Pearson & George (S.E. Asia), Inc. v. National Labor Relations Commission
REITERATIONFacts
1. The Antecedents: Private respondent Leopoldo Llorente served as Vice-Chairman of the Board and Managing Director of petitioner Pearson & George (S.E. Asia), Inc. On January 29, 1990, Llorente was suspended with pay due to alleged anomalous transactions. Subsequently, at the regular stockholders' meeting on March 5, 1990, Llorente was not reelected as a director. The newly elected Board of Directors then abolished the position of Managing Director. Llorente was informed of his non-reelection and termination for cause on March 12, 1990. 2. Procedural History: On April 11, 1990, Llorente filed a complaint with the Labor Arbiter for unfair labor practice, illegal dismissal, and illegal suspension, alleging dismissal without due process. Petitioner moved to dismiss, asserting that the case was intra-corporate and thus under the Securities and Exchange Commission's (SEC) jurisdiction. The Labor Arbiter denied the motion, finding Llorente to be an employee with managerial functions. On May 18, 1992, the Labor Arbiter ruled in favor of Llorente, ordering backwages, attorney's fees, and moral damages. Petitioner appealed to the National Labor Relations Commission (NLRC), which affirmed the Labor Arbiter's decision and denied the motion for reconsideration. 3. The Petition: Petitioner filed a special civil action for certiorari under Rule 65 of the Rules of Court, seeking to annul the NLRC's decision and order. Petitioner argues that the NLRC lacked jurisdiction, asserting the dispute is intra-corporate and falls under the SEC's exclusive jurisdiction pursuant to P.D. No. 902-A. The petition contends that Llorente's loss of the Managing Director position was due to non-reelection as a director and the subsequent abolition of the position, not an illegal dismissal. The Office of the Solicitor General concurred with the petitioner's jurisdictional argument.
Issue(s)
Whether the National Labor Relations Commission (NLRC) has jurisdiction over a complaint for illegal dismissal filed by Leopoldo Llorente, a corporate officer whose position was abolished and who was not reelected as director. Whether the removal of Leopoldo Llorente as Managing Director constitutes illegal dismissal, considering his non-reelection as Director and the subsequent abolition of his position.
Ruling
The petition is GRANTED. The challenged decision and order of the NLRC, as well as the decision of the Labor Arbiter, are ANNULLED and SET ASIDE for having been rendered without jurisdiction.
Ratio Decidendi
On the jurisdiction of the NLRC: The Supreme Court held that the NLRC acted without jurisdiction and with grave abuse of discretion in assuming jurisdiction over the case. The Court clarified that the removal of Llorente as Managing Director was not a dismissal but a consequence of his non-reelection as Director and the subsequent abolition of his position. The Court emphasized that matters concerning the election or appointment of directors, officers, or managers, and controversies arising from intra-corporate relations fall under the exclusive jurisdiction of the Securities and Exchange Commission (SEC) pursuant to Section 5(c) of P.D. No. 902-A. The position of Managing Director presupposes that its occupant is a Director, making the loss of directorship a failure to maintain a prerequisite for the position, not an illegal dismissal. The abolition of the position further solidifies the intra-corporate nature of the dispute. The Court cited previous rulings in Philippine School of Business Administration vs. Leano, Dy vs. National Labor Relations Commission, and Fortune Cement Corporation vs. National Labor Relations Commission to support this conclusion. The reliance of the NLRC on LEP International Philippines, Inc. vs. National Labor Relations Commission was deemed misplaced as that case did not involve a challenge to jurisdiction but the validity of a dismissal of a managerial employee who was not a stockholder or director. On whether the removal constitutes illegal dismissal: The Supreme Court ruled that Llorente was not illegally dismissed. His loss of the position of Managing Director was primarily due to his non-reelection as a Director during the regular stockholders' meeting. The position of Managing Director is contingent upon being a Director, and failure to be reelected means failure to qualify or maintain the prerequisite for that office. Furthermore, the position itself was abolished by the new Board of Directors. Therefore, the situation was not one of dismissal but rather a consequence of corporate actions, specifically non-reelection and abolition of the office, which are intra-corporate matters within the SEC's jurisdiction.
Main Doctrine
A complaint for illegal dismissal arising from the non-reelection of a corporate officer and the abolition of their position is an intra-corporate dispute falling under the exclusive jurisdiction of the Securities and Exchange Commission (SEC), not the National Labor Relations Commission (NLRC).