Title
Cacho vs. Balagtas
Case
G.R. No. 202974
Decision Date
Feb 7, 2018
A corporate officer's dismissal case, deemed an intra-corporate dispute, falls under regular courts' jurisdiction, not labor arbiters.
Font Size:

Case Digest (G.R. No. 202974)

Facts:

Background of the Case:
This case involves a petition for review on certiorari filed by Norma D. Cacho and North Star International Travel, Inc. (petitioners) against Virginia D. Balagtas (respondent). The case originated from a complaint for constructive dismissal filed by Balagtas against North Star and its President, Cacho, before the Labor Arbiter.

Employment and Suspension of Balagtas:
Balagtas was an employee of North Star International Travel, Inc., serving as General Manager and later as Executive Vice President/Chief Executive Officer. On March 19, 2004, she was placed under a 30-day preventive suspension by the Board of Directors due to alleged questionable transactions. Balagtas complied with the order to explain the allegations but was prevented from reassuming her position after her suspension. She subsequently filed a complaint for constructive and illegal dismissal.

Defense of Petitioners:
Petitioners argued that Balagtas was suspended to prevent her from influencing witnesses and to protect the company’s property. They maintained that Balagtas was not dismissed but was merely under preventive suspension.

Labor Arbiter’s Decision:
The Labor Arbiter ruled that Balagtas was illegally dismissed and ordered North Star to pay her separation pay, backwages, commissions, and other benefits, along with moral and exemplary damages.

NLRC’s Ruling:
The National Labor Relations Commission (NLRC) reversed the Labor Arbiter’s decision, holding that Balagtas was a corporate officer and that her dismissal was an intra-corporate matter falling under the jurisdiction of the regular courts, not the Labor Arbiter.

Court of Appeals’ Decision:
The Court of Appeals reversed the NLRC’s ruling, affirming the Labor Arbiter’s decision. It applied the two-tier test (relationship and nature of controversy tests) and found that Balagtas was not a corporate officer and that the case was a labor dispute.

Issue:

  • (Unlock)

Ruling:

  • (Unlock)

Ratio:

  1. Corporate Officer Status: The Court applied the two-tier test to determine whether Balagtas was a corporate officer. It found that:

    • (a) Relationship Test: Balagtas’s position as Executive Vice President was a corporate office under North Star’s by-laws, and she was appointed by the Board of Directors, fulfilling the requirements for a corporate officer.
    • (b) Nature of Controversy Test: The dismissal was rooted in Balagtas’s role as a corporate officer, as the allegations against her were tied to her responsibilities, making it an intra-corporate dispute.
  2. Jurisdiction: The Court held that the dismissal of a corporate officer is an intra-corporate controversy, which falls under the jurisdiction of the regular courts, not the Labor Arbiters.

  3. Estoppel: The Court rejected Balagtas’s argument that petitioners were estopped from questioning jurisdiction, stating that the issue of jurisdiction can be raised at any stage of the proceedings and is not subject to estoppel.

The Court emphasized that the matter of electing or dismissing corporate officers is a corporate act that involves the internal affairs of the corporation and is not a mere labor dispute.


Jur is an AI-powered legal research platform in the Philippines for case digests, summaries, and jurisprudence. AI-generated content may contain inaccuracies; please verify independently.