PURIFICACION G. TABANG, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION AND PAMANA GOLDEN CARE MEDICAL CENTER FOUNDATION, INC., RESPONDENTS.

Tabang versus National Labor Relations Commission and Pamana Golden Care Medical Center Foundation

The Case

This is a petition for certiorari filed by Purificacion Tabang against the National Labor Relations Commission and the Pamana Golden Care Medical Center Foundation, Inc. The petitioner asks the Supreme Court to annul the resolution of the National Labor Relations Commission which affirmed the order of the labor arbiter dismissing her complaint for illegal dismissal with money claims for lack of jurisdiction. The case matters because it draws the dividing line between a corporate officer and an ordinary employee, and it teaches that the dismissal of a corporate officer is always a corporate act, an intra-corporate controversy that belongs to the Securities and Exchange Commission and not to the labor tribunals.

Procedural History

Purificacion Tabang filed a complaint for illegal dismissal and non-payment of wages, allowances and thirteenth month pay before the labor arbiter. The respondent corporation moved to dismiss on the ground of lack of jurisdiction over the subject matter, arguing that the petitioner's position as Medical Director and Hospital Administrator was interlinked with her position as member of the Board of Trustees, making the matter an intra-corporate controversy within the exclusive jurisdiction of the Securities and Exchange Commission. The labor arbiter issued an order dismissing the complaint for lack of jurisdiction, ruling that the case falls within the jurisdiction of the Securities and Exchange Commission pursuant to Section 5 of Presidential Decree Number 902-A. The petitioner's motion for reconsideration was treated as an appeal, and the labor arbiter ordered the elevation of the entire records to the National Labor Relations Commission for appellate review. On appeal, the National Labor Relations Commission affirmed the dismissal, adding the ground that the position of a Medical Director and Hospital Administrator is akin to that of an executive position in a corporate ladder structure, hence the removal was an intra-corporate controversy within the original and exclusive jurisdiction of the Securities and Exchange Commission. Aggrieved, the petitioner filed the instant petition for certiorari before the Supreme Court.

Facts

Purificacion Tabang was a founding member, a member of the Board of Trustees, and the corporate secretary of Pamana Golden Care Medical Center Foundation, Inc., a non-stock corporation engaged in extending medical and surgical services. On October 30, 1990, the Board of Trustees issued a memorandum appointing her as Medical Director and Hospital Administrator of the foundation's medical center in Calamba, Laguna. Although the memorandum was silent as to the amount of remuneration, the petitioner claimed that she received a monthly retainer fee of five thousand pesos from the private respondent, but the payment was allegedly stopped in November 1991. As medical director and hospital administrator, she was tasked to run the affairs of the medical center and perform all acts of administration relative to its daily operations.

On May 1, 1993, the petitioner was allegedly informed personally by Dr. Ernesto Naval that in a special meeting held on April 30, 1993, the Board of Trustees passed a resolution relieving her of her position as Medical Director and Hospital Administrator, and appointing him and Dr. Benjamin Donasco as acting Medical Director and acting Hospital Administrator, respectively. The petitioner averred that she thereafter received a copy of the board resolution.

On June 6, 1993, the petitioner filed a complaint for illegal dismissal and non-payment of wages, allowances and thirteenth month pay before the labor arbiter. The respondent corporation moved to dismiss on the ground of lack of jurisdiction, arguing that the petitioner's position was interlinked with her position as member of the Board of Trustees, hence her dismissal is an intra-corporate controversy within the exclusive jurisdiction of the Securities and Exchange Commission. The petitioner opposed, contending that her position as Medical Director and Hospital Administrator was separate and distinct from her position as member of the Board of Trustees, and that she filed the complaint in her capacity as an employee of the private respondent.

Issues

• Whether or not the labor arbiter and the National Labor Relations Commission have jurisdiction over the petitioner's complaint for illegal dismissal and money claims, or whether jurisdiction belongs to the Securities and Exchange Commission as an intra-corporate controversy.
• Whether or not the petitioner, as Medical Director and Hospital Administrator, is a corporate officer rather than an ordinary employee.
• Whether or not the monthly payment of five thousand pesos may be considered compensation for her services as Medical Director and Hospital Administrator, so as to place her claim within the jurisdiction of the labor tribunals.

Applicable Provisions

Section 5 of Presidential Decree Number 902-A provides:

Section 5. In addition to the functions and powers conferred on it by existing laws, the Commission shall have original and exclusive jurisdiction to hear and decide cases involving controversies in the election or appointment of directors, trustees, officers or managers of corporations, partnerships or associations.

This provision is the basis for holding that the Securities and Exchange Commission, and not the labor arbiter or the National Labor Relations Commission, has jurisdiction over the petitioner's ouster from her corporate offices.

Section 2, paragraph i, Article I of the by-laws of the respondent corporation provides:

To appoint a Medical Director, Comptroller/Administrator, Chiefs of Services and such other officers as it may deem necessary and prescribe their powers and duties.

This provision shows that the positions of Medical Director and Hospital Administrator are corporate offices created under the by-laws, so that the petitioner was appointed as an officer of the corporation.

Ruling

On the first issue, the Court held that it is the Securities and Exchange Commission which has jurisdiction over the case. The charges against the private respondent partake of the nature of an intra-corporate controversy. The determination of the rights of the petitioner and the concomitant liability of the private respondent arising from her ouster as medical director and hospital administrator, which are corporate offices, is an intra-corporate controversy subject to the jurisdiction of the Securities and Exchange Commission. The Court ruled that a corporate officer's dismissal is always a corporate act, or an intra-corporate controversy, and the nature is not altered by the reason or wisdom with which the Board of Directors may have taken such action. An intra-corporate controversy is one which arises between a stockholder and the corporation, and there is no distinction, qualification, nor any exemption whatsoever.

On the second issue, the Court held that the petitioner is a corporate officer. Contrary to her contention, a medical director and a hospital administrator are considered corporate officers under the by-laws of the respondent corporation. The Court distinguished an office from an employee: an office is created by the charter of the corporation and the officer is elected by the directors or stockholders, while an employee usually occupies no office and generally is employed not by 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. Considering that the petitioner, unlike an ordinary employee, was appointed by the respondent corporation's Board of Trustees in its memorandum of October 30, 1990, she is deemed an officer of the corporation. The Court also found that her allegation that her membership in the Board of Trustees was not a consideration for her appointment was belied by the tenor of the memorandum itself, which stated that the foundation hoped she would uphold and promote its mission, a statement that cannot be construed other than in reference to her position as a corporate trustee.

On the third issue, the Court held that the amount of five thousand pesos formerly received by the petitioner every month cannot be considered as compensation for her services as Medical Director and Hospital Administrator. The vouchers she submitted show that the amount was paid to her by Pamana, Inc., a stock corporation separate and distinct from the private respondent. Although the payments were considered advances to Pamana Golden Care, Calamba branch, there is no evidence to show that the Pamana Golden Care stated in the vouchers refers to the respondent foundation. Pamana Golden Care is a division of Pamana, Inc., while the respondent is a non-stock, non-profit corporation. At most, the vouchers can only be considered as proof of payment of retainer fees made by Pamana, Inc. to the petitioner as a retained physician. Moreover, even assuming that the monthly payment was a valid claim against the respondent corporation, this would not operate to effectively remove the case from the jurisdiction of the Securities and Exchange Commission, because the question of remuneration involving a person who is not a mere employee but a stockholder and officer is not a simple labor problem but a matter that comes within the area of corporate affairs and management.

Doctrine

A corporate officer is one who is appointed by the board of directors or trustees, or created by the charter or by-laws of the corporation, as distinguished from an ordinary employee who is employed by the managing officer and whose compensation is determined by that officer. The dismissal of a corporate officer is always a corporate act, or an intra-corporate controversy, and its nature is not altered by the reason or wisdom with which the board may have taken such action. Under Section 5 of Presidential Decree Number 902-A, the Securities and Exchange Commission exercises original and exclusive jurisdiction over controversies in the election or appointment of directors, trustees, officers or managers of corporations. A claim for remuneration by a person who is not a mere employee but a stockholder and officer is not a simple labor problem but a corporate controversy, and it does not remove the case from the jurisdiction of the Securities and Exchange Commission.

Disposition

The Supreme Court affirmed the resolution of the National Labor Relations Commission, without prejudice to the petitioner's taking recourse to and seeking relief through the appropriate remedy in the proper forum.

Remember This

The single line worth memorizing is that a corporate officer's dismissal is always a corporate act, an intra-corporate controversy that belongs to the Securities and Exchange Commission and not to the labor tribunals. Examiners like to use this case to test the distinction between a corporate officer and an ordinary employee, and to ask whether a claim for remuneration by an officer converts an intra-corporate dispute into a labor case.