Marc II Marketing, Inc. vs. Alfredo M. Joson [GR No.

171993, December 12, 2011]

FACTS: Respondent Alfredo Joson was the General Manager, incorporator, director and
stockholder of Marc II Marketing (petitioner corporation). Before petitioner corporation was
officially incorporated, respondent has already been engaged by petitioner Lucila Joson, in her
capacity as President of Marc Marketing Inc., to work as the General Manager of petitioner
corporation through a management contract.
However, petitioner corporation decided to stop and cease its operation wherein respondent's
services were then terminated. Feeling aggrieved, respondent filed a Complaint for
Reinstatement and Money Claim against petitioners before the Labor Arbiter which ruled in
favor of respondent. The National Labor and Relations Commission (NLRC) reversed said
decision. The Court of Appeals (CA) however, upheld the ruling of the Labor Arbiter. Hence, this
petition.
ISSUE: Whether or nor the Labor Arbiter has jurisdiction over the controversy at bar
RULING: Yes. While Article 217(a) 229 of the Labor Code, as amended, provides that it is the
Labor Arbiter who has the original and exclusive jurisdiction over cases involving termination or
dismissal of workers when the person dismissed or terminated is a corporate officer, the case
automatically falls within the province of the Regional Trial Court (RTC). The dismissal of a
corporate officer is always regarded as a corporate act and/or an intra-corporate controversy.
In conformity with Section 25 of the Corporation Code, whoever are the corporate officers
enumerated in the by-laws are the exclusive officers of the corporation and the Board has no
power to create other officers without amending first the corporate by-laws. However, the Board
may create appointive positions other than the positions of the corporate officers, but the persons
occupying such positions are not considered as corporate officers within the meaning of Section
25 of the Corporation Code and are not empowered to exercise the functions of the corporate
officers, except those functions lawfully delegated to them. Their functioning and duties are to be
determined by the Board of Directors/Trustees.
In the case at bar, the respondent was not a corporate officer of petitioner corporation because his
position as General Manager was not specifically mentioned in the roster of corporate officers in
its corporate by-laws. Thus respondent, can only be regarded as its employee or subordinate
official. Accordingly, respondent's dismissal as petitioner corporation's General Manager did not
amount to an intra-corporate controversy. Jurisdiction therefore properly belongs with the Labor
Arbiter and not with the RTC.

Companies with "general managers" beware. Unless your corporate by-laws define this position,
individuals appointed as such cannot be considered corporate officers. For this reason, issues
concerning their removal from office will be governed by the Labor Code and not the Rules on
Intra-Corporate Dispute.
In illegal termination cases filed by employees under the Labor Code, companies have the
burden of proving that the dismissal is for lawful cause and that they complied with procedural
due process requiring a show cause memo and a notice of termination.
The Supreme Court held in Marc II Marketing Inc. vs. Alfredo M. Joson (G.R. No. 171993,
December 12, 2011) that only those persons whose positions are listed in the Corporation Code
and the by-laws of corporation are entitled to be called corporate officers. The Corporation Code
enumerates who are these corporate officers: president, secretary, treasurer and other officers as
may be provided in the by-laws. On the hand, express lane forms from the Securities and
Exchange Commission additionally list the chairman of the board and the vice-president to round
out the top management. Companies have to amend their by-laws in order to include the position
of general manager in the list of officers.
The "general manager" in the Marc II case sued the company before the National Labor
Relations Commission on the ground of illegal dismissal. The company countered with a motion
to dismiss alleging that since the complainant was a "general manager," the NLRC does not have
any jurisdiction over the case. The labor arbiter found that the position of general manager was
not defined by the by-laws of the company so the complainant should be treated as a mere
employee. And, as the complainant was merely given a notice of termination, the labor arbiter
declared
his
dismissal
as
unlawful.
The High Tribunal cited Easycall Communications Philippines vs. Edward King (G.R. No.
145901, December 15, 2005) involving the illegal dismissal of a "vice president for national
expansion." In the Easycall case, the Supreme Court reiterated the distinction between an
"office" which is created by the charter of the corporation and the "officer" as a person elected by
the directors or stockholders while, on the other hand, an employee occupies no office and
generally is employed not by the 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 High Tribunal cited Easycall Communications Philippines vs. Edward King (G.R. No.
145901, December 15, 2005) involving the illegal dismissal of a "vice president for national
expansion." In the Easycall case, the Supreme Court reiterated the distinction between an
"office" which is created by the charter of the corporation and the "officer" as a person elected by
the directors or stockholders while, on the other hand, an employee occupies no office and
generally is employed not by the 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 High Court also relied on Matling Industrial and Commercial Corporation v. Coros (G.R.
No. 157802, October 13, 2010), a case where the "vice president for finance and administration"
sued the employer for illegal dismissal before the NLRC. In Matling, the Court ruled that the
board of directors has no power to create other corporate offices without first amending the
corporate by-laws so as to include therein the newly created corporate office. Though the board
of directors may create appointive positions other than the positions of corporate officers, the
persons occupying such positions cannot be viewed as corporate officers under the Corporation
Code.
Moreover, even though the complainant was also a director and a stockholder of Marc II
Marketing, this fact did not automatically make the case fall within the ambit of intra-corporate
controversy and subject to the jurisdiction of the regular courts. Not all conflicts between the
stockholders and the corporation are classified as intra-corporate. Other factors such as the status
or relationship of the parties and the nature of the question that is the subject of the controversy
must be considered in determining whether the dispute involves corporate matters so as to regard
them as intra-corporate controversies.
Relatedly, companies should not confuse the definition of "corporate officer" in the Marc II case
with the list of officers allowed to receive summons under the Rules of Court. The list provided
by the Rules of Court, which also includes a general manager and an in-house counsel,
prescribes the responsible individuals in the company who are tasked to inform the corporation
about the filing of a complaint against the entity and take action on the legal paper served upon
said party. The only purpose for this list is to allow the court to acquire jurisdiction over the
entity.
MATLING INDUSTRIAL AND COMMERCIAL CORPORATION vs. RICARDO COROS
G.R. No. 157802 October 13, 2010
FACTS: After respondent Ricardo Coros dismissal by Matling as its Vice President for Finance
and Administration, he filed on August 10, 2000 a complaint for illegal suspension and illegal
dismissal against Matling and some of its corporate officers in the NLRC, Sub-Regional
Arbitration Branch XII, Iligan City. The petitioners moved to dismiss the complaint, raising the
ground, among others, that the complaint pertained to the jurisdiction of the Securities and
Exchange Commission due to the controversy being intra-corporate inasmuch as the respondent
was a member of Matlings Board of Directors aside from being its Vice-President for Finance
and Administration prior to his termination. The respondent opposed the petitioners motion to
dismiss, insisting that his status as a member of Matlings Board of Directors was doubtful,
considering that he had not been formally elected as such; that he did not own a single share of
stock in Matling, considering that he had been made to sign in blank an undated indorsement of
the certificate of stock he had been given in 1992; that Matling had taken back and retained the
certificate of stock in its custody; and that even assuming that he had been a Director of Matling,
he had been removed as the Vice President for Finance and Administration, not as a Director, a
fact that the notice of his termination dated April 10, 2000 showed. On October 16, 2000, the

Labor Arbiter granted the petitioners motion to dismiss, ruling that the respondent was a
corporate officer. On March 13, 2001, the NLRC set aside the dismissal, concluding that the
respondents complaint for illegal dismissal was properly cognizable by the LA, not by the SEC,
because he was not a corporate officer by virtue of his position in Matling, albeit high ranking
and managerial, not being among the positions listed in Matlings Constitution and By-Laws. On
motion for reconsideration, petitioners submitted a certified machine copies of Matlings
Amended Articles of Incorporation and By Laws to prove that the President of Matling was
thereby granted "full power to create new offices and appoint the officers thereto and the
minutes of special meeting held on June 7, 1999 by Matlings Board of Directors to prove that
the respondent was, indeed, a Member of the Board of Directors. Nonetheless, the NLRC denied
the petitioners motion for reconsideration. The petitioners elevated the issue to the CA by
petition for certiorari. The CA dismissed the petition for certiorari and ruled that for a position to
be considered as a corporate office, or, for that matter, for one to be considered as a corporate
officer, the position must, if not listed in the by-laws, have been created by the corporation's
board of directors, and the occupant thereof appointed or elected by the same board of directors
or stockholders. Motion for reconsideration was likewise denied. Hence this petition for review
on certiorari.
ISSUE: Whether or not respondent was a corporate officer of Matling Industrial and Commercial
Corporation.
RULING: Conformably with Section 25, a position must be expressly mentioned in the By-Laws
in order to be considered as a corporate office. Thus, the creation of an office pursuant to or
under a By-Law enabling provision is not enough to make a position a corporate office. Guerrea
v. Lezama, the first ruling on the matter, held that the only officers of a corporation were those
given that character either by the Corporation Code or by the By-Laws; the rest of the corporate
officers could be considered only as employees or subordinate officials It is relevant to state in
this connection that the SEC, the primary agency administering the Corporation Code, adopted a
similar interpretation of Section 25 of the Corporation Code in its Opinion dated November 25,
1993, to wit: Thus, pursuant to Section 25 of the Corporation Code, whoever are the corporate
officers enumerated in the by-laws are the exclusive Officers of the corporation and the Board
has no power to create other Offices without amending first the corporate By-laws. However, the
Board may create appointive positions other than the positions of corporate Officers, but the
persons occupying such positions are not considered as corporate officers within the meaning of
Section 25 of the Corporation Code and are not empowered to exercise the functions of the
corporate Officers, except those functions lawfully delegated to them. Their functions and duties
are to be determined by the Board of Directors/Trustees. Moreover, the Board of Directors of
Matling could not validly delegate the power to create a corporate office to the President, in light
of Section 25 of the Corporation Code requiring the Board of Directors itself to elect the
corporate officers. Verily, the power to elect the corporate officers was a discretionary power that
the law exclusively vested in the Board of Directors, and could not be delegated to subordinate
officers or agents. The office of Vice President for Finance and Administration created by
Matlings President pursuant to By Law No. V was an ordinary, not a corporate, office. To

emphasize, the power to create new offices and the power to appoint the officers to occupy them
vested by By-Law No. V merely allowed Matlings President to create non-corporate offices to
be occupied by ordinary employees of Matling. Such powers were incidental to the Presidents
duties as the executive head of Matling to assist him in the daily operations of the business.