Cosare v. Broadcom (G.R. No. 201298; February 5, 2014)
FACTS: In 1993, Cosare was employed as a salesman by Arevalo, who was then in the business of selling broadcast equipment needed by television networks and production houses. In December 2000, Arevalo set up the company Broadcom, still to continue the business of trading communication and broadcast equipment. Cosare was named an incorporator of Broadcom, having been assigned 100 shares of stock with par value of P1.00 per share. In October 2001, Cosare was promoted to the position of Assistant Vice President for Sales (AVP for Sales) and Head of the Technical Coordination.
Sometime in 2003, Alex F. Abiog (Abiog) was appointed as Broadcoms Vice President for Sales and thus, became Cosares immediate superior. Cosare sent a confidential memo to Arevalo to inform him of the anomalies which were allegedly being committed by Abiog against the company. Cosare ended his memo by clarifying that he was not interested in Abiogs position, but only wanted Arevalo to know of the irregularities for the corporations sake.
Apparently, Arevalo failed to act on Cosares accusations. Cosare claimed that he was instead called for a meeting by Arevalo on March 25, 2009, wherein he was asked to tender his resignation in exchange for "financial assistance" in the amount ofP300,000.00.Cosare refused to comply with the directive, as signified in a letter which he sent to Arevalo.
Cosare received from Roselyn Villareal (Villareal), Broadcoms Manager for Finance and Administration, a memosigned by Arevalo, charging him of serious misconduct and willful breach of trust. He was given forty-eight (48) hours from the date of the memo within which to present his explanation on the charges. He was also "suspended from having access to any and all company files/records and use of company assets effective immediately."Thus, Cosare claimed that he was precluded from reporting for work and was instead instructed to wait at the offices receiving section. Upon the specific instructions of Arevalo, he was also prevented by Villareal from retrieving even his personal belongings from the office until he was totally barred from entering the company premises.
Cosare filed a labor complaint, claiming that he was constructively dismissed from employment by the respondents. He further argued that he was illegally suspended, as he placed no serious and imminent threat to the life or property of his employer and co-employees.
In refuting Cosares complaint, the respondents argued that Cosare was neither illegally suspended nor dismissed from employment. They also contended that Cosare committed the following acts inimical to the interests of Broadcom.Furthermore, they contended that Cosare abandoned his job by continually failing to report for work beginning April 1, 2009, prompting them to issue on April 14, 2009 a memorandumaccusing Cosare of absence without leave beginning April 1, 2009.
The Labor Arbiter dismissed the complaint on the ground of Cosares failure to establish that he was constructively dismissed.
Cosare appealed the LA decision to the NLRC. It reversed the LA decision.
The respondents motion for reconsideration was denied.Dissatisfied, they filed a petition for certiorari with the CA on the issues of constructive dismissal and intra-corporate controversy which was within the jurisdiction of the RTC, instead of the LA. They argued that the case involved a complaint against a corporation filed by a stockholder, who, at the same time, was a corporate officer.
The CAgranted the respondents petition. It agreed with the respondents contention that the case involved an intra-corporate controversy which, pursuant to Presidential Decree No. 902-A, as amended, was within the exclusive jurisdiction of the RTC. Hence, this petition filed by Cosare.
ISSUES:
Was the case instituted by Cosare an intra-corporate dispute that was within the original jurisdiction of the RTC, and not of the LAs?
Was Cosare constructively and illegally dismissed from employment by the respondents?
HELD: An intra-corporate controversy, which falls within the jurisdiction of regular courts, has been regarded in its broad sense to pertain to disputes that involve 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.Settled jurisprudence, however, qualifies that when the dispute involves a charge of illegal dismissal, the action may fall under the jurisdiction of the LAs upon whose jurisdiction, as a rule, falls termination disputes and claims for damages arising from employer-employee relations as provided in Article 217 of the Labor Code. Consistent with this jurisprudence, the mere fact that Cosare was a stockholder and an officer of Broadcom at the time the subject controversy developed failed to necessarily make the case an intra-corporate dispute.
In Matling Industrial and Commercial Corporation v. Coros,the Court distinguished between a "regular employee" and a "corporate officer" for purposes of establishing the true nature of a dispute or complaint for illegal dismissal and determining which body has jurisdiction over it. Succinctly, it was explained that "[t]he determination of whether the dismissed officer was a regular employee or corporate officer unravels the conundrum" of whether a complaint for illegal dismissal is cognizable by the LA or by the RTC. "In case of the regular employee, the LA has jurisdiction; otherwise, the RTC exercises the legal authority to adjudicate.
Applying the foregoing to the present case, the LA had the original jurisdiction over the complaint for illegal dismissal because Cosare, although an officer of Broadcom for being its AVP for Sales, was not a "corporate officer" as the term is defined by law.
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There are three specific officers whom a corporation must have under Section 25 of the Corporation Code. These are the president, secretary and the treasurer. The number of officers is not limited to these three. A corporation may have such other officers as may be provided for by its by-laws like, but not limited to, the vice-president, cashier, auditor or general manager. The number of corporate officers is thus limited by law and by the corporations by-laws.
In Tabang v. NLRC, the Court also made the following pronouncement on the nature of corporate offices: 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 corporations charter or by-laws; and (2) the election of the officer is by the directors or stockholders. It is only when the officer claiming to have been illegally dismissed is classified as such corporate officer that the issue is deemed an intra-corporate dispute which falls within the jurisdiction of the trial courts.
The Court disagrees with the respondents and the CA. The only officers who are specifically listed, and thus with offices that are created under Broadcoms by-laws are the following: the President, Vice-President, Treasurer and Secretary. Although a blanket authority provides for the Boards appointment of such other officers as it may deem necessary and proper, the respondents failed to sufficiently establish that the position of AVP for Sales was created by virtue of an act of Broadcoms board, and that Cosare was specifically elected or appointed to such position by the directors. No board resolutions to establish such facts form part of the case records.
The CAs heavy reliance on the contents of the General Information Sheets, which were submitted by the respondents during the appeal proceedings and which plainly provided that Cosare was an "officer" of Broadcom, was clearly misplaced. The said documents could neither govern nor establish the nature of the office held by Cosare and his appointment thereto.
Finally, the mere fact that Cosare was a stockholder of Broadcom at the time of the cases filing did not necessarily make the action an intra-corporate controversy. Not all conflicts between the stockholders and the corporation are classified as intra-corporate. There are other facts to consider in determining whether the dispute involves corporate matters as to consider them as intra-corporate controversies.
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Constructive dismissal occurs when there is cessation of work because continued employment is rendered impossible, unreasonable, or unlikely as when there is a demotion in rank or diminution in pay or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the employee leaving the latter with no other option but to quit.
The Court emphasized in King of Kings Transport, Inc. v. Mamac 553 Phil. 108 the standards to be observed by employers in complying with the service of notices prior to termination:
The first written notice to be served on the employees should contain the specific causes or grounds for termination against them, and a directive that the employees are given the opportunity to submit their written explanation within a reasonable period. "Reasonable opportunity" under the Omnibus Rules means every kind of assistance that management must accord to the employees to enable them to prepare adequately for their defense. This should be construed as a period of at least five (5) calendar days from receipt of the notice to give the employees an opportunity to study the accusation against them, consult a union official or lawyer, gather data and evidence, and decide on the defenses they will raise against the complaint. Moreover, in order to enable the employees to intelligently prepare their explanation and defenses, the notice should contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the employees. A general description of the charge will not suffice. Lastly, the notice should specifically mention which company rules, if any, are violated and/or which among the grounds under Art. 282 is being charged against the employees.
In sum, the respondents were already resolute on a severance of their working relationship with Cosare, notwithstanding the facts which could have been established by his explanations and the respondents full investigation on the matter. In addition to this, the fact that no further investigation and final disposition appeared to have been made by the respondents on Cosares case only negated the claim that they actually intended to first look into the matter before making a final determination as to the guilt or innocence of their employee. This also manifested from the fact that even before Cosare was required to present his side on the charges of serious misconduct and willful breach of trust, he was summoned to Arevalos office and was asked to tender his immediate resignation in exchange for financial assistance.
The charge of abandonment was inconsistent with this imposed suspension. "Abandonment is the deliberate and unjustified refusal of an employee to resume his employment. To constitute abandonment of work, two elements must concur: (1) the employee must have failed to report for work or must have been absent without valid or justifiable reason; and (2) there must have been a clear intention on the part of the employee to sever the employer-employee relationship manifested by some overt act."Cosares failure to report to work beginning April 1, 2009 was neither voluntary nor indicative of an intention to sever his employment with Broadcom. It was illogical to be requiring him to report for work, and imputing fault when he failed to do so after he was specifically denied access to all of the company's assets. Hence, the Court held Petitioner was constructively dismissed by respondent.
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Court reiterated that an illegally or constructively dismissed employee is entitled to: (1) either reinstatement, if viable, or separation pay, if reinstatement is no longer viable; and (2) backwages.The award of exemplary damages was also justified given the NLRC's finding that the respondents acted in bad faith and in a wanton, oppressive and malevolent manner when they dismissed Cosare. It is also by reason of such bad faith that Arevalo was correctly declared solidarily liable for the monetary awards.
