Due to serious business reverses, ABC Co. decided to terminate the services of several officers receiving “fat” compensation packages. One of these officers was Mr. X, its Vice-President for External Affairs and a member of the Board of Directors. Aggrieved, Mr. X filed a complaint for illegal dismissal before the National labor Relations Commission (NLRC) – Regional Arbitration Branch.
ABC Co. moved for the dismissal of the case on the ground of lack of jurisdiction, asserting that since Mr. X occupied the position of Vice-President for External Affairs which is listed in the by-laws of the corporation, the case should have been tiled before the Regional Trial Court.
The Labor Arbiter (LA) denied ABC Co.’s motion and proceeded to rule that Mr. X was illegally dismissed. Hence, he was reinstated in ABC Co.’s payroll pending its appeal to the NLRC.
(a) Did the LA err in denying ABC Co.’s motion to dismiss on the ground of lack of jurisdiction? Explain. (2.5%)
(b) Assuming the LA’s ruling of illegal dismissal with finality, may ABC Co. claim reimbursement for the amounts it paid to Mr. X during the time that he was on payroll reinstatement pending appeal? Explain. (2.5%)
(a) Yes. Answer
Under labor law jurisprudence, one who is included in the by-laws of a corporation in its roster of corporate officers is an officer of said corporation and not a mere employee. The determination of the rights of a corporate officer dismissed from his employment, as well as the corresponding liability of a corporation, if any, is an intra-corporate dispute subject to the jurisdiction of the regular courts. Rule
In the case at bar, Mr. occupies the position of Vice-President for External Affairs which is listed in the by-laws of the corporation. This makes him a corporate officer, and not an employee. The issue on his dismissal is an intra-corporate dispute within the jurisdiction of the Regional Trial Court. Apply
Thus, the LA did not err in denying ABC Co.’s motion to dismiss on the ground of lack jurisdiction. Conclusion
(b) No. Answer
Under labor law jurisprudence, the employer cannot recover amounts paid to the employee during the period of payroll reinstatement if subsequently the NLRC or an appellate court reverses the order of reinstatement by the Labor Arbiter. Rule
In the case at bar, ABC Co. observed payroll reinstatement pending appeal. Should the NLRC reverse the Labor Arbiter’s ruling of illegal dismissal with finality, ABC Co. cannot claim reimbursement for amounts paid during the period of payroll reinstatement. Apply
Thus, ABC Co. may not claim reimbursement for the amounts it paid to Mr. X during the time that he was on payroll reinstatement pending appeal. Conclusion