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RepublicofthePhilippines
SUPREMECOURT
Manila

THIRDDIVISION

G.R.No.107660January2,1995

RAMONC.LOZON,petitioner,
vs.
NATIONALLABORRELATIONSCOMMISSION(SecondDivision)andPHILIPPINEAIRLINES,INC.,
respondents.

VITUG,J.:

PetitionerRamonC.Lozon,acertifiedpublicaccountant,wasaSenior
VicePresidentFinanceofPrivaterespondentPhilippineAirlines,Inc.("PAL"),whenhisserviceswereterminated
on19December1990intheaftermathofthemuchpublicized"twobillionpesoPALscam."Lozonstartedtowork
forthenationalcarrieron23August1967and,fortwentythreeyears,steadilyclimbedthecorporateladderuntil
hebecameoneofitsvicepresidents.1

His termination from the service was spawned by a letter sent some time in June 1990 by a member of PAL's
boardofdirectors,thenSolicitorGeneralFranciscoChavez,toPALPresidentDanteSantos.Chavezdemanded
aninvestigationoftwentythreeirregularitiesallegedlycommittedbytwentytwohighrankingPALofficials.Among
these officials was petitioner he had been administratively charged by Romeo David, Senior VicePresident for
CorporateServicesandLogisticsGroup,forhis(Lozon)purportedinvolvementinfourcases,labeled"Goldair,"
"Autographics,""BigBangof1983"and"Middle
East."2Pendingtheinvestigationofthesecasesbyapanel3constitutedbythenPresidentCorazonC.Aquino,petitioner
wasplacedunderpreventivesuspension.

In the organizational meeting of the PAL board of directors on 19 October 1990 which occasion Feliciano R.
Belmonte, Jr., was elected chairman of the board while Dante G. Santos was designated president and chief
executiveofficer,4theboarddeferredactionontheelectionorappointmentofsomeseniorofficersofthecompanywho,
likepetitioner,hadbeenchargedwithvariousoffenses.

On18January1991,thePALboardofdirectorsissuedtworesolutionsrelativetotheinvestigationconductedby
the presidential investigating panel in the "Autographics" and "Goldair" cases. In "Autographics," petitioner was
charged,alongwiththreeotherofficials,5with"grossinefficiency,negligence,imprudence,mismanagement,dereliction
of duty, failure to observe and/or implement administrative and executive policies" and with the "concealment, or coverup
and prevention of the seasonal discovery of the anomalous transactions" had with Autographics, Inc., resulting in, among
other things, an overpayment by PAL to Autographics in the amount of around P12 million. Petitioner was forthwith
considered"resignedfromtheservice...forlossofconfidenceandforactsinimicaltotheinterestsofthecompany."6A
similar conclusion was arrived at by the PAL board of directors with regard to petitioner in the "Goldair" case where he,
together with six other PAL officials,7 were charged with like "offenses" that had caused PAL's defraudation by Goldair,
PAL'sgeneralsalesagentinAustralia,of14.6millionAustraliandollars.8

AggrievedbytheactiontakenbythePALboardofdirectors,petitioner,on26June1991filedwiththeNational
Labor Relations Commission ("NLRC") in Manila a complaint (docketed NLRCNCR Case No. 00060368491)
forillegaldismissalandforreinstatement,withbackwagesand"fringebenefitssuchasVacationleave,Sickleave,
13th month pay, Christmas Bonus, Medical Expenses, car expenses, trip pass entitlement, etc., plus moral
damagesofP40Million,exemplarydamagesofP10Millionandreasonableattorney'sfees."9

On 09 August 1991, 10 the PAL board of directors also held petitioner as "resigned from the company" for loss of
confidence and for acts inimical to the interests of the company in the "Big Bang of 1983" case for his alleged role in the
irregularitiesthathadprecipitatedthewritedown(writeoff)ofassetsamountingtoP553millionfromthebooksandfinancial
statements of PAL. 11 In the "Middle East" case, the PAL board of directors, on the anomalous administration of
commercialmarketingarrangementsinwhichPALhadlostanestimatedP120million.12

PAL defended the validity of petitioner's dismissal before the Labor Arbiter. It questioned at the same time the
jurisdictionoftheNLRC,positingthetheorythatsincetheinvestigatingpanelwasconstitutedbythenPresident
Aquino, said panel, along with the PAL board of directors, became "a parallel arbitration unit" which, in legal
contemplation, should be deemed to have substituted for the NLRC. Thus, PAL averred, petitioner's recourse
shouldhavebeentoappealhiscasetotheOfficeofthePresident. 13 On the other hand, petitioner questioned the
authority of the panel to conduct the investigation, asseverating that the charges leveled against him were purely
administrative in nature that could have well been ventilated under the grievance procedure outline in PAL's Code of
Discipline.

On17March1992,LaborArbiterJoseG.deVerarenderedadecisionrulingforpetitioner.14Thedecretalportion
ofthedecisionread:

WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered ordering
therespondentPhilippineAirlines,Inc.,toreinstatethecomplainanttohisformerpositionwithallthe
rights, privileges, and benefits appertaining thereto plus backwages, which as of March 15, 1992
already amounted to P2,632,500.00, exclusive of fringes. Further, the respondent company is
orderedtopaycomplainantasfollows:P5,000.00asmoraldamagesP1,000,000.00asexemplary
damages,andattorney'sfeesequivalenttotenpercent(10%)ofalloftheforegoingawards.

SOORDERED.15

Adayafterpromulgatingthedecision,thelaborarbiterissuedawritofexecution.PALfiledamotiontoquashthe
writpetitionerpromptlyopposed.Afterthelaborarbiterhaddeniedthemotiontoquash,PALfiledapetitionfor
injunction with the NLRC (docketed NLRC IC Case No. 0026192). No decision was rendered by NLRC on this
petition.16

Meanwhile,PALappealedthedecisionofthelaborarbiterbyfilingamemorandumonappeal, 17 assailing, once

again, the jurisdiction of the NLRC but this time on the ground that the issue pertaining to the removal or dismissal of
petitioner,acorporateofficer,waswithintheexclusiveandoriginaljurisdictionoftheSecuritiesandExchangeCommission
("SEC"). Petitioner interposed a partial appeal praying for an increase in the amount of moral and exemplary damages
awardedbythelaborarbiter.18

On24July1992,theNLRCrenderedadecision(inNLRCNCRCaseNo.00060368491) 19dismissingthecase
onthestrengthofPAL'snewargumentontheissueofjurisdiction. 20Petitioner'smotionforreconsiderationwasdeniedby
theNLRC.

The instant petition for certiorari filed with this Court raises these issues: (a) Whether or not the NLRC has
jurisdictionovertheillegaldismissalcase,and(b)ontheassumptionthattheSEChasthatjurisdiction,whetheror
notprivaterespondentisestoppedfromraisingNLRC'slackofjurisdictionoverthecontroversy.

WesustainNLRC'sdismissalofthecase.

Presidential Decree No. 902A confers on the SEC original and exclusive jurisdiction to hear and decide
controversiesandcasesinvolving

a. Intracorporate and partnership relations between or among the corporation, officers and
stockholdersandpartners,includingtheirelectionsorappointments

b. State and corporate affairs in relation to the legal existence of corporations, partnerships and
associationsortotheirfranchisesand

c.Investorsandcorporateaffairs,particularlyinrespectofdevicesandschemes,suchasfraudulent
practices,employedbydirectors,officers,businessassociates,and/orotherstockholders,partners,
ormembersofregisteredfirmsaswellas

d. Petitions for suspension of payments filed by corporations, partnerships or associations

possessingsufficientpropertytocoveralltheirdebtsbutwhichforeseetheimpossibilityofmeeting
them when they respectively fall due, or possessing insufficient assets to cover their liabilities and
said entities are upon petition or motu propio, placed under the management of a Rehabilitation
ReceiverorManagementCommittee.
Specifically, in intracorporate matters concerning the election or appointment of officers of a corporation, the
decreeprovides:

Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange
Commission over corporations, partnerships and other forms of association registered with it as
expresslygrantedunderexistinglawsanddecrees,itshallhaveoriginalandexclusivejurisdictionto
hearanddecidecasesinvolving:

xxxxxxxxx

(c)Controversiesintheelectionorappointmentsofdirectors,trustees,officersormanagersofsuch
corporations,partnershipsorassociation.

Petitionerhimselfadmitsthatvicepresidentsareseniormembersof
management,21whosedesignationsarenolongerthanjustbymeansofordinarypromotions.Inhisowncase,petitioner
hasbeenelectedtothepositionofSeniorVicePresidentFinanceGroupbyPAL'sboardofdirectorsatitsorganizational
meetingheldon20October1989pursuanttotheBylaws, 22underwhich,hewouldserveforatermofoneyearanduntil
his successor shall have been elected and qualified. 23 Petitioner, for reasons already mentioned, did not get to be re
electedthereafter.24

InFortuneCementCorporationv.NLRC,25theCourthasquotedwithapprovaltheSolicitorGeneral'scontentionthat"a
corporateofficer'sdismissalisalwaysacorporateactand/orintracorporatecontroversyandthatnatureisnotalteredbythe
reason or wisdom which the Board of Directors may have in taking such action." Not the least insignificant in the case at
bench is that petitioner's dismissal is intertwined with still another intracorporate affair, earlier so ascribed as the "two
billionpesoPALscam,"thatinevitablyplacesthecaseunderthespecializedcompetenceoftheSECandwellbeyondthe
ambitofalaborarbiter'snormaljurisdictionunderthegeneralprovisionsofArticle217oftheLaborCode.26

Petitioner contends that the jurisdiction of the SEC excludes its cognizance over claims for vacation and sick
leaves, 13th month pay, Christmas bonus, medical expenses, car expenses, and other benefits, as well as for
moral damages and attorney's fees. 27 Dy v. NLRC 28 categorically states that the question of remuneration being
assertedbyanofficerofacorporationis"notasimplelaborproblembutamatterthatcomeswithintheareaofcorporate
affairs and management, and is in fact, a corporate controversy in contemplation of the Corporation Code." With regard to
thematterofdamages,inAndayav.
Abadia 29 where, in a complaint filed before the Regional Trial Court, the president and general manager of the Armed
Forces and Police Savings and Loan Association ("AFPSLAI") questioned his ouster from the stewardship of the
association,thisCourt,indismissingthepetitionassailingtheorderofthetrialcourtwhichruledthatSEC,nottheregular
courts,hadjurisdictionoverthecase,hassaid:

The allegations against herein respondents in the amended complaint unquestionably reveal intra
corporate controversies cleverly conceals, although unsuccessfully, by use of civil law terms and
phrases.Theamendedcomplaintimpleadshereinrespondentswho,intheircapacityasdirectorsof
AFPSLAI, allegedly convened an illegal meeting and voted for the reorganization of management
resultinginpetitioner'sousterascorporateofficer.Whileitmaybesaidthatthesamecorporateacts
alsogiverisetocivilliabilityfordamages,itdoesnotfollowthatthecaseisnecessarilytakenoutof
thejurisdictionoftheSECasitmayawarddamageswhichcanbeconsideredconsequentialinthe
exerciseofitsadjudicativepowers.Besides,incidentalissuesthatproperlyfallwithintheauthorityof
a tribunal may also be considered by it to avoid multiplicity of actions. Consequently, in intra
corporate matters such as those affecting the corporation, its directors, trustees, officers,
shareholders,theissueofconsequentialdamagesmayjustaswellberesolvedandadjudicatedby
theSEC.(Emphasissupplied.)

Weherereiteratetheaboveholdingsfor,indeed,controversieswithinthepurviewofSection5ofP.D.No.902A
mustnotbesoconstrictedastodenytotheSECthesoundexerciseofitsexpertiseandcompetenceinresolving
allcloselyrelatedaspectsofsuchcorporatedisputes.

PetitionermaintainsthatPALisestopped,nevertheless,fromquestioningthejurisdictionoftheNLRCconsidering
thatPALdidnotholdthedisputetobeintracorporateuntilafterthecasehadalreadybeenbroughtonappealto
theNLRC.

Inthefirstplace,therewouldnotbemuchbasistoindicatethatPALwas"effectivelybarredbyestoppel." 30 As
earlyastheinitialstagesofthecontroversyPALhadalreadyraisedtheissueofjurisdictionalbeitmistakenlyatfirstonthe
groundthatpetitioner'srecoursewasanappealtotheOfficeofthePresident.TheerrorcouldnotalterthefactthatPALdid
questioneventhenthejurisdictionofboththelaborarbiterandtheNLRC.

Ithaslongbeentheestablishedrule,moreover,thatjurisdictionoverasubjectmatterisconferredbylaw, 31 and
the question of lack of jurisdiction may be raised at anytime even on appeal. 32 In the recent case of La Naval Drug
Corporationvs.CourtofAppeals,G.R.No.103200,31August1994,thisCourtsaid:

Lackofjurisdictionoverthesubjectmatterofthesuitisyetanothermatter.Wheneveritappearsthat
thecourthasnojurisdictionoverthesubjectmatter,theactionshallbedismissed(Section2,Rule9,
Rules of Court). This defense may be interpose at any time, during appeal (Roxas vs. Rafferty, 37
Phil.957)orevenafterfinaljudgment(Cruzcosavs.JudgeConcepcion,etal.,101Phil.146).Suchis
understandable,asthiskindofjurisdictionisconferredbylawandnotwithinthecourts,letalonethe
parties,tothemselvesdetermineorconvenientlysetaside.InPeoplevs.Casiano(111Phil.73,93
94),thisCourt,ontheissueofestoppel,held:

"The operation of the principle of estoppel on the question of jurisdiction seemingly

depends upon whether the lower court actually had jurisdiction or not. If it had no
jurisdiction,butthecasewastriedanddecideduponthetheorythatithadjurisdiction,
the parties are not barred, on appeal, from assailing such jurisdiction, for the same
"mustexistasamatteroflaw,andmaynotbeconferredbyconsentofthepartiesorby
estoppel"(5C.J.S.,861863).However,ifthelowercourthadjurisdiction,andthecase
washeardanddecideduponagiventheory,such,forinstance,asthatthecourthadno
jurisdiction, the party who induced it to adopt such theory will not be permitted, on
appeal,toassumeainconsistentpositionthatthelowercourthadjurisdiction.Here,
theprincipleofestoppelapplies.Therulethatjurisdictionisconferredbylaw,anddoes
notdependuponthewilloftheparties,hasnobearingthereon."

Petitioner points to "PAL's scandalous duplicity" in questioning the jurisdiction of the NLRC in this particular
controversy while upholding it (NLRC's jurisdiction) in "Robin Dui v. Philippine Airlines" (Case No. 00420267)
pending before the Commission. We need not delve into whether or not PAL's conduct does indeed smack of
opportunitiessufficeittosaythatRobinDuiisentirelyanindependentandseparatecaseand,morethanthat,it
isnotbeforeusinthisinstance.

WHEREFORE, the herein petition for certiorari is DISMISSED, and the decision appealed from is AFFIRMED,
withoutprejudicetopetitioner'sseeking,ifcircumstancespermit,arecourseintheproperforum.Nocosts.

SOORDERED.

Bidin,RomeroandMelo,JJ.,concur.

Feliciano,J.,isonleave.

Footnotes

1Petitionerheldthefollowingpositions:TechnicalAssistanttotheComptroller,August23,
1967toJuly23,1968DirectorCorporateAcct.July24,1968toJuly31,1970Comptroller
August1,1970toJuly15,1975VicePresident(Comptroller)July16,1975toMay15,
1979VicePresident(Treasury)May16,1979toJuly15,1986VicePresident(Finance&
Treasurer)July16,1986toJuly15,1987andSeniorVicePresident(FinanceGroup)
June9,1987(Rollo,p.17.)

2Rollo,pp.354392.

3ComposedofJudgeMartinA.OcampofromtheOfficeofthePresident,aschairman,and
FiscalsCesarM.SolisandHenrickF.Gingoyon,bothoftheProsecutionStaffofthe
DepartmentofJustice,asmembers.

4Rollo,pp.351352.

5MilagrosA.Abad,vicepresident,inflightservicesRicardoV.Puno,Jr.,vicepresident,legal
department,andDanielS.Pido,director,cabincrewservices.

6Rollo,p.366.

7LeslieW.Espino,RomeoR.Ines,RobinC.Dui,JosefinaSioson,AidaM.QuijanoandJuan
Ygoa.

8Rollo,p392.

9Ibid.,p.78.
 10ThecasewasbythenpendingwiththeNLRC.

11Ibid.,p.358.ChargedwithpetitionerinthiscasewereRomeoR.Ines,RobinDuiand
JosefinaSioson.

12Ibid.,p.379.PetitionerwaschargedinthiscasetogetherwithLesliW.Espino,JoseMaria
G.Estrada,RomeoR.Ines,RicardoV.Puno,Jr.andDorisCuenca.

13Ibid.,p.130.

14Ibid.,pp.5777.

15Rollo,p.7677.

16Ibid.,p.9.

17Ibid.,p.157.

18Ibid.,p.191.

19PennedbyCommissionerDomingoH.ZapantaandconcurredinbyCommissionerEdnaBonto
Perez.

20Rollo,p.40.

21InhispositionpaperbeforetheNLRC,Rollo,p.107.

22Ibid.,pp.291,334338.

23Ibid.,p.345.

24On23October1991,acertainRicardoG.PalomawasinsteadelectedSeniorVicePresidentfor
Finance(Rollo,pp.393395).

25193SCRA258.

26SeeMacapalanv.KatalbasMoscardon,227SCRA49,54citingVirayv.CourtofAppeals,191
SCRA308andUnionGlass&ContainerCorporationv.SecuritiesandExchangeCommission,126
SCRA31.

27CitingTanv.SecuritiesandExchangeCommission,206SCRA740,wheretheCourt,giventhe
casesettings,saidthattheSECwasnotempoweredtoawarddamagesbutmayonlyimposeafine
andimprisonmentunderSec.56oftheRevisedSecuritiesAct(mistakenlyreferredtointhedecision
astheCorporationCode).

28145SCRA211,213.

29228SCRA705seealsoA&AContinentalCommoditiesPhilippines,Inc.v.Sec,225SCRA341,
346.

30SeePantrancoNorthExpress,Inc.v.CourtofAppeals,224SCRA477,491.

31IlawatBuklodngManggagawa(IBM)v.NLRC,219SCRA536citingTijamv.Sibonghanoy,23
SCRA29AtlasDeveloper&SteelIndustries,Inc.v.SarmientoEnterprises,184SCRA153.

32Zamorav.CourtofAppeals,183SCRA279.

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