Real v. Sangu Philippines

G.R. No. 168757 (January 19, 2011)

Facts:

Petitioner Renato Real was the Manager of Sangu Philippines, Inc., a corporation providing manpower services. In 2001, he, along with 29 other employees, filed complaints for illegal dismissal against the corporation and its Vice-President, Kiichi Abe. Real was removed from his managerial position through Board Resolution 2001-03, which he claimed was invalid as he was not notified of the Board Meeting where the resolution was passed, nor was he formally charged with any infraction. He received a termination letter stating his dismissal was effective March 25, 2001, citing reasons such as continuous absences, loss of trust and confidence, and the need to cut operational expenses.

Respondents contended that Real had committed gross misconduct, including frequent absences, neglect of duties, and engaging in unruly behavior while intoxicated at a client’s premises. They also alleged that he established a competing business and incited employees to file complaints and stage a strike. The Board of Directors met and adopted the resolution to terminate him based on these claims.

The Labor Arbiter ruled in favor of Real, declaring the dismissal illegal due to lack of due process and insufficient evidence for the stated grounds. Respondents appealed to the National Labor Relations Commission (NLRC), arguing that Real's complaint was an intra-corporate controversy, thus beyond the jurisdiction of the Labor Arbiter, as he was both a stockholder and a corporate officer.

The NLRC sided with the respondents, finding that Real's status as a stockholder and corporate officer meant his complaint was indeed intra-corporate. The Court of Appeals (CA) affirmed this decision, leading Real to elevate the case to the Supreme Court.

Legal Issues:

The primary legal issue was whether Real's complaint for illegal dismissal constituted an intra-corporate controversy, thereby placing it beyond the jurisdiction of the Labor Arbiter.

Arguments:

• Petitioner’s Arguments:

  • Real argued that he was not a corporate officer, as he was neither elected nor appointed by the Board of Directors to such a position. He contended that his complaint arose from an employer-employee relationship, which falls under the jurisdiction of the Labor Arbiter.
  • He pointed out that the termination letter acknowledged his entitlement to benefits under the Labor Code, implying recognition of an employer-employee relationship.

• Respondents’ Arguments:

  • Respondents maintained that Real's status as a stockholder and corporate officer classified the case as an intra-corporate controversy. They cited jurisprudence stating that disputes between stockholders and corporations are inherently intra-corporate.
  • They argued that Real's actions, including establishing a competing business and inciting strikes, constituted disloyalty and misconduct, justifying his dismissal.

Court’s Decision and Legal Reasoning:

The Supreme Court ruled in favor of Real, reversing the CA's decision. The Court established that not all disputes involving stockholders and corporations are intra-corporate. It applied a two-tier test to determine jurisdiction, which considers both the status of the parties and the nature of the controversy.

1. Status of the Parties: The Court found that while Real was a stockholder, there was insufficient evidence to classify him as a corporate officer. The respondents failed to provide documentation proving his appointment as Manager was made in accordance with the corporation's by-laws.

2. Nature of the Controversy: The Court determined that the complaint stemmed from Real's dismissal as a Manager, not as a stockholder or corporate officer. The reasons for his dismissal were related to his performance in the managerial role, thus falling under labor relations rather than intra-corporate disputes.

The Court concluded that Real's dismissal was illegal due to lack of due process and insufficient evidence for the stated grounds. It affirmed the Labor Arbiter's decision for reinstatement and backwages, ordering the case to be remanded to the NLRC for computation of these amounts.

Significant Legal Principles Established:

• The distinction between intra-corporate controversies and labor disputes is critical in determining jurisdiction.
• The two-tier test for jurisdiction requires consideration of both the relationship of the parties and the nature of the controversy.
• The burden of proof lies with the employer in cases of illegal dismissal, and due process must be observed in termination proceedings.