Case No.

36

DILY DANY NACPIL vs. INTERNATIONAL BROADCASTING

CORPORATION G.R. No. 144767. March 21, 2002

Facts:

Petitioner was the Assistant General Manager for Finance/Administration and Comptroller of
private respondent Intercontinental Broadcasting Corporation (IBC) from 1996 until April 1997.
Upon assumption of Emiliano Templo as the IBC President, petitioner was forced to retire.
Templo refused to pay him his retirement benefits. Hence, in 1997, petitioner filed with the
Labor Arbiter a complaint for illegal dismissal and non-payment of benefits.

IBC alleged that the Labor Arbiter had no jurisdiction over the case, that the petitioner was a
corporate officer who was duly elected by the Board of Directors of IBC; hence, the case
qualifies as an intra-corporate dispute falling within the jurisdiction of the Securities and
Exchange Commission (SEC).

Petitioner argues that he is not a corporate officer of the IBC but an employee thereof since he
had not been elected nor appointed as Comptroller and Assistant Manager by the IBC's Board of
Directors. He pointed out that he had actually been appointed on January 11, 1995 by the IBC's
General Manager, Ceferino Basilio.

Issue:

Whether or not the Labor Arbiter had jurisdiction over the case for illegal dismissal and non-
payment of benefits filed by petitioner.

Ruling:

Dismissal or non-appointment of a corporate officer is clearly an intra-corporate matter and

jurisdiction over the case properly belongs to the SEC, not to the NLRC. Under Presidential
Decree No. 902-A (the Revised Securities Act), Controversies in the election or appointment of
directors, trustees, officers, or managers of such corporations, partnerships or associations fall
under the exclusive of the SEC. Two elements are to be considered in determining whether the
SEC has jurisdiction over the controversy, to wit: (1) the status or relationship of the parties; and
(2) the nature of the question that is the subject of their controversy.

Since complainant's appointment was approved unanimously by the Board of Directors of the
corporation, he is therefore considered a corporate officer and his claim of illegal dismissal is a
controversy that falls under the jurisdiction of the SEC as contemplated by Section 5 of P.D.
902-A. That the position of Comptroller is not expressly mentioned among the officers of the
IBC in the By-Laws is of no moment, because the IBC's Board of Directors is empowered under
Section 25 of the Corporation Code and under the corporation's By-Laws to appoint such other
officers as it may deem necessary
FULL TEXT CASE:

FIRST DIVISION

[G.R. No. 144767. March 21, 2002]

DILY DANY NACPIL, petitioner, vs. INTERNATIONAL BROADCASTING

CORPORATION, respondent.

DECISION

KAPUNAN, J.:

This is a petition for review on certiorari under Rule 45, assailing the Decision of the
Court of Appeals dated November 23, 1999 in CA-G.R. SP No. 52755 [1] and the
i

Resolution dated August 31, 2000 denying petitioner Dily Dany Nacpil's motion for
reconsideration. The Court of Appeals reversed the decisions promulgated by the Labor
Arbiter and the National Labor Relations Commission (NLRC), which consistently ruled
in favor of petitioner.

Petitioner states that he was Assistant General Manager for Finance/Administration and
Comptroller of private respondent Intercontinental Broadcasting Corporation (IBC) from
1996 until April 1997. According to petitioner, when Emiliano Templo was appointed to
replace IBC President Tomas Gomez III sometime in March 1997, the former told the
Board of Directors that as soon as he assumes the IBC presidency, he would terminate
the services of petitioner. Apparently, Templo blamed petitioner, along with a certain Mr.
Basilio and Mr. Gomez, for the prior mismanagement of IBC. Upon his assumption of
the IBC presidency, Templo allegedly harassed, insulted, humiliated and pressured
petitioner into resigning until the latter was forced to retire. However, Templo refused to
pay him his retirement benefits, allegedly because he had not yet secured the
clearances from the Presidential Commission on Good Government and the
Commission on Audit. Furthermore, Templo allegedly refused to recognize petitioners
employment, claiming that petitioner was not the Assistant General
Manager/Comptroller of IBC but merely usurped the powers of the Comptroller. Hence,
in 1997, petitioner filed with the Labor Arbiter a complaint for illegal dismissal and non-
payment of benefits.

Instead of filing its position paper, IBC filed a motion to dismiss alleging that the Labor
Arbiter had no jurisdiction over the case. IBC contended that petitioner was a corporate
officer who was duly elected by the Board of Directors of IBC; hence, the case qualifies
as an intra-corporate dispute falling within the jurisdiction of the Securities and
Exchange Commission (SEC). However, the motion was denied by the Labor Arbiter in
an Order dated April 22, 1998. [2]
ii
On August 21, 1998, the Labor Arbiter rendered a Decision stating that petitioner had
been illegally dismissed. The dispositive portion thereof reads:

WHEREFORE, in view of all the foregoing, judgment is hereby rendered in favor of the
complainant and against all the respondents, jointly and severally, ordering the latter:

1. To reinstate complainant to his former position without diminution of salary or

loss of seniority rights, and with full backwages computed from the time of his illegal
dismissal on May 16, 1997 up to the time of his actual reinstatement which is tentatively
computed as of the date of this decision on August 21, 1998 in the amount of
P1,231,750.00 (i.e., P75,000.00 a month x 15.16 months = P1,137,000.00 plus 13 th
month pay equivalent to 1/12 of P 1,137,000.00 = P94,750.00 or the total amount of P
1,231,750.00). Should complainant be not reinstated within ten (10) days from receipt of
this decision, he shall be entitled to additional backwages until actually reinstated.

2. Likewise, to pay complainant the following:

a) P 2 Million as and for moral damages;

b) P500,000.00 as and for exemplary damages; plus and (sic)

c) Ten (10%) percent thereof as and for attorneys fees.

SO ORDERED.iii[3]

IBC appealed to the NLRC, but the same was dismissed in a Resolution dated March 2,
1999, for its failure to file the required appeal bond in accordance with Article 223 of the
Labor Code. [4] IBC then filed a motion for reconsideration that was likewise denied in a
iv

Resolution dated April 26, 1999. [5]

v

IBC then filed with the Court of Appeals a petition for certiorari under Rule 65, which
petition was granted by the appellate court in its Decision dated November 23, 1999.
The dispositive portion of said decision states:

WHEREFORE, premises considered, the petition for Certiorari is GRANTED. The

assailed decisions of the Labor Arbiter and the NLRC are REVERSED and SET ASIDE
and the complaint is DISMISSED without prejudice.

SO ORDERED.vi[6]

Petitioner then filed a motion for reconsideration, which was denied by the appellate
court in a Resolution dated August 31, 2000.

Hence, this petition.

Petitioner Nacpil submits that:

I.

THE COURT OF APPEALS ERRED IN FINDING THAT PETITIONER WAS

APPOINTED BY RESPONDENTS BOARD OF DIRECTORS AS
COMPTROLLER. THIS FINDING IS CONTRARY TO THE COMMON,
CONSISTENT POSITION AND ADMISSION OF BOTH PARTIES. FURTHER,
RESPONDENTS BY-LAWS DOES NOT INCLUDE COMPTROLLER AS ONE
OF ITS CORPORATE OFFICERS.

II.

THE COURT OF APPEALS WENT BEYOND THE ISSUE OF THE CASE

WHEN IT SUBSTITUTED THE NATIONAL LABOR RELATIONS
COMMISSIONS DECISION TO APPLY THE APPEAL BOND REQUIREMENT
STRICTLY IN THE INSTANT CASE. THE ONLY ISSUE FOR ITS
DETERMINATION IS WHETHER NLRC COMMITTED GRAVE ABUSE OF
DISCRETION IN DOING THE SAME.vii[7]

The issue to be resolved is whether the Labor Arbiter had jurisdiction over the case for
illegal dismissal and non-payment of benefits filed by petitioner. The Court finds that the
Labor Arbiter had no jurisdiction over the same.

Under Presidential Decree No. 902-A (the Revised Securities Act), the law in force
when the complaint for illegal dismissal was instituted by petitioner in 1997, the
following cases fall under the exclusive of the SEC:

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. (Emphasis supplied.)
The Court has consistently held that there are two elements to be considered in
determining whether the SEC has jurisdiction over the controversy, to wit: (1) the status
or relationship of the parties; and (2) the nature of the question that is the subject of
their controversy. [8]viii

Petitioner argues that he is not a corporate officer of the IBC but an employee thereof
since he had not been elected nor appointed as Comptroller and Assistant Manager by
the IBCs Board of Directors. He points out that he had actually been appointed as such
on January 11, 1995 by the IBCs General Manager, Ceferino Basilio. In support of his
argument, petitioner underscores the fact that the IBCs By-Laws does not even include
the position of comptroller in its roster of corporate officers. [9] He therefore contends
ix

that his dismissal is a controversy falling within the jurisdiction of the labor courts. [10]
x

Petitioners argument is untenable. Even assuming that he was in fact appointed by the
General Manager, such appointment was subsequently approved by the Board of
Directors of the IBC. [11] That the position of Comptroller is not expressly mentioned
xi

among the officers of the IBC in the By-Laws is of no moment, because the IBCs Board
of Directors is empowered under Section 25 of the Corporation Code [12] and under the
xii

corporations By-Laws to appoint such other officers as it may deem necessary. The By-
Laws of the IBC categorically provides:

XII. OFFICERS

The officers of the corporation shall consist of a President, a Vice-President, a

Secretary-Treasurer, a General Manager, and such other officers as the Board of
Directors may from time to time does fit to provide for. Said officers shall be
elected by majority vote of the Board of Directors and shall have such powers and
duties as shall hereinafter provide (Emphasis supplied). xiii[13]

The Court has held that in most cases the by-laws may and usually do provide for such
other officers, [14] and that where a corporate office is not specifically indicated in the
xiv

roster of corporate offices in the by-laws of a corporation, the board of directors may
also be empowered under the by-laws to create additional officers as may be
necessary. [15]
xv

An office has been defined as a creation of the charter of a corporation, while an officer
as a person elected by the directors or stockholders. On the other hand, an employee
occupies no office and is generally employed not by action of the directors and
stockholders but by the managing officer of the corporation who also determines the
compensation to be paid to such employee. [16] xvi

As petitioners appointment as comptroller required the approval and formal action of the
IBCs Board of Directors to become valid, [17] it is clear therefore holds that petitioner is
xvii

a corporate officer whose dismissal may be the subject of a controversy cognizable by

the SEC under Section 5(c) of P.D. 902-A which includes controversies involving both
election and appointment of corporate directors, trustees, officers, and managers. [18] xviii
Had petitioner been an ordinary employee, such board action would not have been
required.

Thus, the Court of Appeals correctly held that:

Since complainants appointment was approved unanimously by the Board of Directors

of the corporation, he is therefore considered a corporate officer and his claim of illegal
dismissal is a controversy that falls under the jurisdiction of the SEC as contemplated by
Section 5 of P.D. 902-A. The rule is that dismissal or non-appointment of a corporate
officer is clearly an intra-corporate matter and jurisdiction over the case properly
belongs to the SEC, not to the NLRC. xix[19]

As to petitioners argument that the nature of his functions is recommendatory thereby

making him a mere managerial officer, the Court has previously held that the
relationship of a person to a corporation, whether as officer or agent or employee is not
determined by the nature of the services performed, but instead by the incidents of the
relationship as they actually exist. [20]
xx

It is likewise of no consequence that petitioner's complaint for illegal dismissal includes

money claims, for such claims are actually part of the perquisites of his position in, and
therefore linked with his relations with, the corporation. The inclusion of such money
claims does not convert the issue into a simple labor problem. Clearly, the issues raised
by petitioner against the IBC are matters that come within the area of corporate affairs
and management, and constitute a corporate controversy in contemplation of the
Corporation Code. [21] xxi

Petitioner further argues that the IBC failed to perfect its appeal from the Labor Arbiters
Decision for its non-payment of the appeal bond as required under Article 223 of the
Labor Code, since compliance with the requirement of posting of a cash or surety bond
in an amount equivalent to the monetary award in the judgment appealed from has
been held to be both mandatory and jurisdictional. [22] Hence, the Decision of the Labor
xxii

Arbiter had long become final and executory and thus, the Court of Appeals acted with
grave abuse of discretion amounting to lack or excess of jurisdiction in giving due
course to the IBCs petition for certiorari, and in deciding the case on the merits.

The IBCs failure to post an appeal bond within the period mandated under Article 223 of
the Labor Code has been rendered immaterial by the fact that the Labor Arbiter did not
have jurisdiction over the case since as stated earlier, the same is in the nature of an
intra-corporate controversy. The Court has consistently held that where there is a
finding that any decision was rendered without jurisdiction, the action shall be
dismissed. Such defense can be interposed at any time, during appeal or even after
final judgment. [23] It is a well-settled rule that jurisdiction is conferred only by the
xxiii

Constitution or by law. It cannot be fixed by the will of the parties; it cannot be acquired
through, enlarged or diminished by, any act or omission of the parties. [24]
xxiv
Considering the foregoing, the Court holds that no error was committed by the Court of
Appeals in dismissing the case filed before the Labor Arbiter, without prejudice to the
filing of an appropriate action in the proper court.

It must be noted that under Section 5.2 of the Securities Regulation Code (Republic Act
No. 8799) which was signed into law by then President Joseph Ejercito Estrada on July
19, 2000, the SECs jurisdiction over all cases enumerated in Section 5 of P.D. 902-A
has been transferred to the Regional Trial Courts. [25]
xxv

WHEREFORE, the petition is hereby DISMISSED and the Decision of the Court of
Appeals in CA-G.R. SP No. 52755 is AFFIRMED.

SO ORDERED.

Davide, Jr., C.J., (Chairman), and Ynares-Santiago, JJ., concur.

Puno, J., on official leave.

i[1] Intercontinental Broadcasting Corporation, Petitioner, vs. National Labor Relations Commission
and Dily Daly Nacpil, Respondents.

ii[2] Rollo, p. 28.

iii[3] Decision of the Labor Arbiter in Case No. NLRC-NCR 00-05-03798-97, Id., at 56-57.

iv[4] Resolution of the National Labor Relations Commission, Second Division, dated March 2, 1999,
Id., at 64-69.

v[5] Id., at 29.

vi[6] Id., at 32.

vii[7] Id., at 14.

viii[8] Saura vs. Saura, Jr., 313 SCRA 465 (1999); Lozano vs. De los Santos, 274 SCRA 452 (1997).

ix[9] Petition, Rollo, p. 14.

x[10] Id., at 14-17.

xi[11] See Minutes of the Annual Stockholders Meeting of the IBC on January 17, 1997, Id., at 108.

xii[12] Section 25 of the Corporation Code explicitly states:

SECTION 25. Corporate officers, quorum.Immediately after their election, the directors of a
corporation must formally organize 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

xiii[13] Rollo, p. 117.

xiv[14] Union Motors vs. NLRC, 314 SCRA 531, 539 (1999).

xv[15] Tabang vs. NLRC, 266 SCRA 462 (1997).

xvi[16] Ibid.

xvii[17] See Article XII of the By-laws of IBC, supra Note 13.

xviii[18] Ongkingco vs. NLRC, 270 SCRA 613 (1997).

xix[19] Rollo, p. 31.

xx[20] Fortune Cement Corporation vs. NLRC, 193 SCRA 258 (1991).
xxi[21] Cagayan de Oro Coliseum, Inc. vs. Office of the MOLE, 192 SCRA 315 (1990).

xxii[22] Petition, Rollo, pp. 18-22.

xxiii[23] Union Motors Corporation vs. NLRC, supra.

xxiv[24] Tolentino vs. Court of Appeals, 280 SCRA 226 (1997).

xxv[25] Section 5.2 of the Securities Regulation Code provides:

The Commissions 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: Provided, That the Supreme Court in the exercise of its authority may designate the
Regional Trial Court branches that shall exercise jurisdiction over the cases. The Commission
shall retain jurisdiction over pending cases involving intra-corporate disputes submitted for final
resolution which should be resolved within one (1) year from the enactment of this Code. The
Commission shall retain jurisdiction over pending suspension of payments/rehabilitation cases filed as
of 30 June 2000 until finally disposed. (Emphasis supplied.)