PHILIPPINE ASSOCIATION OF STOCK TRANSFER AND REGISTRY AGENCIES, INC.

, vs CA

Facts:

Petitioner Philippine Association of Stock Transfer and Registry Agencies, Inc. is an association of stock
transfer agents principally engaged in the registration of stock transfers in the stock-and-transfer book of
corporations.

On May 10, 1996, petitioner’s Board of Directors unanimously approved a resolution allowing its
members to increase the transfer processing fee they charge their clients from ₱45 per certificate to ₱75
per certificate, effective July 1, 1996; and eventually to ₱100 per certificate, effective October 1, 1996.
The resolution also authorized the imposition of a processing fee for the cancellation of stock certificates
at ₱20 per certificate effective July 1, 1996. According to petitioner, the rates had to be increased since it
had been over five years since the old rates were fixed and an increase of its fees was needed to sustain
the financial viability of the association and upgrade facilities and services.

After a dialogue with petitioner, public respondent Securities and Exchange Commission (SEC) allowed
petitioner to impose the ₱75 per certificate transfer fee and ₱20 per certificate cancellation fee effective
July 1, 1996. But, approval of the additional increase of the transfer fees to ₱100 per certificate effective
October 1, 1996, was withheld until after a public hearing. The SEC issued a letter-authorization to this
effect on June 20, 1996.

Thereafter, on June 24, 1996, the Philippine Association of Securities Brokers and Dealers, Inc.
registered its objection to the measure advanced by petitioner and requested the SEC to defer its
implementation. On June 27, 1996, the SEC advised petitioner to hold in abeyance the implementation of
the increases until the matter was cleared with all the parties concerned. The SEC stated that it was
reconsidering its earlier approval in light of the opposition and required petitioner to file comment.
Petitioner nonetheless proceeded with the implementation of the increased fees.

The SEC wrote petitioner, reiterating the directive of June 27, 1996. On July 2, 1996, following a
complaint from the Philippine Stock Exchange, the SEC again sent petitioner a second letter strongly
urging petitioner to desist from implementing the new rates in the interest of all participants in the security
market.

Petitioner replied that it had no intention of defying the orders but stated that it could no longer hold in
abeyance the implementation of the new fees because its members had already put in place the
procedures necessary for their implementation. Petitioner also argued that the imposition of the
processing fee was a management prerogative, which was beyond the SEC’s authority to regulate absent
an express rule or regulation.

On July 8, 1996, the SEC issued Order No. 104, series of 1996, enjoining petitioner from imposing the
new fees pursuant to the powers vested in the Commission under Sec. 40 of the Revised Securities Act
PASTRA.

Aggrieved, petitioner went to the Court of Appeals on certiorari contending that the SEC acted with grave
abuse of discretion or lack or excess of jurisdiction in issuing the above orders

The appellate court dismissed the petition. It ruled that the power to regulate petitioner’s fees was
included in the general power given to the SEC under Section 40 of The Revised Securities Act to
regulate, supervise, examine, suspend or otherwise discontinue, the operation of securities-related
organizations like petitioner. While this case was pending, The Revised Securities Act by authority of
which the assailed orders were issued was repealed by Republic Act No. 8799 or The Securities
Regulation Code, which became effective on August 8, 2000.
Issue: WON SEC can restrict petitioner’s members from increasing the transfer and processing fees
they charge their clients because there is no specific law, rule or regulation authorizing it.

Held:

We find the instant petition bereft of merit. The Court notes that before its repeal, Section 47 of The
Revised Securities Act clearly gave the SEC the power to enjoin the acts or practices of securities-related
organizations even without first conducting a hearing if, upon proper investigation or verification, the SEC
is of the opinion that there exists the possibility that the act or practice may cause grave or irreparable
injury to the investing public, if left unrestrained.

Said section enforces the power of general supervision of the SEC under Section 40 of the then Revised
Securities Act.

As a securities-related organization under the jurisdiction and supervision of the SEC by virtue of Section
40 of The Revised Securities Act and Section 3 of Presidential Decree No. 902-A, petitioner was under
the obligation to comply with the July 8, 1996 Order. Defiance of the order was subject to administrative
sanctions provided in Section 46 of The Revised Securities Act.

Petitioner failed to show that the SEC, which undoubtedly possessed the necessary expertise in matters
relating to the regulation of the securities market, gravely abused its discretion in finding that there was a
possibility that the increase in fees and imposition of cancellation fees will cause grave or irreparable
injury or prejudice to the investing public. Indeed, petitioner did not advance any argument to counter the
SEC’s finding. Thus, there appears to be no substantial reason to nullify the July 8, 1996 Order. This is
true, especially considering that, as pointed out by the OSG, petitioner’s fee increases have far-reaching
effects on the capital market. Charging exorbitant processing fees could discourage many small
prospective investors and curtail the infusion of money into the capital market and hamper its growth.

ONG YONG vs. DAVID S. TIU

Facts:

In 1994, the construction of the Masagana Citimall in Pasay City was threatened with stoppage and
incompletion when its owner, the First Landlink Asia Development Corporation (FLADC), which was
owned by the Tius, encountered dire financial difficulties. It was heavily indebted to the Philippine
National Bank (PNB) for P190 million. To stave off foreclosure of the mortgage on the two lots where the
mall was being built, the Tius invited Ong Yong, Juanita Tan Ong, Wilson T. Ong, Anna L. Ong, William T.
Ong and Julia Ong Alonzo (the Ongs), to invest in FLADC. Under the Pre-Subscription Agreement they
entered into, the Ongs and the Tius agreed to maintain equal shareholdings in FLADC: the Ongs were to
subscribe to 1,000,000 shares at a par value of P100.00 each while the Tius were to subscribe to an
additional 549,800 shares at P100.00 each in addition to their already existing subscription of 450,200
shares. Furthermore, they agreed that the Tius were entitled to nominate the Vice-President and the
Treasurer plus five directors while the Ongs were entitled to nominate the President, the Secretary and
six directors (including the chairman) to the board of directors of FLADC. Moreover, the Ongs were given
the right to manage and operate the mall.

Accordingly, the Ongs paid P100 million in cash for their subscription to 1,000,000 shares of stock while
the Tius committed to contribute to FLADC a four-storey building and two parcels of land respectively
valued at P20 million (for 200,000 shares), P30 million (for 300,000 shares) and P49.8 million (for 49,800
shares) to cover their additional 549,800 stock subscription therein. The Ongs paid in another P70
million to FLADC and P20 million to the Tius over and above their P100 million investment, the total sum
of which (P190 million) was used to settle the P190 million mortgage indebtedness of FLADC to PNB.
The business harmony between the Ongs and the Tius in FLADC, however, was shortlived because the
Tius, rescinded the Pre-Subscription Agreement. The Tius accused the Ongs of (1) refusing to credit to
them the FLADC shares covering their real property contributions; (2) preventing David S. Tiu and Cely Y.
Tiu from assuming the positions of and performing their duties as Vice-President and Treasurer,
respectively, and (3) refusing to give them the office spaces agreed upon. Hence, they felt they were
justified in setting aside their Pre-Subscription Agreement with the Ongs who allegedly refused to comply
with their undertakings.

The Ongs said that David S. Tiu and Cely Y. Tiu had in fact assumed the positions of Vice-President and
Treasurer of FLADC but that it was they who refused to comply with the corporate duties assigned to
them. It was the contention of the Ongs that they wanted the Tius to sign the checks of the corporation
and undertake their management duties but that the Tius shied away from helping them manage the
corporation. On the issue of office space, the Ongs pointed out that the Tius did in fact already have
existing executive offices in the mall since they owned it 100% before the Ongs came in. What the Tius
really wanted were new offices which were anyway subsequently provided to them. On the most
important issue of their alleged failure to credit the Tius with the FLADC shares commensurate to the
Tius' property contributions, the Ongs asserted that, although the Tius executed a deed of assignment for
the 1,902.30 square-meter lot in favor of FLADC, they (the Tius) refused to pay P 570,690 for capital
gains tax and documentary stamp tax. Without the payment thereof, the SEC would not approve the
valuation of the Tius' property contribution (as opposed to cash contribution). This, in turn, would make it
impossible to secure a new Transfer Certificate of Title (TCT) over the property in FLADC's name. In any
event, it was easy for the Tius to simply pay the said transfer taxes and, after the new TCT was issued in
FLADC's name, they could then be given the corresponding shares of stocks. On the 151 square-meter
property, the Tius never executed a deed of assignment in favor of FLADC. The Tius initially claimed that
they could not as yet surrender the TCT because it was "still being reconstituted" by the Lichaucos from
whom the Tius bought it. The Ongs later on discovered that FLADC had in reality owned the property all
along, even before their Pre-Subscription Agreement was executed in 1994. This meant that the 151
square-meter property was at that time already the corporate property of FLADC for which the Tius were
not entitled to the issuance of new shares of stock.

The controversy finally came to a head when this case was commenced4 by the Tius on February 27,
1996 at the Securities and Exchange Commission (SEC), seeking confirmation of their rescission of the
Pre-Subscription Agreement. After hearing, the SEC, through then Hearing Officer Rolando G. Andaya,
Jr., issued a decision on May 19, 1997 confirming the rescission sought by the Tius.

Issue:

1. WON the Tius could legally rescind the Pre-Subscription Agreement.

2. WON Tius claim that their case for rescission, being a petition to decrease capital stock, will not
violate the liquidation procedures under our laws.

Held:

I.

We rule that they could not.

FLADC was originally incorporated with an authorized capital stock of 500,000 shares with the Tius
owning 450,200 shares representing the paid-up capital. When the Tius invited the Ongs to invest in
FLADC as stockholders, an increase of the authorized capital stock became necessary to give each
group equal (50-50) shareholdings as agreed upon in the Pre-Subscription Agreement. The authorized
capital stock was thus increased from 500,000 shares to 2,000,000 shares with a par value of P100 each,
with the Ongs subscribing to 1,000,000 shares and the Tius to 549,800 more shares in addition to their
450,200 shares to complete 1,000,000 shares. Thus, the subject matter of the contract was the
1,000,000 unissued shares of FLADC stock allocated to the Ongs. Since these were unissued shares, the
parties' Pre-Subscription Agreement was in fact a subscription contract as defined under Section 60, Title
VII of the Corporation Code

A subscription contract necessarily involves the corporation as one of the contracting parties since the
subject matter of the transaction is property owned by the corporation – its shares of stock. Thus, the
subscription contract (denominated by the parties as a Pre-Subscription Agreement) whereby the Ongs
invested P100 million for 1,000,000 shares of stock was, from the viewpoint of the law, one between the
Ongs and FLADC, not between the Ongs and the Tius. Otherwise stated, the Tius did not contract in their
personal capacities with the Ongs since they were not selling any of their own shares to them. It was
FLADC that did.

Considering therefore that the real contracting parties to the subscription agreement were FLADC and the
Ongs alone, a civil case for rescission on the ground of breach of contract filed by the Tius in their
personal capacities will not prosper. Assuming it had valid reasons to do so, only FLADC (and certainly
not the Tius) had the legal personality to file suit rescinding the subscription agreement with the Ongs
inasmuch as it was the real party in interest therein. Article 1311 of the Civil Code provides that "contracts
take effect only between the parties, their assigns and heirs…" Therefore, a party who has not taken part
in the transaction cannot sue or be sued for performance or for cancellation thereof, unless he shows that
he has a real interest affected thereby

although the Tius were adversely affected by the Ongs' unwillingness to let them assume their positions,
rescission due to breach of contract is definitely the wrong remedy for their personal grievances. The
Corporation Code, SEC rules and even the Rules of Court provide for appropriate and adequate
intra-corporate remedies, other than rescission, in situations like this. Rescission is certainly not
one of them, specially if the party asking for it has no legal personality to do so and the requirements of
the law therefor have not been met.

II.

The Tius' case for rescission cannot validly be deemed a petition to decrease capital stock because such
action never complied with the formal requirements for decrease of capital stock under Section 33 of the
Corporation Code. No majority vote of the board of directors was ever taken. Neither was there any
stockholders meeting at which the approval of stockholders owning at least two-thirds of the outstanding
capital stock was secured. There was no revised treasurer's affidavit and no proof that said decrease will
not prejudice the creditors' rights. On the contrary, all their pleadings contained were alleged acts of
violations by the Ongs to justify an order of rescission.

Furthermore, it is an improper judicial intrusion into the internal affairs of the corporation to compel
FLADC to file at the SEC a petition for the issuance of a certificate of decrease of stock. Decreasing a
corporation's authorized capital stock is an amendment of the Articles of Incorporation. It is a decision that
only the stockholders and the directors can make, considering that they are the contracting parties
thereto. In this case, the Tius are actually not just asking for a review of the legality and fairness of a
corporate decision. They want this Court to make a corporate decision for FLADC. We decline to
intervene and order corporate structural changes not voluntarily agreed upon by its stockholders and
directors.

Truth to tell, a judicial order to decrease capital stock without the assent of FLADC's directors and
stockholders is a violation of the "business judgment rule" which states that:

xxx xxx xxx (C)ontracts intra vires entered into by the board of directors are binding upon the
corporation and courts will not interfere unless such contracts are so unconscionable and
oppressive as to amount to wanton destruction to the rights of the minority, as when plaintiffs aver
 that the defendants (members of the board), have concluded a transaction among themselves as
will result in serious injury to the plaintiffs stockholders. 29

The reason behind the rule is aptly explained by Dean Cesar L. Villanueva, an esteemed author in
corporate law, thus:

Courts and other tribunals are wont to override the business judgment of the board mainly
because, courts are not in the business of business, and the laissez faire rule or the free
enterprise system prevailing in our social and economic set-up dictates that it is better for the
State and its organs to leave business to the businessmen; especially so, when courts are ill-
equipped to make business decisions. More importantly, the social contract in the corporate
family to decide the course of the corporate business has been vested in the board and not with
courts.

Apparently, the Tius do not realize the illegal consequences of seeking rescission and control of the
corporation to the exclusion of the Ongs. Such an act infringes on the law on reduction of capital stock.
Ordering the return and distribution of the Ongs' capital contribution without dissolving the corporation or
decreasing its authorized capital stock is not only against the law but is also prejudicial to corporate
creditors who enjoy absolute priority of payment over and above any individual stockholder thereof

WPP MARKETING COMMUNICATIONS, INC vs. JOCELYN M. GALERA

Facts:

Petitioner is Jocelyn Galera (GALERA), an American citizen who was recruited from the United States of
America by private respondent John Steedman, Chairman-WPP Worldwide and Chief Executive Officer of
Mindshare, Co., a corporation based in Hong Kong, China, to work in the Philippines for private
respondent WPP Marketing Communications, Inc. (WPP), a corporation registered and operating under
the laws of Philippines. GALERA accepted the offer and she signed an Employment Contract entitled
"Confirmation of Appointment and Statement of Terms and Conditions".

Employment of GALERA with private respondent WPP became effective on September 1, 1999 solely on
the instruction of the CEO and upon signing of the contract, without any further action from the Board of
Directors of private respondent WPP.

Four months had passed when private respondent WPP filed before the Bureau of Immigration an
application for petitioner GALERA to receive a working visa, wherein she was designated as Vice
President of WPP. Petitioner alleged that she was constrained to sign the application in order that she
could remain in the Philippines and retain her employment.

Then, on December 14, 2000, petitioner GALERA alleged she was verbally notified by private
respondent STEEDMAN that her services had been terminated from private respondent WPP. A
termination letter followed the next day.

Galera filed a complaint for illegal dismissal.

Issue: WON Galera is an Employee or a Corporate Officer

Held:

Galera, on the belief that she is an employee, filed her complaint before the Labor Arbiter. On the other
hand, WPP, Steedman, Webster and Lansang contend that Galera is a corporate officer; hence, any
controversy regarding her dismissal is under the jurisdiction of the Regional Trial Court. We agree with
Galera.

Corporate officers are given such character either by the Corporation Code or by the corporation’s by-
laws. Under Section 25 of the Corporation Code, the corporate officers are the president, secretary,
treasurer and such other officers as may be provided in the by-laws. Other officers are sometimes created
by the charter or by-laws of a corporation, or the board of directors may be empowered under the by-laws
of a corporation to create additional offices as may be necessary.

An examination of WPP’s by-laws resulted in a finding that Galera’s appointment as a corporate officer
(Vice-President with the operational title of Managing Director of Mindshare) during a special meeting of
WPP’s Board of Directors is an appointment to a non-existent corporate office. WPP’s by-laws provided
for only one Vice-President. At the time of Galera’s appointment on 31 December 1999, WPP already had
one Vice-President in the person of Webster. Galera cannot be said to be a director of WPP also because
all five directorship positions provided in the by-laws are already occupied. Finally, WPP cannot rely on its
Amended By-Laws to support its argument that Galera is a corporate officer. The Amended By-Laws
provided for more than one Vice-President and for two additional directors. Even though WPP’s
stockholders voted for the amendment on 31 May 2000, the SEC approved the amendments only on 16
February 2001. Galera was dismissed on 14 December 2000. WPP, Steedman, Webster, and Lansang
did not present any evidence that Galera’s dismissal took effect with the action of WPP’s Board of
Directors.

The appellate court further justified that Galera was an employee and not a corporate officer by subjecting
WPP and Galera’s relationship to the four-fold test: (a) the selection and engagement of the employee;
(b) the payment of wages; (c) the power of dismissal; and (d) the employer’s power to control the
employee with respect to the means and methods by which the work is to be accomplished. The
appellate court found:

x x x Sections 1 and 4 of the employment contract mandate where and how often she is to perform her
work; sections 3, 5, 6 and 7 show that wages she receives are completely controlled by x x x WPP; and
sections 10 and 11 clearly state that she is subject to the regular disciplinary procedures of x x x WPP.

Another indicator that she was a regular employee and not a corporate officer is Section 14 of the
contract, which clearly states that she is a permanent employee — not a Vice-President or a member of
the Board of Directors.

xxxx

Another indication that the Employment Contract was one of regular employment is Section 12, which
states that the rights to any invention, discovery, improvement in procedure, trademark, or copyright
created or discovered by petitioner GALERA during her employment shall automatically belong to private
respondent WPP. Under Republic Act 8293, also known as the Intellectual Property Code, this condition
prevails if the creator of the work subject to the laws of patent or copyright is an employee of the one
entitled to the patent or copyright.

Another convincing indication that she was only a regular employee and not a corporate officer is the
disciplinary procedure under Sections 10 and 11 of the Employment Contract, which states that her right
of redress is through Mindshare’s Chief Executive Officer for the Asia-Pacific. This implies that she was
not under the disciplinary control of private respondent WPP’s Board of Directors (BOD), which should
have been the case if in fact she was a corporate officer because only the Board of Directors could
appoint and terminate such a corporate officer.

Although petitioner GALERA did sign the Alien Employment Permit from the Department of Labor and
Employment and the application for a 9(g) visa with the Bureau of Immigration – both of which stated that
she was private respondent’s WPP’ Vice President – these should not be considered against her.
Assurming arguendo that her appointment as Vice-President was a valid act, it must be noted that these
appointments occurred afater she was hired as a regular employee. After her appointments, there was no
appreciable change in her duties.

MARC II MARKETING, INC. vs. ALFREDO M. JOSON

Facts:

Petitioner Marc II Marketing, Inc. is a corporation duly organized and existing under and by virtue of the
laws of the Philippines. It is primarily engaged in buying, marketing, selling and distributing in retail or
wholesale for export or import household appliances and products and other items. It took over the
business operations of Marc Marketing, Inc. which was made non-operational following its incorporation
and registration with the Securities and Exchange Commission (SEC). Petitioner Lucila V. Joson (Lucila)
is the President and majority stockholder of petitioner corporation. She was also the former President and
majority stockholder of the defunct Marc Marketing, Inc.

Respondent Alfredo M. Joson (Alfredo), on the other hand, was the General Manager, incorporator,
director and stockholder of petitioner corporation.

Before petitioner corporation was officially incorporated, respondent has already been engaged by
petitioner Lucila, in her capacity as President of Marc Marketing, Inc., to work as the General Manager of
petitioner corporation. It was formalized through the execution of a Management Contract under the
letterhead of Marc Marketing, Inc. as petitioner corporation is yet to be incorporated at the time of its
execution. It was explicitly provided therein that respondent shall be entitled to 30% of its net income for
his work as General Manager. Respondent will also be granted 30% of its net profit to compensate for the
possible loss of opportunity to work overseas.

Pending incorporation of petitioner corporation, respondent was designated as the General Manager of
Marc Marketing, Inc., which was then in the process of winding up its business. For occupying the said
position, respondent was among its corporate officers by the express provision of Section 1, Article IV of
its by-laws.

On 15 August 1994, petitioner corporation was officially incorporated and registered with the SEC.
Accordingly, Marc Marketing, Inc. was made non-operational. Respondent continued to discharge his
duties as General Manager but this time under petitioner corporation.

Pursuant to Section 1, Article IV of petitioner corporation’s by-laws, its corporate officers are as follows:
Chairman, President, one or more Vice-President(s), Treasurer and Secretary. Its Board of Directors,
however, may, from time to time, appoint such other officers as it may determine to be necessary or
proper.

Per an undated Secretary’s Certificate, petitioner corporation’s Board of Directors conducted a meeting
on 29 August 1994 where respondent was appointed as one of its corporate officers with the designation
or title of General Manager to function as a managing director with other duties and responsibilities that
the Board of Directors may provide and authorized.

Nevertheless, on 30 June 1997, petitioner corporation decided to stop and cease its operations, as
evidenced by an Affidavit of Non-Operation, due to poor sales collection aggravated by the inefficient
management of its affairs. On the same date, it formally informed respondent of the cessation of its
business operation. Concomitantly, respondent was apprised of the termination of his services as
General Manager since his services as such would no longer be necessary for the winding up of its
affairs.
Feeling aggrieved, respondent filed a Complaint for Reinstatement and Money Claim against petitioners
before the Labor Arbiter. In his complaint, respondent averred that petitioner Lucila dismissed him from
his employment with petitioner corporation due to the feeling of hatred she harbored towards his family.
The same was rooted in the filing by petitioner Lucila’s estranged husband, who happened to be
respondent’s brother, of a Petition for Declaration of Nullity of their Marriage.

Issue: WON respondent as General Manager of petitioner corporation is a corporate officer or a mere
employee of the latter.

Held:

While Article 217(a)2 of the Labor Code, as amended, provides that it is the Labor Arbiter who has the
original and exclusive jurisdiction over cases involving termination or dismissal of workers when the
person dismissed or terminated is a corporate officer, the case automatically falls within the province of
the RTC. The dismissal of a corporate officer is always regarded as a corporate act and/or an intra-
corporate controversy.

Under Section 5 of Presidential Decree No. 902-A, intra-corporate controversies are those controversies
arising out of intra-corporate or partnership relations, between and among stockholders, members or
associates; between any or all of them and the corporation, partnership or association of which they are
stockholders, members or associates, respectively; and between such corporation, partnership or
association and the State insofar as it concerns their individual franchise or right to exist as such entity.It
also includes controversies in the election or appointments of directors, trustees,officers or managers of
such corporations, partnerships or associations.

The aforesaid Section 25 of the Corporation Code, particularly the phrase "such other officers as may be
provided for in the by-laws," has been clarified and elaborated in this Courts recent pronouncement in
Matling Industrial and Commercial Corporation v. Coros, where it held, thus:

Conformably with Section 25, a position must be expressly mentioned in the [b]y-[l]aws in order to be
considered as a corporate office. Thus, the creation of an office pursuant to or under a [b]y-[l]aw enabling
provision is not enough to make a position a corporate office. [In] Guerrea v. Lezama [citation omitted] the
first ruling on the matter, held that the only officers of a corporation were those given that character either
by the Corporation Code or by the [b]y-[l]aws; the rest of the corporate officers could be considered only
as employees or subordinate officials. Thus, it was held in Easycall Communications Phils., Inc. v. King
[citation omitted]:

An "office" is created by the charter of the corporation and the officer is elected by the directors or
stockholders. On the other hand, an employee occupies no office and generally is employed not by the
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.

xxxx

This interpretation is the correct application of Section 25 of the Corporation Code, which plainly states
that the corporate officers are the President, Secretary, Treasurer and such other officers as may be
provided for in the [b]y-[l]aws. Accordingly, the corporate officers in the context of PD No. 902-A are
exclusively those who are given that character either by the Corporation Code or by the corporations
[b]y[l]aws.

A careful perusal of petitioner corporations by-laws, particularly paragraph 1, Section 1, Article IV, would
explicitly reveal that its corporate officers are composed only of:

(1) Chairman;
(2) President;
(3) one or more Vice-President;
(4) Treasurer; and
(5) Secretary.

The position of General Manager was not among those enumerated.

With the given circumstances and in conformity with Matling Industrial and Commercial Corporation v.
Coros, this Court rules that respondent was not a corporate officer of petitioner corporation because his
position as General Manager was not specifically mentioned in the roster of corporate officers in its
corporate by-laws. The enabling clause in petitioner corporations by-laws empowering its Board of
Directors to create additional officers, i.e., General Manager, and the alleged subsequent passage of a
board resolution to that effect cannot make such position a corporate office. Matling clearly enunciated
that the board of directors has no power to create other corporate offices without first amending the
corporate by-laws so as to include therein the newly created corporate office. Though the board of
directors may create appointive positions other than the positions of corporate officers, the persons
occupying such positions cannot be viewed as corporate officers under Section 25 of the Corporation
Code. In view thereof, this Court holds that unless and until petitioner corporations by-laws is amended
for the inclusion of General Manager in the list of its corporate officers, such position cannot be
considered as a corporate office within the realm of Section 25 of the Corporation Code.

It is also of no moment that respondent, being petitioner corporations General Manager, was given the
functions of a managing director by its Board of Directors. As held in Matling, the only officers of a
corporation are those given that character either by the Corporation Code or by the corporate by-laws. It
follows then that the corporate officers enumerated in the by-laws are the exclusive officers of the
corporation while the rest could only be regarded as mere employees or subordinate
officials.Respondent, in this case, though occupying a high ranking and vital position in petitioner
corporation but which position was not specifically enumerated or mentioned in the latters by-laws, can
only be regarded as its employee or subordinate official.

That respondent was also a director and a stockholder of petitioner corporation will not automatically
make the case fall within the ambit of intra-corporate controversy and be subjected to RTCs jurisdiction.
To reiterate, not all conflicts between the stockholders and the corporation are classified as intra-
corporate. Other factors such as the status or relationship of the parties and the nature of the question
that is the subject of the controversy must be considered in determining whether the dispute involves
corporate matters so as to regard them as intra-corporate controversies. As previously discussed,
respondent was not a corporate officer of petitioner corporation but a mere employee thereof so there
was no intra-corporate relationship between them. With regard to the subject of the controversy or issue
involved herein, i.e., respondents dismissal as petitioner corporations General Manager, the same did not
present or relate to an intra-corporate dispute.

With all the foregoing, this Court is fully convinced that, indeed, respondent, though occupying the
General Manager position, was not a corporate officer of petitioner corporation rather he was merely its
employee occupying a high-ranking position.

Accordingly, respondents dismissal as petitioner corporations General Manager did not amount to an
intra-corporate controversy. Jurisdiction therefor properly belongs with the Labor Arbiter and not with the
RTC.

In termination cases, the burden of proving just and valid cause for dismissing an employee from his
employment rests upon the employer. The latter's failure to discharge that burden would necessarily
result in a finding that the dismissal is unjustified.