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 petitioners 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 LAs decision. On appeal, the CA affirmed the
decision of NLRC.
Hence, this petition.
ISSUE: WON petitioners complaint for illegal dismissal constitutes an intracorporate 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 Espinos 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 Arbiters 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 officers dismissal is always a corporate act, or an intracorporate 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 SECs jurisdiction over all cases listed in
Section 5 of PD 902-A:
5.2. The Commissions 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.]