MATLING INDUSTRIAL VS COROS (G.R. NO.

157802 OCTOBER 13, 2010)

Matling Industrial and Commercial Corporation vs Coros
G.R. No. 157802 October 13, 2010

Facts: After his dismissal by Matling as its Vice President for Finance and
Administration, the respondent filed on August 10, 2000 a complaint for illegal
suspension and illegal dismissal against Matling and some of its corporate officers
(petitioners) 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
(SEC) due to the controversy being intracorporate 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 LA granted the
petitioners motion to dismiss, ruling that the respondent was a corporate officer because
he was occupying the position of Vice President for Finance and Administration and at
the same time was a Member of the Board of Directors of Matling; and that,
consequently, his removal was a corporate act of Matling and the controversy resulting
from such removal was under the jurisdiction of the SEC, pursuant to Section 5,
paragraph (c) of Presidential Decree No. 902.

Issue: Whether or not the respondent is a corporate officer within the jurisdiction of the
regular courts.

Held: No. As a rule, the illegal dismissal of an officer or other employee of a private
employer is properly cognizable by the LA. This is pursuant to Article 217 (a) 2 of the
Labor Code, as amended, which provides as follows:

Article 217. Jurisdiction of the Labor Arbiters and the Commission. (a) Except as
otherwise provided under this Code, the Labor Arbiters shall have original and 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:

1. Unfair labor practice cases;

2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file
involving wages, rates of pay, hours of work and other terms and conditions of
employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from the
employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions
involving the legality of strikes and lockouts; and
6. Except claims for Employees Compensation, Social Security, Medicare and maternity
benefits, all other claims arising from employer-employee relations, including those of
persons in domestic or household service, involving an amount exceeding five thousand
pesos (P 5,000.00) regardless of whether accompanied with a claim for reinstatement.

(b) The Commission shall have exclusive appellate jurisdiction over all cases decided
by Labor Arbiters. (c) Cases arising from the interpretation or implementation of
collective bargaining agreements and those arising from the interpretation or
enforcement of company personnel policies shall be disposed of by the Labor Arbiter by
referring the same to the grievance machinery and voluntary arbitration as may be
provided in said agreements.

Where the complaint for illegal dismissal concerns a corporate officer, however, the
controversy falls under the jurisdiction of the Securities and Exchange Commission
(SEC), because the controversy arises out of intra-corporate or partnership relations
between and among stockholders, members, or associates, or 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 the controversy concerns their individual franchise
or right to exist as such entity; or because the controversy involves the election or
appointment of a director, trustee, officer, or manager of such corporation, partnership,
or association. Such controversy, among others, is known as an intra-corporate dispute.

Effective on August 8, 2000, upon the passage of Republic Act No. 8799, otherwise
known as The Securities Regulation Code, the SECs jurisdiction over all intra-corporate
disputes was transferred to the RTC, pursuant to Section 5.2 of RA No. 8799.

Thus, pursuant to the above provision (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.

The criteria for distinguishing between corporate officers who may be ousted from office
at will, on one hand, and ordinary corporate employees who may only be terminated for
just cause, on the other hand, do not depend on the nature of the services performed,
but on the manner of creation of the office. In the respondents case, he was supposedly
at once an employee, a stockholder, and a Director of Matling. The circumstances
surrounding his appointment to office must be fully considered to determine whether the
dismissal constituted an intra-corporate controversy or a labor termination dispute. We
must also consider whether his status as Director and stockholder had any relation at all
to his appointment and subsequent dismissal as Vice President for Finance and
Administration.
PRINCE TRANSPORT, INC. v. GARCIA
G.R. 167291
January 12, 2011
Prince Transport, Inc. (PTI), is a company engaged in the business of transporting
passengers by land; respondents were hired either as drivers, conductors, mechanics
or inspectors, except for respondent Diosdado Garcia (Garcia), who was assigned as
Operations Manager. Sometime in October 2007 the commissions received by the

respondents were reduced to 7 to 9% from 8 to 10%. This led respondents and other
employees of PTI to hold a series of meetings to discuss the protection of their interests
as employees. Ranato Claros, president of PTI, made known to Garcia his objections to
the formation of a union and in order to block the continued formation of the union, PTI
caused the transfer of all union members and sympathizers to one of its subcompanies, Lubas Transport (Lubas). The business of Lubas deteriorated because of
the refusal of PTI to maintain and repair the units being used therein, which resulted in
the virtual stoppage of its operations and respondents' loss of employment. Hence, the
respondent-employees filed complaints against PTI for illegal dismissal and unfair labor
practice. PTI contended that it has nothing to do with the management and operations
of Lubas as well as the control and supervision of the latter's employees.
Issue: W/N the Company is guilty of ULP in transferring its employees who formed
a Union and its sympathizers to its sub-company Lubas.
Held:
YES. PTIs transfer of work assignments to Lubas was designed by
petitioners as a subterfuge to foil the formers right to organize themselves into a
union. Under Article 248 (a) and (e) of the Labor Code, an employer is guilty of unfair
labor practice if it interferes with, restrains or coerces its employees in the exercise of
their right to self-organization or if it discriminates in regard to wages, hours of work and
other terms and conditions of employment in order to encourage or discourage
membership in any labor organization. Evidence of petitioners' unfair labor practice is
shown by the established fact that, after respondents' transfer to Lubas, petitioners left
them high and dry insofar as the operations of Lubas was concerned. The Court finds
no error in the findings and conclusion of the CA that petitioners "withheld the necessary
financial and logistic support such as spare parts, and repair and
maintenance of the transferred buses until only two units remained in
running condition." This left respondents virtually jobless.
Other matters:
ISSUE: Whether or not the order to reinstate respondents was valid considering that the
issue of reinstatement was never brought up before the CA and respondents never
questioned the award of separation pay.
HELD: YES. It is clear from the complaints filed by respondents that they are seeking
reinstatement. Section 2 (c), Rule 7 of the Rules of Court provides that a pleading shall
specify the relief sought, but may add a general prayer for such further or other reliefs
as may be deemed just and equitable. A court can grant the relief warranted by the
allegation and the proof even if it is not specifically sought by the injured party; the
inclusion of a general prayer may justify the grant of a remedy different from or together
with the specific remedy sought, if the facts alleged in the complaint and the evidence
introduced so warrant. In this case, aside from their specific prayer for reinstatement,
respondents, in their separate complaints, prayed for such reliefs which are deemed just
and equitable.
ISSUE: Whether or not the factual findings of the NLRC are accorded not only respect
but finality.

HELD: YES. Settled is the rule that factual findings of labor officials, who are deemed to
have acquired expertise in matters within their jurisdiction, are generally accorded not
only respect but even finality by the courts when supported by substantial evidence. But
these findings are not infallible. When there is a showing that they were arrived at
arbitrarily or in disregard of the evidence on record, they may be examined by the
courts. The CA can grant the petition for certiorari if it finds that the NLRC, in its assailed
decision or resolution, made a factual finding not supported by substantial evidence.
ISSUE: Whether or not the petition filed with the CA is fatally defective, because the
attached verification and certificate against forum shopping was signed only by
respondent Garcia.
HELD: NO. While the general rule is that the certificate of non-forum shopping must be
signed by all the plaintiffs in a case and the signature of only one of them is insufficient,
the Court has stressed that the rules on forum shopping, which were designed to
promote and facilitate the orderly administration of justice, should not be interpreted with
such absolute literalness as to subvert its own ultimate and legitimate objective. It does
not, however, prohibit substantial compliance therewith under justifiable circumstances,
considering especially that although it is obligatory, it is not jurisdictional. In a number of
cases, the Court has consistently held that when all the petitioners share a common
interest and invoke a common cause of action or defense, the signature of only one of
them in the certification against forum shopping substantially complies with the rules. In
the present case, there is no question that respondents share a common interest and
invoke a common cause of action. Hence, the signature of respondent Garcia is a
sufficient compliance with the rule governing certificates of non-forum shopping. In the
first place, some of the respondents actually executed a Special Power of Attorney
authorizing Garcia as their attorney-in-fact in filing a petition for certiorari with the CA.
ISSUE: Whether or not the petition filed with the CA is fatally defective, because the
attached verification and certificate against forum shopping was signed only by
respondent Garcia.
HELD: NO. With respect to the absence of some of the workers signatures in the
verification, the verification requirement is deemed substantially complied with when
some of the parties who undoubtedly have sufficient knowledge and belief to swear to
the truth of the allegations in the petition had signed the same. Such verification is
deemed a sufficient assurance that the matters alleged in the petition have been made
in good faith or are true and correct, and not merely speculative.
Prince Transport, Inc. and Mr. Renato Claros v. Diosdado Garcia, Luisito Garcia, Et. Al.
G.R. No. 167291, January 12, 2011
FACTS:
Prince Transport, Inc. (PTI), is a company engaged in the business of transporting
passengers by land; respondents were hired either as drivers, conductors, mechanics
or inspectors, except for respondent Diosdado Garcia (Garcia), who was assigned as
Operations Manager. Sometime in October 2007 the commissions received by the
respondents were reduced to 7 to 9% from 8 to 10%. This led respondents and other

employees of PTI to hold a series of meetings to discuss the protection of their interests
as employees. Ranato Claros, president of PTI, made known to Garcia his objections to
the formation of a union and in order to block the continued formation of the union, PTI
caused the transfer of all union members and sympathizers to one of its subcompanies, Lubas Transport (Lubas). The business of Lubas deteriorated because of
the refusal of PTI to maintain and repair the units being used therein, which resulted in
the virtual stoppage of its operations and respondents' loss of employment. Hence, the
respondent-employees filed complaints against PTI for illegal dismissal and unfair labor
practice. PTI contended that it has nothing to do with the management and operations
of Lubas as well as the control and supervision of the latter's employees.
ISSUE:
Whether or not the order to reinstate respondents was valid considering that the issue
of reinstatement was never brought up before the CA and respondents never
questioned the award of separation pay.
HELD:
YES. It is clear from the complaints filed by respondents that they are seeking
reinstatement. Section 2 (c), Rule 7 of the Rules of Court provides that a pleading shall
specify the relief sought, but may add a general prayer for such further or other reliefs
as may be deemed just and equitable. Under this rule, a court can grant the relief
warranted by the allegation and the proof even if it is not specifically sought by the
injured party; the inclusion of a general prayer may justify the grant of a remedy different
from or together with the specific remedy sought, if the facts alleged in the complaint
and the evidence introduced so warrant. The general prayer is broad enough to justify
extension of a remedy different from or together with the specific remedy sought. Even
without the prayer for a specific remedy, proper relief may be granted by the court if the
facts alleged in the complaint and the evidence introduced so warrant. The court shall
grant relief warranted by the allegations and the proof even if no such relief is prayed
for. The prayer in the complaint for other reliefs equitable and just in the premises
justifies the grant of a relief not otherwise specifically prayed for. In the instant case,
aside from their specific prayer for reinstatement, respondents, in their separate
complaints, prayed for such reliefs which are deemed just and equitable.
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 bylaws. 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.
Donnina Halley vs. Printwell, Inc.
Facts:
O BMPI (Business Media Philippines Inc.) is a corporation under the control of its
stockholders, including Donnina Halley. In the course of its business, BMPI
commissioned PRINTWELL to print Philippines, Inc. (a magazine published and
distributed by BMPI). PRINTWELL extended 30-day credit accommodation in favor of
BMPI and in a period of 9 mos. BMPI placed several orders amounting to 316,000.

However, only 25,000 was paid hence a balance of 291,000. PRINTWELL sued BMPI
for collection of the unpaid balance and later on impleaded BMPIs original stockholders
and incorporators to recover on their unpaid subscriptions. It appears that BMPI has an
authorized capital stock of 3M divided into 300,000shares with P10 par value. Only
75,000 shares worth P750,000 were originally subscribed of whichP187,500 were paid
up capital. Halley subscribed to 35,000 shares worth P350,000 but only paid P87,500.

Halley contends that:1. They all had already paid their subscriptions in full 2. BMPI had
a separate and distinct personality 3. BOD and SH had resolved to dissolve BMPIRTC
and CA
Defendant merely used the corporate fiction as a cloak/cover to create an injustice
(against PRINTWELL)
Rejected allegations of full payment in view of irregularity in the issuance of ORs
(Payment made on a later date was covered by an OR with a lower serial number than
payment made on an earlier date.
Issue: WON a stockholder who was in active management of the business of the
corporation and still has unpaid subscriptions should be made liable for the debts of the
corporation by piercing the veil of corporate fiction
Held: YES! Such stockholder should be made liable up to the extent of her unpaid
subscription
Ratio:
It was found that at the time the obligation was incurred, BMPI was under the control of
its stockholders who know fully well that the corporation was not in a position to pay its
account (thinly capitalized).
And, that the stockholders personally benefited from the operations of the corporation
even though they never paid their subscriptions in full. The stockholders cannot now
claim the doctrine of corporate fiction otherwise (to deny creditors to collect from SH) it
would create an injustice because creditors would be at a loss (limbo) against whom it
would assert the right to collect.
On piercing the veil:
Although the corporation has a personality separate and distinct from its SH, such
personality is merely a legal fiction (for the convenience and to promote the ends of
justice) which may be disregarded by the courts if it is used as a cloak or cover for fraud
,justification of a wrong, or an alter ego for the sole benefit of the SH.
As to the Trust Fund Doctrine:

The RTC and CA correctly applied the Trust Fund Doctrine Under which corporate
debtors might look to the unpaid subscriptions for the satisfaction of unpaid corporate
debts
Subscriptions to the capital of a corporation constitutes a trust fund for the payment of
the creditors (by mere analogy) In reality, corporation is a simple debtor.
Moreover, the corporation has no legal capacity to release an original subscriber to its
capital stock from the obligation of paying for his shares, in whole or in part, without
valuable consideration, or fraudulently, to the prejudice of the creditors.
The creditor is allowed to maintain an action upon any unpaid subscriptions and thereby
steps into the shoes of the corporation for the satisfaction of its debt.
The trust fund doctrine is not limited to reaching the SHs unpaid
subscriptions. The scope of the doctrine when the corporation is insolvent encompasses
not only the capital stock but also other property and assets generally regarded in equity
as a trust fund for the payment of corporate debts