Cosare v. Broadcom Asia, Inc.

TOPICS:

Intra-corporate Controversies; Corporate Officer; Office v. Employee

FACTS:

Cosare was employed as salesman by Arevalo who set up Broadcom. Cosare was named an incorporator of Broadcom and was promoted to the position of Assistant VP for Sales. 

Thereafter, Cosare was replaced by Alex Abiog as VP for Sales. Cosare also sent a confidential memo to Arevalo about the anomalies allegedly committed by Abiog. However, instead of acting on the accusation, Cosare was asked to tender his resignation in exchange for financial assistance in the amount of php 300,000.00. 

Cosare was precluded from reporting to work and barred from entering the company premises. He filed the subject labor complaint.

LA’s Decision:

Cosare’s complaint was dismissed for failure to establish illegal dismissal.

NLRC’s Decision:

Cosare was constructively dismissed. He was awarded in the amount of 100K. 

CA’s Decision:

The case involves an intra-corporate controversy which was within the jurisdiction of the RTC, not LA. Cosare was a stockholder and he was listed as one of its directors. 

ISSUES:

I. WON the Cosare is a corporate officer.

II. WON the LA has a jurisdiction over the case.

III. WON the case involves an intra-corporate controversy. 

RULING:

I.

No, Cosare is not a corporate officer. 

Under the law, a corporate officer is one whose position is created under the corporation’s charter or by-laws and that the election of the officer is by the directors or stockholders. The complaint for illegal dismissal of a corporate officer is lodged with the RTC. 

In this case, Broadcom’s by-laws only created the office of the President, Vice-President, Treasurer, and Secretary. Hence, his position could only be deemed a regular office. 

Therefore, Cosare is not a corporate officer, but a regular employee. 

II.

LA has the jurisdiction over the complaint.

Under the law, the illegal dismissal of a regular employee is cognizable under the LA. 

In this case, Cosare is not a corporate officer since his position as VP for Sales is not one among those offices created in the corporate by-laws. Hence, he is deemed a regular employee. 

Therefore, his complaint is cognizable in the LA. 

III.

The case does not involve an intra-corporate controversy. 

Under the controversy test, the controversy, to qualify as an intra-corporate controversy, must not only be rooted in the existence of an intra-corporate relationship, but must as well pertain to the enforcement of the parties’ correlative rights and obligations under the Corporation Code and the internal and intra-corporate regulatory rules of the corporation.

In this case, the issue pertains to Cosare’s rights and obligations as a regular officer, instead of a stockholder of the corporation. 

Hence, the case does not involve an intra-corporate controversy.

---------------------------

Additional Notes:

INTRA-CORPORATE CONTROVERSY

An intro-corporate controversy which falls within the jurisdiction of regular courts pertains to disputes that involves any of the following relationships:

(1) between the corporation, partnership or association and the public;

(2) between the corporation, partnership or association and the state in so far as its franchise, permit or license to operate is concerned;

(3) between the corporation, partnership or association and its stockholders, partners, members or officers; and 

(4) among the stockholders, partners or associates, themselves.

Under the nature of the controversy test, the incidents of that relationship must also be considered for the purpose of ascertaining whether the controversy itself is intra-corporate. The controversy must not only be rooted in the existence of an intra-corporate relationship, but must as well pertain to the enforcement of the parties’ correlative rights and obligations under the Corporation Code and the internal and intra-corporate regulatory rules of the corporation.

CORPORATE OFFICER

There are two circumstances which must concur in order for an individual to be considered a corporate officer, as against an ordinary employee or officer, namely:

(1) the creation of the position is under the corporation’s charter or by-laws; and

(2) the election of the officer is by the directors or stockholders

The board of directors has no power to create other corporate offices without first amending the corporate by-laws so as to include therein the newly created corporate office.

OFFICE V. EMPLOYEE

It has been held that an "office" is created by the charter of the corporation and the officer is elected by the directors and stockholders. On the other hand, an "employee" usually occupies no office and generally is employed not by action of the directors or stockholders but by the managing officer of the corporation who also determines the compensation to be paid to such employee.