MATLING INDUSTRIAL AND COMMERCIAL CORPORATION, RICHARD K.

SPENCER,
CATHERINE SPENCER, AND ALEX MANCILLA
vs.
RICARDO R. COROS
G.R. No. 157802, October 13, 2010

FACTS:

The respondent filed a case for illegal dismissal against Matling and some of its corporate
officers (petitioners) in the NLRC. He was the Vice President for Finance and Administration when he
was dismissed. The petitioner opposed said complaint on the ground that the issue at hand is an
intra- corporate dispute which falls under the jurisdiction of the SEC. The respondent opposed the
same contending that his being in the position was doubtful that he had not been formally elected as
such. The LA ruled in favor of petitioner but the same was reversed by the NLRC, and to which the
CA affirmed.

ISSUE:

Whether or not respondent is a corporate officer.

RULING:

NO.

The petitioners
a corporate contend
office, having beenthat the position
created of Vice
by Matling’s President
President for Finance
pursuant to theand Administration was
by-Law.
However, the Court explained that 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. In this
case, respondent was appointed vice president for nationwide expansion by M alonzo, petitioner’'s
general manager, not by the board of directors of petitioner. Also his compensation was paid by
Malonzo. Thus, respondent was an employee, not a "corporate officer.
Also, the Board of Directors of Matling could not validly delegate the power to create a corporate
office to the President, in light of Section 25 of the Corporation Code requiring the Board of Directors
itself to elect the corporate officers. Verily, the power to elect the corporate officers was a discretionary
power that the law exclusively vested in the Board of Directors, and could not be delegated to
subordinate officers or agents.The office of Vice President for Finance and Administration created by

Matling’s President pursuant to the by- law was an ordinary, not a corporate, office.

MARC II MARKETING, INC. and LUCILA V. JOSON

vs.
ALFREDO M. JOSON
G.R. No. 171993.December 12, 2011

FACTS:

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 Marc II Marketing, Inc. and Lucila Joson is assailing the decision of the CA for reversing and
settling aside the Resolution of the National Labor Relations Commission. 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. Petitioner Lucila is the President and
majority stockholder of the corporation. Before Marc II Marketing, Inc. was officially incorporated,
Alfredo has already been engaged by Lucila, in her capacity as President, to work as General Manager
of the corporation and it was formalized through the execution of a Management Contract dated in
1994 under Marc Marketing, Inc., as Marc II Marketin g, Inc. was yet to be incorporated. For occupying
the said position, respondent was among the corporation’s corporate officers by the express provision
of Section 1, Article IV of its by-laws.
Alfredo was appointed as one of its officers with the designation or title of General Manager to
function as a managing director with other duties and responsibilities that the Board may provide
and authorized. However, in 1997, Marc II Marketing Inc. decided to stop and cease its operation as
evidenced by an Affidavit of Non-Operation due to poor sales collection aggravated by the inefficient
management of its affairs. Alfredo was informed of the cessation of its business operations and the
termination of his services as General Manager. He filed action for reinstatement and money claim
against petitioners.

ISSUE:

Whether or not Marc II Marketing Inc.’s Board of Direc

tors could create a position for corporate
officers through an enabling clause found in its corporate by-laws.

RULING:
YES.

Accordingly, in determining whether the SEC (now the RTC) has jurisdiction over the
controversy, the status or relationship of the parties and the nature of the question that is the subject
of their controversy must be taken into consideration. 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 itsemployee occupying a high-ranking
position.
Accordingly, respondent’s dismissal as Petitioner Corporation’s General Manager did not
amount to an intra-corporate controversy. Jurisdiction therefor properly belongs with the Labor
Arbiter and not with the RTC.
Having established that respondent wasnot Petitioner Corporation’s corporate officer but

merely its employee, and that, consequently, jurisdiction belongs to the Labor Arbiter.

Wilson P. Gamboa
vs.
Finance Secretary Margarito Teves, et al.,
G.R. No. 176579, June 28, 2011

FACTS:

This is a petition to nullify the sale of shares of stock of Philippine Telecommunications

Investment Corporation (PTIC) by the government of the Republic of the Philippines, acting through
the Inter-Agency Privatization Council (IPC), to Metro Pacific Assets Holdings, Inc. (MPAH), an affiliate
of First Pacific Company Limited (First Pacific), a Hong Kong-based investment management and
holding company and a shareholder of the Philippine Long Distance Telephone Company (PLDT). The

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petitioner questioned the sale on the ground that it also involved an indirect sale of 12 million shares
(or about 6.3 percent of the outstanding common shares) of PLDT owned by PTIC to First Pacific. With
the this sale, First Pacific’s common shareholdings in PLDT increased from 30.7 percent to 37 percent,
thereby increasing the total common shareholdings of foreigners in PLDT to about 81.47%. This,
according to the petitioner, violates Section 11, Article XII of the 1987 Philippine Constitution which
limits foreign ownership of the capital of a public utility to not more than 40%, thus: Section 11. No
franchise, certificate, or any other form of authorization for the operation of a public utility shall be
granted except to citizens of the Philippines or to corporations or associations organized under the
laws of the Philippines, at least sixty per centum of whose capital is owned by such citizens; nor shall
such franchise, certificate, or authorization be exclusive in character or for a longer period than fifty
years. Neither shall any such franchise or right be granted except under the condition that it shall be
subject to amendment, alteration, or repeal by the Congress when the common good so requires. The
State shall encourage equity participation in public utilities by the general public. The participation
of foreign investors in the governing body of any public utility enterprise shall be limited to their
proportionate share in its capital, and all the executive and managing officers of such corporation or
association must be citizens of the Philippines. (Emphasis supplied)

ISSUE:

Whether or not the term “capital” in Section 11, Article XII of the Constitution refer to the total
common shares only, or to the total outstanding capital stock (combined total of common and non-
voting preferred shares) of PLDT, a public utility.

HELD:

YES.

Considering that common shares have voting rights which translate to control, as opposed to
preferred shares which usually have no voting rights, the term “capital” in Section 11, Article XII of
the Constitution refers only to common shares. However, if the preferred shares also have the right
to vote in the election of directors, then the term “capital” shall include such preferred shares because
the right to participate in the control or management of the corporation is exercised through the right
to vote in the election of directors. In short, the term “capital” in Section 11, Article XII of the
Constitution refers only to shares of stock that can vote in the election of directors.
To construe broadly the term “capital” as the total outstanding capital stock, including both
common and non-voting preferred shares, grossly contravenes the intent and letter of the Constitution
that the “State shall develop a self-reliant and independent national economyeffectively controlled by
Filipinos.” A broad definition unjustifiably disregards who owns the all -important voting stock, which

necessarily equates
Holders to control
of PLDT of the
preferred publicare
shares utility.
explicitly denied of the right to vote in the election of
directors. PLDT’s Articles of Incorporation expressly state thatthe “ holders of Serial Preferred Stock
shall not be entitled to vote at any meeting of the stockholders for the election of directors or for any
other purpose or otherwise participate in any action taken by the corporation or its stockholders, or
to receive notice of any meeting of stockholders.” On the other hand, holders of common shares are
granted the exclusive right to vote in the election of directors. PL DT’s Articles of Incorporationstate
that “each holder of Common Capital Stock shall have one vote in respect of each share of such stock
held by him on all matters voted upon by the stockholders, and the holders of Common Capital Stock
shall have the exclusive right to vote for the election of directors and for all other purposes.
”
It must be stressed, and respondents do not dispute, that foreigners hold a majority of the
common shares of PLDT. In fact, based on PLDT’s 2010 General Information Sheet (GIS), which is a
document required to be submitted annually to the Securities and Exchange Commission, foreigners
hold 120,046,690 common shares of PLDT whereas Filipinos hold only 66,750,622 common
shares. In other words, foreigners hold 64.27% of the to
tal number of PLDT’s common shares, while
Filipinos hold only 35.73%. Since holding a majority of the common shares equates to control, it is
clear that foreigners exercise control over PLDT. Such amount of control unmistakably exceeds the

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allowable 40 percent limit on foreign ownership of public utilities expressly mandated in Section 11,
Article XII of the Constitution.
As shown in PLDT’s 2010 GIS,as submitted to the SEC, the par value of PLDT common shares
is P5.00 per share, whereas the par value of preferred shares is P10.00 per share. In other words,
preferred shares have twice the par value of common shares but cannot elect directors and have only
1/70 of the dividends of common shares. Moreover, 99.44% of the preferred shares are owned by
Filipinos while foreigners own only a minuscule 0.56% of the preferred shares. Worse, preferred
shares constitute 77.85% of the authorized capital stock of PLDT while common shares constitute
only 22.15%. This undeniably shows that beneficial interest in PLDT is not with the non-voting
preferred shares but with the common shares, blatantly violating the constitutional requirement of
60 percent Filipino control and Filipino beneficial ownership in a public utility.

FIRST PHILIPPINE INTERNATIONAL BANK

vs.
COURT OF APPEALS
G.R. No. 115849. January 24, 1996

FACTS:

In the course of its banking operations, the defendant Producer Bank of the Philippines
acquired six parcels of land. The srcinal plaintiffs, Demetrio Demetria and Jose O. Janolo, wanted
to purchase the property and thus initiated negotiations for that purpose.
Negotiations happened between the parties. However, petitioner bank reneged their agreement
because it offered the same lot to different buyers. Plaintiffs then filed a suit for specific performance
with damages against the bank, its Manager Rivers and Acting Conservator Encarnacion. The basis
of the suit was that the transaction had with the bank resulted in a perfected contract of sale.
Subsequently, Henry L. Co, filed a motion to intervene in the trial court, alleging that as owner
of 80% of the Bank's outstanding shares of stock, he had a substantial interest in resisting the
complaint. The trial court issued an order denying the motion to intervene on the ground that it was
filed after trial had already been concluded. Henry Co did not appeal the denial of his motion for
intervention.

Duringof
stockholders the pendency
the of the
Bank, filed an proceedings in the Court
action purportedly of Appeals,
a "derivative suit"Henry Co RTC
with the and several
Branchother
134,
against Encarnacion, Demetria and Janolo to declare any perfected sale of the property as
unenforceable and to stop Ejercito from enforcing or implementing the sale. In his answer, Janolo
argued that the Second Case was barred by litis pendentia by virtue of the case then pending in the
Court of Appeals.

ISSUE:

Whether or not the juridical personalities of the two corporations be pierced.

RULING:

YES.

In addition to the many cases where the corporate fiction has been disregarded, we now add
the instant case, and declare herewith that the corporate veil cannot be used to shield an otherwise

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