G.R. No. 107660 January 2, 1995
RAMON C. LOZON, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION (Second Division) and PHILIPPINE AIRLINES, INC., respondents.

FACTS

Petitioner Ramon C. Lozon, a certified public accountant and Senior Vice-President-Finance of Philippine Airlines, Inc. (PAL), was terminated on December 19, 1990. His dismissal stemmed from his alleged involvement in four major financial irregularities investigated by a presidential panel, known collectively as the “PALscam.” Following the investigation, the PAL Board of Directors issued resolutions finding him liable in the “Autographics” and “Goldair” cases, considering him resigned for loss of confidence and acts inimical to the company. Similar resolutions were later issued for the “Big Bang of 1983” and “Middle East” cases.
Lozon filed a complaint for illegal dismissal with the National Labor Relations Commission (NLRC). The Labor Arbiter ruled in his favor, ordering reinstatement with backwages and damages. PAL appealed to the NLRC, initially questioning jurisdiction by arguing the presidential panel had created a parallel arbitration unit. On appeal, PAL shifted its jurisdictional argument, contending that the dismissal of a corporate officer like Lozon fell under the exclusive original jurisdiction of the Securities and Exchange Commission (SEC). The NLRC reversed the Labor Arbiter and dismissed the case for lack of jurisdiction.

ISSUE

Whether the NLRC has jurisdiction over the illegal dismissal case of a corporate officer, or if such jurisdiction pertains exclusively to the SEC.

RULING

The Supreme Court ruled that the NLRC has jurisdiction. The legal logic hinges on the distinction between a corporate officer and a corporate executive acting as an employee. Jurisdiction over dismissal cases is determined by the nature of the relationship and the cause of action. A corporate officer, under the Corporation Code, is one elected or appointed by the Board of Directors or shareholders, such as those listed in the bylaws (e.g., President, Treasurer). Their removal is generally an intra-corporate dispute under SEC jurisdiction. In contrast, an employee, even if holding a high-ranking title like Senior Vice-President, is hired under a employer-employee relationship and is protected by labor laws under NLRC jurisdiction.
The Court found that Lozon, despite his title, was not a corporate officer as defined by PAL’s bylaws or the Corporation Code. His appointment was not through election by the Board or stockholders but through corporate management in the ordinary course of business. His dismissal was based on alleged breaches of duty as an employee, not on a corporate act of removal. Therefore, his case involved an employer-employee relationship, placing it squarely within the jurisdiction of the NLRC. The Court also held that PAL was estopped from raising the NLRC’s lack of jurisdiction after having actively participated in the proceedings before the Labor Arbiter and initially submitting to its authority.