G.R. No.

212774

WESLEYAN UNIVERSITY-PHILIPPINES, Petitioner
vs.
GUILLERMO T. MAGLAYA, SR., Respondent

DECISION

PERALTA, J.:

For this Court's resolution is a petition for review on certiorari filed by petitioner Wesleyan University-
Philippines (WUP) assailing the Resolution  dated January 20, 2014 of the Court of Appeals (CA)
1

which denied its petition for certiorari.

The facts are as follows:

WUP is a non-stock, non-profit, non-sectarian educational corporation duly organized and existing
under the Philippine laws on April 28, 1948. 2

Respondent Atty. Guillermo T. Maglaya, Sr. (Maglaya) was appointed as a corporate member on
January 1, 2004, and was elected as a member of the Board of Trustees (Board) on January 9, 2004
- both for a period of five (5) years. On May 25, 2005, he was elected as President of the University
for a five-year term. He was re-elected as a trustee on May 25, 2007.  3

In a Memorandum dated November 28, 2008, the incumbent Bishops of the United Methodist
Church (Bishops) apprised all the corporate members of the expiration of their tenns on December
31, 2008, unless renewed by the former.   The said members, including Maglaya, sought the renewal
4

of their membership in the WUP's Board, and signified their willingness to serve the corporation.  5

On January 10, 2009, Dr. Dominador Cabasal, Chairman of the Board, informed the Bishops of the
cessation of corporate terms of some of the members and/or trustees since the by-laws provided
that the vacancy shall only be filled by the Bishops upon the recommendation of the Board.  6

On March 25, 2009, Maglaya learned that the Bishops created an Ad Hoc Committee to plan the
efficient and orderly turnover of the administration of the WUP in view of the alleged "gentleman's
agreement" reached in December 2008, and that the Bishops have appointed the incoming
corporate members and trustees.   He clarified that there was no agreement and any discussion of
7

the turnover because the corporate members still have valid and existing corporate terms. 8

On April 24, 2009, the Bishops, through a formal notice to all the officers, deans, staff, and
employees of WUP, introduced the new corporate members, trustees, and officers. In the said
notice, it was indicated that the new Board met, organized, and elected the new set of officers on
April 20, 2009.  Manuel Palomo (Palomo), the new Chairman of the Board, informed Maglaya of the
9

termination of his services and authority as the President of the University on April 27, 2009.  10

Thereafter, Maglaya and other fonner members of the Board (Plaintiffs) filed a Complaint for
Injunction and Damages before the Regional Trial Court (RTC) of Cabanatuan City, Branch 28.   In 11

a Resolution  dated August 19, 2009, the RTC dismissed the case declaring the same as a
12

nuisance or harassment suit prohibited under Section l(b),   Rule 1 of the Interim Rules for Intra-
13

Corporate Controversies.   The RTC observed that it is clear from the by-laws of WUP that insofar
14

as membership in the corporation is concerned, which can only be given by the College of Bishops
of the United Methodist Church, it is a precondition to a seat in the WUP Board.   Consequently, the
15

expiration of the terms of the plaintiffs, including Maglaya, as corporate members carried with it their
termination as members of the Board.   Moreover, their continued stay in their office beyond their
16

terms was only in hold-over capacities, which ceased when the Bishops appointed new members of
the corporation and the Board.  17

The CA, in a Decision  dated .March 15, 2011, affirmed the decision of the RTC, and dismissed the
18

petition for certiorari filed by the plaintiffs for being the improper remedy. The CA held that their
status as corporate members of WUP which expired on December 31, 2008 was undisputed. The
CA agreed with the RTC that the plaintiffs had no legal standing to question the Bishops' alleged
irregular appointment of the new members in their Complaint on May 18, 2009 as the termination of
their membership in the corporation necessarily resulted in the conclusion of their positions as
members of the Board pursuant to the WUP by-laws.  19

Thereafter, Maglaya filed on March 22, 2011 the present illegal dismissal case against WUP,
Palomo, Bishop Lito C. Tangonan (Tangonan), and Bishop Leo A. Soriano (Soriano ).  Maglaya 20

claimed that he was unceremoniously dismissed in a wanton, reckless, oppressive and malevolent
manner on the eve of April 27, 2009.  Tangonan and Soriano acted in evident bad faith when they
21

disregarded his five-year term of office and delegated their protege Palomo as the new university
president.  Maglaya alleged that he faithfully discharged his necessary and desirable functions as
22

President, and received ₱75,000.00 as basic salary, Pl0,000.00 as cost of living allowance, and
₱10,000.00 as representation allowance. He was also entitled to other benefits such as: the use of
university vehicles; the use of a post paid mobile cellular phone in his official transactions; the
residence in the University Executive House located at Inday Street, Magsaysay Sur, Cabanatuan
City, with free water, electricity, and services of a household helper; and receipt of 13th month pay,
vacation leave pay, retirement pay, and shares in related learning experience.  On May 31, 2006,
23

his basic salary was increased to P95,000.00 due to his additional duty in overseeing the operations
of the WUP Cardiovascular and Medical Center.

Maglaya presented the following pieces of evidence: copies of his appointment as President, his
Identification Card, the WUP Administration and Personnel Policy Manual which specified the
retirement of the university president, and the check disbursement in his favor evidencing his salary,
to substantiate his claim that he was a mere employee. 24

WUP, on the other hand, asseverated that the dismissal or removal of Maglaya, being a corporate
officer and not a regular employee, is a corporate act or intra-corporate controversy under the
jurisdiction of the RTC.   WUP also maintained that since Maglaya's appointment was not renewed,
25

he ceased to be a member of the corporation and of the Board; thus, his term for presidency has
also been tenninated.  26

Meanwhile, this Court, in a Resolution dated June 13, 2011, denied the petition for review
on certiorari filed by Maglaya and the other former members of the Board for failure to show any
reversible error in the decision of the CA. The same became final and executory on August 24,
2011.27

In a Decision  dated September 20, 2011, the Labor Arbiter (LA) ruled in favor of WUP. The LA held
28

that the action between employers and employees where the employer-employee relationship is
merely incidental is within the exclusive and original jurisdiction of the regular courts.  Since he was
29

appointed as President of the University by the Board, Maglaya was a corporate officer and not a
mere employee. The instant case involves intra-corporate dispute which was definitely beyond the
jurisdiction of the labor tribunal.  The dispositive portion of the decision reads:
30
WHEREFORE, premises considered, the instant complaint is hereby dismissed for lack of
jurisdiction.

SO ORDERED. 31

In a Decision  dated April 25, 2012, the National Labor Relations Commission (NLRC) in· NLRC-
32

LAC No. 01-000470-12, reversed and set aside the Decision of the LA ruling that the illegal
dismissal case falls within the jurisdiction of the labor tribunals. Since the reasons for his termination
cited by WUP were not among the just causes provided under Article 282  (now Article 297) of the
33

Labor Code, Maglaya was illegally dismissed. The NLRC observed that the Board did not elect
Maglaya, but merely appointed him. Maglaya was appointed for a fixed period of five (5) years from
May 7, 2005 to May 6, 2010, while the period of his appointment as member of the corporation was
five (5) years from January 2004.  The decretal portion of the decision reads:
34

WHEREFORE, premises considered, the appealed decision is hereby REVERSED and SET ASIDE,
declaring:

(a) jurisdiction over this case by virtue of the employer-employee relation of the parties

(b) the illegality of the dismissal of [respondent] by [petitioner] [Petitioner] therefore [is] hereby
ordered to pay [respondent]:

1. separation pay - ₱375,000.00

2. full backwages - 1,252,462.50
3. retirement pay - 500,000.00
4. moral damages - 100,000.00
5. exemplary damages - 50,000.00
6. 10% of the above as attorney's fees - 227,746.25
  TOTAL AWARDS - [₱]2,505,208.75

Based on the attached computation of this Commission’s Computation Unit.

SO ORDERED. 35

Ruling in favor of Maglaya, the NLRC explicated that although the position of the President of the
University is a corporate office, the manner of Maglaya' s appointment, and his duties, salaries, and
allowances point to his being an employee and subordinate.   The control test is the most important
36

indicator of the presence of employer-employee relationship. Such was present in the instant case
as Maglaya had the duty to report to the Board, and it was the Board which terminated or dismissed
him even before his term ends. 37

Thereafter, the NLRC denied the motion for reconsideration filed by WUP in a Resolution  dated 38

February 11, 2013.

In a Resolution, the CA dismissed the petition for certiorari filed by WUP. The CA noted that the
decision and resolution of the NLRC became final and executory on March 16, 2013.  WUP's 39
attempt to resurrect its lost remedy through filing the petition would not prosper since final and
executory judgment becomes unalterable and may no longer be modified in any respect.  Thus: 40

WHEREFORE, the petition is DENIED for lack of merit.

SO ORDERED. 41

Upon denial of his Motion for Reconsideration, WUP elevated the case before this Court raising the
issue:

The Court of Appeals committed an error of law when it summarily dismissed the special civil action
for certiorari raising lack of jurisdiction of the NLRC filed by [WUP] where it was very clear that the
NLRC had no jurisdiction over the case involving a corporate officer and where the nature of the
controversy is an intra-corporate dispute.

We find the instant petition impressed with merit.

WUP alleges that while the NLRC decision became final and executory on March 16, 2013, it did not
mean that the said decision had become immutable and unalterable as the CA ruled. WUP
maintains that the remedy of the aggrieved party against a final and executory decision of the NLRC
is the filing of the petition for certiorari under Rule 65 of the Rules of Court. As such, it was able to
meet the conditions set forth in filing the said remedy before the CA.

Settled is the rule that while the decision of the NLRC becomes final and executory after the lapse of
ten calendar days from receipt thereof by the parties under Article 223  (now Article 229) of the
42

Labor Code, the adverse party is not precluded from assailing it via Petition for Certiorari under Rule
65 before the CA and then to this Court via a Petition for Review under Rule 45. 43

This Court has explained and clarified the power of the CA to review NLRC decisions, viz. :

The power of the Court of Appeals to review NLRC decisions via Rule 65 or Petition
for Certiorari has been settled as early as in our decision in St. Martin Funeral Home v. National
Labor Relations Commission. This Court held that the proper vehicle for such review was a Special
Civil Action for Certiorari under Rule 65 of the Rules of Court, and that this action should be filed in
the Court of Appeals in strict observance of the doctrine of the hierarchy of courts. Moreover, it is
already settled that under Section 9 of Batas Pambansa Blg. 129, as amended by Republic Act No.
7902[10] (An Act Expanding the Jurisdiction of the Court of Appeals, amending for the purpose of
Section Nine of Batas Pambansa Blg. 129 as amended, known as the Judiciary Reorganization Act
of 1980), the Court of Appeals - pursuant to the exercise of its original jurisdiction over Petitions
for Certiorari – is specifically given the power to pass upon the evidence, if and hwen necessary, to
resolve factual issues.44

Consequently, the remedy of the aggrieved party is to timely file a motion for reconsideration as
a precondition for any further or subsequent remedy, and then seasonably avail of the special
civil action of certiorari under Rule 65, for a period of sixty (60) days from notice of the decision.
45

Records reveal that WUP received the decision of the NLRC on May 12, 2012, and filed its motion
for reconsideration on May 24, 2012.  WUP received the Resolution dated February 11, 2013
46

denying its motion on March 12, 2013.  Thereafter, it filed its petition for certiorari before the CA on
47

March 26, 2013. 48

We find that the application of the doctrine of immutability of judgment in the case at bar is
misplaced.  To reiterate, although the 10-day period for finality of the decision of the NLRC may
1âwphi1

already have lapsed as contemplated in the Labor Code, this Court may still take cognizance of the
petition for certiorari on jurisdictional and due process considerations if filed within the reglementary
period under Rule 65.  From the abovementioned, WUP was able to discharge the necessary
49

conditions in availing its remedy against the final and executory decision of the NLRC.

There is an underlying power of the courts to scrutinize the acts of such agencies on questions of
law and jurisdiction even though no right of review is given by statute.  Furthermore, the purpose of
50

judicial review is to keep the administrative agency within its jurisdiction and protect the substantial
rights of the parties.
51

Now on the issue of whether or not the NLRC has jurisdiction over the illegal dismissal case filed by
Maglaya.

The said issue revolves around the question on whether Maglaya is a corporate officer or a mere
employee. For purposes of identifying an intracorporate controversy, We have defined corporate
officers, thus:

"Corporate officers" in the context of Presidential Decree No. 902- A are those officers of the
corporation who are given that character by the Corporation Code or by the corporation's by-
laws. There are three specific officers whom a corporation must have under Section 25 of the
Corporation Code. These are the president, secretary and the treasurer. The number of officers is
not limited to these three. A corporation may have such other officers as may be provided for by its
by-laws like, but not limited to, the vice-president, cashier, auditor or general manager. The number
of corporate officers is thus limited by law and by the corporation's by-laws. 52

The president, vice-president, secretary and treasurer are commonly regarded as the principal or
executive officers of a corporation, and they are usually designated as the officers of the corporation.
However, 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. This Court expounded that an "office" is created by the charter of the
corporation and the officer is elected by the directors or stockholders, while an "employee" usually
occupies no office and 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.  53

From the foregoing, that the creation of the position is under the corporation's charter or by-laws,
and that the election of the officer is by the directors or stockholders must concur in order for an
individual to be considered a corporate officer, as against an ordinary employee or officer. It is only
when the officer claiming to have been illegally dismissed is classified as such corporate officer that
the issue is deemed an intracorporate dispute which falls within the jurisdiction of the trial courts.   In
54

its position paper before the LA, WUP presented its amended ByLaws  dated November 28, 1988
55

submitted to the SEC to prove that Maglaya, as the University President, was a corporate officer
whose rights do not fall within the jurisdiction of the labor tribunal. It also presented the Resolution
dated. August 19, 2009 of the RTC, and the Decision dated March 15, 2011 of the CA to show that
the earlier case was filed by Maglaya and others, as members of the Board, questioning the Bishops'
appointment of the new members without their recommendation.

The relevant portions of the amended By-Laws provide:

ARTICLE VI. BOARD OF TRUSTEES

 xxxx

Section 2. Membership - (a) The Board of Trustees shall be composed of Ten (10) members of the
corporation from among themselves provided, that six (6) shall come from the Ministry and Laity of
the United Methodist [C]hurch in the Philippines, tlu·ee (3) shall be non-Methodist, friends and
sympathizers of the Wesleyan UniversityPhilippines and of the United Methodist Church, and one (1)
representative of the Wesleyan Alumni Association, as provided in section 1 (c), Aiiicle IV hereof,
and (b) provided further that the incumbent area bishop and the President of the Wesleyan
University-Philippines shall be honorary members of the Board.

xxxx 56

ARTICLE VIII. OFFICERS

Section 1. Officers -The officers of the Board of Trustees shall be:

(a) Chairman

(b) Vice-Chairman

(c) Secretary

(d) Treasurer

xxxx

Section 6. The President of Wesleyan University-Philippines -The President of the University, who
must be an active member of the United Methodist Church in the Philippines at the time of his
election shall be incharge of and be responsible for the administration of the University and other
institutions of learning that [ m]ay hereafter be established by the corporation, and

(a) May, with the Board of Trustees;

(1) Organize and/or reorganize the administrative set up of the Wesleyan University-Philippines to
effect efficiency and upgrade institutional administration and supervision;

(2) Employ, suspend, dismiss, transfer or replace personnel and prescribe and enforce rules and
regulations for their proper conduct in the discharge of their duties;

(3) Shall make reports during the different ammal conference of the United Methodist Church and to
such agencies as may be deemed necessary on the operations of the university and related matters;

(4) Shall prescribe and enforce rules and regulations for the promotion and maintenance of discipline
in the proper conduct and discharge of the functions and duties of subordinate administrative
officers, professors, teachers, employees and students and other personnel.

(b) Shall make reports and recommendations to the Board of Trustees or to the Chairman of the
Board of Trustees on matters pertaining to the institution as he may find necessary;

(c) Shall countersign all checks drawn by the Treasurer from the depository of the University, and
(d) Shall exercise, perform and discharge all such other powers, functions and duties as are interest
in the office of the President.

xxx 57

It is apparent from the By-laws of WUP that the president was one of the officers of the corporation,
and was an honorary member of the Board. He was appointed by the Board and not by a managing
officer of the corporation. We held that one who is included in the by-laws of a corporation in its
roster of corporate officers is an officer of said corporation and not a mere employee 58

The alleged "appointment" of Maglaya instead of "election" as provided by the by-laws neither
convert the president of university as a mere employee, nor amend its nature as a corporate officer.
With the office specifically mentioned in the by-laws, the NLRC erred in taking cognizance of the
case, and in concluding that Maglaya was a mere employee and subordinate official because of the
manner of his appointment, his duties and responsibilities, salaries and allowances, and considering
the Identification Card, the Administration and Personnel Policy Manual which specified the
retirement of the university president, and the check disbursement as pieces of evidence supporting
such finding.

A corporate officer's dismissal is always a corporate act, or an intracorporate controversy which

arises between a stockholder and a corporation, and the nature is not altered by the reason or
wisdom with which the Board of Directors may have in taking such action.  The issue of the alleged
59

termination involving a corporate officer, not a mere employee, is not a simple labor problem but a
matter that comes within the area of corporate affairs and management and is a corporate
controversy in contemplation of the Corporation Code. 60

The long-established rule is that the jurisdiction over a subject matter is conferred by law.  Perforce,
61

Section 5 (c) of PD 902-A, as amended by Subsection 5.2, Section 5 of Republic Act No. 8799,
which provides that the regional trial courts exercise exclusive jurisdiction over all controversies in
the election or appointment of directors, trustees, officers or managers of corporations, partnerships
or associations, applies in the case at bar. 62

To emphasize, the determination of the rights of a corporate officer dismissed from his employment,
as well as the corresponding liability of a corporation, if any, is an intra-corporate dispute subject to
the jurisdiction of the regular courts.
63

As held in Leonor v. Court of Appeals,  a void judgment for want of jurisdiction is no judgment at all.
64

It cannot be the source of any right nor the creator of any obligation. All acts perfonned pursuant to it
and all claims emanating from it have no legal effect. Hence, it can never become final and any writ
of execution based on it is void.  65

Since this Court is now reversing the challenged decision of the CA and affirming the decision of the
LA in dismissing the case for want of jurisdiction, Maglaya is not entitled to collect the amount of
₱2,505,208.75 awarded from the time the NLRC decision became final and executory up to the time
the CA dismissed WUP's petition for certiorari.

In sum, this Court finds that the NLRC eITed in assuming jurisdiction over, and thereafter in failing to
dismiss, Maglaya's complaint for illegal dismissal against WUP, since the subject matter of the
instant case is an intra-corporate controversy which the NLRC has no jurisdiction.
WHEREFORE, the petition for review on certiorari filed by petitioner Wesleyan University-Philippines
is hereby GRANTED. The assailed Resolution dated January 20, 2014 of the Court of Appeals in
CAG.R. SP No. 129196 is hereby REVERSED and SET ASIDE. Respondent Atty. Guillermo T.
Maglaya, Sr. is hereby ORDERED to REIMBURSE the petitioner the amount of ₱2,505,208.75
awarded by the National Labor Relations Commission.

SO ORDERED.