Corporate Officer vs. Employee [Study Notes]

Study Smart Law · Corporate Law | Labor Law [Study Notes]

Corporate Officer or
Employee?

The two-box test that decides which court hears the case · RA 11232 (Revised Corporation Code), Sec. 24

THE TEST IN ONE LINE. A corporate office exists only if the position is named in the charter or by-laws and the person is elected to it by the board or stockholders — fail either one, and the person is an employee, whatever the title on the door says.

“Vice President.” “General Manager.” “Comptroller.” Titles like these have landed on both sides of the line in decided cases — sometimes the very same title, decided differently depending on two things the Supreme Court keeps coming back to. Getting the classification wrong is not a paperwork slip: it decides whether a dismissal case belongs to the Regional Trial Court or the Labor Arbiter, and filing in the wrong forum can mean losing the case on jurisdiction alone.

The Two-Box Test

Both boxes below must be checked before a position is a corporate office. This is the rule the Supreme Court settled in Matling Industrial and Commercial Corp. v. Coros (G.R. No. 157802, 13 Oct. 2010), building on Tabang v. NLRC (1997) and Nacpil v. Int’l Broadcasting Corp. (2002).

Box 1

Created in the charter or by-laws

The office itself — its name, and ideally its functions — must be written into the Articles of Incorporation or, more commonly, the By-Laws. A board resolution that merely authorizes the board to create offices, without the by-laws actually naming one, does not satisfy this box.

Box 2

Elected by the board or stockholders

The specific person must be elected or appointed to that named office by the Board of Directors (or Trustees), or by the stockholders or members — not merely hired, assigned, or given the title by the president or the HR department acting alone.

Both conditions must concur. Fail either one — the office is unnamed in the by-laws, or the person was never actually elected to it by the board — and the person is an employee, however senior the title reads on the organizational chart.

The sleeper provision — Sec. 24, RCC

Only three offices are named by the statute itself: president, treasurer, secretary. Every other corporate office exists only because the by-laws say so — which is why a board resolution alone, without a matching by-law provision, does not create an office.

“Immediately after their election, the directors or trustees of a corporation must formally organize by the election of: (a) a president, who must be a director; (b) a treasurer, who must be a resident; (c) a secretary, who must be a citizen and resident of the Philippines; and (d) such other officers as may be provided in the by-laws.”

Revised Corporation Code, Sec. 24

Titles are not self-executing. “Vice President,” “General Manager,” “Comptroller,” “Assistant Vice President,” “Manager” have all appeared on both sides of the line in decided cases — sometimes the same title landing differently depending on whether the by-laws named the office and the board did the electing.

The Pattern Across the Cases

Ten cases, the same two questions asked each time: was the office named in the by-laws, and did the board itself do the electing?

1997

Tabang v. NLRC

Corporate secretary / director role in dispute

Foundational: only offices the Corporation Code or by-laws give that character are corporate offices.

2002

Nacpil v. IBC

Comptroller

Corporate Officer — named in the by-laws and elected by the board. Forum: RTC / SEC.

2005

Easycall Communications v. King

VP for Nationwide Expansion

Employee — not named in the by-laws; appointed by the CEO, not elected by the board. Forum: NLRC.

2009

Okol v. Slimmers World Int’l

VP for Sales (also a director)

Corporate Officer — by-laws authorized the office and the board elected her to it. Forum: RTC.

2010

Matling Industrial v. Coros

VP for Finance and Administration

Employee — by-laws only authorized creation, didn’t name the office; appointed by the President, not the Board. Forum: NLRC.

2010

Locsin v. Nissan Lease Phils.

Executive Vice President

Corporate Officer — named in the by-laws and elected by the board. Forum: RTC.

2011

Real v. Sangu Philippines

Manager

Employee — not named in the by-laws. Forum: NLRC.

2011

Marc II Marketing v. Joson

General Manager

Employee — the by-law amendment naming the office was not shown effective at the relevant time. Forum: NLRC.

2014

Cosare v. Broadcom Asia

AVP for Sales

Employee — not named in the by-laws; appointed by the President. Forum: NLRC.

2014

Wesleyan Univ.-Phils. v. Reyes

University President

Corporate Officer — named per charter/by-laws and elected by the board. Forum: RTC.

This is a teaching summary of the reported holdings, not a verbatim quotation of any decision. G.R. numbers and dates are given in the case notes below.

This table is a teaching summary of the reported holdings, not a verbatim quotation of any decision. G.R. numbers and dates are given below.

What the Supreme Court Has Said

“A corporate office is created only by the corporate charter or the by-laws, and the officer must be elected to it by the directors or stockholders… a Vice President for Finance and Administration who was appointed by the President rather than elected by the Board, to a position not itself named in the by-laws, was held to be a regular employee, and the dismissal dispute belonged to the Labor Arbiter, not the Regional Trial Court.”

Matling Industrial and Commercial Corp. v. Coros, G.R. No. 157802, 13 Oct. 2010

“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 is generally employed not by action of the directors or stockholders but by the managing officer of the corporation.”

Easycall Communications Phils., Inc. v. King, G.R. No. 145901, 15 Dec. 2005

By contrast, a Vice President for Sales who was also a director was held a corporate officer: the by-laws authorized the board to create the office, and the board did, by resolution, elect her to it. Performing managerial or sales functions similar to those of an ordinary manager did not change the analysis — the source of the appointment did.

Okol v. Slimmers World International, G.R. No. 160146, 11 Dec. 2009

A General Manager’s dismissal case was held to belong to the NLRC, not the RTC, because the by-laws in force at the time did not yet name “General Manager” as a corporate office — a later amendment adding it could not retroactively convert an earlier appointment into a corporate office.

Marc II Marketing, Inc. v. Joson, G.R. No. 171993, 12 Dec. 2011

Common Mistakes — The Seven Traps

Almost every misclassification dispute traces back to one of these. Read this list twice — it is the part practitioners get wrong most often.

1. The title-alone trap. Assuming a senior-sounding title — Vice President, General Manager, Comptroller — by itself makes someone a corporate officer. It does not.
2. The board-resolution-only trap. Creating a new post by board resolution alone, with no matching by-law provision naming that office.
3. The unregistered-amendment trap. Amending the by-laws to add an office, but treating the amendment as effective before it has gone through the corporation’s own amendment procedure and been filed (see Marc II Marketing).
4. The wrong-forum trap. Filing — or defending — a dismissal dispute in the wrong forum, risking dismissal for lack of jurisdiction while the prescriptive period keeps running.
5. The rubber-stamp trap. Treating “elected by the board” as satisfied by a board simply approving a hire that HR or management already made.
6. The director-vs-officer trap. Forgetting that removal as a director, if the person also holds a board seat, is a separate act under Sec. 27, RCC, with its own 2/3-vote requirement — distinct from removal as an officer under Sec. 24.
7. The over-correction trap. Assuming that because a position is not a corporate office, no board involvement is proper at all — many corporations still confirm senior hires by board resolution as a governance practice, without that alone making them officers.

Implications for HR and Counsel

Dimension	Corporate Officer	Employee
Forum for a dismissal case	Regional Trial Court (intra-corporate dispute)	Labor Arbiter, then the NLRC
Standard for removal	Board’s pleasure; no just/authorized cause needed under the Labor Code	Just or authorized cause, with twin-notice due process
Appeal route	RTC → Court of Appeals, Rule 43	Labor Arbiter → NLRC → CA (Rule 65) → Supreme Court
Prescriptive period	Ordinary civil-law prescription for the cause pleaded	4 yrs illegal dismissal; 3 yrs money claims (Art. 306, Labor Code)
Burden of proof	On whoever asserts officer status	—
SSS / PhilHealth / Pag-IBIG	Mandatory for both	Mandatory for both

Two removals, two different rules. Removing a person as an officer (Sec. 24, RCC — a board act) and removing the same person as a director (Sec. 27, RCC — a stockholders’ act requiring a 2/3 vote of the outstanding capital stock) are governed by different provisions with different actors and votes. They are frequently conflated in practice.

Still an open question. Whether a removed corporate officer’s accrued money claims (unpaid wages, unpaid 13th-month pay) can still be pursued separately at the NLRC is fact-specific and not uniformly resolved across the cases surveyed here. Flag this for specific research before advising on a live dispute.

Applying the Test to Your Org Chart

Take three positions a corporation is considering creating for a new business line: General Manager, Accountant, and Sales & Marketing Manager. Running each through the two-box test before amending the by-laws:

Proposed Position	Two-Box Result	Likely Classification
General Manager	Only if the amended by-laws expressly name it (effective) and the board itself elects the person	Officer — only if both boxes are met
Accountant	Rarely named as its own office; usually hired by management, not board-elected	Employee, ordinarily
Sales & Marketing Manager	Rarely named as its own office; usually hired by management	Employee, ordinarily

The practical safeguard: if the intent is for a position to be non-permanent and removable at the board’s discretion, both boxes need to be affirmatively completed — name the office in the by-laws, have the board (not management) do the electing, and confirm the by-law amendment is effective — rather than relying on the title or a single board resolution alone.

Source. RA 11232, Revised Corporation Code of the Philippines, Sec. 24 · RA 8799, Securities Regulation Code, Sec. 5.2 · Interim Rules of Procedure Governing Intra-Corporate Controversies, A.M. No. 01-2-04-SC.

Read with. Labor Code of the Philippines, Book VI, on security of tenure and money claims.

Disclaimer. This post is for general information and educational purposes only. It is not legal advice and does not create a lawyer-client relationship. Citations were compiled from research and were not re-verified against lawphil.net or the e-Library in this session — confirm each G.R. number, date, and holding against the primary text before relying on it in a pleading, an opinion, or a public post.