022-Dy v. NLRC G.R. No. L-68544 October 27, 1986
022-Dy v. NLRC G.R. No. L-68544 October 27, 1986
SUPREME COURT December 1, 1983 on the adjusted salary rate of P620.00 r month until he is actually
Manila reinstated, plus cost-of-living allowance.
FIRST DIVISION Lorenzo Dy, et al. appealed to the NLRC, assigning error to the decision of the Labor Arbiter on various
G.R. No. L-68544 October 27, 1986 grounds, among them: that Vailoces was not entitled to notice of the Board meeting of July 2, 1983 which
LORENZO C. DY, ZOSIMO DY, SR., WILLIAM IBERO, RICARDO GARCIA AND RURAL decreed his relief because he was no longer a member of the Board on said date; that he nonetheless had the
BANK OF AYUNGON, INC., petitioners, opportunity to refute the charges against him and seek a formal investigation because he received a copy of
vs. the minutes of said meeting while he was still the bank manager (his removal was to take effect only on
NATIONAL LABOR RELATIONS COMMISSION AND EXECUTIVE LABOR ARBITER August 15, 1983), instead of which he simply abandoned the work he was supposed to perform up to the
ALBERTO L. DALMACION, AND CARLITO H. VAILOCES, respondents. effective date of his relief; and that the matter of his relief was within the adjudicatory powers of the Securities
Marcelino C. Maximo and Ramon Barrameda for petitioners. and Exchange Commission.
Carlito H. Vailoces for private respondent. The NLRC, however bypassed the issues raised and simply dismissed the appeal for having been filed late.
NARVASA, J.: It ruled that:
Petitioners assail in this Court the resolution of the National Labor Relations Commission (NLRC) dismissing The record shows that a copy of the decision sent by registered mail to respondents'
their appeal from the decision of the Executive Labor Arbiter in Cebu City which found private respondent counsel, Atty. Edmund Tubio, was received on January 11, 1984 by a certain Atty.
to have been illegally dismissed by them. Ramon Elesteria, a law office partner of Atty. Tubio. ... This fact is corroborated by
Said private respondent, Carlito H. Vailoces, was the manager of the Rural Bank of Ayungon (Negros the certification issued by the Postmaster of Dumaguete City... Moreover, the same is
Oriental), a banking institution duly organized under Philippine laws. He was also a director and stockholder admitted by no less than Atty. Ramon Elesteria himself in his affidavit. It further
of the bank. appears in the record that on January 30, 1984 a certain Atty. Francisco Zerna, a new
On June 4, 1983, a special stockholders' meeting was called for the purpose of electing the members of the lawyer engaged by the respondents for the appeal, received a copy of the decision in
bank's Board of Directors. Immediately after the election the new Board proceeded to elect the bank's this case as certified by Julia Pepito in an affidavit subscribed before the Senior Labor
executive officers. Arbitration Specialist. The appeal was filed only on February 17, 1984.
Pursuant to Article IV of the bank's by-laws, providing for the election by the entire membership of the Board Considering that it was a law partner of the respondents' counsel who received on
of the executive officers of the bank, i.e., the president, vice-president, secretary, cashier and bank manager, January 11, 1984 the registered letter, his actual receipt thereof completes the
in that board meeting of June 4, 1983, petitioners Lorenzo Dy, William Ibero and Ricardo Garcia were elected service. ... And even assuming that such was not a valid service, since the respondents
president, vice-president and corporate secretary, respectively. Vailoces was not re-elected as bank manager, received another copy of the decision on January 30, 1984, through their newly
Because of this development, the Board, on July 2, 1983, passed Resolution No. 5, series of 1983, relieving engaged counsel, it is therefore our opinion that the appeal herein was filed out of time,
him as bank manager. whether the time is reckoned from the receipt by Atty. Elesteria or Atty. Zerna, and,
On August 3, 1983, Vailoces filed a complaint for illegal dismissal and damages with the Ministry of Labor for this reason, we can not give due course to his appeal.
and Employment against Lorenzo Dy and Zosimo Dy, Sr. The complaint was amended on September 22, In this Court, petitioners assail said ruling as an arbitrary deprivation of their right to appeal through
1983 to include additional respondents-William Ibero, Ricardo Garcia and the Rural Bank of Ayungon, and unreasonable adherence to procedural technicality. They argue that they should not be bound by the service
additional causes of action for underpayment of salary and non-payment of living allowance. of the Labor Arbiter's decision by Atty. Elesteria on January 11, 1984 or by Atty. Zerna on January 30, 1984,
In his complaint and position paper, Vailoces asserted that Lorenzo Dy, after obtaining control of the majority because neither lawyer was authorized to accept service for their counsel Atty. Tubio, and that their 10 day
stock of the bank by buying the shares of Marcelino Maximo, called an illegal stockholders' meeting and period of appeal should be counted from February 10, 1984 when they actually received the copy of the
elected a Board of Directors controlled by him; that after its illegal constitution, said Board convened on July decision from Atty. Zerna. On the merits, they assert that the Arbiter's finding of illegal dismissal was without
2, 1983 and passed a resolution dismissing him as manager, without giving him the opportunity to be heard evidentiary basis, that it was error to impose the obligation to pay damages upon the individual petitioners,
first; that his dismissal was motivated by Lorenzo Dy's desire to take over the management and control of the instead of the Rural Bank of Ayungon, which was Vailoces' real employer, and that the damages awarded
bank, not to mention the fact that he (Dy) harbored ill feelings against Vailoces on account of the latter's are exorbitant and oppressive.
filing of a complaint for violation of the corporation code against him and another complaint for compulsory While the comment of Vailoces traverses the averments of the petition, that of the Solicitor General on behalf
recognition of natural child with damages against Zosimo Dy, Sr. of public respondents perceives the matter as an intracorporate controversy of the class described in Section
In their answer, Lorenzo Dy, et al. denied the charge of illegal dismissal. They pointed out that Vailoces' 5, par. (c), of Presidential Decree No. 902-A, namely:
position was an elective one, and he was not re-elected as bank manager because of the Board's loss of (c) Controversies in the election or appointments of directors, trustees, officers or
confidence in him brought about by his absenteeism and negligence in the performance of his duties; and that managers of such corporations, partnerships or associations.
the Board's action was taken to protect the interest of the bank and was "designed as an internal control explicitly declared to be within the original and exclusive jurisdiction of the Securities and Exchange
measure to secure the check and balance of authority within the organization." Commission, and recommends that the questioned resolution of the NLRC as well as the decision of the
The Executive Labor Arbiter found that Vailoces was: Labor Arbiter be set aside as null and void.
(a) Illegally dismissed, first not because of absenteeism and negligence, but of the In truth, the issue of jurisdiction is decisive and renders unnecessary consideration of the other questions
resentment of petitioners against Vailoces which arose from the latter's filing of the raised.
cases for recognition as natural child against Zosimo Dy, Sr. and for violation of the There is no dispute that the position from which private respondent Vailoces claims to have been illegally
corporation code against Lorenzo Dy; and second, because he was not afforded the due dismissed is an elective corporate office. He himself acquired that position through election by the bank's
process of law when he was dismissed during the Board meeting of July 2, 1983 the Board of Directors at the organizational meeting of November 17, 1979. He lost that position because the
validity of which is seriously doubted; Board that was elected in the special stockholders' meeting of June 4, 1983 did not re-elect him. And when
(b) Not paid his cost of living allowance; and Vailoces, in his position paper submitted to the Labor Arbiter, impugned said stockholders' meeting as
(c) Underpaid with only P500 monthly salary, illegally convoked and the Board of Directors thereby elected as illegally constituted, he made it clear that at
and consequently ordered the individual petitioners — Lorenzo Dy and Zosimo Dy-but not the Bank itself, the heart of the matter was the validity of the directors' meeting of June 4, 1983 which, by not re-electing him
to: to the position of manager, in effect caused termination of his services.
(a) Pay Vailoces jointly and severally, the sum of P111,480.60 representing his salary The case thus falls squarely within the purview of Section 5, par. (c), No. 902-A just cited. In PSBA vs. Leaño,
differentials, cost of living allowances, back wages from date of dismissal up to the this Court, confronted with a similar controversy, ruled that the Securities and Exchange Commission, not
date of the decision (November 29, 1983), moral and exemplary damages, and the NLRC, has jurisdiction:
attorney's fees; and It was at a Board regular monthly meeting held on August 1, 1981, that three directors
were elected to fill vacancies. And, it was at the regular Board meeting of September lack of jurisdiction of a court may be raised at any stage of the proceedings, even on
5, 1981 that all corporate positions were declared vacant in order to effect a appeal. This doctrine has been qualified by recent pronouncements which stemmed
reorganization, and at the ensuing election of officers, Tan was not re-elected as principally from the ruling in the cited case of Sibonghanoy. It is to be regretted,
Executive Vice-President. however, that the holding in said case had been applied to situations which were
Basically, therefore, the question is whether the election of directors on August 1, 1981 obviously not contemplated therein. The exceptional circumstances involved in
and the election of officers on September 5, 1981, which resulted in Tan's failure to be Sibonghanoy which justified the departure from the accepted concept of non-
re-elected, were validly held. This is the crux of the question that Tan has raised before waivability of objection to jurisdiction has been ignored and, instead a blanket doctrine
the SEC. Even in his position paper before the NLRC, Tan alleged that the election on had been repeatedly upheld that rendered the supposed ruling in Sibonghanoy not as
August 1, 1981 of the three directors was in contravention of the PSBA By-Laws the exception, but rather the general rule, virtually overthrowing altogether the time-
providing that any vacancy in the Board shall be filled by a majority vote of the honored principle that the issue of jurisdiction is not lost by waiver or by estoppel.
stockholders at a meeting specially called for the purpose. Thus, he concludes, the xxx xxx xxx
Board meeting on September 5, 1981 was tainted with irregularity on account of the It is neither fair nor legal to bind a party by the result of a suit or proceeding which was
presence of illegally elected directors without whom the results could have been taken cognizance of in a court which lacks jurisdiction over the same irrespective of
different. the attendant circumstances. The equitable defense of estoppel requires knowledge or
Tan invoked the same allegations in his complaint filed with the SEC. So much so, that consciousness of the facts upon which it is based . The same thing is true with estoppel
on December 17, 1981, the SEC (Case No. 2145) rendered a Partial Decision annulling by conduct which may be asserted only when it is shown, among others, that the
the election of the three directors and ordered the convening of a stockholders' meeting representation must have been made with knowledge of the facts and that the party to
for the purpose of electing new members of the Board. The correctness of d conclusion whom it was made is ignorant of the truth of the matter (De Castro vs. Gineta, 27 SCRA
is not for us to pass upon in this case. Tan was present at said meeting and again sought 623). The filing of an action or suit in a court that does not possess jurisdiction to
the issuance of injunctive relief from the SEC. entertain the same may not be presumed to be deliberate and intended to secure a ruling
The foregoing indubitably show that, fundamentally, the controversy is intra-corporate which could later be annulled if not favorable to the party who filed such suit or
in nature. It revolves around the election of directors, officers or managers of the proceeding in a court that lacks jurisdiction to take cognizance of the same, such act
PSBA, the relation between and among its stockholders, and between them and the may not at once be deemed sufficient basis of estoppel. It could have been the result of
corporation. Private respondent also contends that his "ouster" was a scheme to an honest mistake or of divergent interpretation of doubtful legal provisions. If any
intimidate him into selling his shares and to deprive him of his just and fair return on fault is to be imputed to a party taking such course of action, part of the blame should
his investment as a stockholder received through his salary and allowances as be placed on the court which shall entertain the suit, thereby lulling the parties into
Executive Vice-President. Vis-a-vis the NLRC, these matters fall within the believing that they pursued their remedies in the correct forum. Under the rules, it is
jurisdiction of the SEC. Presidential Decree No. 902-A vests in the Securities and the duty of the court to dismiss an action 'whenever it appears that court has no
Exchange Commission: jurisdiction over the subject matter.' (Section 2, Rule 9, Rules of Court) Should the
... Original and exclusive jurisdiction to hear and decide cases involving: Court render a judgment without jurisdiction, such judgment may be impeached or
a) Devices or schemes employed by or any acts, of the board of directors, business annulled for lack of jurisdiction (Sec. 30, Rule 132, Ibid), within ten (10) years from
associates, its officers or partners, amounting to fraud and misrepresentation) which the finality of the same (Art. 1144, par. 3, Civil Code).
may be detrimental to the interest of the public and/or of the stockholders, partners, To be sure, petitioners failed to raise the issue of jurisdiction in their petition before this Court. But this, too,
members of associations or organizations registered with the Commission. is no hindrance to the Court's considering said issue.
b) Controversies arising out of intracorporate or partnership relations, between and The failure of the appellees to invoke anew the aforementioned solid ground of want of jurisdiction of the
among stockholders, members or associates; between any of all of them and the lower court in this appeal should not prevent this Tribunal to take up that issue as the lack of jurisdiction of
corporation, partnership or association of which they are stockholders, members or the lower court is apparent upon the face of the record and it is fundamental that a court of justice could only
associates, respectively; and between such corporation, partnership or association and validly act upon a cause of action or subject matter of a case over which it has jurisdiction and said jurisdiction
the state insofar as it concerns their individual franchise or right to exist as such entity; is one conferred only by law; and cannot be acquired through, or waived by, any act or omission of the parties
c) Controversies in the election or appointments of directors, trustees, officers or (Lagman vs. CA, 44 SCRA 234 [1972]); hence may be considered by this court motu proprio (Gov't. vs.
managers of such corporations, partnership or associations. American Surety Co., 11 Phil. 203 [1908])...
This is not a case of dismissal. The situation is that of a corporate office having been These considerations make inevitable the conclusion that the judgment of the Labor Arbiter and the resolution
declared vacant, and of Tan's not having been elected thereafter. The matter of whom of the NLRC are void for lack of cause of jurisdiction, and this Court must set matters aright in the exercise
to elect is a prerogative that belongs to the Board, and involves the exercise of of its judicial power. It is of no moment that Vailoces, in his amended complaint, seeks other relief which
deliberate choice and the faculty of discriminative selection. Generally speaking, the would seemingly fan under the jurisdiction of the Labor Arbiter, because a closer look at these-underpayment
relationship of a person to corporation, whether as officer or as agent or employee, is of salary and non-payment of living allowance-shows that they are actually part of the perquisites of his
not determined by the nature of the services performed, but by the incidents of the elective position, hence, intimately linked with his relations with the corporation. The question of
relationship as they actually exist. remuneration, involving as it does, a person who is not a mere employee but a stockholder and officer, an
Respondent Vailoces' invocation of estoppel as against petitioners with respect to the issue of jurisdiction is integral part, it might be said, of the corporation, is not a simple labor problem but a matter that comes within
unavailing. In the first place, it is not quite correct to state that petitioners did not raise the point in the lower the area of corporate affairs and management, and is in fact a corporate controversy in contemplation of the
tribunal. Although rather off handedly, in their appeal to the NLRC they called attention to the Labor Arbiter's Corporation Code.
lack of jurisdiction to rule on the validity of the meeting of July 2, 1983, but the dismissal of the appeal for WHEREFORE, the questioned decision of the Labor Arbiter and the Resolution of the NLRC dismissing
alleged tardiness effectively precluded consideration of that or any other question raised in the appeal. More petitioners' appeal from said decision are hereby set aside because rendered without jurisdiction. The
importantly, estoppel cannot be invoked to prevent this Court from taking up the question of jurisdiction, amended complaint for illegal dismissal, etc., basis of said decision and Resolution, is ordered dismissed,
which has been apparent on the face of the pleadings since the start of litigation before the Labor Arbiter. It without prejudice to private respondent's seeking recourse in the appropriate forum.
is well settled that the decision of a tribunal not vested with appropriate jurisdiction is null and void. Thus, SO ORDERED.
in Calimlim vs. Ramirez, this Court held: Yap (Chairman), Melencio-Herrera, Cruz and Feliciano, JJ., concur.
A rule that had been settled by unquestioned acceptance and upheld in decisions so
numerous to cite is that the jurisdiction of a court over the subject matter of the action
is a matter of law and may not be conferred by consent or agreement of the parties. The