ARMANDO T. DE ROSSI, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION (First Division), MATLING INDUSTRIAL AND COMMERCIAL CORPORATION AND RICHARD K. SPENCER, respondents. ULANDU

This petition for certiorari, under Rule 65 of the Rules of Court, assails the Decision1 [Rollo, pp. 25-44; dated October 30, 1992 and penned by Commissioner Vicente Veloso with Presiding Commissioner Bartolome Carale and Romeo Putong, concurring.] of the National Labor Relations Commission (NLRC) which ruled that jurisdiction over a complaint by a corporate executive and management officer for illegal dismissal rests with the Securities and Exchange Commission, and not the Labor Arbiter and the NLRC. Said Decision reversed and set aside the holding of the Labor Arbiter2 [Manuel P. Asuncion; Rollo, pp. 69-79.] who sustained petitioner’s claim for reinstatement and damages.

The antecedent facts are as follows:

An Italian citizen, petitioner was the Executive Vice-President and General Manager of private respondent, Matling Industrial and Commercial Corporation (MICC). He started work on July 1, 1985. On August 10, 1988, MICC terminated his employment.

Aggrieved, petitioner filed with the NLRC, National Capital Region on September 21, 1989, a complaint3 [NLRC Records, pp. 2-6; NLRC Case No. 00-09-04460-89.] for illegal dismissal with corresponding damages.

MICC based petitioner’s dismissal on the ground that the petitioner failed to secure his employment permit, grossly mismanaged the business affairs of the company, and misused corporate funds. However, petitioner argued that it was the duty of the company to secure his work permit during the term of his office, and that his termination was illegal for lack of just cause.

On November 27 1991, Labor Arbiter Asuncion rendered a decision in favor of petitioner, disposing as follows:

MICC appealed the decision of the labor arbiter to the NLRC (First Division) on the ground that Asuncion committed grave abuse of discretion amounting to lack of jurisdiction in reinstating the petitioner and awarding him backwages and damages, because the termination of petitioner was for a valid cause.

On January 6, 1992, petitioner filed a motion for issuance of writ of execution,5 [Rollo, pp. 87-88.] stating that the reinstatement order is immediately executory, even pending appeal pursuant to Article 223 of the Labor Code.

On January 16, 1992, respondents opposed the said motion. On February 6, 1992, petitioner filed a manifestation reiterating his request for reinstatement.

On February 26, 1992, and March 12, 1992, respectively, private respondents filed a counter manifestation and motion; they reiterated their vehement objection thereto as already signified in their opposition. Further, they contended that the position of executive vice-president is an elective post, specifically provided by the corporate’s by-laws. Thus, the dismissal of the petitioner was an intra-corporate matter within the jurisdiction of the Securities and Exchange Commission (SEC) and not with the Labor Arbiter nor the NLRC. Therein, private respondents cited several cases decided by the Court in support of their contention, among them: Dy vs. National Labor Relations Commission, 145 SCRA 211, Fortune Cement Corp. vs. National Labor Relations Commission, 193 SCRA 258, PSBA vs. Leano, 127 SCRA 778.

On July 7, 1992, OIC and Executive Labor Arbiter Lita Aglibut issued a writ of execution. Aglibut directed Sheriff Max Lago to collect the backwages of petitioner de Rossi, in the amount of six hundred seventy five thousand (P675,000.00) pesos from MICC. Further, she gave MICC the option to reinstate de Rossi physically or constructively through payroll reinstatement until the final resolution of the case by the NLRC. Mesm

On August 5, 1992, private respondents filed a motion for reconsideration of the writ of execution, reiterating their argument that the SEC and not the NLRC has original and exclusive jurisdiction over the subject matter which involves the removal of a corporate officer.

On October 30, 1992, the NLRC rendered its decision dismissing the case by virtue of Section 5, paragraph (c), of P.D. No. 902-A. However, the Commission stated that, although in its view it has jurisdiction over the case, it must yield to the Supreme Court’s decisions recognizing SEC’s jurisdiction over such a case, to wit:

x x x

In his petition for certiorari dated February 11, 1993, petitioner contends that:

Petitioner asserts that even managerial employees are entitled to the protection of labor laws. He states that his case is peculiar, and not similar to those cited by private respondents. Petitioner claims that he was neither elected to the post nor stockholder of MICC. Furthermore, petitioner avers that during the proceedings before the Labor Arbiter, private respondents never questioned the issue of jurisdiction; it would be too late to raise it now.

Respondent NLRC argues that under the Corporation Code, there is no requirement that an executive vice-president of a corporation should be a stockholder or a member of the Board of Directors. Further, as observed by the Solicitor General, Section 5 of P. D. 902-A did not limit the jurisdiction of the SEC to controversies in the election or appointment of directors and trustees, but also included officers or managers of such corporations, partnerships or associations.

On this score, we are in agreement with the public respondent’s submission through the Solicitor General. In a string of cases8 [PSBA vs. Leano, 127 SCRA 778 (1984); Dy vs. NLRC, 145 SCRA 211 (1986); Cagayan de Oro Coliseum, Inc. vs. Office of the MOLE, 192 SCRA 315 (1990); Fortune Cement Corporation vs. NLRC, 193 SCRA 258 (1991); Lozon vs. NLRC, 240 SCRA 1 (1995); Espino vs. NLRC, 240 SCRA 52 (1995). Note that these cases are distinct from G.R. No. 122725, Biogenerics Marketing & Research Corp. vs. NLRC, September 8, 1999 because in Biogenerics the jurisdictional issue concerns the cash or surety bond requirement. For lack of such requirement, NLRC dismissed petitioners’ appeal.] this Court has consistently held that the SEC, and not the NLRC, has original and exclusive jurisdiction over cases involving the removal of corporate officers. Section 5, paragraph (c) of P.D. 902-A unequivocally provides that SEC has jurisdiction over intra-corporate affairs regarding the election or appointment of officers of a corporation, to wit:

x x x

We have earlier pronounced that an "office" is created by the charter of the corporation under which a corporation is organized, and the officer is elected by the directors or stockholders.9 [Tabang vs. NLRC, 266 SCRA 462, 467 (1997); citing 2 Fletcher Cyc. Corp., Ch. II, Sec. 266.] In the present case, private respondents aver that the officers and their terms of office are prescribed by the corporation’s by-laws, which provide as follows:

x x x

The by-laws being in force, clearly petitioner is considered an officer of MICC, elected and/or designated by its board of directors. Following Section 5(c) of P.D. No. 902-A, the SEC exercises exclusive jurisdiction over controversies regarding the election and/or designation of directors, trustees, officers or managers of a corporation, partnership or association. This provision is indubitably applicable to the petitioner’s case. Jurisdiction here is not with the Labor Arbiter nor the NLRC, but with the SEC.

Note that a corporate officer’s removal from his office is a corporate act. If such removal occasions an intra-corporate controversy, its nature is not altered by the reason or wisdom, or lack thereof, with which the Board of Directors might have in taking such action.11 [Lozon vs. NLRC, 240 SCRA 1, 9 (1995); Espino vs. NLRC, 240 SCRA 52, 62 (1995)] When petitioner, as Executive Vice-President allegedly diverted company funds for his personal use resulting in heavy financial losses to the company, this matter would amount to fraud. Such fraud would be detrimental to the interest not only of the corporation but also of its members.12 [Alleje vs. Court of Appeals, 240 SCRA 495, 501 (1995)] This type of fraud encompasses controversies in a relationship within the corporation covered by SEC jurisdiction.13 [Magalad vs. Premier Financing Corporation, 209 SCRA 260, 264 (1992)] Perforce, the matter would come within the area of corporate affairs and management, and such a corporate controversy would call for the adjudicative expertise of the SEC, not the Labor Arbiter or the NLRC. Kyle

Petitioner maintains that MICC can not question now the issue of jurisdiction of the NLRC, considering that MICC did not raise this matter until after the case had been brought on appeal to the NLRC. However, it has long been established as a rule, that jurisdiction of a tribunal, agency, or office, is conferred by law, and its lack of jurisdiction may be questioned at any time even on appeal.14 [Estrada vs. NLRC, 262 SCRA 709, 714 (1996)] In La Naval Drug Corporation vs. Court of Appeals, 236 SCRA 78, 90,15 [Citing Roxas vs. Rafferty, 37 Phil. 957 (1918); Corona vs. Court of Appeals, 214 SCRA 378 (1992); Javier vs. Court of Appeals, 214 SCRA 572 (1992); Southeast Asian Fisheries Development Center-Aquaculture Department vs. NLRC, 206 SCRA 283 (1992); People vs. Eduarte, 182 SCRA 750 (1990)] this Court said:

Hence, lack of jurisdiction on the part of the Labor Arbiter first, and of the NLRC on appeal, is fatal to petitioner’s cause.

WHEREFORE, the instant petition is hereby DENIED, and the respondent NLRC’s dismissal of the complaint for lack of jurisdiction, is hereby AFFIRMED, with costs against petitioner.