G.R. No. L-68544 October 27, 1986 LORENZO C. DY, ZOSIMO DY, SR., ILLI!M I"ERO, RIC!RDO G!RCI!

!ND R#R!L "!N$ O% !Y#NGON, INC., petitioners, vs. N!&ION!L L!"OR REL!&IONS COMMISSION !ND E'EC#&I(E L!"OR !R"I&ER !L"ER&O L. D!LM!CION, !ND C!RLI&O ). (!ILOCES, respondents. Marcelino C. Maximo and Ramon Barrameda for petitioners. Carlito H. Vailoces for private respondent.

N!R(!S!, J.: Petitioners assail in this Court the resolution of the National Labor Relations Commission (NLRC) dismissing their appeal from the decision of the Executive Labor rbiter 1 in Cebu Cit! "hich found private respondent to have been illegall! dismissed b! them. #aid private respondent, Carlito $. %ailoces, "as the manager of the Rural &an' of !ungon (Negros (riental), a ban'ing institution dul! organi)ed under Philippine la"s. $e "as also a director and stoc'holder of the ban'. (n *une +, ,-./, a special stoc'holders0 meeting "as called for the purpose of electing the members of the ban'0s &oard of 1irectors. 2mmediatel! after the election the ne" &oard proceeded to elect the ban'0s executive officers. Pursuant to rticle 2% of the ban'0s b!3la"s,
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providing for the election b! the entire membership of the &oard of the executive officers of the ban', i.e., the president, vice3president, secretar!, cashier and ban' manager, in that board meeting of *une +, ,-./, petitioners Loren)o 1!, 4illiam 2bero and Ricardo 5arcia "ere elected president, vice3president and corporate secretar!, respectivel!. %ailoces "as not re3elected as ban' manager, &ecause of this development, the &oard, on *ul! 6, ,-./, passed Resolution No. 7, series of ,-./, relieving him as ban' manager.

(n ugust /, ,-./, %ailoces filed a complaint for illegal dismissal and damages "ith the 8inistr! of Labor and Emplo!ment against Loren)o 1! and 9osimo 1!, #r. :he complaint "as amended on #eptember 66, ,-./ to include additional respondents34illiam 2bero, Ricardo 5arcia and the Rural &an' of !ungon, and additional causes of action for underpa!ment of salar! and non3pa!ment of living allo"ance. 2n his complaint and position paper, %ailoces asserted that Loren)o 1!, after obtaining control of the ma;orit! stoc' of the ban' b! bu!ing the shares of 8arcelino 8aximo, called an illegal stoc'holders0 meeting and elected a &oard of

1irectors controlled b! him< that after its illegal constitution, said &oard convened on *ul! 6, ,-./ and passed a resolution dismissing him as manager, "ithout giving him the opportunit! to be heard first< that his dismissal "as motivated b! Loren)o 1!0s desire to ta'e over the management and control of the ban', not to mention the fact that he (1!) harbored ill feelings against %ailoces on account of the latter0s filing of a complaint for violation of the corporation code against him and another complaint for compulsor! recognition of natural child "ith damages against 9osimo 1!, #r. 4 2n their ans"er, Loren)o 1!, et al. denied the charge of illegal dismissal. :he! pointed out that %ailoces0 position "as an elective one, and he "as not re3elected as ban' manager because of the &oard0s loss of confidence in him brought about b! his absenteeism and negligence in the performance of his duties< and that the &oard0s action "as ta'en to protect the interest of the ban' and "as =designed as an internal control measure to secure the chec' and balance of authorit! "ithin the organi)ation.= 5 :he Executive Labor rbiter found that %ailoces "as> (a) 2llegall! dismissed, first not because of absenteeism and negligence, but of the resentment of petitioners against %ailoces "hich arose from the latter0s filing of the cases for recognition as natural child against 9osimo 1!, #r. and for violation of the corporation code against Loren)o 1!< and second, because he "as not afforded the due process of la" "hen he "as dismissed during the &oard meeting of *ul! 6, ,-./ the validit! of "hich is seriousl! doubted< (b) Not paid his cost of living allo"ance< and (c) ?nderpaid "ith onl! P7@@ monthl! salar!, and conseAuentl! ordered the individual petitioners B Loren)o 1! and 9osimo 1!3but not the &an' itself, to> (a) Pa! %ailoces ;ointl! and severall!, the sum of P,,,,+.@.C@ representing his salar! differentials, cost of living allo"ances, bac' "ages from date of dismissal up to the date of the decision (November 6-, ,-./), moral and exemplar! damages, and attorne!0s fees< and (b) Reinstate %ailoces to his position as ban' manager, "ith additional bac'"ages from 1ecember ,, ,-./ on the ad;usted salar!

rate of PC6@.@@ r month until he is actuall! reinstated, plus cost3of3 living allo"ance. 6 Loren)o 1!, et al. appealed to the NLRC, assigning error to the decision of the Labor rbiter on various grounds, among them> that %ailoces "as not entitled to notice of the &oard meeting of *ul! 6, ,-./ "hich decreed his relief because he "as no longer a member of the &oard on said date< that he nonetheless had the opportunit! to refute the charges against him and see' a formal investigation because he received a cop! of the minutes of said meeting "hile he "as still the ban' manager (his removal "as to ta'e effect onl! on ugust ,7, ,-./), instead of "hich he simpl! abandoned the "or' he "as supposed to perform up to the effective date of his relief< and that the matter of his relief "as "ithin the ad;udicator! po"ers of the #ecurities and Exchange Commission. 7 :he NLRC, ho"ever b!passed the issues raised and simpl! dismissed the appeal for having been filed late. 2t ruled that> :he record sho"s that a cop! of the decision sent b! registered mail to respondents0 counsel, tt!. Edmund :ubio, "as received on *anuar! ,,, ,-.+ b! a certain tt!. Ramon Elesteria, a la" office partner of tt!. :ubio. ... :his fact is corroborated b! the certification issued b! the Postmaster of 1umaguete Cit!... 8oreover, the same is admitted b! no less than tt!. Ramon Elesteria himself in his affidavit. 2t further appears in the record that on *anuar! /@, ,-.+ a certain tt!. Drancisco 9erna, a ne" la"!er engaged b! the respondents for the appeal, received a cop! of the decision in this case as certified b! *ulia Pepito in an affidavit subscribed before the #enior Labor rbitration #pecialist. :he appeal "as filed onl! on Debruar! ,E, ,-.+. Considering that it "as a la" partner of the respondents0 counsel "ho received on *anuar! ,,, ,-.+ the registered letter, his actual receipt thereof completes the service. ... nd even assuming that such "as not a valid service, since the respondents received another cop! of the decision on *anuar! /@, ,-.+, through their ne"l! engaged counsel, it is therefore our opinion that the appeal herein "as filed out of time, "hether the time is rec'oned from the receipt b! tt!. Elesteria or tt!. 9erna, and, for this reason, "e can not give due course to his appeal. 8 2n this Court, petitioners assail said ruling as an arbitrar! deprivation of their right to appeal through unreasonable adherence to procedural technicalit!. :he! argue that the! should not be bound b! the service of the Labor rbiter0s decision

b! tt!. Elesteria on *anuar! ,,, ,-.+ or b! tt!. 9erna on *anuar! /@, ,-.+, because neither la"!er "as authori)ed to accept service for their counsel tt!. :ubio, and that their ,@ da! period of appeal should be counted from Debruar! ,@, ,-.+ "hen the! actuall! received the cop! of the decision from tt!. 9erna. (n the merits, the! assert that the rbiter0s finding of illegal dismissal "as "ithout evidentiar! basis, that it "as error to impose the obligation to pa! damages upon the individual petitioners, instead of the Rural &an' of !ungon, "hich "as %ailoces0 real emplo!er, and that the damages a"arded are exorbitant and oppressive. 4hile the comment of %ailoces traverses the averments of the petition, that of the #olicitor 5eneral on behalf of public respondents perceives the matter as an intracorporate controvers! of the class described in #ection 7, par. (c), of Presidential 1ecree No. -@63 , namel!> (c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations, partnerships or associations. explicitl! declared to be "ithin the original and exclusive ;urisdiction of the #ecurities and Exchange Commission, and recommends that the Auestioned resolution of the NLRC as "ell as the decision of the Labor rbiter be set aside as null and void. 9 2n truth, the issue of ;urisdiction is decisive and renders unnecessar! consideration of the other Auestions raised. :here is no dispute that the position from "hich private respondent %ailoces claims to have been illegall! dismissed is an elective corporate office. $e himself acAuired that position through election b! the ban'0s &oard of 1irectors at the organi)ational meeting of November ,E, ,-E-. 1+ $e lost that position because the &oard that "as elected
in the special stoc'holders0 meeting of *une +, ,-./ did not re3elect him. nd "hen %ailoces, in his position paper submitted to the Labor rbiter, impugned said stoc'holders0 meeting as illegall! convo'ed and the &oard of 1irectors thereb! elected as illegall! constituted, he made it clear that at the heart of the matter "as the validit! of the directors0 meeting of *une +, ,-./ "hich, b! not re3electing him to the position of manager, in effect caused termination of his services.
11

:he case thus falls sAuarel! "ithin the purvie" of #ection 7, par. (c), No. -@63 ;ust cited. 2n PSBA vs. Leao, 12this Court, confronted "ith a similar controvers!, ruled that the #ecurities and
Exchange Commission, not the NLRC, has ;urisdiction>

2t "as at a &oard regular monthl! meeting held on ugust ,, ,-.,, that three directors "ere elected to fill vacancies. nd, it "as at the regular &oard meeting of #eptember 7, ,-., that all corporate positions "ere declared vacant in order to effect a reorgani)ation,

and at the ensuing election of officers, :an "as not re3elected as Executive %ice3President. &asicall!, therefore, the Auestion is "hether the election of directors on ugust ,, ,-., and the election of officers on #eptember 7, ,-.,, "hich resulted in :an0s failure to be re3elected, "ere validl! held. :his is the crux of the Auestion that :an has raised before the #EC. Even in his position paper before the NLRC, :an alleged that the election on ugust ,, ,-., of the three directors "as in contravention of the P#& &!3La"s providing that an! vacanc! in the &oard shall be filled b! a ma;orit! vote of the stoc'holders at a meeting speciall! called for the purpose. :hus, he concludes, the &oard meeting on #eptember 7, ,-., "as tainted "ith irregularit! on account of the presence of illegall! elected directors "ithout "hom the results could have been different. :an invo'ed the same allegations in his complaint filed "ith the #EC. #o much so, that on 1ecember ,E, ,-.,, the #EC (Case No. 6,+7) rendered a Partial 1ecision annulling the election of the three directors and ordered the convening of a stoc'holders0 meeting for the purpose of electing ne" members of the &oard. :he correctness of d conclusion is not for us to pass upon in this case. :an "as present at said meeting and again sought the issuance of in;unctive relief from the #EC. :he foregoing indubitabl! sho" that, fundamentall!, the controvers! is intra3corporate in nature. 2t revolves around the election of directors, officers or managers of the P#& , the relation bet"een and among its stoc'holders, and bet"een them and the corporation. Private respondent also contends that his =ouster= "as a scheme to intimidate him into selling his shares and to deprive him of his ;ust and fair return on his investment as a stoc'holder received through his salar! and allo"ances as Executive %ice3President. %is3a3vis the NLRC, these matters fall "ithin the ;urisdiction of the #EC. Presidential 1ecree No. -@63 vests in the #ecurities and Exchange Commission> ... (riginal and exclusive ;urisdiction to hear and decide cases involving> a) 1evices or schemes emplo!ed b! or an! acts, of the board of directors, business associates, its officers or partners, amounting to fraud and misrepresentation) "hich ma! be detrimental to the

interest of the public andFor of the stoc'holders, partners, members of associations or organi)ations registered "ith the Commission. b) Controversies arising out of intracorporate or partnership relations, bet"een and among stoc'holders, members or associates< bet"een an! of all of them and the corporation, partnership or association of "hich the! are stoc'holders, members or associates, respectivel!< and bet"een such corporation, partnership or association and the state insofar as it concerns their individual franchise or right to exist as such entit!< c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations, partnership or associations. :his is not a case of dismissal. :he situation is that of a corporate office having been declared vacant, and of :an0s not having been elected thereafter. :he matter of "hom to elect is a prerogative that belongs to the &oard, and involves the exercise of deliberate choice and the facult! of discriminative selection. 5enerall! spea'ing, the relationship of a person to corporation, "hether as officer or as agent or emplo!ee, is not determined b! the nature of the services performed, but b! the incidents of the relationship as the! actuall! exist. Respondent %ailoces0 invocation of estoppel as against petitioners "ith respect to the issue of ;urisdiction is unavailing. 2n the first place, it is not Auite correct to state that petitioners did not raise the point in the lo"er tribunal. lthough rather off handedl!, in their appeal to the NLRC the! called attention to the Labor rbiter0s lac' of ;urisdiction to rule on the validit! of the meeting of *ul! 6, ,-./, but the dismissal of the appeal for alleged tardiness effectivel! precluded consideration of that or an! other Auestion raised in the appeal. 8ore importantl!, estoppel cannot be invo'ed to prevent this Court from ta'ing up the Auestion of ;urisdiction, "hich has been apparent on the face of the pleadings since the start of litigation before the Labor rbiter. 2t is "ell settled that the decision of a tribunal not vested "ith appropriate ;urisdiction is null and void. :hus, in Calimlim vs. Ramirez, 1* this Court held> rule that had been settled b! unAuestioned acceptance and upheld in decisions so numerous to cite is that the ;urisdiction of a court over the sub;ect matter of the action is a matter of la" and ma! not be conferred b! consent or agreement of the parties. :he lac' of ;urisdiction of a court ma! be raised at an! stage of the proceedings,

even on appeal. :his doctrine has been Aualified b! recent pronouncements "hich stemmed principall! from the ruling in the cited case of Si on!"ano#. 2t is to be regretted, ho"ever, that the holding in said case had been applied to situations "hich "ere obviousl! not contemplated therein. :he exceptional circumstances involved in Si on!"ano# "hich ;ustified the departure from the accepted concept of non3"aivabilit! of ob;ection to ;urisdiction has been ignored and, instead a blan'et doctrine had been repeatedl! upheld that rendered the supposed ruling in Si on!"ano# not as the exception, but rather the general rule, virtuall! overthro"ing altogether the time3honored principle that the issue of ;urisdiction is not lost b! "aiver or b! estoppel. xxx xxx xxx 2t is neither fair nor legal to bind a part! b! the result of a suit or proceeding "hich "as ta'en cogni)ance of in a court "hich lac's ;urisdiction over the same irrespective of the attendant circumstances. :he eAuitable defense of estoppel reAuires 'no"ledge or consciousness of the facts upon "hich it is based . :he same thing is true "ith estoppel b! conduct "hich ma! be asserted onl! "hen it is sho"n, among others, that the representation must have been made "ith 'no"ledge of the facts and that the part! to "hom it "as made is ignorant of the truth of the matter (1e Castro vs. 5ineta, 6E #CR C6/). :he filing of an action or suit in a court that does not possess ;urisdiction to entertain the same ma! not be presumed to be deliberate and intended to secure a ruling "hich could later be annulled if not favorable to the part! "ho filed such suit or proceeding in a court that lac's ;urisdiction to ta'e cogni)ance of the same, such act ma! not at once be deemed sufficient basis of estoppel. 2t could have been the result of an honest mista'e or of divergent interpretation of doubtful legal provisions. 2f an! fault is to be imputed to a part! ta'ing such course of action, part of the blame should be placed on the court "hich shall entertain the suit, thereb! lulling the parties into believing that the! pursued their remedies in the correct forum. ?nder the rules, it is the dut! of the court to dismiss an action 0"henever it appears that court has no ;urisdiction over the sub;ect matter.0 (#ection 6, Rule -, Rules of Court) #hould the Court render a ;udgment "ithout ;urisdiction, such ;udgment ma! be impeached or annulled for lac' of ;urisdiction (#ec. /@, Rule ,/6, $ id), "ithin ten (,@) !ears from the finalit! of the same ( rt. ,,++, par. /, Civil Code).

:o be sure, petitioners failed to raise the issue of ;urisdiction in their petition before this Court. &ut this, too, is no hindrance to the Court0s considering said issue. :he failure of the appellees to invo'e ane" the aforementioned solid ground of "ant of ;urisdiction of the lo"er court in this appeal should not prevent this :ribunal to ta'e up that issue as the lac' of ;urisdiction of the lo"er court is apparent upon the face of the record and it is fundamental that a court of ;ustice could onl! validl! act upon a cause of action or sub;ect matter of a case over "hich it has ;urisdiction and said ;urisdiction is one conferred onl! b! la"< and cannot be acAuired through, or "aived b!, an! act or omission of the parties (Lagman vs. C , ++ #CR 6/+ G,-E6H)< hence ma! be considered b! this court motu proprio (5ov0t. vs. merican #uret! Co., ,, Phil. 6@/ G,-@.H)... 14 :hese considerations ma'e inevitable the conclusion that the ;udgment of the Labor rbiter and the resolution of the NLRC are void for lac' of cause of ;urisdiction, and this Court must set matters aright in the exercise of its ;udicial po"er. 2t is of no moment that %ailoces, in his amended complaint, see's other relief "hich "ould seemingl! fan under the ;urisdiction of the Labor rbiter, because a closer loo' at these3underpa!ment of salar! and non3pa!ment of living allo"ance3sho"s that the! are actuall! part of the perAuisites of his elective position, hence, intimatel! lin'ed "ith his relations "ith the corporation. :he Auestion of remuneration, involving as it does, a person "ho is not a mere emplo!ee but a stoc'holder and officer, an integral part, it might be said, of the corporation, is not a simple labor problem but a matter that comes "ithin the area of corporate affairs and management, and is in fact a corporate controvers! in contemplation of the Corporation Code. 4$ERED(RE, the Auestioned decision of the Labor rbiter and the Resolution of the NLRC dismissing petitioners0 appeal from said decision are hereb! set aside because rendered "ithout ;urisdiction. :he amended complaint for illegal dismissal, etc., basis of said decision and Resolution, is ordered dismissed, "ithout pre;udice to private respondent0s see'ing recourse in the appropriate forum. #( (R1ERE1.