462

SUPREME COURT REPORTS ANNOTATED

Tabang vs. National Labor Relations Commission

G.R. No. 121143. January 21, 1997.*

PURIFICACION G. TABANG, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and PAMANA
GOLDEN CARE MEDICAL CENTER FOUNDATION, INC., respondents.

Labor Law; Securities and Exchange Commission; Jurisdiction; The determination of the rights of a
person and the concomitant liability of a corporation arising from the former’s ouster as medical
director and/or hospital administrator, which are corporate offices, is an intra-corporate controversy
subject to the jurisdiction of the SEC.—We agree with the findings of the NLRC that it is the SEC which
has jurisdiction over the case at bar. The charges against herein private respondent partake of the
nature of an intra-corporate controversy. Similarly, the determination of the rights of petitioner and the
concomitant liability of private respondent arising from her ouster as a medical director and/or hospital
administrator, which are corporate offices, is an intra-corporate controversy subject to the jurisdiction
of the SEC.

Same; Same; Corporation Law; The president, vice-president, secretary and treasurer are commonly
regarded as the principal or executive officers of a corporation but other offices are sometimes created
by the charter or by-laws of a corporation, or the board of directors may be empowered under the by-
laws of a corporation to create additional offices as may be necessary.—The president, vicepresident,
secretary and treasurer are commonly regarded as the principal or executive officers of a corporation,
and modern corporation statutes usually designate them as the officers of the corporation. However,
other offices are sometimes created by the charter or by-laws of a corporation, or the board of directors
may be empowered under the by-laws of a corporation to create additional offices as may be necessary.

Same; Same; Same; Words and Phrases; “Officer” and “Employee,” Distinguished.—It has been held that
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” 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.

Same; Same; Same; Where a medical director and/or hospital administrator was appointed by the
corporation’s Board of Trustees, she is deemed an officer of the corporation.—In the case at bar,
considering that herein petitioner, unlike an ordinary employee, was appointed by respondent
corporation’s Board of Trustees in its memorandum of October 30, 1990, she is deemed an officer of the
corporation. Perforce, Section 5(c) of Presidential Decree No. 902-A, which provides that the SEC
exercises exclusive jurisdiction over controversies in the election or appointment of directors, trustees,
officers or managers of corporations, partnerships or associations, applies in the present dispute.
Accordingly, jurisdiction over the same is vested in the SEC, and not in the Labor Arbiter or the NLRC.

Same; Same; Same; 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 in taking such action.—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 in taking such action. Also, an intra-corporate controversy is one which arises
between a stockholder and the corporation. There is no distinction, qualification, nor any exemption
whatsoever. The provision is broad and covers all kinds of controversies between stockholders and
corporations.

Same; Same; Same; The question of remuneration involving as it does, a person who is not a mere
employee but a stockholder and officer, an integral part of the corporation, is not a simple labor
problem but a matter that comes within the area of corporate affairs and management and is in fact a
corporate controversy in contemplation of the Corporation Code.—Moreover, even assuming that the
monthly payment of P5,000.00 was a valid claim against respondent corporation, this would not operate
to effectively remove this case from the jurisdiction of the SEC. In the case of Cagayan de Oro Coliseum,
Inc. vs. Office of the Minister of Labor and Employment, etc., et al., we ruled that “(a)lthough the reliefs
sought by Chavez appear to fall under the jurisdiction of the labor arbiter as they are claims for unpaid
salaries and other remunerations for services rendered, a close scrutiny thereof shows that said claims
are actually part of the perquisites of his position in, and therefore interlinked with, his relations with
the corporation. In Dy, et al., vs. NLRC, et al., the Court said: ‘(t)he question of remuneration involving as
it does, a person who is not a mere employee but a stockholder and officer, an integral part, it might be
said, of the corporation, is not a simple labor problem but a matter that comes within the area of
corporate affairs and management and is in fact a corporate controversy in contemplation of the
Corporation Code.’ ”

SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.

The facts are stated in the opinion of the Court.

      Roldan M. Noynay for petitioner.

      Bernadette C. Fuentes for private respondent.

REGALADO, J.:

This is a petition for certiorari which seeks to annul the resolution of the National Labor Relations
Commission (NLRC), dated June 26, 1995, affirming in toto the order of the labor arbiter, dated April 26,
1994, which dismissed petitioner’s complaint for illegal dismissal with money claims for lack of
jurisdiction.

The records show that petitioner Purificacion Tabang was a founding member, a member of the Board
of Trustees, and the corporate secretary of private respondent 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 petitioner as
Medical Director and Hospital Administrator of private respondent’s Pamana Golden Care Medical
Center in Calamba, Laguna.
Although the memorandum was silent as to the amount of remuneration for the position, petitioner
claims that she received a monthly retainer fee of five thousand pesos (P5,000.00) from private
respondent, but the payment thereof was allegedly stopped in November, 1991.

As medical director and hospital administrator, petitioner was tasked to run the affairs of the aforesaid
medical center and perform all acts of administration relative to its daily operations.

On May 1, 1993, 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 the latter and Dr. Benjamin Donasco as
acting Medical Director and acting Hospital Administrator, respectively. Petitioner averred that she
thereafter received a copy of said board resolution.

On June 6, 1993, petitioner filed a complaint for illegal dismissal and non-payment of wages, allowances
and 13th month pay before the labor arbiter.

Respondent corporation moved for the dismissal of the complaint on the ground of lack of jurisdiction
over the subject matter. It argued that petitioner’s position as Medical Director and Hospital
Administrator was interlinked with her position as member of the Board of Trustees, hence, her
dismissal is an intra-corporate controversy which falls within the exclusive jurisdiction of the Securities
and Exchange Commission (SEC).

Petitioner opposed the motion to dismiss, contending that her position as Medical Director and Hospital
Administrator was separate and distinct from her position as member of the Board of Trustees. She
claimed that there is no intracorporate controversy involved since she filed the complaint in her capacity
as Medical Director and Hospital Administrator, or as an employee of private respondent.

On April 26, 1994, the labor arbiter issued an order dismissing the complaint for lack of jurisdiction. He
ruled that the case falls within the jurisdiction of the SEC, pursuant to Section 5 of Presidential Decree
No. 902-A.1

Petitioner’s motion for reconsideration was treated as an appeal by the labor arbiter who consequently
ordered the elevation of the entire records of the case to public respondent NLRC for appellate review.2

On appeal, respondent NLRC affirmed the dismissal of the case on the additional 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, petitioner’s removal from the said position was an intracorporate
controversy within the original and exclusive jurisdiction of the SEC.3

Aggrieved by the decision, petitioner filed the instant petition which we find, however, to be
without merit.
We agree with the findings of the NLRC that it is the SEC which has jurisdiction over the case at bar.

The charges against herein private respondent partake of the nature of an intra-corporate controversy.
Similarly, the determination of the rights of petitioner and the concomitant liability of private
respondent arising from her ouster as a medical director and/or hospital administrator, which are
corporate offices, is an intra-corporate controversy subject to the jurisdiction of the SEC.

Contrary to the contention of petitioner, a medical director and a hospital administrator are considered
as corporate officers under the by-laws of respondent corporation. Section 2(i), Article I thereof states
that one of the powers of the Board of Trustees is “(t)o appoint a Medical Director,
Comptroller/Administrator, Chiefs of Services and such other officers as it may deem necessary and
prescribe their powers and duties.”

The president, vice-president, secretary and treasurer are commonly regarded as the principal or
executive officers of a corporation, and modern corporation statutes usually designate them as the
officers of the corporation. However, other offices are sometimes created by the charter or by-laws of a
corporation, or the board of directors may be empowered under the by-laws of a corporation to create
additional offices as may be necessary.6

It has been held that 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” 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.8

In the case at bar, considering that herein petitioner, unlike an ordinary employee, was appointed
by respondent corporation’s Board of Trustees in its memorandum of October 30, 1990,9 she is deemed
an officer of the corporation. Perforce, Section 5(c) of Presidential Decree No. 902-A, which provides
that the SEC exercises exclusive jurisdiction over controversies in the election or appointment of
directors, trustees, officers or managers of corporations, partnerships or associations, applies in the
present dispute. Accordingly, jurisdiction over the same is vested in the SEC, and not in the Labor Arbiter
or the NLRC.

Moreover, the allegation of petitioner that her being a member of the Board of Trustees was not one of
the considerations for her appointment is belied by the tenor of the memorandum itself. It states: “We
hope that you will uphold and promote the mission of our foundation,” and this cannot be construed
other than in reference to her position or capacity as a corporate trustee.

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 in taking such
action.11 Also, an intra-corporate controversy is one which arises between a stockholder and the
corporation. There is no distinction, qualification, nor any exemption whatsoever. The provision is
broad and covers all kinds of controversies between stockholders and corporations.12

With regard to the amount of P5,000.00 formerly received by herein petitioner every month, the same
cannot be considered as compensation for her services rendered as Medical Director and Hospital
Administrator. The vouchers13 submitted by petitioner show that the said amount was paid to her by
PAMANA, Inc., a stock corporation which is separate and distinct from herein 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 herein respondent
Pamana Golden Care Medical Center Foundation, Inc.
Pamana Golden Care is a division of Pamana, Inc., while respondent Pamana Golden Care Medical
Center Foundation, Inc. is a non-stock, non-profit corporation. It is stated in the memorandum of
petitioner that Pamana, Inc. is a stock and profit corporation selling pre-need plan for education,
pension and health care. The health care plan is called Pamana Golden Care Plan and the holders are
called Pamana Golden Care Card Holders or, simply, Pamana Members.14

It is an admitted fact that herein petitioner is a retained physician of Pamana, Inc., whose patients are
holders of the Pamana Golden Care Card. In fact, in her complaint15 filed before the Regional Trial Court
of Calamba, herein petitioner is asking, among others, for professional fees and/or retainer fees earned
for her treatment of Pamana Golden Care card holders.16 Thus, at most, said vouchers can only be
considered as proof of payment of retainer fees made by Pamana, Inc. to herein petitioner as a retained
physician of Pamana Golden Care.

Moreover, even assuming that the monthly payment of P5,000.00 was a valid claim against respondent
corporation, this would not operate to effectively remove this case from the jurisdiction of the SEC. In
the case of Cagayan de Oro Coliseum, Inc. vs. Office of the Minister of Labor and Employment, etc., et
al., we ruled that “(a)lthough the reliefs sought by Chavez appear to fall under the jurisdiction of the
labor arbiter as they are claims for unpaid salaries and other remunerations for services rendered, a
close scrutiny thereof shows that said claims are actually part of the perquisites of his position in, and
therefore interlinked with, his relations with the corporation.

In Dy, et al., vs. NLRC, et al., the Court said: ‘(t)he question of remuneration involving as it does, a person
who is not a mere employee but a stockholder and officer, an integral part, it might be said, of the
corporation, is not a simple labor problem but a matter that comes within the area of corporate affairs
and management and is in fact a corporate controversy in contemplation of the Corporation Code.’ ”

WHEREFORE, the questioned resolution of the NLRC is hereby AFFIRMED, without prejudice to
petitioner’s taking recourse to and seeking relief through the appropriate remedy in the proper forum.

SO ORDERED.

Romero, Puno, Mendoza and Torres, Jr., JJ., concur.

Resolution affirmed.

Notes.—An otherwise ordinary action for recovery of certain properties and sum of money with
damages is transposed into an intracorporate controversy calling for the adjudicative powers of the SEC
when the complaint alleges that an officer employed devices or schemes tantamount to fraud and
misrepresentation in order to divert corporate funds and assets for his personal use. (Alleje vs. Court of
Appeals, 240 SCRA 495 [1995])

Corporate officers are not personally liable for money claims of discharged corporate employees unless
they acted with evident malice and bad faith in terminating their employment. (AHS/Philippines, Inc. vs.
Court of Appeals, 257 SCRA 319 [1996])

——o0o——
© Copyright 2021 Central Book Supply, Inc. All rights reserved. Tabang vs. National Labor Relations
Commission, 266 SCRA 462, G.R. No. 121143 January 21, 1997