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G.R. No. 160146 - Leslie Okol v. Slimmers World International, et al. : DECEMBER 2009 - PHILIPPINE SUPREME COURT JURISPRUDENCE - CH

SECONDDIVISION
[G.R.NO.160146:December11,2009]
LESLIEOKOL,Petitioner,v.SLIMMERSWORLDINTERNATIONAL,BEHAVIORMODIFICATIONS,INC.,and
RONALDJOSEPHMOY,Respondents.
DECISION
CARPIO,J.:
TheCase
BeforetheCourtisaPetitionforReviewonCertiorari1assailingtheDecision2dated18October2002andResolution
dated22September2003oftheCourtofAppealsinCAG.R.SPNo.69893,whichsetasidetheResolutionsdated29
May2001and21December2001oftheNationalLaborRelationsCommission(NLRC).
TheFacts
Respondent Slimmers World International operating under the name Behavior Modifications, Inc. (Slimmers World)
employedpetitionerLeslieOkol(Okol)asamanagementtraineeon15June1992.Sheroseuptherankstobecome
HeadOfficeManagerandthenDirectorandVicePresidentfrom1996untilherdismissalon22September1999.
On28July1999,priortoOkol'sdismissal,SlimmersWorldpreventivelysuspendedOkol.Thesuspensionarosefrom
theseizurebytheBureauofCustomsofsevenPrecorellipticalmachinesandsevenPrecortreadmillsbelongingtoor
consignedtoSlimmersWorld.TheshipmentoftheequipmentwasplacedunderthenamesofOkolandtwocustoms
brokersforavaluelessthanUS$500.Forbeingundervalued,theequipmentwereseized.
On2September1999,Okolreceivedamemorandumthathersuspensionhadbeenextendedfrom2Septemberuntil
1October1999pendingtheoutcomeoftheinvestigationonthePrecorequipmentimportation.
On17September1999,OkolreceivedanothermemorandumfromSlimmersWorldrequiringhertoexplainwhyno
disciplinaryactionshouldbetakenagainstherinconnectionwiththeequipmentseizedbytheBureauofCustoms.
On19September1999,Okolfiledherwrittenexplanation.However,SlimmersWorldfoundOkol'sexplanationtobe
unsatisfactory. Through a letter dated 22 September 1999 signed by its president Ronald Joseph Moy (Moy),
SlimmersWorldterminatedOkol'semployment.
Okolfiledacomplaint3withtheArbitrationbranchoftheNLRCagainstSlimmersWorld,BehaviorModifications,Inc.
andMoy(collectivelycalledrespondents)forillegalsuspension,illegaldismissal,unpaidcommissions,damagesand
attorney'sfees,withprayerforreinstatementandpaymentofbackwages.
On 22 February 2000, respondents filed a Motion to Dismiss4 the case with a reservation of their right to file a
PositionPaperatthepropertime.RespondentsassertedthattheNLRChadnojurisdictionoverthesubjectmatterof
thecomplaint.
InanOrder,5dated20March2000,thelaborarbitergrantedthemotiontodismiss.ThelaborarbiterruledthatOkol
was the vicepresident of Slimmers World at the time of her dismissal. Since it involved a corporate officer, the
disputewasanintracorporatecontroversyfallingoutsidethejurisdictionoftheArbitrationbranch.
OkolfiledanappealwiththeNLRC.InaResolution6dated29May2001,theNLRCreversedandsetasidethelabor
arbiter'sorder.Thedispositiveportionoftheresolutionstates:
WHEREFORE, the Order appealed from is SET ASIDE and REVERSED. A new one is hereby ENTERED ordering
respondent Behavior Modification, Inc./Slimmers World International to reinstate complainant Leslie F. Okol to her
former position with full back wages which to date stood in the amount ofP10,000,000.00 computed from July 28,
1999 to November 28, 2000 until fully reinstated and the further sum of P1,250,000.00 as indemnity pay plus
attorney'sfeeequivalenttoten(10%)ofthetotalmonetaryaward.However,shouldreinstatementbenotfeasible
separation pay equivalent to one month pay per year of service is awarded, a fraction of at least six months
consideredonewholeyear.
Allotherclaimsaredismissedforlackoffactualorlegalbasis.
SOORDERED.7
RespondentsfiledaMotionforReconsiderationwiththeNLRC.Respondentscontendedthatthereliefprayedforwas
confinedonlytothequestionofjurisdiction.However,theNLRCnotonlydecidedthecaseonthemeritsbutdidsoin
the absence of position papers from both parties. In a Resolution8dated 21 December 2001, the NLRC denied the
motionforlackofmerit.
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RespondentsthenfiledanappealwiththeCourtofAppeals,docketedasCAG.R.SPNo.69893.
TheRulingoftheCourtofAppeals
InaDecision9dated18October2002,theappellatecourtsetasidetheNLRC'sResolutiondated29May2001and
affirmed the labor arbiter's Order dated 20 March 2000. The Court of Appeals ruled that the case, being an intra
corporatedispute,fallswithinthejurisdictionoftheregularcourtspursuanttoRepublicActNo.8799.10Theappellate
court added that the NLRC had acted without jurisdiction in giving due course to the complaint and deprived
respondentsoftheirrighttodueprocessindecidingthecaseonthemerits.
OkolfiledaMotionforReconsiderationwhichwasdeniedinaResolution11dated22September2003.
Hence,theinstantpetition.
TheIssue
TheissueiswhetherornottheNLRChasjurisdictionovertheillegaldismissalcasefiledbypetitioner.
TheCourt'sRuling
Thepetitionlacksmerit.
Petitioner insists that the Court of Appeals erred in ruling that she was a corporate officer and that the case is an
intracorporate dispute falling within the jurisdiction of the regular courts. Petitioner asserts that even as vice
president,theworkthatsheperformedconformstothatofanemployeeratherthanacorporateofficer.Meretitleor
designationinacorporationwillnot,byitself,determinetheexistenceofanemployeremployeerelationship.Itisthe
"fourfold"test,namely(1)thepowertohire,(2)thepaymentofwages,(3)thepowertodismiss,and(4)thepower
tocontrol,whichmustbeapplied.
PetitionerenumeratedtheinstancesthatshewasunderthepowerandcontrolofMoy,SlimmersWorld'spresident:
(1)petitionerreceivedsalaryevidencedbypayslips,(2)MoydeductedMedicareandSSSbenefitsfrompetitioner's
salary, and (3) petitioner was dismissed from employment not through a board resolution but by virtue of a letter
fromMoy.Thus,havingshownthatanemployeremployeerelationshipexists,thejurisdictiontohearanddecidethe
caseisvestedwiththelaborarbiterandtheNLRC.
Respondents, on the other hand, maintain that petitioner was a corporate officer at the time of her dismissal from
SlimmersWorldassupportedbytheGeneralInformationSheetandDirector'sAffidavitattestingthatpetitionerwas
anofficer.Also,thefactorscitedbypetitionerthatshewasamereemployeedonotprovethatshewasnotanofficer
of Slimmers World. Even the alleged absence of any resolution of the Board of Directors approving petitioner's
termination does not constitute proof that petitioner was not an officer. Respondents assert that petitioner was not
onlyanofficerbutalsoastockholderanddirectorwhichfactsprovidefurtherbasisthatpetitioner'sseparationfrom
SlimmersWorlddoesnotcomeundertheNLRC'sjurisdiction.
TheissuerevolvesmainlyonwhetherpetitionerwasanemployeeoracorporateofficerofSlimmersWorld.Section
25 of the Corporation Code enumerates corporate officers as the president, secretary, treasurer and such other
officersasmaybeprovidedforinthebylaws.InTabangv.NLRC,12weheldthatan"office"iscreatedbythecharter
of the corporation and the officer is elected by the directors or 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
managingofficerofthecorporationwhoalsodeterminesthecompensationtobepaidtosuchemployee.
In the present case, the respondents, in their motion to dismiss filed before the labor arbiter, questioned the
jurisdiction of the NLRC in taking cognizance of petitioner's complaint. In the motion, respondents attached the
GeneralInformationSheet13(GIS)dated14April1998,Minutes14ofthemeetingoftheBoardofDirectorsdated14
April 1997 and Secretary's Certificate,15and the Amended ByLaws16dated 1 August 1994 of Slimmers World as
submitted to the SEC to show that petitioner was a corporate officer whose rights do not fall within the NLRC's
jurisdiction.TheGISandminutesofthemeetingoftheboardofdirectorsindicatedthatpetitionerwasamemberof
theboardofdirectors,holdingonesubscribedshareofthecapitalstock,andanelectedcorporateofficer.
The relevant portions of the Amended ByLaws of Slimmers World which enumerate the power of the board of
directorsaswellastheofficersofthecorporationstate:
ArticleII
TheBoardofDirectors
1.QualificationsandElectionThegeneralmanagementofthecorporationshallbevestedinaboard
offivedirectorswhoshallbestockholdersandwhoshallbeelectedannuallybythestockholdersand
whoshallserveuntiltheelectionandqualificationoftheirsuccessors.
xxx
ArticleIII
Officers
xxx

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4. VicePresident Like the Chairman of the Board and the President, the VicePresident shall be
electedbytheBoardofDirectorsfrom[its]ownmembers.
TheVicePresidentshallbevestedwithallthepowersandauthorityandisrequiredtoperformallthe
dutiesofthePresidentduringtheabsenceofthelatterforanycause.
TheVicePresidentwillperformsuchdutiesastheBoardofDirectorsmayimposeuponhimfromtime
totime.
xxx
Clearly,fromthedocumentssubmittedbyrespondents,petitionerwasadirectorandofficerofSlimmersWorld.The
charges of illegal suspension, illegal dismissal, unpaid commissions, reinstatement and back wages imputed by
petitioneragainstrespondentsfallsquarelywithintheambitofintracorporatedisputes.Inanumberofcases,17we
haveheldthatacorporateofficer'sdismissalisalwaysacorporateact,oranintracorporatecontroversywhicharises
between a stockholder and a corporation. The question of remuneration involving a stockholder and officer, not a
mere employee, is not a simple labor problem but a matter that comes within the area of corporate affairs and
managementandisacorporatecontroversyincontemplationoftheCorporationCode.18
Prior to its amendment, Section 5(c) of Presidential Decree No. 902A19(PD 902A) provided that intracorporate
disputesfallwithinthejurisdictionoftheSecuritiesandExchangeCommission(SEC):
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
hearanddecidecasesinvolving:
xxx
c) Controversies in the election or appointments of directors, trustees, officers or managers of such
corporations,partnershipsorassociations.
Subsection5.2,Section5ofRepublicActNo.8799,whichtookeffecton8August2000,transferredto
regionaltrialcourtstheSEC'sjurisdictionoverallcaseslistedinSection5ofPD902A:
5.2. The Commission's jurisdiction over all cases enumerated under Section 5 of Presidential Decree
No.902AisherebytransferredtotheCourtsofgeneraljurisdictionortheappropriateRegionalTrial
Court.
xxx
Itisasettledrulethatjurisdictionoverthesubjectmatterisconferredbylaw.20Thedeterminationoftherightsofa
directorandcorporateofficerdismissedfromhisemploymentaswellasthecorrespondingliabilityofacorporation,if
any,isanintracorporatedisputesubjecttothejurisdictionoftheregularcourts.Thus,theappellatecourtcorrectly
ruledthatitisnottheNLRCbuttheregularcourtswhichhavejurisdictionoverthepresentcase.
WHEREFORE,weDENYthepetition.WeAFFIRMthe18October2002Decisionand22September2003Resolutionof
the Court of Appeals in CAG.R. SP No. 69893. This Decision is without prejudice to petitioner Leslie Okol's taking
recoursetoandseekingreliefthroughtheappropriateremedyintheproperforum.
SOORDERED.
Endnotes:
*DesignatedadditionalmemberperSpecialOrderNo.807.
**DesignatedadditionalmemberperSpecialOrderNo.776.
1UnderRule45ofthe1997RevisedRulesofCivilProcedure.
2Rollo,pp.3239.PennedbyJusticeDaniloB.PinewithJusticesRubenT.Reyes(retiredmemberof

thisCourt)andMarinaL.Buzon,concurring.

3DocketedasNLRCNCRCaseNo.30120098999.
4Rollo,pp.4554.
5Id.at7475.
6Id.at8389.
7Id.at88.
8Id.at9192.
9Id.at3239.

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10TheSecuritiesRegulationCode,approvedon19July2000andtookeffecton8August2000.
11Rollo,p.41.
12G.R.No.121143,21January1997,266SCRA462,467.
13Rollo,pp.5859.
14Id.at60.
15Id.at61.
16Id.at6271.
17Estrada v. NLRC, G.R. No. 106722, 4 October 1996, 262 SCRA 709 Lozon v. NLRC, 310 Phil. 1

(1995) Espino v. NLRC, 310 Phil. 61 (1995) Fortune Cement Corporation v. NLRC, G.R. No. 79762,
24January1991,193SCRA258.
18Supranote12,citingDyv.NLRC,229Phil.234(1986).
19Reorganization of the Securities and Exchange Commission with Additional Powers and Placing the

said Agency under the Administrative Supervision of the Office of the President. Took effect on 11
March1976.
20SeeEstradav.NLRC,supranote17Paguiov.NLRC,323Phil.203(1996).

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