The Supreme Court ruled that when a dispute arises from the dismissal of a corporate officer, the case falls under the jurisdiction of regular courts, not the National Labor Relations Commission (NLRC). This is because such disputes are considered intra-corporate controversies. The determination hinges on whether the individual was functioning as a corporate officer or a mere employee, based on their role and the manner of their appointment and dismissal. This distinction is critical, as it dictates the proper venue for resolving employment-related claims.

Leslie Okol’s Dual Role: Employee or Corporate Officer?

This case revolves around Leslie Okol, who was employed by Slimmers World International, operating under Behavior Modifications, Inc. Okol rose through the ranks to become Vice President before her dismissal. The central legal question is whether Okol’s position as Vice President makes her a corporate officer, thus placing her illegal dismissal case outside the jurisdiction of the NLRC, or whether her actual duties align more with those of a regular employee, thereby keeping the case within the NLRC’s purview. This determination rests on an analysis of her role, powers, and the circumstances surrounding her termination.

The petitioner, Okol, argued that despite her title as Vice President, the nature of her work resembled that of a regular employee. She emphasized the control exerted by the company president, Ronald Joseph Moy, over her work, the payment of wages, and the deduction of standard employee benefits. She further highlighted that her dismissal was executed through a letter from Moy, not a formal board resolution. Citing the “four-fold” test, Okol claimed that the power to hire, payment of wages, power to dismiss, and power to control all pointed to an employer-employee relationship, thus vesting jurisdiction with the labor arbiter and the NLRC. The four-fold test, a well-established principle, is used to ascertain the existence of an employer-employee relationship.

Respondents, Slimmers World and Moy, countered that Okol’s position as a corporate officer was evident in the General Information Sheet (GIS) and Director’s Affidavit submitted to the Securities and Exchange Commission (SEC). These documents attested to her role as an officer. They argued that the factors Okol cited as indicative of an employee status did not negate her role as an officer. Moreover, the absence of a board resolution for her termination was deemed insufficient to prove she was not an officer. The respondents maintained that Okol’s status as a stockholder and director further solidified the argument that her separation from the company was an intra-corporate matter outside the NLRC’s jurisdiction. The critical distinction lies in whether Okol’s role was merely operational or involved corporate governance and policy-making.

The Supreme Court referred to Section 25 of the Corporation Code, which enumerates corporate officers as the president, secretary, treasurer, and other officers specified in the by-laws. The Court also cited Tabang v. NLRC, which clarifies the distinction between an “office” created by the corporate charter and an “employee” hired by the managing officer. In this context, the Court examined the evidence presented by the respondents, including the General Information Sheet (GIS), minutes of the Board of Directors’ meeting, the Secretary’s Certificate, and the Amended By-Laws of Slimmers World. These documents indicated that Okol was a member of the board of directors, holding one subscribed share of the capital stock, and an elected corporate officer. The Court emphasized the importance of the corporate charter and by-laws in defining the roles and powers of corporate officers.

The Court scrutinized the Amended By-Laws of Slimmers World, which outlined the powers of the board of directors and the officers of the corporation. Specifically, the By-Laws stipulated that the Vice-President, like the Chairman and President, is elected by the Board of Directors from its own members. The Vice-President is vested with the powers and duties of the President during the latter’s absence and performs duties imposed by the Board of Directors. Given these provisions, the Supreme Court concluded that Okol was indeed a director and officer of Slimmers World. The charges she filed against the respondents—illegal suspension, illegal dismissal, unpaid commissions, reinstatement, and back wages—were deemed to fall within the scope of intra-corporate disputes. This conclusion aligned with precedent holding that a corporate officer’s dismissal is a corporate act, creating an intra-corporate controversy between a stockholder and the corporation.

The Court further emphasized that disputes involving the remuneration of a stockholder and officer, as opposed to a mere employee, are not simple labor problems but matters of corporate affairs and management. Such controversies are contemplated under the Corporation Code. The Supreme Court has consistently held this view in similar cases. Before its amendment, Section 5(c) of Presidential Decree No. 902-A (PD 902-A) granted the Securities and Exchange Commission (SEC) original and exclusive jurisdiction over intra-corporate disputes. However, with the enactment of Republic Act No. 8799, which took effect on August 8, 2000, jurisdiction over these cases was transferred to the regional trial courts.

Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over corporations, partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving:

x x x

c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations, partnerships or associations.

The Court underscored the fundamental principle that jurisdiction over the subject matter is conferred by law. The determination of the rights of a director and corporate officer dismissed from employment, as well as the corresponding liability of the corporation, if any, constitutes an intra-corporate dispute subject to the jurisdiction of regular courts. Consequently, the appellate court correctly ruled that the NLRC lacked jurisdiction over the case, and the regular courts were the proper venue. This underscores the importance of properly classifying an individual’s role within a corporation to determine the appropriate legal recourse in case of disputes.

FAQs

What was the key issue in this case?	The primary issue was whether the NLRC had jurisdiction over the illegal dismissal case filed by Leslie Okol, which depended on whether she was a corporate officer or a regular employee of Slimmers World.
What is an intra-corporate dispute?	An intra-corporate dispute is a conflict that arises between a corporation and its stockholders, directors, officers, or managers, typically involving matters of corporate governance and management.
What is the “four-fold” test?	The “four-fold” test is used to determine the existence of an employer-employee relationship, considering the power to hire, the payment of wages, the power to dismiss, and the power to control the employee’s conduct.
Who are considered corporate officers under the Corporation Code?	Corporate officers typically include the president, secretary, treasurer, and other officers as may be provided for in the corporation’s by-laws.
What role did the General Information Sheet (GIS) play in the case?	The GIS submitted to the SEC served as evidence that Leslie Okol was listed as a member of the board of directors and a corporate officer of Slimmers World.
Which court has jurisdiction over intra-corporate disputes?	Originally, the SEC had jurisdiction over intra-corporate disputes, but this jurisdiction was transferred to the Regional Trial Courts (RTC) by Republic Act No. 8799.
What was the basis for the Court’s decision?	The Court based its decision on the documents submitted by the respondents, which showed that Okol was a director and officer of Slimmers World, thus making her dismissal an intra-corporate dispute.
What is the practical implication of this ruling for corporate officers?	Corporate officers who are dismissed from their positions must seek legal recourse in the regular courts rather than the NLRC, as their disputes are considered intra-corporate controversies.

This case underscores the importance of clearly defining the roles and responsibilities of individuals within a corporation to accurately determine the appropriate venue for resolving employment-related disputes. The distinction between a corporate officer and a regular employee is crucial in determining jurisdiction. In conclusion, The Supreme Court denied the petition, affirming the Court of Appeals’ decision that the NLRC lacked jurisdiction over the case. This Decision is without prejudice to petitioner Leslie Okol’s taking recourse to and seeking relief through the appropriate remedy in the proper forum.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: LESLIE OKOL VS. SLIMMERS WORLD INTERNATIONAL, G.R. No. 160146, December 11, 2009