In this Petition for Review on Certiorari under Rule 45 of the Rules of Court, herein petitioners Marc II Marketing, Inc. and Lucila V. Joson assailed the Decision ¹ dated 20 June 2005 of the Court of Appeals in CA-G.R. SP No. 76624 for reversing and setting aside the Resolution ² of the National Labor Relations Commission (NLRC) dated 15 October 2002, thereby affirming the Labor Arbiter's Decision ³ dated 1 October 2001 finding herein respondent Alfredo M. Joson's dismissal from employment as illegal.  In the questioned Decision, the Court of Appeals upheld the Labor Arbiter's jurisdiction over the case on the basis that respondent was not an officer but a mere employee of petitioner Marc II Marketing, Inc., thus, totally disregarding the latter's allegation of intra-corporate controversy.  Nonetheless, the Court of Appeals remanded the case to the NLRC for further proceedings to determine the proper amount of monetary awards that should be given to respondent.cralaw

Assailed as well is the Court of Appeals Resolution ⁴ dated 7 March 2006 denying their Motion for Reconsideration.

Petitioner Marc II Marketing, Inc. (petitioner corporation) 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. ⁵  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.

The controversy of this case arose from the following factual milieu:

Before petitioner corporation was officially incorporated, ⁶ 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 ⁷ dated 16 January 1994 under the letterhead of Marc Marketing, Inc. ⁸ 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. ⁹

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 ¹⁰ of its by-laws. ¹¹

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 ¹² of petitioner corporation's by-laws, ¹³ 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, ¹⁴ 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. ¹⁵

Nevertheless, on 30 June 1997, petitioner corporation decided to stop and cease its operations, as evidenced by an Affidavit of Non-Operation ¹⁶ dated 31 August 1998, 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. ¹⁷

Feeling aggrieved, respondent filed a Complaint for Reinstatement and Money Claim against petitioners before the Labor Arbiter which was docketed as NLRC NCR Case No. 00-03-04102-99.

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. ¹⁸

For the parties'™ failure to settle the case amicably, the Labor Arbiter required them to submit their respective position papers.  Respondent complied but petitioners opted to file a Motion to Dismiss grounded on the Labor Arbiter's lack of jurisdiction as the case involved an intra-corporate controversy, which jurisdiction belongs to the SEC [now with the Regional Trial Court (RTC)]. ¹⁹  Petitioners similarly raised therein the ground of prescription of respondent's monetary claim.

On 5 September 2000, the Labor Arbiter issued an Order ²⁰ deferring the resolution of petitioners' Motion to Dismiss until the final determination of the case.  The Labor Arbiter also reiterated his directive for petitioners to submit position paper.  Still, petitioners did not comply.  Insisting that the Labor Arbiter has no jurisdiction over the case, they instead filed an Urgent Motion to Resolve the Motion to Dismiss and the Motion to Suspend Filing of Position Paper.

In an Order ²¹ dated 15 February 2001, the Labor Arbiter denied both motions and declared final the Order dated 5 September 2000.  The Labor Arbiter then gave petitioners a period of five days from receipt thereof within which to file position paper, otherwise, their Motion to Dismiss will be treated as their position paper and the case will be considered submitted for decision.

Petitioners, through counsel, moved for extension of time to submit position paper.  Despite the requested extension, petitioners still failed to submit the same.  Accordingly, the case was submitted for resolution.

On 1 October 2001, the Labor Arbiter rendered his Decision in favor of respondent.  Its decretal portion reads as follows:

WHEREFORE, premises considered, judgment is hereby rendered declaring [respondent's] dismissal from employment illegal.  Accordingly, [petitioners] are hereby ordered:

1. To reinstate [respondent] to his former or equivalent position without loss of seniority rights, benefits, and privileges;
2. Jointly and severally liable to pay [respondent's] unpaid wages in the amount of P450,000.00 per month from [26 March 1996] up to time of dismissal in the total amount of P6,300,000.00;
3. Jointly and severally liable to pay [respondent's] full backwages in the amount of P450,000.00 per month from date of dismissal until actual reinstatement which at the time of promulgation amounted to P21,600,000.00;
4. Jointly and severally liable to pay moral damages in the amount of P100,000.00 and attorney's fees in the amount of 5% of the total monetary award. ²²  [Emphasis supplied.

In the aforesaid Decision, the Labor Arbiter initially resolved petitioners' Motion to Dismiss by finding the ground of lack of jurisdiction to be without merit.  The Labor Arbiter elucidated that petitioners failed to adduce evidence to prove that the present case involved an intra-corporate controversy.  Also, respondent's money claim did not arise from his being a director or stockholder of petitioner corporation but from his position as being its General Manager.  The Labor Arbiter likewise held that respondent was not a corporate officer under petitioner corporation's by-laws.  As such, respondent's complaint clearly arose from an employer-employee relationship, thus, subject to the Labor Arbiter's jurisdiction.

The Labor Arbiter then declared respondent's dismissal from employment as illegal.  Respondent, being a regular employee of petitioner corporation, may only be dismissed for a valid cause and upon proper compliance with the requirements of due process.  The records, though, revealed that petitioners failed to present any evidence to justify respondent's dismissal.

Aggrieved, petitioners appealed the aforesaid Labor Arbiter's Decision to the NLRC.

In its Resolution dated 15 October 2002, the NLRC ruled in favor of petitioners by giving credence to the Secretary's Certificate, which evidenced petitioner corporation's Board of Directors'™ meeting in which a resolution was approved appointing respondent as its corporate officer with designation as General Manager.  Therefrom, the NLRC reversed and set aside the Labor Arbiter's Decision dated 1 October 2001 and dismissed respondent's Complaint for want of jurisdiction. ²³

The NLRC enunciated that the validity of respondent's appointment and termination from the position of General Manager was made subject to the approval of petitioner corporation's Board of Directors.  Had respondent been an ordinary employee, such board action would not have been required.  As such, it is clear that respondent was a corporate officer whose dismissal involved a purely intra-corporate controversy.  The NLRC went further by stating that respondent's claim for 30% of the net profit of the corporation can only emanate from his right of ownership therein as stockholder, director and/or corporate officer.  Dividends or profits are paid only to stockholders or directors of a corporation and not to any ordinary employee in the absence of any profit sharing scheme.  In addition, the question of remuneration of a person who is not a mere employee but a stockholder and officer of a corporation is not a simple labor problem.  Such matter comes within the ambit of corporate affairs and management and is an intra-corporate controversy in contemplation of the Corporation Code. ²⁴

When respondent's Motion for Reconsideration was denied in another Resolution ²⁵ dated 23 January 2003, he filed a Petition for Certiorari with the Court of Appeals ascribing grave abuse of discretion on the part of the NLRC.

On 20 June 2005, the Court of Appeals rendered its now assailed Decision declaring that the Labor Arbiter has jurisdiction over the present controversy.  It upheld the finding of the Labor Arbiter that respondent was a mere employee of petitioner corporation, who has been illegally dismissed from employment without valid cause and without due process.  Nevertheless, it ordered the records of the case remanded to the NLRC for the determination of the appropriate amount of monetary awards to be given to respondent.  The Court of Appeals, thus, decreed:

WHEREFORE, the petition is by us PARTIALLY GRANTED.  The Labor Arbiter is DECLARED to have jurisdiction over the controversy.  The records are REMANDED to the NLRC for further proceedings to determine the appropriate amount of monetary awards to be adjudged in favor of [respondent].  Costs against the [petitioners] in solidum. ²⁶

Petitioners moved for its reconsideration but to no avail. ²⁷

Petitioners are now before this Court with the following assignment of errors:

I.

THE COURT OF APPEALS ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION IN DECIDING THAT THE NLRC HAS THE JURISDICTION IN RESOLVING A PURELY INTRA-CORPORATE MATTER WHICH IS COGNIZABLE BY THE SECURITIES AND EXCHANGE COMMISSION/REGIONAL TRIAL COURT.

II.

ASSUMING, GRATIS ARGUENDO, THAT THE NLRC HAS JURISDICTION OVER THE CASE, STILL THE COURT OF APPEALS SERIOUSLY ERRED IN NOT RULING THAT THERE IS NO EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN [RESPONDENT] ALFREDO M. JOSON AND MARC II MARKETING, INC. [PETITIONER CORPORATION].

III.

ASSUMING GRATIS ARGUENDO THAT THE NLRC HAS JURISDICTION OVER THE CASE, THE COURT OF APPEALS ERRED IN  NOT RULING THAT THE  LABOR ARBITER COMMITTED GRAVE ABUSE OF DISCRETION IN AWARDING MULTI-MILLION PESOS IN COMPENSATION AND BACKWAGES BASED ON THE PURPORTED GROSS INCOME OF [PETITIONER CORPORATION].

IV.

THE COURT OF APPEALS SERIOUSLY ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION IN NOT MAKING ANY FINDINGS AND RULING THAT [PETITIONER LUCILA] SHOULD NOT BE HELD SOLIDARILY LIABLE IN THE ABSENCE OF EVIDENCE OF MALICE AND BAD FAITH ON HER PART. ²⁸

Petitioners fault the Court of Appeals for having sustained the Labor Arbiter's finding that respondent was not a corporate officer under petitioner corporation's by-laws.  They insist that there is no need to amend the corporate by-laws to specify who its corporate officers are.  The resolution issued by petitioner corporation's Board of Directors appointing respondent as General Manager, coupled with his assumption of the said position, positively made him its corporate officer.  More so, respondent's position, being a creation of petitioner corporation's Board of Directors pursuant to its by-laws, is a corporate office sanctioned by the Corporation Code and the doctrines previously laid down by this Court.  Thus, respondent's removal as petitioner corporation's General Manager involved a purely intra-corporate controversy over which the RTC has jurisdiction.

Petitioners further contend that respondent's claim for 30% of the net profit of petitioner corporation was anchored on the purported Management Contract dated 16 January 1994.  It should be noted, however, that said Management Contract was executed at the time petitioner corporation was still nonexistent and had no juridical personality yet.  Such being the case, respondent cannot invoke any legal right therefrom as it has no legal and binding effect on petitioner corporation.  Moreover, it is clear from the Articles of Incorporation of petitioner corporation that respondent was its director and stockholder.  Indubitably, respondent's claim for his share in the profit of petitioner corporation was based on his capacity as such and not by virtue of any employer-employee relationship.

Petitioners further avow that even if the present case does not pose an intra-corporate controversy, still, the Labor Arbiter's multi-million peso awards in favor of respondent were erroneous.  The same was merely based on the latter's self-serving computations without any supporting documents.

Finally, petitioners maintain that petitioner Lucila cannot be held solidarily liable with petitioner corporation.  There was neither allegation nor iota of evidence presented to show that she acted with malice and bad faith in her dealings with respondent.  Moreover, the Labor Arbiter, in his Decision, simply concluded that petitioner Lucila was jointly and severally liable with petitioner corporation without making any findings thereon.  It was, therefore, an error for the Court of Appeals to hold petitioner Lucila solidarily liable with petitioner corporation.

From the foregoing arguments, the initial question is which between the Labor Arbiter or the RTC, has jurisdiction over respondent's dismissal as General Manager of petitioner corporation.  Its resolution necessarily entails the determination of whether respondent as General Manager of petitioner corporation is a corporate officer or a mere employee of the latter.

While Article 217(a)2 ²⁹ 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. ³⁰

Under Section 5 ³¹ 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. ³²

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. ³³

In Easycall Communications Phils., Inc. v. King, this Court held that in the context of Presidential Decree No. 902-A, corporate officers are those officers of a corporation who are given that character either by the Corporation Code or by the corporation's by-laws.  Section 25 ³⁴ of the Corporation Code specifically enumerated who are these corporate officers, to wit: (1) president; (2) secretary; (3) treasurer; and (4) such other officers as may be provided for in the by-laws. ³⁵

The aforesaid Section 25 of the Corporation Code, particularly the phrase 'œsuch other officers as may be provided for in the by-laws,'