G.R. No. 202974 , February 7, 2018
NORMA D. CACHO and NORTH STAR INTERNATIONAL TRAVEL, INC., Petitioners vs. VIRGINIA D. BALAGTAS, Respondent

FACTS

Respondent Virginia Balagtas was an incorporator, director, and the elected Executive Vice President/Chief Executive Officer of petitioner North Star International Travel, Inc. On March 19, 2004, the Board of Directors placed her under a 30-day preventive suspension due to alleged questionable transactions. Balagtas complied with the order to explain but later attempted to reassume her position during the suspension period, which was prevented by petitioner Norma Cacho, the company President. Consequently, Balagtas filed a complaint for constructive dismissal before the Labor Arbiter. The Labor Arbiter ruled in her favor, declaring the dismissal illegal and awarding separation pay, backwages, damages, and attorney’s fees.
On appeal, petitioners raised the issue of jurisdiction for the first time before the National Labor Relations Commission (NLRC). They argued that Balagtas, as a corporate officer, was not a mere employee and that her dismissal constituted an intra-corporate dispute falling under the jurisdiction of the regular courts, not the labor tribunals. The NLRC agreed, reversing the Labor Arbiter’s decision and dismissing the complaint for lack of jurisdiction. Balagtas then filed a petition for certiorari with the Court of Appeals, which reinstated the Labor Arbiter’s decision, holding that the NLRC had jurisdiction.

ISSUE

Whether the labor tribunals (Labor Arbiter and NLRC) have jurisdiction over the complaint for illegal dismissal filed by respondent Virginia Balagtas.

RULING

The Supreme Court ruled that the labor tribunals have jurisdiction. The Court clarified that jurisdiction is determined by the allegations in the complaint. Balagtas’s complaint was one for illegal dismissal, a matter expressly falling under the original and exclusive jurisdiction of Labor Arbiters under Article 217 of the Labor Code. The fact that she was a corporate officer does not automatically oust labor tribunals of jurisdiction. The doctrine that disputes involving corporate officers are intra-corporate controversies applies only when the controversy arises from intra-corporate relations, such as election or removal of officers as prescribed by corporate by-laws or the Corporation Code.
Here, Balagtas’s complaint was rooted in employer-employee relations, specifically an alleged illegal termination of her employment. The cause of her removal was not an intra-corporate act like a board resolution for removal under corporate governance rules but was treated as a disciplinary action akin to that of an ordinary employee. The Court distinguished this from cases where an officer is removed via a corporate act in accordance with the by-laws. Since the complaint essentially alleged an unfair labor practice and sought reinstatement and backwages—remedies under labor law—the Labor Arbiter correctly assumed jurisdiction. The NLRC’s dismissal was erroneous, and the Court of Appeals correctly reinstated the Labor Arbiter’s decision.