General Manager of a Cooperative may not be an Employee

General Manager of a Cooperative may not be an Employee

Is the General Manager of a cooperative an employee? When he files a labor complaint will the Labor Arbiter have jurisdiction over it?

In the case of Ellao vs. Batangas I Electric Cooperative Inc. (BATELEC I) (835 Phil. 914 (2018)), Ellao was appointed as General Manager of the cooperative. Ellao committed irregularities while in office and was terminated from employment through a board resolution.

Ellao then filed a complaint for illegal dismissal before the labor tribunals, which assumed jurisdiction over the case. However, the CA reversed the respective decisions of the labor tribunals. When the case was elevated to the Supreme Court (SC).

The SC ruled that complaints for illegal dismissal filed by a cooperative officer constitute an intra-cooperative controversy.

By jurisprudence, termination disputes involving corporate or cooperative officers are treated differently from illegal dismissal cases brought by ordinary employees. In Tabang vs. National Labor Relations Commission (334 Phil. 424 (1997)), the SC differentiated between an “officer” and an “employee” in the following manner:

  1. It has been held that an “office” is created by the charter of the corporation and the officer is elected by the directors or stockholders.
  2. 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.

Thus, in the case of Uson vs. PLDT Employees Credit Cooperative (G.R. No. 253149, February 08, 2023), the SC held that to be considered a cooperative officer, the following must concur:

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(1) the office must be created by the charter to the by-laws of the cooperative; and

(2) the officer must be elected by the board of directors.

An individual is a cooperative officer if his position, for instance, of General Manager was created by the by-laws of of the cooperative and he was elected as General Manager by its Board of Directors.

Consequently, his dismissal from office is an intra-cooperative dispute which is beyond the jurisdiction of the labor tribunals.

Will the argument that the phrase “regular employee and simultaneous reappointment as General Manager” confers the status of both a regular employee and cooperative officer?

In Uson case, the SC held that the phrase “regular employee and simultaneous reappointment as General Manager” means that the individual was appointed as a full¬≠ time General Manager. The nomenclature distinction between “regular” and “acting” reveals that the Board of Directors distinguished between Uson’s appointment as General Manager from his initial appointment to the same position in an acting capacity.

Learn how to Validly Terminate Employee in the Philippines with this Tutorial Video of Atty. Elvin

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