Never too late - A Law Each Day (Keeps Trouble Away)

Cases of illegal dismissal are generally within the jurisdiction of the labor arbiter and the NLRC to decide. But this is one exception.

This case involves Mario, an Italian citizen who worked as the executive vice president and general manager of a multi-national company. He started work on July 1, 1985. Three years later the company terminated his employment on the ground that he failed to secure his employment permit, grossly mismanaged the business affairs of the company, and misused corporate funds.

Believing that it was the duty of the company to secure his work permit during the term of his office and that the other grounds of his termination were unfounded, Mario filed a complaint for illegal dismissal against the company before the NLRC.

Subsequently, after due notice and hearing, the labor arbiter rendered a decision in favor of Mario ordering the company to immediately reinstate him to his former position as executive vice president and general manager without loss of seniority rights and other privileges and with full backwages. The company was likewise ordered to pay Mario moral and exemplary damages and attorney's fees.

The company appealed this decision of the labor arbiter to the NLRC. Pending appeal, Mario in turn filed a motion for issuance of writ of execution stating that his reinstatement is immediately executory even pending appeal pursuant to Art. 223 of the Labor Code. In opposing Mario's motion for immediate execution, the company raised for the first time the lack of jurisdiction of the NLRC over the case. They contended that under the By-laws of the Corporation, the executive vice president is one of the corporate officers elected and or designated by its board of directors. Thus, the dismissal of Mario was an intra-corporate matter within the jurisdiction of the Securities and Exchange Commission (SEC) and not with the labor arbiter nor the NLRC.

Acting on this opposition of the company, the NLRC dismissed the case for lack of jurisdiction despite its belief to the contrary and despite the issuance of the writ of execution by the labor arbiter. Was the NLRC correct?

Yes. The SEC, and not the NLRC has original and exclusive jurisdiction to hear and decide cases involving controversies in the election of appointments of directors, trustees, officers or managers of a corporation (Sec. 5 (C) PD 902-A). An "office" is one created by the charter of the corporation under which a corporation is organized, and the officer is elected by the directors or stockholders. In the present case, the officers and their terms of office are prescribed by the company's By-law which includes the president, executive vice president, secretary and treasurer.

The corporate officer's removal from his office is a corporate act. When Mario, as executive vice president allegedly diverted company funds for his personal use resulting in heavy financial losses to the company, the matter would amount to fraud. Such fraud would be detrimental to the interest not only of the corporation but also of its members. This type of fraud encompasses controversies in a relationship within the corporation covered by SEC jurisdiction. 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.

And since jurisdiction is conferred by law, its lack may be interposed at any time even on appeal (De Rossi vs. NLRC et. al. G.R. No. 108710 Sept. 14, 1999).

Atty. Sison's e-mail address: [email protected].