Real VS Sangu Philippines, Inc
Real VS Sangu Philippines, Inc
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controversy. Hence, respondents pray that this petition be dismissed for lack of “The fact that the parties involved in the controversy are all stockholders or that
merit. the parties involved are the stockholders and the corporation does not necessarily
place the dispute within the ambit of the jurisdiction of the SEC (now the Regional
_______________ Trial Court19). The better policy to be followed in determining jurisdiction
over a case should be to consider concurrent factors such as the status or
15 Respondent’s Comment/Opposition (To the Petition for Review), Rollo, pp. relationship of the parties or the nature of the question that is subject of
89-100. their controversy. In the absence of any one of these factors, the SEC will not
79 have jurisdiction. Furthermore, it does not necessarily follow that every conflict
between the corporation and its stockholders would involve such corporate matters
, JANUARY 19, 2011 79
as only SEC (now the Regional Trial Court20) can resolve in the exercise of its
Real vs. Sangu Philippines, Inc. adjudicatory or quasi-judicial powers.” (Emphasis ours)
Issues And, while Tabang was promulgated later than Mainland Construction Co.,
From the foregoing and as earlier mentioned, the core issue to be resolved in Inc., the “better policy” enunciated in the latter appears to have developed into a
this case is whether petitioner’s complaint for illegal dismissal constitutes an intra- standard approach in classifying what constitutes an intra-corporate controversy.
corporate controversy and thus, beyond the jurisdiction of the Labor Arbiter. This is explained lengthily in Reyes v. Regional Trial Court of Makati, Br. 142,21 to
wit:
Our Ruling “Intra-Corporate Controversy
A review of relevant jurisprudence shows a development in the Court’s
Two-tier test in determining the existence approach in classifying what constitutes an intra-corporate controversy. Initially,
of intra-corporate controversy the main consideration in determining whether a dispute constitutes an intra-
Respondents strongly rely on this Court’s pronouncement in the 1997 case corporate controversy was limited to a consideration of the intra-corporate
of Tabang v. National Labor Relations Commission, to wit: relationship existing between or among the parties. The types of relationships
“[A]n intra-corporate controversy is one which arises between a stockholder and embraced under Section 5(b) x x x were as follows:
the corporation. There is no distinction, qualification nor any exemption a) between the corporation, partnership or association and the public;
whatsoever. The provision is broad and covers all kinds of controversies between b) between the corporation, partnership or association and its stockholders,
stockholders and corporations.”16 partners, members or officers;
In view of this, respondents contend that even if petitioner challenges his being
a corporate officer, the present case still constitutes an intra-corporate controversy _______________
as petitioner is undisputedly a stockholder and a director of respondent
corporation. 19 Pursuant to Section 5.2 of Republic Act No. 8799 otherwise known as The
It is worthy to note, however, that before the promulgation of the Tabang case, Securities Regulation Code.
the Court provided in Mainland Construction Co., Inc. v. Movilla17 a “better 20 Id.
policy” in determining which between the Securities and Exchange Commission 21 G.R. No. 165744, August 11, 2008, 561 SCRA 593, 609-612.
(SEC) and the Labor Arbiter has jurisdiction over termination disputes,18 or 81
similarly, whether they are intra-corporate or not, viz.: , JANUARY 19, 2011 81
Real vs. Sangu Philippines, Inc.
_______________
c) between the corporation, partnership or association and the State as far as
its franchise, permit or license to operate is concerned; and
16 Supra note 9 at p. 430; p. 468.
d) among the stockholders, partners or associates themselves.
17 320 Phil. 353, 359-360; 250 SCRA 290, 295 (1995).
The existence of any of the above intra-corporate relations was sufficient to
18 See C.A. Azucena Jr.’s The Labor Code With Comments and Cases, Volume
confer jurisdiction to the SEC (now the RTC), regardless of the subject matter of
II, 6th Edition (2007) pp. 46-49.
the dispute. This came to be known as the relationship test.
80
However, in the 1984 case of DMRC Enterprises v. Esta del Sol Mountain
Reserve, Inc., the Court introduced the nature of the controversy test. We declared
80 SUPREME COURT REPORTS ANNOTATED
in this case that it is not the mere existence of an intra-corporate relationship that
Real vs. Sangu Philippines, Inc. gives rise to an intra-corporate controversy; to rely on the relationship test alone
Page 5 of 9
will divest the regular courts of their jurisdiction for the sole reason that the What then is the nature of petitioner’s Complaint for Illegal Dismissal? Is it
dispute involves a corporation, its directors, officers, or stockholders. We saw that intra-corporate and thus beyond the jurisdiction of the Labor Arbiter? We shall
there is no legal sense in disregarding or minimizing the value of the nature of the answer this question by using the standards set forth in the Reyes case.
transactions which gives rise to the dispute. No intra-corporate relationship between the parties
Under the nature of the controversy test, the incidents of that relationship must As earlier stated, petitioner’s status as a stockholder and director of respondent
also be considered for the purpose of ascertaining whether the controversy itself is corporation is not disputed. What the parties disagree on is the finding of the NLRC
intra-corporate. The controversy must not only be rooted in the existence of an and the CA that petitioner is a corporate officer. An examination of the complaint
intra-corporate relationship, but must as well pertain to the enforcement of the for illegal dismissal, however, reveals that the root of the controversy is petitioner’s
parties’ correlative rights and obligations under the Corporation Code and the dismissal as Manager of
internal and intra-corporate regulatory rules of the corporation. If the relationship 83
and its incidents are merely incidental to the controversy or if there will still be , JANUARY 19, 2011 83
conflict even if the relationship does not exist, then no intra-corporate controversy
exists. Real vs. Sangu Philippines, Inc.
The Court then combined the two tests and declared that jurisdiction should be respondent corporation, a position which respondents claim to be a corporate office.
determined by considering not only the status or relationship of the parties, but Hence, petitioner is involved in this case not in his capacity as a stockholder or
also the nature of the question under controversy. This two-tier test was adopted director, but as an alleged corporate officer. In applying the relationship test,
in the recent case of Speed Distribution Inc. v. Court of Appeals: therefore, it is necessary to determine if petitioner is a corporate officer of
‘To determine whether a case involves an intra-corporate controversy, respondent corporation so as to establish the intra-corporate relationship between
and is to be heard and decided by the branches of the RTC specifically the parties. And albeit respondents claim that the determination of whether
designated by the Court to try and decide such cases, two elements must petitioner is a corporate officer is a question of fact which this Court cannot pass
concur: (a) the status or rela- upon in this petition for review on certiorari, we shall nonetheless proceed to
82 consider the same because such question is not the main issue to be resolved in this
case but is merely collateral to the core issue earlier mentioned.
82 SUPREME COURT REPORTS ANNOTATED
Petitioner negates his status as a corporate officer by pointing out that although
Real vs. Sangu Philippines, Inc. he was removed as Manager through a board resolution, he was never elected to
tionship of the parties, and (2) the nature of the question that is the subject of their said position nor was he appointed thereto by the Board of Directors. While the By-
controversy. Laws of respondent corporation provides that the Board may from time to time
appoint such officers as it may deem necessary or proper, he avers that respondents
The first element requires that the controversy must arise out of intra- failed to present any board resolution that he was appointed pursuant to said By-
corporate or partnership relations between any or all of the parties and the Laws. He instead alleges that he was hired as Manager of respondent corporation
corporation, partnership, or association of which they are not stockholders, solely by respondent Abe. For these reasons, petitioner claims to be a mere
members or associates, between any or all of them and the corporation, employee of respondent corporation rather than as a corporate officer.
partnership or association of which they are stockholders, members or We find merit in petitioner’s contention.
associates, respectively; and between such corporation, partnership, or “ ‘Corporate officers’ in the context of Presidential Decree No. 902-A are those
association and the State insofar as it concerns the individual franchises. officers of the corporation who are given that character by the Corporation Code or
The second element requires that the dispute among the parties be by the corporation’s by-laws. There are three specific officers whom a corporation
intrinsically connected with the regulation of the corporation. If the nature must have under Section 25 of the Corporation Code. These are the president,
of the controversy involves matters that are purely civil in character, secretary and the treasurer. The number of officers is not limited to these three. A
necessarily, the case does not involve an intra-corporate controversy.’ corporation may have such other officers as may be provided for by its by-laws like,
[Citations omitted.] but not limited to, the vice-president, cashier, auditor or gen-
Guided by this recent jurisprudence, we thus find no merit in respondents’ 84
contention that the fact alone that petitioner is a stockholder and director of
84 SUPREME COURT REPORTS ANNOTATED
respondent corporation automatically classifies this case as an intra-corporate
controversy. To reiterate, not all conflicts between the stockholders and the Real vs. Sangu Philippines, Inc.
corporation are classified as intra-corporate. There are other factors to consider in eral manager. The number of corporate officers is thus limited by law and by the
determining whether the dispute involves corporate matters as to consider them as corporation’s by-laws.”22
intra-corporate controversies.
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Respondents claim that petitioner was appointed Manager by virtue of Section Tsutomo Nogami requested Mr. Masahiko Shibata, one of respondent-appellant
1, Article IV of respondent corporation’s By-Laws which provides: Sangu’s Board of Directors, if complainant-appellee Renato Real could work as one
ARTICLE IV of its employees here in the Philippines because he had been blacklisted at Japan’s
OFFICER Immigration Office and could no longer go back to Japan. And so it was arranged
“Section 1. Election/Appointment.—Immediately after their election, the that he would serve as respondent-appellant Sangu’s manager, receiving a
Board of Directors shall formally organize by electing the President, Vice- salary of P25,000.00. As such, he was tasked to oversee the operations of the
President, the Secretary at said meeting. company. x x x (Emphasis ours)
The Board, may from time to time, appoint such other officers as it may xxxx
determine to be necessary or proper. Any two (2) or more positions may be held As earlier stated, complainant-appellee Renato Real was hiredas the manager
concurrently by the same person, except that no one shall act as President and of respondent-appellant Sangu. As such, his position was reposed with full trust
Treasurer or Secretary at the same time. and confidence. x x x”
x x x x”23 (Emphasis ours) While respondents repeatedly claim that petitioner was appointed as Manager
We have however examined the records of this case and we find nothing to prove pursuant to the corporation’s By-Laws,
that petitioner’s appointment was made pursuant to the above-quoted provision of
respondent corporation’s By-Laws. No copy of board resolution appointing _______________
petitioner as Manager or any other document showing that he was appointed to
said position by action of the board was submitted by respondents. What we found 25 General Milling Corporation v. Casio, G.R. No. 149552, March 10, 2010, 615
instead were mere allegations of respondents in their various pleadings24 that SCRA 13 citing Rimbunan Hijau Group of Companies v. Oriental Wood Processing
petitioner was appointed as Manager of respondent corpora- Corporation, 507 Phil. 631, 648-649; 470 SCRA 650, 665 (2005).
26 CA Rollo, pp. 122-220 at 191 and 212.
_______________ 86
86 SUPREME COURT REPORTS ANNOTATED
22 Garcia v. Eastern Telecommunications Philippines, Inc., G.R. Nos. 173115
and 173163-164, April 16, 2009, 585 SCRA 450, 468. Real vs. Sangu Philippines, Inc.
23 CA Rollo, pp. 266-273. the above-quoted inconsistencies in their allegations as to how petitioner was
24 Respondents’ Position Paper filed with the Labor Arbiter, id., at pp. 94- placed in said position, coupled by the fact that they failed to produce any
113; Memorandum on Appeal and Rejoinder filed with the NLRC, id., at pp. 182- documentary evidence to prove that petitioner was appointed thereto by action or
220 and 285-294; Comment filed with the CA, id., at pp. 302- with approval of the board, only leads this Court to believe otherwise. It has been
319; Comment/Opposition (To The Petition for Review) and Memorandum filed consistently held that “[a]n ‘office’ is created by the charter of the corporation and
before this Court, Rollo, pp. 89-100 and 169-187. the officer is elected (or appointed) by the directors or stockholders.”27Clearly here,
85 respondents failed to prove that petitioner was appointed by the board of directors.
Thus, we cannot subscribe to their claim that petitioner is a corporate officer.
, JANUARY 19, 2011 85
Having said this, we find that there is no intra-corporate relationship between the
Real vs. Sangu Philippines, Inc. parties insofar as petitioner’s complaint for illegal dismissal is concerned and that
tion and nothing more. “The Court has stressed time and again that allegations same does not satisfy the relationship test.
must be proven by sufficient evidence because mere allegation is definitely not Present controversy does not relate
evidence.”25 to intra-corporate dispute
It also does not escape our attention that respondents made the following We now go to the nature of controversy test. As earlier stated, respondents
conflicting allegations in their Memorandum on Appeal26 filed before the NLRC terminated the services of petitioner for the following reasons: (1) his continuous
which cast doubt on petitioner’s status as a corporate officer, to wit: absences at his post at Ogino Philippines, Inc; (2) respondents’ loss of trust and
“x x x x confidence on petitioner; and, (3) to cut down operational expenses to reduce further
24. Complainant-appellee Renato Real was appointed as the manager of losses being experienced by the corporation. Hence, petitioner filed a complaint for
respondent-appellant Sangu on November 6, 1998. Priorly [sic], he was working at illegal dismissal and sought reinstatement, backwages, moral damages and
Atlas Ltd. Co. at Mito-shi, Ibaraki-ken Japan. He was staying in Japan as an illegal attorney’s fees. From these, it is not difficult to see that the reasons given by
alien for the past eleven (11) years. He had a problem with his family here in the respondents for dismissing petitioner have something to do with his being a
Philippines which prompted him to surrender himself to Japan’s Bureau of Manager of respondent corporation and nothing with his being a director or
Immigration and was deported back to the Philippines. His former employer, Mr. stockholder. For one, petitioner’s continuous absences in his post in Ogino relates
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to his performance as Manager. Second, respondents’ loss of trust and confidence We take note of the cases cited by respondents and find them inapplicable to
in petitioner the case at bar. Fortune Cement Corporation v. National Labor Relations
Commission31involves a member of the board of directors and at the same time a
_______________ corporate officer who claims he was illegally dismissed after he was stripped of his
corporate position of Executive Vice-President because of loss of trust and
27 Easycall Communications Phils., Inc. v. King, G.R. No. 145901, December confidence. On the other hand, Philippine School of Business Administration v.
15, 2005, 478 SCRA 102, 110. Leano32 and Pearson & George v. National Labor Relations Commis-
87
_______________
, JANUARY 19, 2011 87
Real vs. Sangu Philippines, Inc. 30 ART. 217. Jurisdiction of the Labor Arbiters and the Commission.(a)
stemmed from his alleged acts of establishing a company engaged in the same line Except as otherwise provided under this Code, the Labor Arbiters shall have
of business as respondent corporation’s and submitting proposals to the latter’s original and exclusive jurisdiction to hear and decide, within thirty (30) calendar
clients while he was still serving as its Manager. While we note that respondents days after the submission of the case by the parties for decision without extension,
also claim these acts as constituting acts of disloyalty of petitioner as director and even in the absence of stenographic notes, the following cases involving all workers,
stockholder, we, however, think that same is a mere afterthought on their part to whether agricultural or non-agricultural:
make it appear that the present case involves an element of intra-corporate 1. Unfair labor practice cases;
controversy. This is because before the Labor Arbiter, respondents did not see such 2. Termination disputes;
acts to be disloyal acts of a director and stockholder but rather, as constituting 3. If accompanied with a claim for reinstatement, those cases that workers
willful breach of the trust reposed upon petitioner as Manager.28 It was only after may file involving wages, rates of pay, hours of work and other terms and conditions
respondents invoked the Labor Arbiter’s lack of jurisdiction over petitioner’s of employment;
complaint in the Supplemental Memorandum of Appeal29 filed before the NLRC 4. Claims for actual, moral, exemplary and other forms of damages arising
that respondents started considering said acts as such. Third, in saying that they from the employer-employee relations;
were dismissing petitioner to cut operational expenses, respondents actually want 5. Cases arising from any violation of Article 264 of this Code, including
to save on the salaries and other remunerations being given to petitioner as its questions involving the legality of strikes and lock-outs; and
Manager. Thus, when petitioner sought for reinstatement, he wanted to recover his 6. Except claims for Employees Compensation, Social Security, Medicare and
position as Manager, a position which we have, however, earlier declared to be not Maternity benefits, all other claims arising from employer-employee relations,
a corporate position. He is not trying to recover a seat in the board of directors or including those of persons in domestic or household service, involving an amount
to any appointive or elective corporate position which has been declared vacant by exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with
the board. Certainly, what we have here is a case of termination of employment a claim for reinstatement.
which is a labor controversy and not an intra-corporate dispute. In sum, we hold xxxx
that petitioner’s complaint likewise does not satisfy the nature of controversy test. 31 Supra note 13.
With the elements of intra-corporate controversy being absent in this case, we 32 Supra note 12.
thus hold that petitioner’s complaint for illegal dismissal against respondents is 89
not intra-corporate. Rather, it is a termination dispute and, consequently, falls
, JANUARY 19, 2011 89
_______________ Real vs. Sangu Philippines, Inc.
sion33 both concern a complaint for illegal dismissal by corporate officers who were
28 Respondents’ Position Paper, CA Rollo, pp. 94-113 at 109-110. not re-elected to their respective corporate positions. The Court declared all these
29 Id., at pp. 221-236. cases as involving intra-corporate controversies and thus affirmed the jurisdiction
88 of the SEC (now the RTC)34 over them precisely because they all relate to corporate
officers and their removal or non-reelection to their respective corporate positions.
88 SUPREME COURT REPORTS ANNOTATED
Said cases are by no means similar to the present case because as discussed earlier,
Real vs. Sangu Philippines, Inc. petitioner here is not a corporate officer.
under the jurisdiction of the Labor Arbiter pursuant to Section 21730 of the Labor With the foregoing, it is clear that the CA erred in affirming the decision of the
Code. NLRC which dismissed petitioner’s complaint for lack of jurisdiction. In cases such
as this, the Court normally remands the case to the NLRC and directs it to properly
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dispose of the case on the merits. “However, when there is enough basis on which allegations without sufficient proof. To reiterate, allegations must be proven by
a proper evaluation of the merits of petitioner’s case may be had, the Court may sufficient evidence because mere allegation is definitely not evidence.38
dispense with the time-consuming procedure of remand in order to prevent further Moreover, petitioner’s dismissal was effected without due process of law. “The
delays in the disposition of the case.”35 “It is already an accepted rule of procedure twin requirements of notice and hearing
for us to strive to settle the entire controversy in a single proceeding, leaving no
root or branch to bear the seeds of litigation. If, based on the records, the pleadings, _______________
and other evidence, the dispute can be resolved by us, we will do so to serve the
ends of justice instead of remanding the case to the lower court for further 37 Pepsi Cola Products Philippines, Inc. v. Santos, G.R. No. 165968, April 14,
proceedings.”36 We have gone over the records before us and we are convinced that 2008, 551 SCRA 245, 252.
we can now altogether resolve the issue 38 Supra note 25.
91
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, JANUARY 19, 2011 91
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