover, as was properly pointed out by petitioners,[42] Section 26[43] of the Corporation Code mandates private respondents to submit to the Securities and Exchange Commission the names, nationalities and residences of its directors, trustees and officers elected within thirty (30) days after the election.[44] Nonetheless, in the General Information Sheet of STI Colleges of Mindanao, Inc. for the years 2006, 2007 and 2008,[45] the names of petitioners do not appear therein despite private respondents’ insistence that they are among the corporate officers elected. Truly, it is against the ordinary course of events and things to elect a person as an officer and not reflect his name in the General Information Sheet when the same is required by law.
Furthermore, We are not convinced with private respondents’ protestation that petitioners are estopped from denying their positions as corporate officers after enjoying the remunerations, benefits and other “perks” on account of their positions.[46] Private respondents failed to adduce any piece of evidence to support these allegations more so in the face of petitioners’ consistent stance that their duties and functions as employees of STI College of Davao remained the same even after their supposed election as corporate officers. Certainly, bare allegations, unsubstantiated by evidence, are not equivalent to proof.[47]
From the foregoing, it appears that petitioners’ positions as CEO and COO were mere nomenclatures. They are in truth mere employees of private respondents. This is supported by the Certificate of Employment[48] of petitioner Tumambing as Administrator. In addition, she was repeatedly referred to as School Administrator in the Show Cause Memo,[49] Notice of Preventive Suspension50 and Notice of Termination[51] issued to her by private respondent Pres. Fernandez. As regards petitioner Torres, her Employment Contract[52] as Chief Executive Officer enumerates the terms and conditions for her employment. This shows therefore that private respondents have the power of control over petitioner Torres. The “control test” constitutes the most important index of the existence of employer-employee relationship, that is, where private respondents reserve the right to control petitioner Torres not only as to the result of the work to be done but also the means and methods by which the same is to be accomplished.[53]
Also, it bears stressing that private respondents dismissed petitioners on the basis of the provisions of the Labor Code, among others, as shown in the Show Cause Memo, Notice of Preventive Suspension and Notice of Termination. We cannot simply sustain private respondents’ convenient asseveration that they were only affording petitioners procedural due process in employing the terminologies of the Labor Code.[54] Indeed, if petitioners were corporate officers, they should have been dismissed on the basis of the provisions of the Amended By-Laws, not of the Labor Code.
Having established that petitioners are employees, not corporate officers, it follows that it is the Labor Arbiter who has the original and exclusive jurisdiction to hear this case pursuant to Article 217 paragraph (a) (2) of the Labor Code which provides:
“Article 217. Jurisdiction of the Labor Arbiters and the Commission. (a)Except as otherwise provided under this Code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural:
- Unfair labor practice cases;
- Termination disputes;
- If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of work and other terms and conditions of employment;
- Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations;
Xxx xxx xxx” (Emphasis Supplied)
As regards the last issue, considering that the parties were not able to fully present their side of the controversy due to the erroneous dismissal of the case before the Labor Arbiter, We cannot grant petitioners’ prayer for monetary claims[55] as the same will still have to be proven below. Thus, We resolve to remand this case to the Labor Arbiter.
WHEREFORE, the Petition for Certiorari is PARTLY GRANTED. The assailed twin Resolutions dated September 30, 2010[56] and January 31, 2011[57] of public respondent National Labor Relations Commission, 5th Division, Cagayan de Oro City, are ANNULLED and SET ASIDE. Public respondent is DIRECTED to remand the case to the National Labor Relations Commission – Regional Arbitration, Branch XI, Davao City for its proper adjudication on the merits.
SO ORDERED.
CERTIFICATION
Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above decision were reached in consultation before the case was assigned to the writer of the opinion of the Court.
Camello, J., Ch., and Inting, JJ., concur.
[1] Rollo, pp. 3-18
[2] Rollo, pp. 72-79
[3] Rollo, pp. 20-21
[4] Rollo, p. 7
[5] Rollo, p. 7
[6] Rollo, p. 104
[7] Rollo, pp. 311-315
[8] Rollo, p. 22
[9] Rollo, pp. 105-113
[10] Rollo, pp. 114-116
[11] Article 282. Termination by employer. An employer may terminate an employment for any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representatives; and
(e) Other causes analogous to the foregoing.
[12] Rollo, pp. 117-118
[13] Rollo, p. 285
[14] Rollo, pp. 121-130; 276-278
[15] Rollo, pp. 285-286
[16] Rollo, pp. 287-303
[17] Rollo, pp. 304-310
[18] Rollo, p. 42
[19] Rollo, pp. 22-30
[20] Section 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.
Xxx xxx xxx
c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations, partnerships or associations.
[21] REORGANIZATION OF THE SECURITIES AND EXCHANGE COMMISSION WITH ADDITIONAL POWER AND PLACING THE SAID AGENCY UNDER THE ADMINISTRATIVE SUPERVISION OF THE OFFICE OF THE PRESIDENT, March 11, 1976
[22] Section 5. Powers and Functions of the Commission.– 5.1. The commission shall act with transparency and shall have the powers and functions provided by this code, Presidential Decree No. 902-A, the Corporation Code, the Investment Houses law, the Financing Company Act and other existing laws. Pursuant thereto the Commission shall have, among others, the following powers and functions:
Xxx xxx xxx
5.2. The Commission’s jurisdiction over all cases enumerated under section 5 of Presidential Decree No. 902-A is hereby transferred to the Courts of general jurisdiction or the appropriate Regional Trial Court: Provided, That the Supreme Court in the exercise of its authority may designate the Regional Trial Court branches that shall exercise jurisdiction over the cases. The Commission shall retain jurisdiction over pending cases involving intra-corporate disputes submitted for final resolution which should be resolved within one (1) year from the enactment of this Code. The Commission shall retain jurisdiction over pending suspension of payment/rehabilitation cases filed as of 30 June 2000 until finally disposed.
[23] July 19, 2000
[24] Rollo, pp. 31-36
[25] Rollo, pp. 37-39
[26] Rollo, pp. 40-41
[27] Rollo, pp. 72-79
[28] Rollo, p.78
[29] Rollo, pp. 80-90
[30] Rollo, pp. 20-21
[31] Rollo, pp. 8-9
[32] Rollo, pp. 399-407
[33] Rollo, pp. 311-315
[34] Rollo, pp. 389-391
[35] Morales v. Skills International Company, G.R. No. 149285, August 30, 2006
[36] The Corporation Code of the Philippines, May 1, 1980
[37] G.R. No. 157802, October 13, 2010
[38] G.R. No. 171993, December 12, 2011
[39] G.R. No. 121143, January 21, 1997
[40] G.R. No. 144767, March 21, 2002
[41] Rollo, p. 391
[42] Rollo, pp. 11-13
[43] Section 26. Report of election of directors, trustees and officers. – Within thirty (30) days after the election of the directors, trustees and officers of the corporation, the secretary, or any other officer of the corporation, shall submit to the Securities and Exchange Commission, the names, nationalities and residences of the directors, trustees, and officers elected. Should a director, trustee or officer die, resign or in any manner cease to hold office, his heirs in case of his death, the secretary, or any other officer of the corporation, or the director, trustee or officer himself, shall immediately report such fact to the Securities and Exchange Commission
[44] Sy Tiong Shiou v. Sy Chim, G.R. No. 174168, March 30, 2009; Monfort Hermanos Agricultural Development Corporation v. Monfort III, G.R. No. 152542, July 8, 2004
[45] Rollo, pp. 322-338
[46] Rollo, pp. 392-393; 492
[47] Coronel v. Constantino, G.R. No. 121069, February 7, 2003
[48] Rollo, p. 104
[49] Rollo, p. 114
[50] Rollo, p. 117
[51] Rollo, p. 306
[52] Rollo, pp. 102-103
[53] G.R. No. 167622, November 7, 2008
[54] Rollo, pp. 393-395
[55] Rollo, pp. 16-17
[56] Rollo, pp. 72-79
[57] Rollo, pp. 20-21