Atty - Garcia Vs Eastern Telecom

11. GR No.
173115 & 173163-64, April 16, 2009

Atty Garcia vs. Eastern Telecommunications Phils., et al.,
FACTS:
Atty. Virgilio R. Garcia was placed under preventive suspension for complaints of sexual harassment. After
the period of preventive suspension, Atty. Garcia was terminated as Vice President and Head of Business Support
Services and Human Resource Departments of the Eastern Telecommunications Philippines, Inc. (ETPI) by Atty.
Salvador C. Hizon, President/Chief Executive Officer of ETPI. Aggrieved by his termination from ETPI, Atty.
Garcia filed a case before the National Labor Relations Commission (NLRC) for illegal dismissal with prayer for
full back wages.
The Labor Arbiter ruled that the preventive suspension and the subsequent dismissal of Atty. Garcia are
illegal. However, the NLRC, on appeal, dismissed the case for lack of jurisdiction. Unperturbed, Atty. Garcia
appealed the dismissal of the case to the Court of Appeals (CA). Upon review of the case, the appellate court
dismissed the case for lack of merit. The appellate court ruled that Atty. Garcia, being the Vice President for
Business Support Services and Human Resource Departments of ETPI, was a corporate officer at the time he was
removed. Being a corporate officer, his removal was a corporate act and/or an intra-corporate controversy, the
jurisdiction of which rested with the Securities and Exchange Commission (now with the Regional Trial Court), and
not the Labor Arbiter and the NLRC. It added that ETPI and Atty. Hizon were not estopped from questioning the
jurisdiction of the Labor Arbiter before the NLRC on appeal, inasmuch as said issue was seasonably raised by ETPI
and Atty. Hizon in their reply memorandum before the Labor Arbiter.
Atty. Garcia is now before us via a Petition for Review, which he filed on 3 August 2006. The petition was
docketed as G.R. No. 173115. On 8 August 2006, he filed an Amended Petition for Review.He prays that the
decision of the NLRC dated 21 March 2003 and its resolution dated 16 December 2003, and the decision of the
Court of Appeals dated 24 March 2006 and its resolution dated 14 June 2006, be reconsidered and set aside and that
the decision of the Labor Arbiter dated 30 September 2002 be affirmed and reinstated.
ISSUE: Whether or not the Labor Arbiter has the jurisdiction over the case
RULING:Labor Arbiter has no jurisdiction over the case
The Supreme Court, in a long line of cases, has decreed that a corporate officer’s dismissal or removal is
always a corporate act and/or an intra-corporate controversy, over which the Securities and Exchange Commission
[SEC] (now the Regional Trial Court) has original and exclusive jurisdiction.
We have ruled that an intra-corporate controversy is one which pertains to any of the following
relationships: (1) between the corporation, partnership or association and the public; (2) between the corporation,
partnership or association and the State insofar as the former’s franchise, permit or license to operate is
concerned;(3) between the corporation, partnership or association and its stockholders, partners, members
or officers; and (4) among the stockholders, partners or associates themselves. InLozon v. National Labor Relations
Commission,we declared that Presidential Decree No. 902-A confers on the SEC original and exclusive jurisdiction
to hear and decide controversies and cases involving intra-corporate and partnership relations between or among the
corporation, officers and stockholders and partners, including their elections or appointments …xxx…
Before a dismissal or removal could properly fall within the jurisdiction of the SEC, it has to be first
established that the person removed or dismissed was a corporate officer. “Corporate officers” in the context of
Presidential Decree No. 902-Aare those officers of the corporation who are given that character by the Corporation
Code or by the corporation’s by-laws. There are three specific officers whom a corporation must have under Section
25 of the Corporation Code. These are the president, secretary and the treasurer. The number of officers is not
limited to these three. A corporation may have such other officers as may be provided for by its by-laws like, but
not limited to, the vice-president, cashier, auditor or general manager. The number of corporate officers is thus
limited by law and by the corporation’s by-laws.
In the case before us, the by-laws of ETPI provide:

ARTICLE V
Officers
Section 1. Number. – The officers of the Company shall be a Chairman of the Board, a
President, one or more Vice-Presidents, a Treasurer, a Secretary, an Assistant Secretary, and such
other officers as may be from time to time be elected or appointed by the Board of Directors. One
person may hold any two compatible offices.
Atty. Garcia tries to deny he is an officer of ETPI. Not being a corporate officer, he argues that the Labor
Arbiter has jurisdiction over the case. One of the corporate officers provided for in the by-laws of ETPI is the Vice-
President. It can be gathered from Atty. Garcia’s complaint-affidavit that he was Vice President for Business
Support Services and Human Resource Departments of ETPI when his employment was terminated effective 16
April 2000. It is therefore clear from the by-laws and from Atty. Garcia himself that he is a corporate officer. One
who is included in the by-laws of a corporation in its roster of corporate officers is an officer of said corporation and
not a mere employee. Being a corporate officer, his removal is deemed to be an intra-corporate dispute cognizable
by the SEC and not by the Labor Arbiter.
We agree with both the NLRC and the Court of Appeals that Atty. Garcia’s ouster as Vice-President, who
is a corporate officer of ETPI, partakes of the nature of an intra-corporate controversy, jurisdiction over which is
vested in the SEC (now the RTC). The Labor Arbiter thus erred in assuming jurisdiction over the case filed by Atty.
Garcia, because he had no jurisdiction over the subject matter of the controversy.

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11. GR No.

173115 & 173163-64, April 16, 2009

RULING:Labor Arbiter has no jurisdiction over the case

In the case before us, the by-laws of ETPI provide:

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