Fortune Cement Corporation v. National Labor Relations Commission
REITERATIONFacts
The Antecedents: Antonio M. Lagdameo (Lagdameo), a registered stockholder of Fortune Cement Corporation (FCC), was elected Executive Vice-President of FCC effective November 1, 1975. In February 1983, the FCC Board of Directors resolved that incumbent corporate officers, including Lagdameo, would be retained unless they resigned or were terminated. Subsequently, in June 1983, the FCC Board passed a resolution dismissing Lagdameo as Executive Vice-President for loss of trust and confidence, effective immediately. Procedural History: Lagdameo filed a complaint for illegal dismissal with the National Labor Relations Commission (NLRC), alleging dismissal without a formal hearing and investigation, thus violating due process. FCC moved to dismiss the complaint, asserting that the dismissal of a corporate officer is an intra-corporate controversy under the exclusive jurisdiction of the Securities and Exchange Commission (SEC). The Labor Arbiter granted FCC's motion. On appeal, the NLRC reversed the Labor Arbiter's order, remanding the case for further proceedings, and subsequently denied FCC's motion for reconsideration. The Petition: FCC filed a petition for certiorari with the Supreme Court, seeking to annul the NLRC's resolution, arguing that the NLRC lacked jurisdiction over the case.
Issue(s)
Whether the National Labor Relations Commission (NLRC) has jurisdiction over a complaint for illegal dismissal filed by a corporate executive vice-president resulting from a board resolution dismissing him from such office. Whether the dismissal of a corporate officer constitutes an intra-corporate controversy within the exclusive jurisdiction of the Securities and Exchange Commission (SEC), including considerations of due process.
Ruling
The petition is granted. The Resolution of the NLRC is reversed and set aside. The decision of the Labor Arbiter dismissing the complaint for lack of jurisdiction is affirmed.
Ratio Decidendi
On the jurisdiction of the NLRC over the dismissal of a corporate officer: The Supreme Court held that the NLRC does not have jurisdiction over a complaint filed by a corporate executive vice-president for illegal dismissal, which arose from a board resolution dismissing him from his corporate office. This is because the nature of the dispute is an intra-corporate controversy. The Court emphasized that the dismissal of a corporate officer is a corporate act, and its nature is not altered by the reason or wisdom behind the Board of Directors' action. Such disputes fall squarely within the original and exclusive jurisdiction of the Securities and Exchange Commission (SEC) as provided by Section 5 of Presidential Decree No. 902-A. The Court applied the doctrines laid down in PSBA vs. Leaño and Dy vs. National Labor Relations Commission. In PSBA vs. Leaño, it was held that the SEC, not the NLRC, has jurisdiction over a situation where a corporate office is declared vacant. In Dy vs. NLRC, the Court ruled that a dispute involving remuneration of a person who is not a mere employee but a stockholder and officer is a corporate controversy within the contemplation of the Corporation Code, not a simple labor problem. These cases support the principle that disputes concerning corporate officers' positions and their removal are within the SEC's domain. On the classification of the dispute as an intra-corporate controversy and Lagdameo's arguments regarding due process: The Court reiterated that controversies arising out of intra-corporate relations between and among stockholders, members, or associates, and between any or all of them and the corporation, partnership, or association of which they are stockholders, members, or associates, fall under the SEC's jurisdiction. Specifically, Section 5(c) of P.D. 902-A grants the SEC original and exclusive jurisdiction over controversies in the election or appointments of directors, trustees, officers, or managers of such corporations. The position of Executive Vice-President is an elective corporate office, and its removal is a matter of corporate governance. While Lagdameo argued that his dismissal was wrongful and arbitrary due to lack of investigation and due process, the Court found this issue to be secondary to the jurisdictional question. The Court cited Dy vs. NLRC again, stating that it is of no moment that the amended complaint seeks other reliefs which might seem to fall under the Labor Arbiter's jurisdiction, because if the core issue is an intra-corporate matter, the SEC retains exclusive jurisdiction. The question of whether the dismissal was done with or without due process is a matter to be determined by the SEC, not the NLRC, in the context of an intra-corporate dispute.
Main Doctrine
The dismissal of a corporate officer, even if alleged to be illegal or without due process, constitutes an intra-corporate controversy falling under the exclusive jurisdiction of the Securities and Exchange Commission (SEC), not the National Labor Relations Commission (NLRC).