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G.R. No. 185567 : October 20, 2010 ARSENIO Z. LOCSIN, Petitioner, v. NISSAN LEASE PHILS. INC. and LUIS BANSON, Respondents.cralaw : OC

THIRDDIVISION
G.R.No.185567:October20,2010
ARSENIOZ.LOCSIN,Petitioner,v.NISSANLEASEPHILS.INC.andLUISBANSON,Respondents.

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DECISION
BRION,J.:
Through a petition for review on certiorari,1 petitioner Arsenio Z. Locsin (Locsin) seeks the reversal of the
Decision2 oftheCourtofAppeals(CA)datedAugust28,2008,3 inArsenioZ.Locsinv.NissanCarLeasePhils.,Inc.
and Luis Banson, docketed as CAG.R. SP No. 103720 and the Resolution dated December 9, 2008,4 denying
LocsinsMotionforReconsideration.TheassailedrulingoftheCAreversedandsetasidetheDecision5 oftheHon.
LaborArbiterThelmaConcepcion(LaborArbiterConcepcion)whichdeniedNissanLeasePhils.Inc.s(NCLPI)andLuis
T.Bansons(Banson)MotiontoDismiss.
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THEFACTUALANTECEDENTS
On January 1, 1992, Locsin was elected Executive Vice President and Treasurer (EVP/Treasurer) of NCLPI. As
EVP/Treasurer, his duties and responsibilities included: (1) the management of the finances of the company (2)
carrying out the directions of the President and/or the Board of Directors regarding financial management and (3)
the preparation of financial reports to advise the officers and directors of the financial condition of NCLPI.6 Locsin
heldthispositionfor13years,havingbeenreelectedeveryyearsince1992,untilJanuary21,2005,whenhewas
nominatedandelectedChairmanofNCLPIsBoardofDirectors.7
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OnAugust5,2005,alittleoverseven(7)monthsafterhiselectionasChairmanoftheBoard,theNCLPIBoardhelda
special meeting at the Manila Polo Club. One of the items of the agenda was the election of a new set of officers.
Unfortunately,LocsinwasneitherreelectedChairmannorreinstatedtohispreviouspositionasEVP/Treasurer.8
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Aggrieved,onJune19,2007,Locsinfiledacomplaintforillegaldismissalwithprayerforreinstatement,paymentof
backwages,damagesandattorneysfeesbeforetheLaborArbiteragainstNCLPIandBanson,whowasthenPresident
ofNCLPI.9
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TheCompulsoryArbitrationProceedingsbeforetheLaborArbiter.
OnJuly11,2007,insteadoffilingtheirpositionpaper,NCLPIandBansonfiledaMotiontoDismiss,10 ontheground
that the Labor Arbiter did not have jurisdiction over the case since the issue of Locsins removal as EVP/Treasurer
involvesanintracorporatedispute.
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OnAugust16,2007,Locsinsubmittedhisoppositiontothemotiontodismiss,maintaininghispositionthatheisan
employeeofNCLPI.
OnMarch10,2008,LaborArbiterConcepcionissuedanOrderdenyingtheMotiontoDismiss,holdingthatheroffice
acquired jurisdiction to arbitrate and/or decide the instant complaint finding extant in the case an employer
employeerelationship.11
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NCLPI,onJune3,2008,elevatedthecasetotheCAthroughaPetitionforCertiorariunderRule65oftheRulesof
Court.12 NCLPI raised the issue on whether the Labor Arbiter committed grave abuse of discretion by denying the
MotiontoDismissandholdingthatherofficehadjurisdictionoverthedispute.
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TheCADecisionLocsinwasacorporateofficertheissueofhisremovalasEVP/Treasurerisanintra
corporatedisputeundertheRTCsjurisdiction.
OnAugust28,2008,13 theCAreversedandsetasidetheLaborArbitersOrderdenyingtheMotiontoDismissand
ruledthatLocsinwasacorporateofficer.
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Citing PD 902A, the CA defined corporate officers as those officers of a corporation who are given that character
eitherbytheCorporationCodeorbythecorporationsbylaws.Inthisregard,theCAheld:
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Scrutinizing the records, We hold that petitioners successfully discharged their onus of establishing that private
respondentwasacorporateofficerwhoheldthepositionofExecutiveVicePresident/Treasurerasprovidedintheby
lawsofpetitionercorporationandthatheheldsuchpositionbyvirtueofelectionbytheBoardofDirectors.
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Thatprivaterespondentisacorporateofficercannotbedisputed.ThepositionofExecutiveVicePresident/Treasurer
isspecificallyincludedintherosterofofficersprovidedforbythe(Amended)ByLawsofpetitionercorporation,his
dutiesandresponsibilities,aswellascompensationassuchofficerarelikewisesetforththerein.14
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Article 280 of the Labor Code, the receipt of salaries by Locsin, SSS deductions on that salary, and the element of
controlintheperformanceofworkdutiesindiciausedbytheLaborArbitertoconcludethatLocsinwasaregular
employeewereheldinapplicablebytheCA.15 TheCAnotedtheLaborArbitersfailuretoaddressthefactthatthe
positionofEVP/Treasurerisspecificallyenumeratedasanofficeinthecorporationsbylaws.16
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Further, the CA pointed out Locsins failure to state any circumstance by which NCLPI engaged his services as a
corporate officer that would make him an employee. The CA found, in this regard, that Locsins assumption and
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G.R. No. 185567 : October 20, 2010 ARSENIO Z. LOCSIN, Petitioner, v. NISSAN LEASE PHILS. INC. and LUIS BANSON, Respondents.cralaw : OC

retentionasEVP/Treasurerwasbasedonhiselectionandsubsequentreelectionsfrom1992until2005.Further,he
performed only those functions that were specifically set forth in the ByLaws or required of him by the Board of
Directors.17
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WithrespecttothesuitLocsinfiledwiththeLaborArbiter,theCAheldthat:

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Privaterespondent,inbelatedlyfilingthissuitbeforetheLaborArbiter,questionedthelegalityofhisdismissalbut
inessence,heraisestheissueofwhetherornottheBoardofDirectorshadtheauthoritytoremovehim
fromthecorporateofficetowhichhewaselectedpursuanttotheByLawsofthepetitionercorporation.
Indeed, had private respondent been an ordinary employee, an election conducted by the Board of Directors would
not have been necessary to remove him as Executive VicePresident/Treasurer. However, in an obvious attempt to
preclude the application of settled jurisprudence that corporate officers whose position is provided in the bylaws,
theirelection,removalordismissalissubjecttoSection5ofP.D.No.902A(nowR.A.No.8799),privaterespondent
would even claim in his Position Paper, that since his responsibilities were akin to that of the companys Executive
VicePresident/Treasurer, he was hired under the pretext that he was being elected into said post.18 [Emphasis
supplied.]
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Asaconsequence,theCAconcludedthatLocsindoesnothaveanyrecoursewiththeLaborArbiterortheNLRCsince
the removal of a corporate officer, whether elected or appointed, is an intracorporate controversy over which the
NLRChasnojurisdiction.19 Instead,accordingtotheCA,Locsinscomplaintforillegaldismissalshouldhavebeen
filed in the Regional Trial Court (RTC), pursuant to Rule 6 of the Interim Rules of Procedure Governing Intra
CorporateControversies.20
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Finally, the CA addressed Locsins invocation of Article 4 of the Labor Code. Dismissing the application of the
provision,theCAcitedDeanCesarVillanuevaoftheAteneoSchoolofLaw,asfollows:
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x x x the noncoverage of corporate officers from the security of tenure clause under the
Constitution is now wellestablished principle by numerous decisions upholding such doctrine
undertheaegisofthe1987ConstitutioninthefaceofcontemporarydecisionsofthesameSupreme
Courtlikewiseconfirmingthatsecurityoftenurecoversallemployeesorworkersincludingmanagerial
employees.21
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THEPETITIONERSARGUMENTS
FailingtoobtainareconsiderationoftheCAsdecision,LocsinfiledthepresentpetitiononJanuary28,2009,raising
thefollowingproceduralandsubstantiveissues:
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(1)WhethertheCAhasoriginaljurisdictiontoreviewdecisionoftheLaborArbiterunderRule65?
(2)WhetherheisaregularemployeeofNCLPIunderthedefinitionofArticle280oftheLaborCode?
and
(3) Whether Locsins position as Executive VicePresident/Treasurer makes him a corporate officer
therebyexcludinghimfromthecoverageoftheLaborCode?
Procedurally, Locsin essentially submits that NCLPI wrongfully filed a petition for certiorari before the
CA,asthelattersremedyistoproceedwiththearbitration,andtoappealtotheNLRCaftertheLabor
Arbitershallhaveruledonthemeritsofthecase.Locsincites,inthisregard,RuleV,Section6ofthe
RevisedRulesoftheNationalLaborRelationsCommission(NLRCRules),whichprovidesthatadenial
ofamotiontodismissbytheLaborArbiterisnotsubjecttoanappeal.Locsinalsoarguesthatevenif
the Labor Arbiter committed grave abuse of discretion in denying the NCLPI motion, a special civil
actionforcertiorari,filedwiththeCAwasnottheappropriateremedy,sincethiswasabreachofthe
doctrineofexhaustionofadministrativeremedies.
Substantively,LocsinsubmitsthatheisaregularemployeeofNCLPIsinceashearguedbeforethe
LaborArbiterandtheCAhisrelationshipwiththecompanymeetsthefourfoldtest.
First,LocsincontendsthatNCLPIhadthepowertoengagehisservicesasEVP/Treasurer.Second,he
received regular wages from NCLPI, from which his SSS and Philhealth contributions, as well as his
withholdingtaxeswerededucted.Third,NCLPIhadthepowertoterminatehisemployment.22 Lastly,
NissanhadcontroloverthemanneroftheperformanceofhisfunctionsasEVP/Treasurer,asshownby
the13yearsoffaithfulexecutionofhisjob,whichhecarriedoutinaccordancewiththestandardsand
expectations set by NCLPI.23 Further, Locsin maintains that even after his election as Chairman, he
essentially performed the functions of EVP/Treasurer handling the financial and administrative
operationsoftheCorporationthusmakinghimaregularemployee.24
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Undertheseclaimedfacts,LocsinconcludesthattheLaborArbiterandtheNLRCnottheRTC(asNCLPIposits)
hasjurisdictiontodecidethecontroversy.Parenthetically,Locsinclarifiesthathedoesnotdisputethevalidityofhis
election as Chairman of the Board on January 1, 2005. Instead, he theorizes that he never lost his position as
EVP/Treasurer having continuously performed the functions appurtenant thereto.25 Thus, he questions his
unceremoniousremovalasEVP/TreasurerduringtheAugust5,2005specialBoardmeeting.
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THERESPONDENTSARGUMENTS
ItitsApril17,2009Comment,26 Nissanpraysforthedenialofthepetitionforlackofmerit.Nissansubmitsthatthe
CA correctly ruled that the Labor Arbiter does not have jurisdiction over Locsins complaint for illegal dismissal. In
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support,NissanmaintainsthatLocsinisacorporateofficerandnotanemployee.Inaddressingtheproceduraldefect
Locsin raised, Nissan brushes the issue aside, stating that (1) this issue was belatedly raised in the Motion for
Reconsideration, and that (2) in any case, Rule VI, Section 2(1) of the NLRC does not apply since onlyappealable
decisions,resolutionsandordersarecoveredundertherule.
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THECOURTSRULING
Weresolvetodenythepetitionforlackofmerit.
Attheoutset,westressthattherearetwo(2)importantconsiderationsinthefinaldeterminationofthiscase.Onthe
onehand,Locsinraisesaproceduralissuethat,ifprovencorrect,willrequiretheCourttodismisstheinstantpetition
for using an improper remedy. On the other hand, there is the substantive issue that will be disregarded if a strict
implementationoftherulesofprocedureisupheld.
Prefatorily, we agree with Locsins submission that the NCLPI incorrectly elevated the Labor Arbiters denial of the
MotiontoDismisstotheCA.Locsiniscorrectinpositingthatthedenialofamotiontodismissisunappealable.Asa
general rule, an aggrieved partys proper recourse to the denial is to file his position paper, interpose the grounds
relieduponinthemotiontodismissbeforethelaborarbiter,andactivelyparticipateintheproceedings.Thereafter,
thelaborarbitersdecisioncanbeappealedtotheNLRC,nottotheCA.
Asarule,westrictlyadheretotherulesofprocedureanddoeverythingwecan,tothepointofpenalizingviolators,
toencouragerespectfortheserules.Wetakeexceptiontothisgeneralrule,however,whenastrictimplementation
oftheseruleswouldcausesubstantialinjusticetotheparties.
Weseeitappropriatetoapplytheexceptiontothiscaseforthereasonsdiscussedbelowhence,wearecompelledto
gobeyondprocedureandruleonthemeritsofthecase.Inthecontextofthiscase,weseesufficientjustificationto
rule on the employeremployee relationship issue raised by NCLPI, even though the Labor Arbiters interlocutory
orderwasincorrectlybroughttotheCAunderRule65.
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The NLRC Rules are clear: the denial by the labor arbiter of the motion to dismiss is not appealable
becausethedenialismerelyaninterlocutoryorder.
InMetroDrugv.MetroDrugEmployees,27 we definitively stated that the denial of a motion to dismiss by a labor
arbiterisnotimmediatelyappealable.28
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We similarly ruled in Texon Manufacturing v. Millena,29 in Sime Darby Employees Association v. National Labor
RelationsCommission30 andinWestmontPharmaceuticalsv.Samaniego.31 InTexon,wespecificallysaid:
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TheOrderoftheLaborArbiterdenyingpetitionersmotiontodismissisinterlocutory.Itiswellsettledthatadenial
of a motion to dismiss a complaint is an interlocutory orderandhence, cannot be appealed, until a final
judgmentonthemeritsofthecaseisrendered.[Emphasissupplied.] 32
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andindicatedtheappropriaterecourseinMetroDrug,asfollows:33

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xx x TheNLRC ruleproscribing appeal from a denialof a motionto dismiss is similartothegeneral


ruleobservedincivilprocedurethatanorderdenyingamotiontodismissisinterlocutoryand,hence,
notappealableuntilfinaljudgmentororderisrendere.Theremedyoftheaggrievedpartyincaseof
denialofthemotiontodismissistofileananswerandinterpose,asadefenseordefenses,the
ground or grounds relied upon in the motion to dismiss, proceed to trial and, in case of
adverse judgment, to elevate the entire case by appeal in due course[Mendoza v. Court of
Appeals,G.R.No.81909,September5,1991,201SCRA343 .Inordertoavailoftheextraordinary
writ of certiorari, it is incumbent upon petitioner to establish that the denial of the motion to dismiss
wastaintedwithgraveabuseofdiscretion.[MacawiwiliGoldMiningandDevelopmentCo.,Inc.v.Court
ofAppeals,G.R.No.115104,October12,1998,297SCRA602
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InsocitingFeriaandNoche,theCourtwasreferringtoSec.1(b),Rule41oftheRulesofCourt,whichspecifically
enumerates interlocutory orders as one of the court actions that cannot be appealed. In the same rule, as
amendedbyA.M.No.07712SC,theaggrievedpartyisallowedtofileanappropriatespecialcivilactionunderRule
65. The latter rule, however, also contains limitations for its application, clearly outlined in its Section 1 which
provides:
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Section1.Petitionforcertiorari.
Whenanytribunal,boardorofficerexercisingjudicialorquasijudicialfunctionshasactedwithoutorinexcessofits
or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, andthere is no
appeal, or any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved
therebymayfileaverifiedpetitioninthepropercourt,allegingthefactswithcertaintyandprayingthat
judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, and
grantingsuchincidentalreliefsaslawandjusticemayrequire.
Inthelaborlawsetting,aplain,speedyandadequateremedyisstillopentotheaggrievedpartywhenalaborarbiter
denies a motion to dismiss. This is Article 223 of Presidential Decree No. 442, as amended (Labor Code),34 which
states:
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ART.223.APPEAL
Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the
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Commission by any or both parties within ten (10) calendar days from receipt of such
decisions, awards, or orders. Such appeal may be entertained only on any of the following
grounds:
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(a)IfthereisprimafacieevidenceofabuseofdiscretiononthepartoftheLaborArbiterxx
x[Emphasissupplied.]
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PursuanttothisArticle,weheldinMetroDrug(citingAirServicesCooperative,etal.v.CourtofAppeals35 )thatthe
NLRC is clothed with sufficient authority to correct any claimed erroneous assumption of jurisdiction by labor
arbiters:
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In Air Services Cooperative, et al. v. The Court of Appeals, et al., a case where the jurisdiction of the labor arbiter
wasputinissueandwasassailedthroughapetitionforcertiorari,prohibitionandannulmentofjudgmentbeforea
regionaltrialcourt,thisCourthadtheopportunitytoexpoundonthenatureofappealasembodiedinArticle223of
theLaborCode,thus:
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xxxAlso,whilethetitleoftheArticle223seemstoprovideonlyfortheremedyofappealasthatterm
isunderstoodinprocedurallawandasdistinguishedfromtheofficeofcertiorari,nonetheless,acloser
readingthereofrevealsthatitisnotaslimitedasunderstoodbythepetitionersxxx.
Abuse of discretion is admittedly within the ambit of certiorari and its grant of review thereof to the
NLRCindicatesthelawmakersintentiontobroadenthemeaningofappealasthattermisusedintheCode.Forthis
reason, petitioners cannot argue now that the NLRC is devoid of any corrective power to rectify a
supposederroneousassumptionofjurisdictionbytheLaborArbiterxxx.[AirServicesCooperative,etal.
v.TheCourtofAppeals,etal.G.R.No.118693,23July1998,293SCRA101
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SincethelegislaturehadclothedtheNLRCwiththeappellateauthoritytocorrectaclaimederroneousassumptionof
jurisdiction on the part of the labor arbiter a case of grave abuse of discretion the remedy availed of by
petitioner in this case is patently erroneous as recourse in this case is lodged, under the law, with the
NLRC.
InMetroDrug,asinthepresentcase,thedefectimputedthroughtheNLCPIMotiontoDismissisthelaborarbiters
lack of jurisdiction since Locsin is alleged to be a corporate officer, not an employee. Parallelisms between the two
casesisundeniable,astheyaresimilaronthefollowingpoints:(1)inMetroDrug,asinthiscase,theLaborArbiter
issuedanOrderdenyingtheMotiontoDismissbyoneoftheparties(2)thebasisoftheMotiontoDismissisalsothe
allegedlackofjurisdictionbytheLaborArbitertosettlethedisputeand(3)dissatisfiedwiththeOrderoftheLabor
Arbiter,theaggrievedpartylikewiseelevatedthecasetotheCAviaRule65.
The similarities end there, however. Unlike in the present case, the CA denied the petition for certiorari and the
subsequent Motion for Reconsideration in Metro Drug the CA correctly found that the proper appellate mechanism
wasanappealtotheNLRCandnotapetitionforcertiorariunderRule65.Inthepresentcase,theCAtookadifferent
positiondespiteourclearrulinginMetroDrug,andallowed,notonlytheuseofRule65,butalsoruledonthemerits.
From this perspective, the CA clearly erred in the application of the procedural rules by disregarding the relevant
provisions of the NLRC Rules, as well as the requirements for a petition for certiorari under the Rules of Court. To
reiterate,theproperactionofanaggrievedpartyfacedwiththelaborarbitersdenialofhismotiontodismissisto
submithispositionpaperandraisethereinthesupposedlackofjurisdiction.Theaggrievedpartycannotimmediately
appeal the denial since it is an interlocutory order the appropriate remedial recourse is the procedure outlined in
Article223oftheLaborCode,notapetitionforcertiorariunderRule65.
A strict implementation of the NLRC Rules and the Rules of Court would cause injustice to the parties
becausetheLaborArbiterclearlyhasnojurisdictionoverthepresentintracorporatedispute.
OurrulinginMejillanov.Lucillo36 standsforthepropositionthatweshouldstrictlyapplytherulesofprocedure.We
said:
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Time and again, we have ruled that procedural rules do not exist for the convenience of the
litigants. Rules of Procedure exist for a purpose, and to disregard such rules in the guise of liberal
construction would be to defeat such purpose. Procedural rules were established primarily to
provideordertoandenhancetheefficiencyofourjudicialsystem.[Emphasissupplied.]
AnexceptiontothisruleisourrulinginLazarov.CourtofAppeals37 whereweheldthatthestrictenforcementof
therulesofproceduremayberelaxedinexceptionallymeritoriouscases:
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x x x Procedural rules are not to be belittled or dismissed simply because their non
observancemayhaveresultedinprejudicetoaparty'ssubstantiverights.Likeallrules,they
are required to be followed except only for the most persuasive of reasons when they may be
relaxedtorelievealitigantofaninjusticenotcommensuratewiththedegreeofhisthoughtlessnessin
not complying with the procedure prescribed. The Court reiterates that rules of procedure, especially
those prescribing the time within which certain acts must be done, "have oft been held as absolutely
indispensable to the prevention of needless delays and to the orderly and speedy discharge of
business.xxxThereasonforrulesofthisnatureisbecausethedispatchofbusinessbycourtswould
be impossible, and intolerable delays would result, without rules governing practice x x x. Such rules
areanecessaryincidenttotheproper,efficientandorderlydischargeofjudicialfunctions."Indeed,in
no uncertain terms, the Court held that the said rules may be relaxed only in exceptionally
meritoriouscases.[Emphasissupplied.]
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Whetheracaseinvolvesanexceptionallymeritoriouscircumstancecanbetestedundertheguidelinesweestablished
inSanchezv.CourtofAppeals,38 asfollows:
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Asidefrommatters of life, liberty, honor or propertywhich would warrant the suspension of the
Rules of the most mandatory character and an examination and review by the appellate court of the
lower courts findings of fact, the other elements that should be considered are the following: (a)the
existenceofspecialorcompellingcircumstances,(b)themeritsofthecase,(c)acausenot
entirelyattributabletothefaultornegligenceofthepartyfavoredbythesuspensionofthe
rules,(d)alackofanyshowingthatthereviewsoughtismerelyfrivolousanddilatory,and
(e)theotherpartywillnotbeunjustlyprejudicedthereby.[Emphasissupplied.] ]
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Underthesestandards,weholdthatexceptionalcircumstancesexistinthepresentcasetomerittherelaxationofthe
applicablerulesofprocedure.
Due to existing exceptional circumstances, the ruling on the merits that Locsin is an officer and not an
employeeofNissanmusttakeprecedenceoverproceduralconsiderations.
We arrived at the conclusion that we should go beyond the procedural rules and immediately take a look at the
intrinsicmeritsofthecasebasedonseveralconsiderations.
First, the parties have sufficiently ventilated their positions on the disputed employeremployee relationship and
have,infact,submittedthematterfortheCAsconsideration.
Second,theCAcorrectlyruledthatnoemployeremployeerelationshipexistsbetweenLocsinandNissan.
LocsinwasundeniablyChairmanandPresident,andwaselectedtothesepositionsbytheNissanboardpursuantto
itsBylaws.39 Assuch,hewasacorporateofficer,notanemployee.TheCAreachedthisconclusionbyrelyingon
the submitted facts and on Presidential Decree 902A, which defines corporate officers as those officers of a
corporationwhoaregiventhatcharactereitherbytheCorporationCodeorbythecorporationsbylaws.Likewise,
Section25ofBatasPambansaBlg.69,ortheCorporationCodeofthePhilippines(CorporationCode)providesthat
corporateofficersarethepresident,secretary,treasurerandsuchotherofficersasmaybeprovidedforin
thebylaws.
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Third.EvenasExecutiveVicePresident/Treasurer,Locsinalreadyactedasacorporateofficerbecausethepositionof
Executive VicePresident/Treasurer is provided for in Nissans ByLaws. Article IV, Section 4 of these ByLaws
specificallyprovidesforthisposition,asfollows:
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ARTICLEIV
Officers
Section 1. Election and Appointment The Board of Directors at their first meeting, annually
thereafter, shall elect as officers of the Corporation a Chairman of the Board, a President, an
Executive VicePresident/Treasurer, a VicePresident/General Manager and a Corporate
Secretary.TheotherSeniorOperatingOfficersoftheCorporationshallbeappointedbythe
BoardupontherecommendationofthePresident.
xxxx
Section4.ExecutiveVicePresident/TreasurerTheExecutiveVicePresident/Treasurershallhavesuch
powersandperformsuchdutiesasareprescribedbytheseByLaws,andasmayberequiredofhimby
theBoardofDirectors.AstheconcurrentTreasureroftheCorporation,heshallhavethechargeofthe
funds, securities, receipts, and disbursements of the Corporation. He shall deposit, or cause to be
deposited,thecreditoftheCorporationinsuchbanksortrustcompanies,orwithsuchbanksofother
depositories, as the Board of Directors may from time to time designate. He shall tender to the
President or to the Board of Directors whenever required an account of the financial condition of the
corporationandofallhistransactionsasTreasurer.Assoonaspracticableafterthecloseofeachfiscal
year,heshallmakeandsubmittotheBoardofDirectorsalikereportofsuchfiscalyear.Heshallkeep
correctbooksofaccountofallthebusinessandtransactionsoftheCorporation.
InOkolv.SlimmersWorldInternational,40 citingTabangv.NationalLaborRelationsCommission,41 weheldthat
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xxxanofficeiscreatedbythecharterofthecorporationandtheofficeriselectedbythe
directorsorstockholders.Ontheotherhand,anemployeeusuallyoccupiesnoofficeand
generally is employed not by action of the directors or stockholders but by the managing
officer of the corporation who also determines the compensation to be paid to such
employee.[Emphasissupplied.]
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Inthiscase,LocsinwaselectedbytheNCLPIBoard,inaccordancewiththeAmendedByLawsofthecorporation.
ThefollowingfactualdeterminationbytheCAiselucidating:
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More important, private respondent failed to state any such circumstance by which the petitioner corporation
engaged his services as corporate officer that would make him an employee. In the first place, the Vice
President/Treasurer was elected on an annual basis as provided in the ByLaws, and no duties and responsibilities
werestatedbyprivaterespondentwhichhedischargedwhileoccupyingsaidpositionotherthanthosespecificallyset
forth in the ByLaws or required of him by the Board of Directors. The unrebutted fact remains that private
respondentheldthepositionofExecutiveVicePresident/Treasurerofpetitionercorporation,apositionprovidedforin
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the latters bylaws, by virtue of election by the Board of Directors, and has functioned as such Executive Vice
President/Treasurer pursuant to the provisions of the said ByLaws. Private respondent knew very well that he was
simply not reelected to the said position during the August 5, 2005 board meeting, but he had objected to the
election of a new set of officers held at the time upon the advice of his lawyer that he cannot be terminated or
replacedasExecutiveVicePresident/Treasurerashehadattainedtenurialsecurity.42
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We fully agree with this factual determination which we find to be sufficiently supported by evidence. We likewise
rule, based on law and established jurisprudence, thatLocsin, at the time of his severance from NCLPI, was the
latterscorporateofficer.
a.TheQuestionofJurisdiction
GivenLocsinsstatusasacorporateofficer,theRTC,nottheLaborArbiterortheNLRC,hasjurisdictiontohearthe
legalityoftheterminationofhisrelationshipwithNissan.AswealsoheldinOkol,acorporateofficersdismissalfrom
serviceisanintracorporatedispute:
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Inanumberofcases[Estradav.NationalLaborRelationsCommission,G.R.No.106722,4October1996,262SCRA
709 Lozon v. National Labor Relations Commission, 310 Phil. 1 (1995) Espino v. National Labor Relations
Commission, 310 Phil. 61 (1995) Fortune Cement Corporation v. National Labor Relations Commission, G.R. No.
79762, 24 January 1991, 193 SCRA 258 , we have held that a corporate officers dismissal is always a
corporate act, or an intracorporate controversy which arises between a stockholder and a
corporation.43 [Emphasissupplied.]
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sothattheRTCshouldexercisejurisdictionbasedonthefollowinglegalreasoning:

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Prior to its amendment, Section 5(c) of Presidential Decree No. 902A (PD 902A) provided that intracorporate
disputesfallwithinthejurisdictionoftheSecuritiesandExchangeCommission(SEC):
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Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange
Commission over corporations, partnerships and other forms of associations registered with it as
expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to
hearanddecidecasesinvolving:
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xxxx
c) Controversies in the election or appointments of directors, trustees, officers or managers of such
corporations,partnershipsorassociations.
Subsection5.2,Section5ofRepublicActNo.8799,whichtookeffecton8August2000,transferredto
regionaltrialcourtstheSECsjurisdictionoverallcaseslistedinSection5ofPD902A:
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5.2. The Commissions jurisdiction over all cases enumerated under Section 5 of Presidential Decree
No.902AisherebytransferredtotheCourtsofgeneraljurisdictionortheappropriateRegionalTrial
Court.[Emphasissupplied.]
chanroblesvirtuallawlibrary

b.PrecedenceofSubstantiveMerits
PrimacyofElementofJurisdiction
Based on the above jurisdictional considerations, we would be forced to remand the case to the Labor Arbiter for
furtherproceedingsifweweretodismissthepetitionoutrightduetothewrongfuluseofRule65.44 Wecannotclose
our eyes, however, to the factual and legal reality, established by evidence already on record, that Locsin is a
corporateofficerwhoseterminationofrelationshipisoutsidealaborarbitersjurisdictiontoruleupon.
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Under these circumstances, we have to give precedence to the merits of the case, and primacy to the element of
jurisdiction.Jurisdictionisthepowertohearandruleonacaseandisthethresholdelementthatmustexistbefore
anyquasijudicialofficercanact.Inthecontextofthepresentcase,theLaborArbiterdoesnothavejurisdictionover
theterminationdisputeLocsinbrought,andshouldnotbeallowedtocontinuetoactonthecaseaftertheabsenceof
jurisdiction has become obvious, based on the records and the law. In more practical terms, a contrary ruling will
only cause substantial delay and inconvenience as well as unnecessary expenses, to the point of injustice, to the
parties.Thisconclusion,ofcourse,doesnotgointothemeritsofterminationofrelationshipandiswithoutprejudice
tothefilingofanintracorporatedisputeonthispointbeforetheappropriateRTC.
WHEREFORE,weDISMISSthepetitionerspetitionforreviewoncertiorari,andAFFIRMtheDecisionoftheCourtof
Appeals,inCAG.R.SPNo.103720,promulgatedonAugust28,2008,aswellasitsResolutionofDecember9,2008,
whichreversedandsetasidetheMarch10,2008OrderofLaborArbiterConcepcioninNLRCNCRCaseNo.0006
0616507.ThisDecisioniswithoutprejudicetopetitionerLocsinsavailablerecourseforreliefthroughtheappropriate
remedyintheproperforum.
Nopronouncementastocosts.
SOORDERED.
ARTUROD.BRION***
AssociateJustice
WECONCUR:
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ANTONIOT.CARPIO*
AssociateJustice
ANTONIOEDUARDOB.NACHURA**
AssociateJustice

JOSECATRALMENDOZA****
AssociateJustice

MARIALOURDESP.A.SERENO
AssociateJustice
ATTESTATION
IattestthattheconclusionsintheaboveDecisionhadbeenreachedinconsultationbeforethecasewasassignedto
thewriteroftheopinionoftheCourtsDivision.
ARTUROD.BRION
AssociateJustice
ActingChairperson
CERTIFICATION
PursuanttoSection13,ArticleVIIIoftheConstitution,andtheDivisionActingChairpersonsAttestation,itishereby
certifiedthattheconclusionsintheaboveDecisionhadbeenreachedinconsultationbeforethecasewasassignedto
thewriteroftheopinionoftheCourtsDivision.
RENATOC.CORONA
ChiefJustice

Endnotes:

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*DesignatedAdditionalMemberoftheThirdDivision,perRaffledatedOctober20,2010.
**DesignatedAdditionalMemberoftheThirdDivision,perSpecialOrderNo.907datedOctober13,2010.
***DesignatedActingChairpersonoftheThirdDivision,perSpecialOrderNo.906datedOctober13,2010.
****DesignatedAdditionalMemberoftheThirdDivision,perSpecialOrderNo.911datedOctober15,2010.
1 FiledunderRule45oftheRulesofCourt,rollop.9.
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2 PennedbyAssociateJusticeMartinS.Villarama,Jr.(nowamemberofthisCourt),withAssociateJusticesNoel
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G.TijamandArturoG.Tayagconcurring,id.at6073.
3 Id.at60.
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4 Id.at75.
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5 DatedMarch10,2008,id.at268.
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6 Id.at227.
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7 Id.at212.
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8 Id.at215216.
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9 Id.at100101.
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10 Id.at105117.
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11 Id.at269.
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12 Id.at242264.
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13 Id.at60.
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14 Id.at68.
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15 Id.at69.
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16 Ibid.
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17 Id.at70.
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18 Id.at70.
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19 Id. at 71, citing Paguio v. National Labor Relations Commission, G.R. No. 116662, February 1, 1996, 253
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SCRA166.

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20 A.M.No.01204SC.
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21 CesarL.Villanueva,PhilippineCorporateLaw358(2001).
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22 Rollo,p.31.
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23 Id.at32.
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24 Ibid.
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25 Id.at42.
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26 Id.at461493.
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27 G.R.No.142666,September26,2005,471SCRA45.
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28 Id.at56.
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29 G.R.No.141380,April14,2004,427SCRA377.
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30 G.R.No.148021,December6,2006,510Phil.204.
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31 G.R.Nos.14665354andG.R.Nos.14740708,February20,2006,482SCRA611.
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32 Supranote29,at383.
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33 Supranote27,at56.
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34 CitedinMetroDrug,id.
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35 G.R.No.118693,July23,1998,293SCRA101.
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36 G.R.No.154717,June19,2009,590SCRA1,9.
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37 G.R.No.137761,April6,2000,330SCRA208,214.
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38 G.R.No.152766,June20,2003,404SCRA540,546.
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39 Rollo,p.212.
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40 G.R.No.160146,December11,2009,608SCRA97.
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41 G.R.No.121143,January21,1997,266SCRA462,467.
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42 Rollo,p.70.
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43 Supranote40.
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44 Supranote27,at59.
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