COSARE VS BROADCOM ASIA

The case stems from a complaint for constructive dismissal, illegal suspension and monetary
claims filed with the NCR Arbitration Branch of the NLRC by Cosare against the respondents.

Cosare claimed that sometime in April 1993, he 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. Cosare
was named an incorporator of Broadcom, having been assigned 100 shares of stock with par
value of ₱1.00 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.

Cosare sent a confidential memo to Arevalo to inform him of the following anomalies which
were allegedly being committed by Abiog (a newly appointed VP).

Apparently, Arevalo failed to act on Cosare’s 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. Cosare refused to comply with the directive.

Cosare received from Broadcom’s Manager for Finance and Administration, a memo signed
by Arevalo, charging him of serious misconduct and willful breach of trust.

LA dismissed the complaint on the ground of Cosare’s failure to establish that he was
dismissed, constructively or otherwise. NLRC rendered its Decision reversing the Decision of
LA Menese and found respondents guilty of Illegal Constructive Dismissal.

In a manifestation filed by the respondents during the pendency of the CA appeal, they
raised a new argument, i.e., the case involved an 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.

CA rendered the assailed Decision granting the respondents’ petition. It agreed with the
respondents’ contention that the case involved an intra-corporate controversy.

whether or not the case instituted by Cosare was an intra-corporate dispute that
was within the original jurisdiction of the RTC, and not of the LAs - NO,
jurisdiction belongs to the LA

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.

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.
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.

Corporate officers’ in the context of Presidential Decree No. 902-A are those officers of the
corporation who are given that character by the Corporation Code or by the corporation’s
by-laws.

There are three specific officers whom a corporation must have under Section 25 of the
Corporation Code. 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 corporation’s by-laws.

It has been held that an "office" is created by the charter of the corporation and the officer is
elected by the directors and 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.

As may be deduced from the foregoing, 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 corporation’s 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.

To support their argument that Cosare was a corporate officer, the respondents referred to
Section 1, Article IV of Broadcom’s by-laws, which reads: Note: The by-laws says The Board
may, from time to time, appoint such other officers as it may determine to be necessary or
proper. Although a blanket authority provides for the Board’s 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 Broadcom’s board, and
that Cosare was specifically elected or appointed to such position by the directors.

Finally, the mere fact that Cosare was a stockholder of Broadcom at the time of the case’s
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."42 Time and again, the Court has ruled that
in determining the existence of an intra-corporate dispute, the status or relationship of the
parties and the nature of the question that is the subject of the controversy must be taken
into account. Considering that the pending dispute particularly relates to Cosare’s rights and
obligations as a regular officer of Broadcom, instead of as a stockholder of the corporation,
the controversy cannot be deemed intra-corporate. This is consistent with the "controversy
test".

Under the nature of the controversy test, the incidents of that relationship must also be
considered for the purpose of ascertaining whether the controversy itself is intra-corporate.
The controversy must not only be rooted in the existence of an intra-corporate relationship,
but must as well pertain to the enforcement of the parties’ correlative rights and obligations
under the Corporation Code and the internal and intra-corporate regulatory rules of the
corporation. If the relationship and its incidents are merely incidental to the controversy or if
there will still be conflict even if the relationship does not exist, then no intra-corporate
controversy exists.
All told, it is then evident that the CA erred in reversing the NLRC’s ruling that favored
Cosare solely on the ground that the dispute was an intra-corporate controversy within the
jurisdiction of the regular courts.