Perlas - de Rossi vs. NLRC

G.R. No. 108710 September 14, 1999 officers. Section 5, paragraph (c) of P.D.
902-A unequivocally
provides that SEC has jurisdiction over intra-corporate affairs
ARMANDO T. DE ROSSI, petitioner, regarding the election or appointment of officers of a
vs. corporation.
NATIONAL LABOR RELATIONS COMMISSION (First
Division), MATLING INDUSTRIAL AND COMMERCIAL We have earlier pronounced that an "office" is created by the
CORPORATION AND RICHARD K. SPENCER, charter of the corporation under which a corporation is
respondents. organized, and the officer is elected by the directors or
stockholders. In the present case, private respondents aver
FACTS: that the officers and their terms of office are prescribed by
the corporation's by-laws, which provide as follows:
An Italian citizen, petitioner was the Executive Vice-
President and General Manager of private respondent, BY-LAW NO. III Directors and Officers
Matling Industrial and Commercial Corporation (MICC). He
started work on July 1, 1985. On August 10, 1988, MICC xxx xxx xxx
terminated his employment.
Aggrieved, petitioner filed with the NLRC, National Capital The officers of the corporation shall be the President,
Region on September 21, 1989, a complaint for illegal Executive Vice President, Secretary and Treasurer,
dismissal with corresponding damages. each of whom may hold his office until his successor
is elected and qualified, unless sooner removed by
MICC based petitioner's dismissal on the ground that the the Board of Directors; Provided, That for the
petitioner failed to secure his employment permit, grossly convenience of the corporation the office of the
mismanaged the business affairs of the company, and Secretary and Treasurer may be held by one and the
misused corporate funds. However, petitioner argued that it same person. Officers shall be designated by the
was the duty of the company to secure his work permit stockholders' meeting at the time they elect the
during the term of his office, and that his termination was members of the Board of Directors. Any vacancy
illegal for lack of just cause. occurring among the officers of the Corporation on
account of removal or resignation shall be filled by a
Labor Arbiter Asuncion rendered a decision in favor of stockholder's meeting. Stockholders holding one half,
petitioner. or more of the subscribed capital stock of the
corporation may demand and compel the resignation
Private respondents contended that the position of executive of any officer at any time. 10
vice-president is an elective post, specifically provided by the
corporate's by-laws. Thus, the dismissal of the petitioner was The by-laws being in force, clearly petitioner is considered
an intra-corporate matter within the jurisdiction of the an officer of MICC, elected and/or designated by its board of
Securities and Exchange Commission (SEC) and neither directors. Following Section 5(c) of P.D. No. 902-A, the SEC
with the Labor Arbiter nor the NLRC. They argued that the exercises exclusive jurisdiction over controversies regarding
SEC and not the NLRC has original and exclusive the election and/or designation of directors, trustees, officers
jurisdiction over the subject matter which involves the or managers of a corporation, partnership or association.
removal of a corporate officer. This provision is indubitably applicable to the petitioner's
case. Jurisdiction here is not with the Labor Arbiter nor the
NLRC rendered its decision recognizing the SEC's NLRC, but with the SEC.
jurisdiction over the case.
ISSUE: Note that a corporate officer's removal from his office is a

corporate act. If such removal occasions an intra-corporate
WHETHER OR NOT THE NATIONAL LABOR RELATIONS controversy, its nature is not altered by the reason or
COMMISSION COMMITTED GRAVE ABUSE OF wisdom, or lack thereof, with which the Board of Directors
DISCRETION AMOUNTING TO LACK OF JURISDICTION might have in taking such action. When petitioner, as
OR ACTED IN EXCESS OF ITS JURISDICTION IN Executive Vice-President allegedly diverted company funds
HOLDING THAT THE SECURITIES AND EXCHANGE for his personal use resulting in heavy financial losses to the
COMMISSION HAS JURISDICTION OVER THE company, this matter would amount to fraud. Such fraud
COMPLAINT FOR ILLEGAL DISMISSAL FILED BY would be detrimental to the interest not only of the
PETITIONER. corporation but also of its members. This type of fraud
encompasses controversies in a relationship within the
RULING: corporation covered by SEC jurisdiction. Perforce, the matter
would come within the area of corporate affairs and
In a string of cases this Court has consistently held that the management, and such a corporate controversy would call
SEC, and not the NLRC, has original and exclusive for the adjudicative expertise of the SEC, not the Labor
jurisdiction over cases involving the removal of corporate Arbiter or the NLRC.

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G.R. No. 108710 September 14, 1999 officers. Section 5, paragraph (c) of P.D.

ISSUE: Note that a corporate officer's removal from his office is a

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