FIRST DIVISION

[G.R. No. 201497. October 3, 2018.]

JOHN L. TAN, petitioner, vs. DOWNTOWN REALTY

INVESTMENT, INC., EDWARD LIM, EVELYN TAN, PABLO TAN,
AND DAVID TAN, respondents.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, First Division, issued a Resolution
dated October 3, 2018 which reads as follows:
"G.R. No. 201497 (John L. Tan v. Downtown Realty Investment,
Inc., Edward Lim, Evelyn Tan, Pablo Tan, and David Tan) . — This is a
petition for review on certiorari 1 under Rule 45 of the Rules of Court filed by
John L. Tan (petitioner), seeking to nullify the Court of Appeals' (CA) April 12,
2012 Decision 2 in CA-G.R. SP No. 118626. The CA denied the petition for
certiorari 3 under Rule 65 filed by petitioner against the November 12, 2010
Decision 4 and January 11, 2011 Resolution 5 of the National Labor Relations
Commission (NLRC). The NLRC affirmed the March 30, 2010 Decision 6 of the
Labor Arbiter (LA) dismissing the complaint for illegal dismissal filed by
petitioner against Downtown Realty Investment, Inc. (DRI), Edward Lim,
Evelyn Tan, Pablo Tan, and David Tan [collectively, respondents] for lack of
jurisdiction over the subject matter. 7
DRI is a closed family corporation principally engaged in the business
of leasing out office and business spaces. 8 It was founded and owned by Tan
Pee. In 1958, Tan Pee's four sons, namely, Robert Tan Yu Sam, Tan Poe Lion,
9 Tan Sam Yu, and Tan Yu Tit, formally incorporated DRI. Petitioner is the

grandson of Tan Pee thru Tan Poe Lion. 10 SCaITA

Sometime in 1974, Tan Pee, as then President and General Manager of

DRI, asked petitioner to be the Building Administrator of the Downtown
Center Building (building). Among petitioner's duties then were to collect
rentals from the tenants and to administer the building. In 1983, Tan Pee
died, and petitioner's father, Tan Poe Lion, succeeded him as President and
General Manager. In 1984, petitioner became DRI's "Manager" to assist his
father in running the business. In 1989, petitioner acquired a sizeable
stockholding in the corporation. 11
In 2002, Tan Poe Lion died, and petitioner's uncle, Tan Yu Tit,
succeeded as President of DRI. During Tan Yu Tit's presidency, petitioner
remained as "Manager" and assisted the former in the performance of his
duties. Petitioner also became a Director of DRI, representing his father's
line. 12
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 On February 28, 2008, the stockholders, in a special meeting,
discussed the following matters: (1) the offer of one Alfredo Yao (Yao) to buy
DRI; (2) the grant of separation benefit of P2,500,000.00 to petitioner,
P500,000.00 of which would be personally shouldered by brothers George
Tan Ty Beng, Tan Ti Giap, and Joshua Tan; and (3) the assignment of
petitioner, among others, to represent DRI in its negotiations with Yao. 13
In January 2009, the group of Evelyn Tan, Pablo Tan, David Tan, and
Edward Lim (Tan group), representing the line of Tan Yu Sam, acquired 50%
of DRI's shareholdings and became the dominant group within the company.
14 In the annual stockholders' meeting held on January 6, 2009, Edward Lim
replaced Tan Yu Tit as President. A new set of directors, sans petitioner,
were also elected for the year 2009. 15
In a letter 16 dated February 2, 2009, Edward Lim informed petitioner
that, as President, he was taking over petitioner's functions as "General
Manager." This was followed by the difficult turnover of the operation and
properties of DRI due to petitioner's refusal to cooperate with the newly
elected officers in the turnover of the following: (1) the certificates of title,
corporate papers, receipts, and other documents; and (2) the lease
payments in the form of petty cash. 17
On July 22, 2009, 18 petitioner filed a complaint for illegal dismissal,
non-payment of 13th month pay, separation pay, moral and exemplary
damages, and attorney's fees with the LA against DRI and the Tan group. 19
aTHCSE

On August 1, 2009, or two weeks after the complaint's filing, Yao

acquired full ownership of DRI, including petitioner's shareholdings.
Consequently, the Tan group, among others, vacated the seats of the Board
of Directors and Officers and turned over the operations of the company to
its new owner. 20
On November 9, 2009, DRI and the Tan group filed with the LA their
position paper with motion to dismiss. 21 They averred that: (1) the
individuals impleaded in the complaint are not the real parties in interest;
and (2) the LA had no jurisdiction over the case because petitioner was not a
regular employee but a corporate officer, director, and shareholder of DRI. 22
On March 30, 2010, the LA dismissed the case for lack of jurisdiction
over the subject matter. 23 He ruled that petitioner was considered as an
officer of DRI. 24 The NLRC adopted the findings of the LA, adding that since
petitioner is a stockholder of DRI, the case is an intra-corporate controversy
covered by Presidential Decree No. 902-A 25 (PD 902-A), properly cognizable
by the Regional Trial Court (RTC) acting as a special commercial court. 26
The CA denied petitioner's petition for certiorari under Rule 65. 27 It
found no grave abuse of discretion on the NLRC's part in holding that the
subject of the controversy involves an intra-corporate dispute cognizable by
RTCs. Petitioner held the position of "Manager" who is specifically tasked
with the overall management of the company. As "Manager," he held a
significant role in the running of the affairs of the corporation and performed
the functions of the General Manager under DRI's by-laws. 28 His
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 appointment as "Manager" was not just made by the sitting Presidents but
by the Board of Directors. 29 The various General Information Sheets (GIS)
submitted by DRI to the Securities and Exchange Commission (SEC) also
declared petitioner as a shareholder, director, and officer of the corporation.
30

Here, petitioner maintains that: (1) he is not the General Manager but
merely a regular employee of DRI; (2) he was initially hired as Building
Administrator and eventually promoted to "Manager" in charge of the over-
all administration of the building without the need of concurrence, election,
or appointment from the Board; (3) he never occupied the position of
General Manager; (4) the General Manager is not a corporate officer; 31 (5)
his status as director and stockholder did not convert his dismissal into an
intra-corporate dispute; 32 and (6) the Tan group acted in bad faith in
terminating his services through a letter dated February 2, 2009 without just
or authorized cause, thus entitling him to the award of damages. 33 cAaDHT

In their comment, 34 respondents counter that the CA Decision is in

accord with law: (1) petitioner is the General Manager, a corporate officer, of
DRI; (2) the by-laws explicitly provide for the position of General Manager; 35
(3) petitioner is deemed a corporate officer because his appointment to the
position was approved by the Board of Directors; (4) petitioner failed to
present proof that DRI exercised the power of control over him; 36 and (5)
the CA already declared in CA-G.R. SP No. 117801, decided on December 19,
2011, that petitioner is a stockholder, director, and officer of DRI. 37
In his reply, 38 petitioner reiterates that while it was undisputed that he
is a stockholder and director of DRI, his removal as "Manager" or as
"Building Administrator" involves his tenure as an employee of the company.
The issue for resolution here is whether petitioner is a corporate officer
or a regular employee of DRI. This is necessary to determine which tribunal
has jurisdiction over the case.
We deny the petition.

At the outset, we stress that in reviewing labor cases brought to this

Court via a Rule 45 petition from a Rule 65 petition before the CA, we do not
re-examine the correctness of the NLRC decision. Our power of review is
limited to the determination of whether the CA correctly resolved the
presence or absence of grave abuse of discretion on the part of the NLRC.
We said in Montoya v. Transmed Manila Corporation: 39
x x x In a Rule 45 review, we consider the correctness of the
assailed CA decision, in contrast with the review for jurisdictional
error that we undertake under Rule 65. Furthermore, Rule 45 limits
us to the review of questions of law raised against the assailed CA
decision. In ruling for legal correctness, we have to view the CA
decision in the same context that the petition for certiorari it ruled
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 upon was presented to it; we have to examine the CA decision
from the prism of whether it correctly determined the
presence or absence of grave abuse of discretion in the NLRC
decision before it, not on the basis of whether the NLRC
decision on the merits of the case was correct. In other words,
we have to be keenly aware that the CA undertook a Rule 65 review,
not a review on appeal, of the NLRC decision challenged before it.
This is the approach that should be basic in a Rule 45 review of a CA
ruling in a labor case. In question form, the question to ask is:
Did the CA correctly determine whether the NLRC committed
grave abuse of discretion in ruling on the case? 40 (Emphasis in
the original; citations omitted.) HCaDIS

In resolving this issue, we go back to the basic precepts governing a

Rule 65 petition. A special civil action for certiorari under Rule 65 does not
concern itself with errors of judgment; its province is confined to issues of
jurisdiction or grave abuse of discretion. "Grave abuse of discretion connotes
judgment exercised in a capricious and whimsical manner that is tantamount
to lack of jurisdiction. To be considered 'grave,' discretion must be exercised
in a despotic manner by reason of passion or personal hostility, and must be
so patent and gross as to amount to an evasion of positive duty or to a
virtual refusal to perform the duty enjoined by or to act at all in
contemplation of law." 41
In labor disputes, grave abuse of discretion may be ascribed to the
NLRC: (1) when its findings and conclusions are not supported by substantial
evidence or are in total disregard of evidence material to, or even decisive
of, the controversy; (2) when it is necessary to prevent a substantial wrong
or to do substantial justice; (3) when the findings of the NLRC contradict
those of the LA; and (4) when necessary to arrive at a just decision of the
case. 42
Bearing these in mind, we now proceed to determine whether there is
grave abuse of discretion on the part of the NLRC in affirming the LA's
decision.

II

Jurisdiction over the subject matter is conferred by law. 43 Section 5.2

of Republic Act No. 8799 44 (RA 8799), in relation to PD 902-A, conferred
jurisdiction over intra-corporate controversies on RTCs to be designated by
this Court (special commercial courts). 45 These controversies, as identified
in Section 5 of PD 902-A, are as follows:
a) Devices or schemes employed by or any acts, of the board of
directors, business associates, its officers or partnership,
amounting to fraud and misrepresentation which may be
detrimental to the interest of the public and/or of the stockholder,
partners, members of associations or organizations registered
with the Commission;
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 b) 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;
AHCETa

c) Controversies in the election or appointments of

directors, trustees, officers or managers of such
corporations, partnerships or associations. (Emphasis
supplied.)
Generally, the determination of whether a dispute falls within the ambit
of an intra-corporate controversy depends upon the satisfaction of two tests:
(1) the relationship test; and (2) the nature of the controversy test. 46 Under
the relationship test, there is an intra-corporate controversy when the
dispute is: (a) between the corporation, partnership, or association and the
public; (b) between the corporation, partnership, or association and its
stockholders, partners, members, or officers; (c) between the corporation,
partnership, or association and the State as far as its franchise, permit, or
license to operate is concerned; and (d) among stockholders, partners, or
associates themselves. 47 On the other hand, the nature of the controversy
test requires us to look beyond the relationship of the parties and examine
the nature of the dispute. An intra-corporate controversy arises when the
controversy is also rooted "in the enforcement of the parties' correlative
rights and obligations under the Corporation Code and the internal and intra-
corporate regulatory rules of the corporation." 48
When the controversy, however, involves the dismissal of a corporate
officer, it "is always regarded as a corporate act and/or an intra-corporate
controversy:" 49
A corporate officer's dismissal is always a corporate act, or an
intra-corporate 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 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. 50
(Citations omitted.)
Thus, courts of general jurisdiction have original and exclusive
jurisdiction over cases involving the removal of corporate officers. 51 This
dispute is beyond the jurisdiction of the LA or the NLRC since their authority
to decide cases only encompasses employer-employee relations. 52
In cases involving a complaint for illegal dismissal, a distinction must
be made between a "regular employee" and a "corporate officer" for
purposes of establishing the dispute's true nature and determining which
body has jurisdiction over it. 53 In Cosare v. Broadcom Asia, Inc., 54 we
explained that two circumstances "must concur in order for an individual to
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 be considered a corporate officer, as against an ordinary employee or
officer, namely: (1) the creation of the position is under the corporation's
charter or by-laws; and (2) the election of the officer is by the directors or
stockholders." 55 ScHADI

The conflict here does not concern petitioner's status as a stockholder

or director but his removal by the Board of Directors from what he claims to
be an employment position. Applying the foregoing rules, as well as the
parameters by which we resolve this case, we find that the CA correctly
ruled that no grave abuse of discretion attended the NLRC's Decision. The LA
and NLRC's conclusion that petitioner was a corporate officer is supported by
substantial evidence.
Contrary to petitioner's claims, DRI's By-Laws 56 explicitly create the
position and office of the General Manager without the need of an enabling
clause. 57 The By-Laws detail the General Manager's office as having the
"power to supervise, direct and control the management of the business and
operation of the corporation to its best interests, advantage and profit,
subject to such policies, regulations or limitations as the Board of Directors
may lay down." 58 While the By-Laws state that the President, by default,
shall concurrently hold the same position, they also allow for an exception
where the Board of Directors may provide otherwise. 59 A person other than
the President may, if the Board of Directors so provides, occupy the office of
the General Manager, as what petitioner did. Thus, we agree with
respondents that the General Manager is a corporate officer of DRI.
While we have ruled before that the General Manager is not a
corporate officer, 60 it was for the reason that there was no express mention
in the By-Laws for the position of the General Manager. We emphasized that
a general enabling clause allowing the Board of Directors to create an
additional office is insufficient to give the office created a corporate
character. 61 This is not the case here. 62
At this juncture, the conclusion that petitioner occupied the position of
General Manager is also supported by substantial evidence. Petitioner's
appointment to the position is supported by the minutes of the meeting of
the Board of Directors held on January 28, 2008. 63 The GIS, submitted by
DRI to the SEC, listed petitioner as an officer under the nomenclature of
"Manager." 64 More, petitioner cannot downplay his position by claiming that
he was a mere "Manager" of the building. Petitioner himself admits that the
building is the only asset of the corporation. 65 Even as DRI was about to be
sold, he was authorized to represent DRI in its negotiations with Yao. 66 What
is apparent is that petitioner actively participated in the running of DRI's
affairs pursuant to the functions of a General Manager. The imprecise
nomenclature of his position cannot detract from the fact that petitioner
exercised the functions of General Manager under the By-Laws and was
treated as such by DRI.
Noteworthy also is the observation of the CA that petitioner failed to
prove that he was still an employee at the time of the termination. 67
Petitioner failed to substantiate his claim of employment, particularly, the
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 control test. As ruled by the LA: aICcHA

In the case at bench, to show that respondent [DRI] is his

employer, complainant showed his Income Tax Returns (ITR). If at all,
this document only establishes payment of wages and is insufficient
to establish employer-employee relationship. Complainant
discussed the elements of employee-employer relationship,
however there is no sufficient narration as to the exact
nature of his work or that the same is under the control of
respondent [DRI]. This being the case, this office has no basis
to determine whether complainant's position and how he
performs the same can sufficiently pass the control test.
On the other hand, the records are replete with evidence that
complainant is a corporate officer. Among them is the General
Information Sheet (G.I.S.) of respondent [DRI], showing and naming
complainant as either "Corporate Secretary/Manager" or "Manager."
The purpose of the G.I.S. is to name and identify the corporate
officers of a corporation. Normally, an employment position is not, in
the first place stated in the G.I.S. Under this premise, while
complainant is merely referred to as "Manager," in the G.I.S. it is
obvious that the intention of the corporate officers is to treat him as
among the officers, in the same category as the President, Secretary
and the Treasurer.
Too, the records show that complainant has a vital role not only
as "Manager" of the corporation, but also as part of the policy making
body. Complainant is referred in communications as an officer of the
corporation and was even part of the delegation who represented the
corporation when the same was sold. 68 (Emphasis and underscoring
supplied.)
In sum, the validity of petitioner's removal from a corporate office is an
intra-corporate controversy which falls under the jurisdiction of the regional
trial courts. We thus sustain the CA's finding that no grave abuse of
discretion attended the NLRC and LA's decisions in dismissing the case for
lack of jurisdiction over the subject matter.
WHEREFORE, the petition is DENIED. The Court of Appeals' Decision
dated April 12, 2012 in CA-G.R. SP No. 118626 is AFFIRMED. No costs. EHaASD

SO ORDERED." Bersamin, J., on official travel.

Very truly yours,

(SGD.) LIBRADA C. BUENA

Division Clerk of Court

Footnotes
1. Rollo , pp. 447-479.

2. Id. at 482-499; penned by Associate Justice Manuel M. Barrios, with the

concurrence of Associate Justices Juan Q. Enriquez, Jr. and Apolinario D.
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 Bruselas, Jr.
3. Id. at 346-377.

4. Id. at 504-512.
5. Id. at 501-502.
6. Id. at 703-717.
7. Id. at 512. The dispositive portion of the NLRC Decision reads:
WHEREFORE, premises considered, the appeal is hereby DENIED for lack of
merit. The Decision below is hereby AFFIRMED, in toto.
SO ORDERED.

8. Id. at 482-483.
9. Also referred to as Tan Poe Liong in other parts of the record.
10. Rollo , pp. 866-867.
11. Id. at 483.
12. Id.

13. Rollo , pp. 540-541.

14. Id. at 539, 486.
15. Id. at 596.
16. Id. at 603.

17. Id. at 908-911.

18. Id. at 576, 706.
19. Id. at 452-453.
20. Id. at 488.
21. Id. at 581-595.

22. Id. at 488-489.

23. Id. at 716-717. The dispositive portion of the LA's Decision reads:
WHEREFORE, foregoing premises considered, the instant case is hereby
DISMISSED for lack of jurisdiction.
SO ORDERED.
24. Id. at 711-716.
25. Reorganization of the Securities and Exchange Commission with Additional
Powers and Placing the Said Agency under the Administrative Supervision of
the Office of the President (1976).
26. Rollo , pp. 510-511.

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 27. Id. at 498-499. The dispositive portion of the CA Decision reads:
WHEREFORE, the petition is DENIED. The Decision dated 12 November
2010 and the Resolution dated 11 January 2011 of the National Labor
Relations Commission are SUSTAINED.
SO ORDERED.
28. Id. at 493-494.
29. Id. at 490-491.
30. Id. at 493.

31. Id. at 459-460.

32. Id. at 466-467.
33. Id. at 470.
34. Id. at 865-885.

35. Id. at 874-876.

36. Id. at 878.
37. Id. at 881-882.
38. Id. at 938-943.
39. G.R. No. 183329, August 27, 2009, 597 SCRA 334.

40. Id. at 342-343.

41. E. Ganzon, Inc. (EGI) v. Ando, Jr., G.R. No. 214183, February 20, 2017, 818
SCRA 165, 173-174. Citation omitted.
42. Id. at 174.
43. Aguirre II v. FQB+7, Inc., G.R. No. 170770, January 9, 2013, 688 SCRA 242,
257.
44. THE SECURITIES REGULATION CODE.
45. Aguirre II v. FQB+7, Inc., supra; Republic Act No. 8799, Sec. 5.2. The
Commission's jurisdiction over all cases enumerated under Section 5 of
Presidential Decree No. 902-A is hereby transferred to the Courts of general
jurisdiction or the appropriate Regional Trial Court: Provided, That the
Supreme Court in the exercise of its authority may designate the Regional
Trial Court branches that shall exercise jurisdiction over these cases. x x x
46. See San Jose v. Ozamiz, G.R. No. 190590, July 12, 2017; and Marc II Marketing,
Inc. v. Joson, G.R. No. 171993, December 12, 2011, 662 SCRA 35, 51.
47. Real v. Sangu Philippines, Inc., G.R. No. 168757, January 19, 2011, 640 SCRA
67, 80-81, citing Reyes v. Regional Trial Court of Makati, Br. 142 , G.R. No.
165744, August 11, 2008, 561 SCRA 593, 609-610.

48. San Jose v. Ozamiz, G.R. No. 190590, July 12, 2017.
49. Marc II Marketing, Inc. v. Joson, G.R. No. 171993, December 12, 2011, 662
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 SCRA 35, 50.
50. Wesleyan University-Philippines v. Maglaya, Sr., G.R. No. 212774, January 23,
2017, 815 SCRA 171, 189.
51. Id. at 189-190.
52. See Cosare v. Broadcom Asia, Inc. , G.R. No. 201298, February 5, 2014, 715
SCRA 534, 547-548.
53. Id. at 548, citing Matling Industrial and Commercial Corporation v. Coros, G.R.
No. 157802, October 13, 2010, 633 SCRA 12.
54. Supra note 52.
55. Id. at 549.
56. Rollo , pp. 604-613.

57. Id. at 607.

58. Id. at 610.
59. Id. at 607.
60. See Marc II Marketing, Inc. v. Joson, supra note 49 at 58.

61. Id. at 52-54.

62. See Easycall Communications Phils., Inc. v. King, G.R. No. 145901, December
15, 2005, 478 SCRA 102, 110.

63. Rollo , p. 921. The pertinent portion of the resolution states:

RESOLVED, to elect and/or appoint as it does elect and/or appoint the
following officers of the company for the year 2008-2009:
1. MR. TAN YU TIT — President

xxx xxx xxx

5. MR. JOHN TAN — Manager (Emphasis supplied.)

64. Id. at 493.

65. Id. at 451.
66. Id. at 541.
67. Id. at 493-494.

68. Id. at 712-713.

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