Leslie Okol v Slimmers World

Corporate Officers, NLRC jurisdiction

7 International
G.R. No. 160146 December 11, 2009 Carpio AJ
Petitioner/s: Respondent/s:
LESLIE OKOL SLIMMERS WORLD INTERNATIONAL, BEHAVIOR
MODIFICATIONS, INC., and RONALD JOSEPH MOY
Recit Ready Summary
Slimmers World International employed Leslie Okol as a management trainee. Later, she became a
Director and Vice President of Slimmers World. Slimmers World preventively suspended Okol when the
Bureau of Customs seized 7 Precor elliptical machines and 7 Precor treadmills belonging to Slimmers
World for being undervalued because the shipment were placed under Okol’s name and 2 customs
brokers for a value less than US$500.
Okol received 2 memos for her suspension. When Slimmers World found her explanation to be
unsatisfactory, she was terminated through a letter signed by President Moy. Thus, Okol filed a complaint
against Slimmers World for illegal suspension, illegal dismissal, unpaid commissions, damages and
attorney's fees, with prayer for reinstatement and payment of backwages.
Respondents filed a MTD for lack of jurisdiction. The LA granted the MTD since Okol was a VP of
Slimmers World, so the dispute was an intra-corporate controversy. The NLRC reversed the LA decision
and ordered Okol’s reinstatement. On appeal, the CA affirmed the LA’s decision and ruled that the NLRC
had acted without jurisdiction. Okol asserts that even as VP, the work that she performed conforms to
that of an employee rather than a corporate officer.

Issue:
Is Okol an employee or a corporate officer of Slimmers World? A corporate officer.
Does the NLRC have jurisdiction over the illegal dismissal case filed by Okol? No.

An "office" is created by the charter 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 managing officer of the corporation who also
determines the compensation to be paid to such employee.

In this case, Slimmers World attached the GIS, Minutes of the meeting of the Board of Directors and
Secretary's Certificate, and the Amended By-Laws of Slimmers World. The GIS and minutes of the
meeting of the board of directors indicated that Okol was a member of the board of directors, holding 1
subscribed share of the capital stock, and an elected corporate officer.

Application: From the documents, Okol was a director and officer of Slimmers World. A corporate
officer's dismissal is always a corporate act, or an intra-corporate controversy which arises between a
stockholder and a corporation. The determination of the rights of a director and 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. Thus, the SC ruled that the NLRC
has no jurisdiction over the case.
Facts
1. Slimmers World International operating under the name Behavior Modifications, Inc. (Slimmers
World) employed petitioner Leslie Okol (Okol) as a management trainee on 15 June 1992. She
rose up the ranks to become Head Office Manager and then Director and Vice President.
2. Prior to Okol's dismissal, Slimmers World preventively suspended Okol, which arose from the
seizure by the Bureau of Customs of 7 Precor elliptical machines and 7 Precor treadmills
belonging to or consigned to Slimmers World. The shipment of the equipment was placed under
the names of Okol and two customs brokers for a value less than US$500. For being
undervalued, the equipment were seized.
3. Okol received a memorandum that her suspension had been extended ending the outcome of
the investigation on the Precor equipment importation. She received another memorandum from
Slimmers World requiring her to explain why no disciplinary action should be taken against her.

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 4. Okol filed her written explanation. However, Slimmers World found Okol's explanation to be
unsatisfactory. Through a letter signed by its president Ronald Joseph Moy (Moy), Slimmers
World terminated Okol's employment.
Procedural History
1. Okol filed a complaint with the Arbitration branch of the NLRC against Slimmers World, Behavior
Modifications, Inc. and Moy for illegal suspension, illegal dismissal, unpaid commissions,
damages and attorney's fees, with prayer for reinstatement and payment of backwages.
2. Respondents filed a MTD and asserted that the NLRC had no jurisdiction.
3. LA granted the MTD. It ruled that Okol was the vice-president of Slimmers World at the time of
her dismissal. Since it involved a corporate officer, the dispute was an intra-corporate
controversy falling outside the jurisdiction of the Arbitration branch.
4. Okol filed an appeal with the NLRC. The NLRC reversed and set aside the LA’s order. It also
ordered respondents to reinstate Okol to her former position with full back wages. Respondents
filed a MR with the NLRC. NLRD Denied.
5. Respondents then filed an appeal with the CA. CA affirmed the LA decision. It ruled that the
case, being an intra-corporate dispute, falls within the jurisdiction of the regular courts and that
the NLRC had acted without jurisdiction in giving due course to the complaint. Okol’s MR was
denied.

Contentions:
Okol: Asserts that even as vice-president, the work that she performed conforms to that of an employee
rather than a corporate officer. She insists that the Court of Appeals erred in ruling that she was a
corporate officer and that the case is an intra-corporate dispute falling within the jurisdiction of the regular
courts. Okol enumerated the instances that she was under the power and control of Moy, Slimmers
World's president:
1) She received salary evidenced by pay slips,
2) Moy deducted Medicare and SSS benefits from petitioner's salary, and
3) She was dismissed from employment not through a board resolution but by virtue of a letter from
Moy. Thus, having shown that an employer-employee relationship exists, the jurisdiction to hear
and decide the case is vested with the labor arbiter and the NLRC.

Slimmers World: Okol was a corporate officer at the time of her dismissal from Slimmers World as
supported by the General Information Sheet and Director's Affidavit attesting that she was an officer.
Also, the factors cited by petitioner that she was a mere employee do not prove that she was not an
officer 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 Okol was not only an officer but also a stockholder and director; which facts provide further basis
that petitioner's separation from Slimmers World does not come under the NLRC's jurisdiction.
Issue/s Ruling
1. W/N Okol is an employee or a corporate officer of Slimmers World 1. Corporate Officer,
and whether the NLRC has jurisdiction over the illegal dismissal NLRC has no
case filed by Okol. jurisdiction
Rationale
1. Okol is a corporate officer so the case is an intra-corporate dispute. Thus, the NLRC has no
jurisdiction over the illegal dismissal case.

Section 25 of the Corporation Code enumerates corporate officers as the president, secretary,
treasurer and such other officers as may be provided for in the by-laws. In Tabang v. NLRC, an "office"
is created by the charter 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 managing officer of the corporation who also determines the
compensation to be paid to such employee.

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 In the present case, respondents attached the GIS, Minutes of the meeting of the Board of Directors
and Secretary's Certificate, and the Amended By-Laws of Slimmers World1 as submitted to the SEC to
show that petitioner was a corporate officer whose rights do not fall within the NLRC's jurisdiction. The
GIS and minutes of the meeting of the board of directors indicated that petitioner was a member of the
board of directors, holding one subscribed share of the capital stock, and an elected corporate officer.

From the documents, Okol was a director and officer of Slimmers World. A corporate officer's
dismissal is always a corporate act, or an intra-corporate controversy which arises 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 management and is a corporate controversy in contemplation of the Corporation Code.

Prior to its amendment, PD 902-A provided that intra-corporate disputes fall within the jurisdiction of the
Securities and Exchange Commission (SEC). It is a settled rule that jurisdiction over the subject matter
is conferred by law. The determination of the rights of a director and 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. Thus, the appellate court correctly ruled that
it is not the NLRC but the regular courts which have jurisdiction over the present case.

Disposition
WHEREFORE, we DENY the petition. We AFFIRM the 18 October 2002 Decision and 22 September
2003 Resolution of the Court of Appeals in CA-G.R. SP No. 69893. This Decision is without prejudice to
petitioner Leslie Okol's taking recourse to and seeking relief through the appropriate remedy in the proper
forum.

1
The relevant portions of the Amended By-Laws of Slimmers World which enumerate the power of the board of directors as well as
the officers of the corporation state:
Article II
The Board of Directors
1. Qualifications and Election - The general management of the corporation shall be vested in a board of five directors who shall
be stockholders and who shall be elected annually by the stockholders and who shall serve until the election and qualification of
their successors.

Article III
Officers
4. Vice-President - Like the Chairman of the Board and the President, the Vice-President shall be elected by the Board of
Directors from [its] own members.
The Vice-President shall be vested with all the powers and authority and is required to perform all the duties of the President
during the absence of the latter for any cause.
The Vice-President will perform such duties as the Board of Directors may impose upon him from time to time.

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