Lincoln was in the business of trading broadcast equipment used by television and radio networks. He employed Lionel as his agent. Subsequently, Lincoln set up Liberty Communications to formally engage in the same business. He requested Lionel to be one of the incorporators and assigned to him 100 Liberty shares. Lionel was also given the title Assistant Vice-President for Sales and Head of Technical Coordination. After several months, there were allegations that Lionel was engaged in “under the table dealings” and received “confidential commissions” from Liberty’s clients and suppliers. He was, therefore, charged with serious misconduct and willful breach of trust, and was given 48 hours to present his explanation on the charges. Lionel was unable to comply with the 48 -hour deadline and was subsequently barred from entering company premises. Lionel then filed a complaint with the Labor Arbiter claiming constructive dismissal. Among others, the company sought the dismissal of the complaint alleging that the case involved an intra-corporate controversy which was within the jurisdiction of the Regional Trial Court (RTC).
If you were the Labor Arbiter assigned to the case, how would you rule on the company’s motion to dismiss? (5%)
Suggested answer only. Not an official answer and not legal advice.
I will deny the company's motion to dismiss. Under Presidential Decree No. 902-A and the Corporation Code, corporate officers whose removal is an intra-corporate controversy under RTC jurisdiction are those created by the
Unlock the full Labor Law answers365 days of full access. GCash, Maya and card accepted.
This is not an official scoring system and carries no weight with the Supreme Court or any bar review provider. It measures how much of the suggested answer's wording your response covers, not whether your reasoning is correct. For practice only.
Quick check
Which tribunal has jurisdiction over an illegal dismissal complaint filed by an executive whose position is not created by the corporate by-laws?
Labor Arbiters have jurisdiction over dismissal cases of employees whose positions are not designated as corporate officers in the by-laws.
Which specific positions are explicitly recognized as corporate officers directly by the Corporation Code?
The Corporation Code explicitly creates and recognizes the President, Corporate Secretary, and Corporate Treasurer as corporate officers.
What evidentiary test determines whether an employee holding shares is a corporate officer for jurisdictional purposes?
An officer position must be expressly designated in the corporate by-laws to classify the holder as a corporate officer.
Does an employee's nominal ownership of one hundred corporate shares automatically divest the Labor Arbiter of jurisdiction?
Choices available with full access.
What are the two dual tests applied to determine the existence of an intra-corporate controversy?
Choices available with full access.
Learn more about these topics
1. Corporate Officer Test
Under Presidential Decree No. 902-A and the Corporation Code, an intra-corporate controversy involving the removal of an officer falls within the jurisdiction of the Regional Trial Court only if the position is explicitly created by the Corporation Code or expressly designated as a corporate officer in the corporate by-laws. Officers appointed by the board of directors or executive officers whose positions are created merely by managerial appointment or general management decisions remain regular employees. Consequently, disputes regarding their dismissal belong exclusively to the jurisdiction of the Labor Arbiter.
2. Intra-Corporate Controversy Nature
To determine whether a dispute constitutes an intra-corporate controversy under Regional Trial Court jurisdiction, courts apply the relationship test and the nature of the controversy test. Under the relationship test, the dispute must arise between the corporation and its stockholders, directors, or officers. Under the nature of the controversy test, the dispute must intrinsically involve corporate governance, enforcement of corporate rights under the Corporation Code, or internal regulatory affairs. Dismissal of non-corporate officer employees, even if nominal shareholders, remains a labor dispute.
3. Labor Arbiter Jurisdiction
Under Article 228 of the Labor Code, Labor Arbiters possess exclusive original jurisdiction over all illegal dismissal and constructive dismissal complaints filed by regular workers. When an employer moves to dismiss a labor complaint based on alleged intra-corporate jurisdiction, the employer bears the evidentiary burden of proving that the dismissed worker was a corporate officer created by the corporate by-laws. In the absence of such proof, the Labor Arbiter must deny the motion to dismiss and adjudicate the termination dispute.