G.R. No. L-68544. October 27, 1986.
LORENZO C. DY, ZOSIMO DY, SR., WILLIAM IBERO, RICARDO GARCIA AND RURAL BANK OF AYUNGON, INC., petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION AND EXECUTIVE LABOR ARBITER ALBERTO L. DALMACION, AND CARLITO H. VAILOCES, respondents.

FACTS

Private respondent Carlito H. Vailoces was the manager, a director, and a stockholder of the Rural Bank of Ayungon. Following a stockholders’ meeting on June 4, 1983, a new Board of Directors was elected. This new Board, on July 2, 1983, passed a resolution relieving Vailoces of his position as bank manager. Vailoces filed a complaint for illegal dismissal and damages with the Ministry of Labor and Employment against the individual petitioners and the Bank. He alleged the stockholders’ meeting and his dismissal were illegal, motivated by Lorenzo Dy’s desire for control and personal resentment due to unrelated cases Vailoces had filed against the Dy family.
The Executive Labor Arbiter ruled in favor of Vailoces, finding illegal dismissal due to lack of due process and improper motives, and ordered his reinstatement with full backwages and damages. Petitioners appealed to the NLRC, raising substantive defenses including the claim that the Labor Arbiter lacked jurisdiction over the case. The NLRC, however, did not address these merits. It dismissed the appeal purely on procedural grounds, ruling it was filed late based on its computation of the date of receipt of the Labor Arbiter’s decision.

ISSUE

Whether the National Labor Relations Commission and the Executive Labor Arbiter had jurisdiction over the complaint for illegal dismissal filed by a corporate officer.

RULING

No. The Supreme Court set aside the decisions of both the Labor Arbiter and the NLRC for lack of jurisdiction. The Court held that the controversy fell outside the jurisdiction of labor tribunals and was within the exclusive original jurisdiction of the Securities and Exchange Commission (SEC). The legal logic is anchored on the nature of Vailoces’s position and his relationship with the corporation. Vailoces was not an ordinary employee. He was a corporate officer—the bank manager—whose position was expressly provided for in the corporate by-laws and who was elected by the Board of Directors. His removal was an intra-corporate dispute, a matter of corporate governance between a stockholder-officer and the corporation itself.
The Court distinguished between two classes of corporate officers: those appointed by the Board of Directors as prescribed by the by-laws, and those appointed by subordinate corporate officers. Disputes involving the former, including their election, appointment, and removal, are intra-corporate controversies governed by the Corporation Code and within the SEC’s jurisdiction. Since Vailoces’s position as manager was created by the by-laws and filled by Board election, his dismissal was an intra-corporate act. The ancillary claims for salary differentials and allowances were deemed inseparable from his corporate office. Consequently, the Labor Arbiter had no jurisdiction to adjudicate the case. The Supreme Court dismissed the complaint without prejudice to Vailoces seeking recourse in the proper forum, the SEC.