BIENVENIDO ONGKINGCO, AS PRESIDENT AND GALERIA DE MAGALLANES CONDOMINIUM ASSOCIATION, INC., PETITIONERS, VS. NATIONAL LABOR RELATIONS COMMISSION AND FEDERICO B. GUILAS, RESPONDE…

Ongkingco versus Galeria de Magallanes Condominium Association

The Case

This is a special civil action for certiorari brought by Bienvenido Ongkingco, as president, and the Galeria de Magallanes Condominium Association against the National Labor Relations Commission and Federico Guilas. The petitioners ask the Supreme Court to set aside two resolutions of the labor commission which had taken cognizance of Guilas's complaint for illegal dismissal. The case matters because it draws the dividing line between the jurisdiction of the labor tribunals and the original and exclusive jurisdiction of the Securities and Exchange Commission over intra-corporate controversies, and it tells us exactly when a person is a corporate officer rather than a mere employee.

Procedural History

Guilas filed a complaint for illegal dismissal and non-payment of salaries before the National Labor Relations Commission. The Association moved to dismiss on the ground that jurisdiction lay with the Securities and Exchange Commission, and Labor Arbiter Oswald Lorenzo granted the motion, dismissing the action for lack of jurisdiction. Guilas appealed, and the labor commission reversed the labor arbiter in its resolution of 9 March 1995, holding that the issue of illegal dismissal fell squarely within its jurisdiction, and it remanded the records to the arbitration branch of origin. The Association's motion for reconsideration was denied in the resolution of 4 April 1995. The Association then came to the Supreme Court by petition for certiorari under Rule 65, raising the single issue that the labor commission acted without or in excess of jurisdiction in taking cognizance of a matter that fell within the original and exclusive jurisdiction of the Securities and Exchange Commission.

Facts

Galeria de Magallanes Condominium Association is a non-stock, non-profit corporation formed under the Condominium Act. Its primary purpose is to hold title to the common areas of the condominium project and to manage and administer them for the use and convenience of the residents and owners. Bienvenido Ongkingco was its president.

On 1 September 1990, the Board of Directors appointed Federico Guilas as Administrator or Superintendent, with a monthly salary of 10,000 pesos subject to review after five months and thereafter as the Association's finances improved. As Administrator, he was tasked with maintaining the performance and elegance of the common areas and the external appearance of the compound, for the convenience and comfort of the residents and to keep up the quality image and value of the investment of the owners.

On 17 March 1992, through a resolution of the Board of Directors, Guilas was not re-appointed as Administrator. On 15 May 1992, he filed his complaint for illegal dismissal and non-payment of salaries. The Association moved to dismiss, insisting that the Securities and Exchange Commission, and not the labor arbiter, had jurisdiction.

Issues

• Whether or not Federico Guilas was a corporate officer of the Galeria de Magallanes Condominium Association rather than a mere employee.
• Whether or not his non-appointment or dismissal is an intra-corporate controversy falling within the original and exclusive jurisdiction of the Securities and Exchange Commission rather than the labor tribunals.
• Whether or not the inclusion of money claims in his complaint for illegal dismissal places the case within the jurisdiction of the labor arbiter.

Applicable Provisions

Section 5 of Presidential Decree Number 902-A, as quoted in the decision, provides:

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: 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 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 appointment of directors, trustees, officers, or managers of such corporations, partnerships or associations. d) Petitions of corporations, partnerships or associations to be declared in the state of suspension of payments in cases where the corporation, partnership or association possesses property to cover all of its debts but foresees the impossibility of meeting them when they respectively fall due or in cases where the corporation, partnership or association has no sufficient assets to cover its liabilities, but is under the Management Committee created pursuant to this Decree.

Paragraph c is the provision that governs, because it expressly covers controversies in the election or appointment of corporate officers, and the Court held that Guilas was such an officer.

The by-laws of the Association, quoted in the decision, provide:

ARTICLE IV OFFICERS Section 1. Executive Officers — The Executive officers of the corporation shall be a President, a Vice President, a Treasurer, all of whom shall be elected by the Board of Directors. They may be removed with or without cause at any meeting by the concurrence of four directors. The Board of Directors may appoint a Superintendent or Administrator and such other officers and employees and delineate their powers and duties as the Board shall find necessary to manage the affairs of the corporation.

This provision places the Superintendent or Administrator in the roster of corporate officers, which is the basis for treating Guilas as an officer and not a mere employee.

The by-laws further provide:

Section 6. The Superintendent or Administrator — The Board of Directors may appoint a Superintendent or Administrator for the condominium project if the activities and financial condition of the Association so warrant. If one is so appointed, he shall be the principal administrative officer of the Association. He shall attend to routinary and day-to-day business and activities of the Association and shall keep regular officer hours for the purpose. He shall have such other duties and powers as may be conferred upon him by the Board of Directors or delegated by the President of the Association. At the discretion of the Board of Directors, the work and duties of Superintendent or Administrator may be entrusted to a juridical entity which is qualified and competent to perform such work.

This confirms that the Administrator is the principal administrative officer of the Association, appointed by the Board itself.

Ruling

On the first issue, the Court held that Guilas was an officer of the Association and not its mere employee. The by-laws specifically include the Superintendent or Administrator in the roster of corporate officers, and he was appointed directly by the Board of Directors, not by any managing officer, with his salary likewise set by the same Board. The Court relied on its ruling in Tabang versus the National Labor Relations Commission, which held that a hospital administrator appointed by the board of trustees under the by-laws is a corporate officer, and that an office is created by the charter or by-laws and the officer is elected or appointed by the directors or stockholders, while an employee usually occupies no office and is employed by the managing officer.

On the second issue, the Court held that the dismissal or non-appointment of a corporate officer is always a corporate act and an intra-corporate controversy, and that this nature is not altered by the reason or wisdom which the Board of Directors may have in taking such action. Jurisdiction therefore belongs to the Securities and Exchange Commission and not to the labor arbiter or the labor commission. The Court rejected the argument that Guilas was merely appointed and not elected, because the provision expressly covers both election and appointment:

P.D. 902-A cannot be any clearer. Sec. 5(c) of said law expressly covers both election and appointment of corporate directors, trustees, officers and managers.

On the third issue, the Court held that it is of no consequence that the complaint includes money claims, because jurisdiction remains with the Securities and Exchange Commission. The claims for unpaid salaries are part of the perquisites of the officer's position and are interlinked with his relations with the corporation, so the question of remuneration is not a simple labor problem but a matter within corporate affairs and management.

Doctrine

A corporate officer is one who is elected or appointed by the board of directors or stockholders pursuant to the charter or by-laws, as distinguished from an employee, who usually occupies no office and is employed by the managing officer who also fixes his compensation. The dismissal or non-appointment of a corporate officer is always a corporate act and an intra-corporate controversy, and that character is not altered by the motive of the board. Under Section 5, paragraph c of Presidential Decree Number 902-A, the Securities and Exchange Commission has original and exclusive jurisdiction over controversies in the election or appointment of directors, trustees, officers, or managers, and this covers appointment as well as election. The presence of money claims does not move the case to the labor arbiter, because such claims are part of the perquisites of the office and are interlinked with the officer's relations with the corporation.

Disposition

The petition was granted; the assailed resolutions of the National Labor Relations Commission were reversed, and the order of the Labor Arbiter dismissing the complaint for lack of jurisdiction was reinstated.

Remember This

Memorize the line that a corporate officer's dismissal is always a corporate act and an intra-corporate controversy, and that this is not altered by the reason or wisdom of the board. Examiners use this case to test the boundary between the labor tribunals and the Securities and Exchange Commission, and to ask whether a person appointed by the board under the by-laws is an officer or a mere employee.