Title
De Rossi vs. National Labor Relations Commission
Case
G.R. No. 108710
Decision Date
Sep 14, 1999
An Italian corporate officer's illegal dismissal claim was dismissed; jurisdiction lies with SEC, not NLRC, as removal of corporate officers is an intra-corporate matter.
jurisdiction
illegal dismissal
corporate officer

Case Summary (G.R. No. 108710)

Factual Background

Petitioner began working for MICC on July 1, 1985. On August 10, 1988, MICC terminated his employment. MICC justified the termination on the grounds that petitioner failed to secure his employment permit, grossly mismanaged the company’s business affairs, and misused corporate funds. Petitioner resisted these allegations and maintained that it was the company’s duty to secure his work permit during his tenure and that the termination was illegal for lack of just cause.

Complaint for Illegal Dismissal and Labor Arbiter’s Ruling

Aggrieved, petitioner filed with the NLRC, National Capital Region on September 21, 1989 a complaint for illegal dismissal with corresponding damages. The labor arbiter, Asuncion, ruled in petitioner’s favor on November 27, 1991. The dispositive portion ordered MICC and Richard K. Spencer, jointly and severally, to reinstate petitioner to his former positions without loss of seniority rights and with full backwages from the date his salary was withheld until actual reinstatement. The order also required the payment of moral damages of P800,000 and exemplary damages of P700,000, plus attorney’s fees equivalent to ten percent of the total award. The reinstatement was declared immediately executory.

Appeal to the NLRC and Motions Regarding Execution

MICC appealed to the NLRC on the ground of grave abuse of discretion amounting to lack of jurisdiction, arguing that petitioner’s termination was for a valid cause. While the appeal was pending, petitioner filed on January 6, 1992 a motion for issuance of a writ of execution, invoking the immediacy of reinstatement even pending appeal under Article 223 of the Labor Code. Respondents opposed on January 16, 1992. On February 6, 1992, petitioner reiterated his request for reinstatement. Private respondents then filed further submissions—counter manifestations and motions—reasserting their opposition. They also advanced a jurisdictional theory: petitioner’s dismissal involved an intra-corporate matter because the Executive Vice-President post was allegedly elective under MICC’s by-laws, and thus the SEC—not the Labor Arbiter or the NLRC—had jurisdiction.

Writ of Execution and Subsequent Jurisdictional Objections

On July 7, 1992, OIC and Executive Labor Arbiter Lita Aglibut issued a writ of execution. The sheriff collected alleged backwages of P675,000 from MICC and gave MICC the option to reinstate petitioner physically or constructively through payroll reinstatement until the NLRC’s final resolution. On August 5, 1992, private respondents moved for reconsideration of the writ. They reiterated that the SEC had original and exclusive jurisdiction because the case involved the removal of a corporate officer.

NLRC Decision: Dismissal for Lack of Jurisdiction

On October 30, 1992, the NLRC dismissed the complaint, citing Section 5, paragraph (c) of P.D. No. 902-A. The NLRC stated that while it believed it had jurisdiction notwithstanding P.D. No. 902-A, it considered itself bound by Supreme Court jurisprudence recognizing the SEC’s jurisdiction over such matters. The NLRC thus set aside the labor arbiter’s ruling and dismissed the case for want of jurisdiction, concluding that jurisdiction rested with the SEC rather than the labor tribunals.

Petitioner’s Arguments in the Supreme Court

Petitioner filed a petition for certiorari dated February 11, 1993. He argued that the NLRC committed grave abuse of discretion amounting to lack of jurisdiction or acted in excess of jurisdiction when it held that the SEC had jurisdiction over the complaint for illegal dismissal. He also maintained that the issues raised were ripe for adjudication by the Court. Petitioner further asserted that even managerial employees are entitled to labor-law protection, and he argued that his situation was distinct from cases invoked by private respondents. In particular, he contended he was neither elected to the position nor a stockholder of MICC. He also claimed that private respondents did not raise the jurisdictional issue before the labor arbiter, and thus it was allegedly too late to raise it on appeal.

The Parties’ Respective Jurisdictional Positions

The NLRC, through the Solicitor General, took the position that P.D. No. 902-A did not limit SEC jurisdiction only to controversies involving election or appointment of directors and trustees, but also encompassed disputes involving officers or managers of corporations. The Court agreed that jurisprudence consistently recognizes SEC jurisdiction, not NLRC jurisdiction, in controversies involving the removal of corporate officers. The Court emphasized the text of Section 5(c) of P.D. No. 902-A, which grants the SEC original and exclusive jurisdiction over controversies involving the election or appointments of directors, trustees, officers, or managers of corporations.

Determinative Facts for Jurisdiction Under P.D. No. 902-A

The Court explained that an office is created by the corporation’s charter and that the officer is elected by the directors or stockholders. In the case at bar, private respondents relied on MICC’s by-laws to show that the Executive Vice-President was an officer of the corporation, designated by the stockholders meeting and removable by the Board of Directors. MICC’s by-laws were invoked to establish that petitioner was an officer elected and/or designated by MICC’s corporate processes. Accordingly, the Court held that Section 5(c) of P.D. No. 902-A applied and placed jurisdiction over the dispute—characterized as removal-related corporate controversy—within the SEC’s exclusive domain.

Characterization of the Complaint and the Scope of SEC Jurisdiction

The Court treated the dismissal of petitioner as a corporate act. It reasoned that once the act constituted an intra-corporate controversy, the nature of the dispute did not change depending on the alleged reason for removal. The Court further reasoned that allegations that petitioner diverted corporate funds for personal use and caused heavy financial losses would amount to fraud, and it viewed such fraud as encompassing controversies involving relationships within corporations covered by SEC jurisdiction. Thus, the Court concluded that the dispute fell within corporate affairs and management and called for the SEC’s adjudicative expertise rather than the Labor Arbiter or the NLRC.

Timeliness of the Jurisdictional Objection

On petitioner’s claim that respondents could no longer question NLRC jurisdiction because they allegedly did not raise it before the labor arbiter, the Court held that the argument was unavailing. Jurisdiction over the subject matter is conferred by law. Lack of jurisdiction may be questioned at any time, even on appeal and even after final judgment. The Court cited La Naval Drug Corporation vs. Court of Appeals to underscore that when a court lacks subject-matter jurisdiction, the action must be dismissed and the defense may be raised at any stage. The Court therefo

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