SEC REORGANIZATION DECREE; JURISDICTION OVER INTRACORPORATE CONTROVERSIES

Real v. Sangu Philippines Inc. et al

FACTS:

Renato Real was the Manager of respondent corporation Sangu Philippines, Inc. which is engaged in the business of providing manpower for general services. He filed a complaint for illegal dismissal against the respondents stating that he was neither notified of the Board meeting during which his removal was discussed nor was he formally charged with any infraction.

Respondents, on the other hand, said that Real committed gross acts of misconduct detrimental to the company since 2000. The LA declared petitioner as having been illegally dismissed. Sangu appealed to NLRC and established petitioner’s status as a stockholder and as a corporate officer and hence, his action against respondent corporation is an intra-corporate controversy over which the Labor Arbiter has no jurisdiction. NLRC modified the LA’s decision. On appeal, the CA affirmed the decision of NLRC.

Hence, this petition.

ISSUE: WON petitioner’s complaint for illegal dismissal constitutes an intra-corporate controversy.

RULING:

To determine whether a case involves an intra-corporate controversy, and is to be heard and decided by the branches of the RTC specifically designated by the Court to try and decide such cases, two elements must concur: (a) the status or relationship of the parties, and (2) the nature of the question that is the subject of their controversy.

The first element requires that the controversy must arise out of intra-corporate or partnership relations between any or all of the parties and the corporation x x . The second element requires that the dispute among the parties be intrinsically connected with the regulation of the corporation. If the nature of the controversy involves matters that are purely civil in character, necessarily, the case does not involve an intra-corporate controversy.

Guided by this recent jurisprudence, we thus find no merit in respondents’ contention that the fact alone that petitioner is a stockholder and director of respondent corporation automatically classifies this case as an intra-corporate controversy. To reiterate, not all conflicts between the stockholders and the corporation are classified as intra-corporate. There are other factors to consider in determining whether the dispute involves corporate matters as to consider them as intra-corporate controversies.

ESPINO V. NLRC

Petitioner Leslie W. Espino was the Executive Vice PresidentChief Operating Officer of private respondent Philippine Airlines (PAL) when his services were terminated sometime in December 1990 by the Board of Directors of PAL as a result of the findings of the panels created by then President Corazon C. Aquino to investigate the administrative charges filed against him and other senior officers for their purported involvement in four, denominated “Goldair,” “Robelle,” “Kasbah/La Primavera,” and “Middle East” which allegedly prejudiced the interests of both PAL and the Philippine Government.

As a result of his termination, petitioner Espino filed a complaint for illegal dismissal against PAL with the National Labor Relations Commission.

PAL justified the legality of petitioner Espino’s dismissal from the service before the Labor Arbiter but questioned the jurisdiction of the NLRC contending that, because the investigating panels were created by President Corazon C. Aquino, it became, together with the PAL Board of Directors, a “parallel arbitration unit” which substituted the NLRC. As such, PAL argued that since the Board resolutions on the aforesaid cases; cannot be reviewed by the NLRC, the recourse of petitioner Espino should have been addressed, by way of anappeal, to the Office of the President of the Republic of the

Labor arbiter ordered the reinstatement of Espino.

PAL argued that the Labor Arbiter’s decision is null and void for lack of jurisdiction over the subject matter as it is the Securities and Exchange Commission, and not the NLRC, which has original and exclusive jurisdiction over cases involving dismissal or removal of corporate officers.

Issue: WON NLRC has jurisdiction under Article 217, par. (2) of the Labor Code, as amended, to hear the illegal dismissal case he filed against PAL as it involves the termination of a regular and permanent employee.

Held: No. a corporate officer’s dismissal is always a corporate act, or an intra-corporate controversy which arises between a stockholder and a corporation.[17][43] [Emphasis supplied.] so that the RTC should exercise jurisdiction based on the following legal reasoning:

Prior to its amendment, Section 5(c) of Presidential Decree No. 902-A (PD 902-A) provided that intra-corporate disputes fall within the jurisdiction of the Securities and Exchange Commission (SEC):

Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations, partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving:

x x x x

c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations, partnerships or associations.

Subsection 5.2, Section 5 of Republic Act No. 8799, which took effect on 8 August 2000, transferred to regional trial courts the SEC’s jurisdiction over all cases listed in Section 5 of PD 902-A:

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. [Emphasis supplied.]