Case Summary (G.R. No. 201298)
Applicable Law and Procedural Posture
The petition for review on certiorari was filed under Rule 45 of the Rules of Court, assailing the Court of Appeals’ (CA) decision that the Regional Trial Court (RTC) had jurisdiction over Cosare’s complaint rather than the Labor Arbiter (LA). The case was decided in 2014, thus applying the 1987 Philippine Constitution and relevant laws, primarily the Labor Code and the Corporation Code, including Presidential Decree No. 902-A as amended.
Background and Labor Complaint
Cosare’s complaint was for constructive dismissal, illegal suspension, and monetary claims filed with the National Labor Relations Commission (NLRC). Allegations included being asked to resign in exchange for financial assistance, being barred from accessing company files and assets, and being suspended without due process. Respondents asserted abandonment and misconduct as justifications for separation.
Labor Arbiter’s Decision
The LA dismissed Cosare’s complaint, concluding that he was not dismissed and that the March 30, 2009 memorandum was a mere show-cause order. The LA found insufficient evidence to prove illegal suspension or nonpayment of employee benefits. Cosare appealed to the NLRC.
NLRC’s Ruling
The NLRC reversed the LA’s decision, holding that Cosare was constructively dismissed when asked to resign and suspended from company assets without just cause. The NLRC awarded backwages, separation pay, and damages totaling approximately P1.9 million, including exemplary damages due to bad faith termination. The claim for unpaid commissions was denied for procedural reasons.
Court of Appeals’ Decision
On respondents’ petition, the CA ruled in favor of the respondents, holding that the dispute was an intra-corporate controversy subject to RTC jurisdiction under Presidential Decree No. 902-A. The CA found that Cosare was a corporate officer by virtue of his position as AVP for Sales and his inclusion as an officer in Broadcom’s General Information Sheet submitted to the Securities and Exchange Commission (SEC). The CA dismissed the labor complaint for lack of jurisdiction.
Issues on Review
The Supreme Court resolved two principal issues: (1) whether the labor complaint was an intra-corporate dispute within the RTC’s jurisdiction or properly cognizable by the Labor Arbiter; and (2) whether Cosare was constructively and illegally dismissed.
Jurisdiction Over the Controversy
The Court reaffirmed that disputes involving termination of employment fall primarily within the jurisdiction of the Labor Arbiter pursuant to Article 217 of the Labor Code. The mere fact of being a stockholder or holding a position labeled as "officer" does not convert a labor dispute into an intra-corporate controversy.
An intra-corporate dispute involves internal corporate governance issues or stockholder conflicts resolved by regular courts, not the Labor Arbiter. Following precedent, the Court distinguished between a regular employee and a bona fide corporate officer whose office is created by the corporation’s charter or by-laws, and who is elected by the board or stockholders.
Definition and Classification of Corporate Officers
The Court clarified that corporate officers for jurisdictional purposes are those expressly created under the Corporation Code and the corporation’s by-laws, specifically the President, Secretary, and Treasurer, with some corporations including Vice-President, General Manager, or other expressly created positions. Broadcom’s by-laws provided for the President, Vice-President, Treasurer, and Secretary, and for the board’s power to appoint other officers as necessary.
However, the Court found that Cosare’s position as AVP for Sales was not proven to be a corporate office created by the board or stockholders. No board resolution or formal appointment was presented. Moreover, relying solely on the General Information Sheets submitted to the SEC was insufficient to establish corporate office status for jurisdictional purposes.
Precedents emphasize that a position created merely by a board’s enabling clause without amendment of the by-laws to include such office does not constitute a corporate office. This protects employees’ security of tenure from circumvention.
Relation of Cosare’s Stockholder Status to Jurisdiction
Being a stockholder did not make the dispute intra-corporate. For a controversy to be intra-corporate, it must involve enforcement of corporate rights and obligations under the Corporation Code and internal corporate governance. Here, the dispute concerned Cosare’s employment relationship, rights, and obligations as a regular officer, not a corporate governance issue.
Hence, the CA erred in concluding that the RTC had exclusive jurisdiction over the claim.
Constructive and Illegal Dismissal
The Court agreed with the NLRC that Cosare was constructively dismissed. Constructive dismissal occurs where employment becomes intolerable due to employer actions, ef
...continue readingCase Syllabus (G.R. No. 201298)
Background and Nature of the Case
- The case involves a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the November 24, 2011 Decision and March 26, 2012 Resolution of the Court of Appeals (CA).
- The CA ruled that the Regional Trial Court (RTC) had jurisdiction over the petitioner’s complaint for illegal dismissal, not the Labor Arbiter (LA).
- Petitioner Raul C. Cosare filed a complaint for constructive dismissal, illegal suspension, and monetary claims before the National Capital Region Arbitration Branch of the National Labor Relations Commission (NLRC), against Broadcom Asia, Inc. and its President, Dante Arevalo.
- Cosare’s employment began in 1993 as a salesman, and he was named an incorporator with 100 shares of stock when Broadcom was established in 2000.
- He was promoted in 2001 to Assistant Vice President (AVP) for Sales and Head of Technical Coordination, earning a basic monthly net salary of ₱18,000 plus average commissions of ₱37,000.
Allegations and Employment Dynamics Leading to the Dispute
- In 2003, Alex F. Abiog was appointed Vice President for Sales, becoming Cosare’s immediate superior.
- On March 23, 2009, Cosare sent a confidential memo to Arevalo reporting alleged anomalies committed by Abiog, including failure to report on time, encouraging clients to buy competitors' products, gaining unauthorized commissions, and grievances about uncompetitive salaries and delayed benefits.
- Arevalo did not act on the memo; instead, on March 25, 2009, Cosare was asked to resign with an offer of ₱300,000 financial assistance, which he rejected.
- On March 30, 2009, Cosare received a memo signed by Arevalo charging him with serious misconduct and willful breach of trust; reasons included attempted diversion of clients to competitors, abandonment of a company vehicle in poor condition, failure to submit reports, frequent absence/tardiness, and no sales recorded over twelve months.
- Cosare was directed to submit an explanation within 48 hours and was suspended from using company assets.
- From March 31, 2009, Cosare was effectively barred from accessing the company premises and his personal belongings, prompting him to file a barangay blotter report.
Procedural History and Respondents’ Defense
- Cosare furnished a written denial memo on April 2, 2009, which the respondents refused to accept due to late filing, leading him to send it by registered mail.
- On April 3, 2009, Cosare filed the labor complaint claiming constructive dismissal and illegal suspension.
- Respondents contended Cosare was neither illegally suspended nor dismissed, that he abandoned his job starting April 1, 2009, and asserted acts detrimental to the company including failure to sell since 2007 and making unauthorized requests.
- On April 14, 2009, a memorandum accused Cosare of absence without leave beginning April 1.
Decision of the Labor Arbiter (LA)
- On January 6, 2010, the LA dismissed Cosare’s complaint, holding that he failed to prove he was dismissed, whether constructively or otherwise.
- The LA viewed the March 30 memo as a show-cause order affording Cosare a chance to be heard before any dismissal.
- The LA noted Cosare preempted such action by immediately filing the complaint and sought separation pay instead of reinstatement.
- The LA also found no evidence supporting illegal suspension or unpaid allowances and commissions.
Decision of the National Labor Relations Commission (NLRC)
- On August 24, 2010, the NLRC reversed the LA, ruling in favor of Cosare and finding illegal constructive dismissal.
- NLRC awarded backwages, separation pay, and damages totaling ₱1,915,458.33, including exemplary damages of ₱100,000 for bad faith, wanton, oppressive, and malevolent termination.
- NLRC reasoned that Cosare was constructively dismissed when asked to resign under duress and that suspension from company assets contradicted the claim that Cosare abandoned his post.
- The claim for unpaid commissions was denied due to its omission in pleadings.
- The respondents' motion for reconsideration was denied.