April 2010 - Philippine Supreme Court Resolutions
Philippine Supreme Court Resolutions
[G.R. No. 170885 : April 14, 2010]
FEDERICO T. ESCALONA, PETITIONER, V. EUPEN CABLE ASIA, INC., EUPEN MARKETING ASIA, INC., AXEL BOURSEAUX AND ERNESTO APOCADA, RESPONDENTS.
G.R. No. 170885 (FEDERICO T. ESCALONA, Petitioner, v. EUPEN CABLE ASIA, INC., EUPEN MARKETING ASIA, INC., AXEL BOURSEAUX and ERNESTO APOCADA, Respondents)
This is a petition for review[1] of the 31 August 2005 Decision[2] and 6 December 2005 Resolution[3] of the Court of Appeals in CA-G.R. SP No. 84049. In its 31 August 2005 Decision, the Court of Appeals granted respondents Eupen Cable Asia, Inc., Eupen Marketing Asia, Inc., Axel Bourseaux, and Ernesto Apocada's (respondents) petition for certiorari and declared the labor arbiter's 1 March 2004 Decision[4] and the National Labor Relations Commission's (NLRC) 15 April 2005 Decision[5] in NLRC Case No. RAB VII-09-1999-2003 void for being rendered without jurisdiction. In its 6 December 2005 Resolution, the Court of Appeals denied petitioner Federico T. Escalona's (Escalona) motion for reconsideration.
On 21 October 1999, by virtue of a board resolution of respondent Eupen Cable Asia, Inc. (Eupen Cable), respondent Axel Bourseaux (Bourseaux), as chairman of the board, was authorized to seek and choose appropriate candidates for the position of chief executive officer (CEO), negotiate the terms and conditions of employment, and sign the employment agreement.[6]
On 24 February 2000, Escalona and Eupen Cable, represented by Bourseaux, entered into an employment agreement[7] and Escalona was appointed as CEO.[8] It was also provided that the employment agreement shall terminate on 31 January 2017.
On 2 April 2001, in a board meeting called for the election of corporate officers for the year 2001-2002, Escalona was elected as president.[9] Subsequently, Escalona discharged his duties as president and CEO of Eupen Cable.
In a board meeting on 7 August 2003, Eupen Cable declared the positions of president and CEO vacant and agreed to cut short the tenure of Escalona.[10] In a letter dated 28 August 2003, Eupen Cable informed Escalona that it was serving the required 120 days prior notice of the termination of their employment agreement.[11]
On 23 September 2003, Escalona filed, before the labor arbiter, a complaint against respondents for illegal dismissal, nonpayment of allowances, full backwages, unpaid shares in the profit sharing agreement, unused vacation leaves, cash proceeds of the pension plan and commissions on the tax credit availment on the Sky Cable account and the sales to PLDT andNPC.[12]
During the preliminary conference, respondents argued that the labor arbiter had no jurisdiction over Escalona's complaint because it involved an intra-corporate dispute which is under the jurisdiction of the proper regional trial court. Respondents reiterated their objection in their position paper.
In her 1 March 2004 Decision, the labor arbiter declared she had jurisdiction over the complaint because it did not involve an intra-corporate dispute. The labor arbiter also ruled that Escalona was illegally dismissed. The dispositive portion of the 1 March 2004 Decision provides:
WHEREFORE, IN LIGHT OF THE FOREGOING, judgment is hereby rendered declaring complainant FEDERICO T. ESCALONA as having been ILLEGALLY DISMISSED from his employment. Consequently, respondents EUPEN CABLE ASIA, INC., AXEL BOURSEAUS [sic] and ERKESTO APOCADA, are hereby ordered to pay, jointly and severally, complainant FEDERICO T. ESCALONA, the net amount of FOUR MILLION FIFTY NINE THOUSAND FOUR HUNDRED TWENTY-ONE PESOS and 25/100 (P4,059,421.25), Philippine currency, representing the complainant's net monetary award, broken down as follows:Dissatisfied with the labor arbiter's decision, Escalona appealed to the NLRC on 2 April 2004. Escalona asked the NLRC to modify the labor arbiter's decision by ordering his reinstatement, awarding him his salary for the remaining 13 years in the employment agreement, commissions, profit sharing, vacation leaves, travel, car and housing privileges, damages and attorney's fees. Escalona also questioned the labor arbiter's decision to exonerate respondent Eupen Marketing Asia, Inc. from any liability.within ten (10) days from receipt hereof, through the Cashier of this Arbitration Branch.
1. Separation Pay 2. Backwages 3. 43 vacation leave credits 4. Unpaid 77 remaining days of the 120 days pre-termination notice 5. 2-month rental deposit 6. Attorney's Fees Less: a. 2-month rental deposit b. Unliquidated and Unaccounted Travel Cash Advance
Further, complainant is ordered to return to [sic] the Mitsubishi Adventure Van belonging to the respondent company, which is now in his possession, should complainant opt not to buy and take ownership of the same as voluntarily offered by the respondent company.
Other claims are DISMISSED for failure to substantiate. No corroborative evidence is presented to support other money claims of herein complainant.
Respondent EUPEN MARKETING ASIA, INC. is hereby discharged from the monetary liability arising from the monetary award herein decreed in favor of complainant inasmuch as it is not the employer of complainant and thus, not the real party in interest.
SO ORDERED.[13]
On 11 May 2004, respondents filed a petition for certiorari before the Court of Appeals assailing the labor arbiter's 1 March 2004 Decision for being rendered without jurisdiction. Respondents also asked the Court of Appeals to enjoin the NLRC from taking jurisdiction over Escalona's appeal.
Before the Court of Appeals could rule on respondents' petition for certiorari, the NLRC, in its 15 April 2005 Decision, ruled in favor of Escalona. The dispositve portion of the 15 April 2005 Decision provides:
WHEREFORE, premises considered, the Decision of Labor Arbiter Julie C. Rendoque finding complainant's dismissal illegal is hereby AFFIRMED.On 31 August 2005, the Court of Appeals rendered a decision in favor of respondents. The Court of Appeals declared that Escalona was a corporate officer and that his removal from office was an intra-corporate dispute. The dispositve portion of the 31 August 2005 Decision provides:
Respondents Eupen Cable Asia, Inc., Axel Bourseaus [sic] and Ernesto Apocada are hereby ordered to pay complainant jointly and severally the monetary award which we modify, as follows:The Order of the Labor Arbiter for complainant to return the Mitsubishi Adventure Van belonging to respondent company which is in his possession unless [he] opts to buy the vehicle as offered by respondent company is hereby affirmed.
1. Salary for the unexpired portion of the Employment Agreement (180.40 months) Euro 1,106,754 2. Separation Pay (17 years) Euro 104,295 3. Pre-termination notice (120 days) Euro 24,540 4. Vacation Leave (43 days) Euro 8,793.50 5. Housing Allowance (157 months) Euro 193,895 6. Cash value of three (3) business class round-trip tickets to Europe/year (13 years) (subject to computation) 7. Profit sharing (subject to computation) PhP 100,000.00 from Eupen's PhP 3 Million tax credit; PhP 500,000.00 in Dec. 15, 2004 when the full payment of PhP 53 Million of Skycable falls due; One percent (1%) of confirmed sales to PLDT and NPC/ Transco between April 1, 2004 and Dec. 31, 2004 Profit sharing equivalent to (turnover-purchase of material and services - taxes and duties) x 0.4% 8. Moral damages P 5,000,000.00 9. Exemplary damages P 5,000,000.00 10. Ten percent (10%) of total monetary award
The discharge of Eupen Marketing Asia, Inc. in the Labor Arbiter's Decision is likewise affirmed.
SO ORDERED.[14]
IN LIGHT OF THR FOREGOING CONSIDERATIONS, the instant petition is GRANTED. Consequently, the decision of Labor Arbiter Julie C. Rendoque in NLRC Case No. RAB VII-09-1999-2003 and the Commission are hereby declared NULL and VOID for being rendered without jurisdiction and the complain! is hereby DISMISSED without prejudice to the filing of an appropriate action in the proper court.Escalona filed a motion for reconsideration. In its 6 December 2005 Resolution, the Court of Appeals denied Escalona's motion.
The proceeding before the Commission treating the motion for reconsideration which was temporarily restrained is hereby ENJOINED PERMANENTLY. No pronouncement as to cost.
SO ORDERED.[15]
Hence, this petition.
Escalona raises the following issues:
The petition has no merit.I. Whether the exclusive jurisdiction of termination cases like this case at bar belongs to the labor arbiter or the NLRC by express provision of substantive law.II. Whether ail termination cases of corporate officers are intra-corporate in nature and hence belongs to the jurisdiction of the intra-corporate court.III. Whether the cases of Gregorio Araneta University Foundation v. Teodoro and Mainland Construction V. Movilla have been abandoned or modified by the honorable Supreme Court.IV. Whether jurisdiction must be based on the allegations of the plaintiff's or complainant's complaint or on the allegations of defendant's or respondent's answer.V. Whether the honorable Court of Appeals committed serious errors of law and jurisdiction when it took cognizance of the case even while the respondents' motion for reconsideration is still pending with the NLRC.VI. Whether the honorable Court of Appeals committed serious error of law and jurisdiction when it took cognizance of the respondents' petition after respondents lost their right to appeal thereby violating the cardinal rule that certiorari cannot be a substitute for lost appeal.VII. Whether respondents are already in estoppel in questioning the jurisdiction of the labor arbiter after they actively participated and asked for affirmative relief thereon.[16]
Escalona argues that the Court of Appeals erred in ruling that his dismissal was an intra-corporate dispute falhng within the jurisdiction of the regional trial court. According to Escalona, since the termination of his employment did not involve a question as to the validity of a board meeting or a board resolution electing or removing a corporate officer, then this case does not involve an intra-corporate dispute. Escalona insists that this is a purely labor matter because he has an employment agreement with Eupen Cable making him a fixed term employee and that the termination of the employment agreement is a termination dispute under Article 217[17] of the Labor Code.
On the other hand, respondents maintain that Escalona was a corporate officer and that jurisdiction over the case belonged to the regional trial court. Respondents also point out that Escalona was a member of the board of directors and a nominal stockholder of Eupen Cable.
The issue revolves mainly on whether Escalona was an employee or a corporate officer of Eupen Cable. In Tabang v. National Labor Relations Commission,[18] we held that an "office" is created by the charter of the corporation and the officer is elected by the directors and stockholders. Section 25[19] of the Corporation Code enumerates corporate officers as the president, secretary, treasurer and such other officers as may be provided for in the by-laws. On the other hand, 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.
The By-laws of Eupen Cable provide for the following corporate officers: chairman, president, vice-president(s), treasurer and secretary. Escalona was hired as CEO of Eupen Cable by virtue of the 21 October 2001 board resolution.[20] Escalona was also elected president of Eupen Cable by the board of directors on 2 April 2001.[21] Escalona's termination as president and CEO was also discussed by the board of. directors in its 7 August 2003 board meeting.[22] The General Information Sheet of Eupen Cable for 2003 indicated that Escalona was a member of the board of directors, holding one subscribed share of the capital stock.[23]
Moreover, Escalona does not deny that he was the president and CEO of Eupen Cable. In fact, in his complaint before the labor arbiter, Escalona specifically stated that he was CEO and president.[24] He also did not deny that he was a member of the board of directors and that he held one common stock of Eupen Cable. Clearly, Escalona was a director and officer of Eupen Cable.
In a number of cases,[25] we have held that a corporate officer's dismissal is always a corporate act or an intra-corporate controversy over which the proper regional trial courts have original and exclusive jurisdiction.[26] The question of remuneration involving a corporate officer, not a mere employee, is 'not a simple labor problem but a matter that comes within the area of corporate affairs and management and is a corporate controversy in contemplation of the Corporation Code.[27]
Since Escalona is a corporate officer, his removal is deemed to be an intra-corporate dispute cognizable by the proper regional trial court, and not by the labor arbiter. The charge of illegal dismissal and claim for backwages, unused vacation leaves, unpaid allowances, shares in profit sharing, pension plan and commissions imputed by Escalona against respondents fall squarely within the ambit of intra-corporate disputes.
It is settled that jurisdiction over the subject matter is conferred by law.[28] The determination of the rights of a director and corporate officer dismissed from his employment as well as the corresponding liability of a corporation, if any, is an intra-corporate dispute subject to the jurisdiction of the regular courts.[29] Thus, the Court of Appeals correctly ruled that it is not the NLRC but the regular courts which have jurisdiction over the present case.
Having ruled that Escalona is a corporate officer and that the proper regional trial court has jurisdiction over the case, we find it unnecessary, due to mootness, to further discuss and rule on the other issues raised by Escalona.
WHEREFORE, we DENY the petition. We AFFIRM the 31 August 2005 Decision and the 6 December 2005 Resolution of the Court of Appeals in CA-G.R. SP No. 84049. This Decision is without prejudice to petitioner Federico T. Escalona's taking recourse to and seeking relief through the appropriate remedy in the proper forum.
SO ORDERED.
WITNESS the Honorable Antonio T. Carpio, Chairperson, Honorable Arturo D. Brion, Mariano C. Del Castillo, Roberto A. Abad and Jose P. Perez, Members, Second Division, this 14th day of April, 2010.
(Sgd.) MA.LUISA L. LAUREA
Clerk of Court
Endnotes:
[1] Under Rule 45 of the 1997 Rules of Civil Procedure.
[2] Rollo, pp. 59-72. Penned by Associate Justice Enrico A. Lanzanas, with Associate justices Arsenio J. Magpale and Sesinando E. Villon, concurring.
[3] Id. at 73-74. Penned by Associate Justice Enrico A. Lanzanas, with Associate Justices Arsenio J. Magpale and Isaias P. Dicdican, concurring.
[4] Id. at 136-176. Penned by Labor Arbiter Julie C. Rendoque.
[5] Id. at 178-201. Penned by Presiding Commissioner Gerardo C. Nograles, with Commissioners Oscar S. Uy and Aurelio D. Menzon concurring.
[6] Annex "O," rollo, p. 302.
[7] Annex "C," id. at 75-80.
[8] Annex "D," id. at 81-82.
[9] Annex "l," id. at 339-340.
[10] Annex "P," id. at 303.
[11] Annex "E," id. at 83.
[12] Annex "G," id. at 85.
[13] Rollo, pp. 175-176.
[14] Id. at 199-200.
[15] Id. at 71.
[16] Id. at 411-412.
[17] Article 217 of the Labor Code provides:
ART. 217. Jurisdiction of Labor Arbiters and the Commission. - (a) Except as otherwise provided under this Code, the Labor Arbiters shall have original arid 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:
xxx (2) Termination disputes; xxx
[18] G.R. No. 121143, 21 January 1997, 266 SCRA 462.
[19] Section 25 of the Corporation Code reads:
Sec. 25. Corporate officers; quorum. - Immediately after their election, the directors of a corporation must formally organized 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. xxx
[20] Annex "O," rollo, p. 302.
[21] Annex "l," id. at 339-340.
[22] Annex "P," id. at 303.
[23] Annex "6," id. at 359-365.
[24] Annex "G," id. at 85.
[25] Okol v. Slimmers World International, G.R. No. 160146, 11 December 2009; Garcia v. Eastern Telecommunications Philippines, Inc., G.R. Nos. 173115 and 173163-64, 16 April 2009, 585 SCRA 450; Estrada v. National Labor Relations Commission, G.R. No. 106722, 4 October 1996, 262 SCRA 709; Lozon v. National Labor Relations Commission, 310 Phil. 1 (1995); Espino v. National Labor Relations Commission, 310 Phil. 61 (1995); Fortune Cement Corporation v. National Labor Relations Commission, G.R. No. 79762, 24 January 1991, 193 SCRA 258.
[26] Prior to its amendment, Section 5(c) of Presidential Decree No. 902-A (PD 902-A) provided that intra-corporate disputes fell within the jurisdiction of the Securities and Exchange Commission (SEC). Section 5(c) reads:
Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations, partnerships and other forms of association 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
c) Controversies in the election or appointment of directors, trustees, officers or managers of such corporations, partnerships or associations.
Subsection 5.2, Section 5 of Republic Act No. 8799, which took effect on 8 August 2000, transferred to regional trial courts the SEC's jurisdiction over all cases listed in Section 5 of PD 902-A. Subsection 5.2 provides:
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. (See Okol v. Slimmers World International, supra.)
[27] Okol v. Slimmers World International, supra.
[28] See Estrada v. National Labor Relations Commission, G.R. No. 106722, 4 October 1996, 262 SCRA 709; Paguio v. National labor Relations Commission, 323 Phil. 203 (1996).
[29] Okol v. Slimmers World International, supra note 25.
