DE ROSSI vs. NLRC G.R. No. 108710, September 14, 1999

Facts: An Italian citizen, herein petitioner, was the Executive VP and GM of private respondent Mating Industrial and Commercial Corporation (MICC). He started work on July 1, 1985 and terminated on August 10, 1988 by MICC based on the ground that the petitioner failed to secure his employment permit, grossly mismanaged the business of the company, and misused corporate funds.

Consequently, petitioner filed with the NLRC, a complaint for illegal dismissal with corresponding damages to which the Labor Arbiter rendered a decision in favor of petitioner. On appeal to the NLRC (First Division), petitioner contended that the position of exec. VP 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 SEC and not with the Labor Arbiter or the NLRC. Hence, the NLRC rendered the decision dismissing the case by virtue of Section 5, par. (c) of PD No. 902-A.

Issue: Does SEC have jurisdiction over the complaint for illegal dismissal filed by the petitioner?

Held: Yes. Sec. 45, par. (c) of PD 902-A unequivocally provides that SEC has jurisdiction over intra-corporate affairs regarding the election or appointment of officers of a corporation. In the present case, petitioner is considered an officer of MICC, elected and/or designated by its Board of Directors, since such is prescribed by the corporation’s by-laws.

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 tasking such action. When petitioner, as Exec. VP 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. 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.

NOTE: Under R.A. 8799, otherwise known as the “Securities Regulation Code”, which was approved July 19, 2000, The Commission’s jurisdiction over all cases enumerated under Sec. 5 of P.D. 902-A is hereby transferred to the courts of general jurisdiction or the appropriate RTC: Provided, that the Supreme Court in the exercise of its authority may designate the RTC branches that shall exercise jurisdiction over these cases. The Commission shall retain jurisdiction over pending cases involving intra corporate disputes submitted for final resolution which should be resolved within one year from the enactment of this code. The Commission shall retain jurisdiction over pending suspension of payments/rehabilitation cases filed as of June 30, 2000 until finally disposed. The case, however, is still important in determining if jurisdiction vests in the labor arbiter or the regular courts.