Dismissal of an employee should observe both substantive and procedural due process requirements. Dishonesty of a managerial employee renders her liable for dismissal.

Thus, the SC held in the July 2, 2018 case:

Stradcom Corporation and Jose A. Chua vs. Joyce Annabelle L. Orpilla
G.R. No. 206800, July 2, 2018

Willful breach of trust; Dishonesty; The dismissal of a dishonest employee is to the best interest not only of the management but also of labor; Procedural due process; Constructive dismissal


This involves a claim for constructive dismissal case filed by Stradcom’s Human Resource Administration Department (HRAD) Head, Orpilla Joyce Anabelle L. Orpilla (Orpilla).

There are two versions of events:

A.) Version of Orpilla

According to Orpilla she was employed by Stradcom as Human Resources Administration Department (HRAD) Head with duties involving administrative and training matters.

Chua, the President and Chief Executive Officer (CEO) of Stradcom, issued a Memorandum addressed to the Chief Operating Officer (COO), Ramon G. Reyes (Reyes), and Chief Financial Officer (CFO), Raul C. Pagdanganan (Pagdanganan), announcing the reorganization of the HRAD. The reorganization states that the Training Section of the Department shall be spinned off and will form part of the Business Operations. The Training Section should be called Human Resources Training and Development. Under the said reorganization, the Human Resources Training and Development shall be reporting to Mr. Ramon G. Reyes, COO, the Personnel and Administration shall be reporting to Mr. Raul Pagdangan, CFO and Orpilla and the Training Section will be reporting directly to the COO.

After the tum-over of the documents and equipment of HRAD, Orpilla inquired from Chua as to her status in the light of the said reorganization. Chua, on the other hand, replied that the management has lost its trust and confidence in her and it would be better if she resigned. Orpilla protested the resignation and insisted that if there were charges against her, she was open for formal investigation. Chua, however, was not able to come up with any charges.

Thereafter, a meeting was held wherein, Atty. Eric Gene Pilapil (Atty. Pilapil), the Chief Legal Officer (CLO) offered a settlement to Orpilla in exchange for her employment, otherwise, Orpilla would have to undergo the burden of litigation in pursuing the retention of her employment. Atty. Pilapil set another meeting on January 13, 2003 with Orpilla, and told her to take a leave in the meantime to think about the settlement offer. Atty. Pilapil also assured Orpilla that she would continue to receive her salary. Subsequently, per advice of Atty. Pilapil, Orpilla reported for work but the guards refused her entry and advised her to take a leave of absence.

Orpilla claimed that she was informed by Accounting Manager, Mr. Arnold C. Ocampo, that her January 15, 2003 salary was already deposited in her bank account which included the proportionate 13th month pay for the year 2003 and was her last and final pay. After such, Orpilla no longer received any kind of payment from Stradcom, et al. Orpilla claimed that she was constructively dismissed on January 2, 2003 and turned into an actual dismissal on January 15, 2003, when she received her last pay.

Orpilla filed a complaint for constructive dismissal with monetary claims of backwages, attorney’s fees and damages.

B.) Version of Stradcom

Sometime in December 2002, Pagdanganan gave instructions to Orpilla to commence preparations for Stradcom’s 2002 Christmas party. Chua also gave instructions to Orpilla to include the Land Registration Systems, Inc. (Lares) officers and employees, an affiliate of Stradcom in the Christmas party, to foster camaraderie and working relations between the two companies.

Contrary to Chua’s instruction, Orpilla then called a staff lunch meeting for Stradcom’s 2002 Christmas party, wherein Orpilla conveyed her intention of easing out Lares’ employees from the party.

Later, it had come to Stradcom’s attention that Orpilla was not comfortable with the idea to include Lares in the Christmas party, as Orpilla appeared evasive on the queries about the event made by Ms. May Marcelo, the Head Personnel and Administration of Lares. This matter was brought to the attention of Chua, who decided to strip Orpilla of any responsibility in organizing the Christmas party and transferred the same to another committee. As part of the turnover, Orpilla furnished the committee with a copy of the initial budget which included the catering services from G& W Catering Services at P250 per head.

The Christmas Party Committee was surprised to find out that the price of the food was actually P200 per head and not P250 per head as represented by Orpilla. Suspicious about the correct pricing, Samson and Galgana reported the matter to the Stradcom’s management. Stradcom began its investigation and interviewed some employees regarding the conduct of Orpilla.

After the investigation, Stradcom also discovered that Orpilla required her staff to prepare presentation/training materials/manuals using company resources for purposes not related to the affairs of the company, on overtime and on Sundays. Subsequently, Pagdanganan called for a conference with Orpilla, and discussed Orpilla’s non-inclusion of Lares in Stradcom’s Christmas party, the overpricing of the food, and her moonlighting. Orpilla made a bare denial.

Chua notified his employees about the reorganization of the HRAD and the Business Operations Department. On the same date and as part of routine procedure, Orpilla turned-over the necessary documents and equipment. Orpilla reported to Reyes, her new immediate superior and secured the latter’s approval for her leave of absence on the dates of January 3 in the afternoon up to January 6, 2003, due to personal reasons. Reyes approved her leave.

However, before Orpilla’s scheduled leave, she approached Chua to discuss the reorganization and her previous conference with Pagdanganan regarding her said infractions. Chua told Orpilla that the management has lost its trust and confidence in her due to her willful disobedience in excluding the employees of Lares in the Stradcom’s Christmas party and for willful breach of trust in connection with the canvassing of the caterer.

Orpilla explained her side and asked Chua for his advice. Chua replied that considering her position is one that requires the trust and confidence of the management, it would be difficult to force herself on the management. Thus, Orpilla conveyed her willingness to resign. In view of this, Stradcom’s officers agreed that any formal investigation on Orpilla was unnecessary in view of her willingness to resign.

However, Orpilla reported for work and suprisedly informed Stradcom that she would not resign. When Chua found out about Orpilla’s retraction of her statement to resign, he instructed Atty. Pilapil to talk things through with Orpilla.

Atty. Pilapil invited Orpilla for dinner outside the company premises. Orpilla was given another chance regarding her said infractions. Orpilla then requested for four days leave to think things through and Atty. Pilapil adhered to request and assured her that she will receive her pay while on leave. They likewise agreed that they would meet again outside the office to discuss Orpilla’s final decision. Stradcom, et al. were shocked when they found out that Orpilla had filed a complaint for constructive dismissal with monetary claims of backwages, attorney’s fees and damages.

Stradcom, et al. contended that the dismissal of Orpilla was for just cause on the ground of loss of trust and confidence and the same was in compliance with the due process requirements. Stradcom, et al. further contended that the acts that caused the loss of trust and confidence of Stradcom, et al. in the Orpilla were her mishandling of Stradcom’s 2002 Christmas party, dishonesty in preparing the budget thereof, misrepresentation in her application for employment, and using company personnel and resources for purposes not beneficial to the interest of Stradcom.

LA Ruling:

The LA rendered a Decision, which ruled that Orpilla was illegally dismissed and Chua is solidarily liable with Stradcom for the payment of the monetary awards to Orpilla.

Aggrieved, Stradcom, et al. seasonably filed a memorandum of appeal before the NLRC.

NLRC Ruling:

The NLRC issued its Decision. It partially granted the appeal filed by Stradcom, et al. and modified the Decision of the LA. The NLRC ruled that Orpilla was validly dismissed on the ground of loss and trust confidence, due to her mishandling of the 2002 budget for the Christmas party. The NLRC awarded Orpilla her unpaid salary for the period when she was formally advised of her disengagement from service. Attorney’s fees were also awarded.

Orpilla sought to reconsider the above-mentioned Decision but it was denied by the NLRC for lack of merit. Dismayed, Orpilla filed a petition for review on certiorari under Rule 65 with the CA.

CA Ruling:

The CA reversed and set aside the NLRC and ruled that Orpilla was illegally dismissed. Stradcom, et al. promptly filed a Motion for Reconsideration but it was denied by the CA.

Hence, the present petition before the SC.


Whether or not dishonesty of a managerial employee consisting of overpricing of company food and moonlighting is a ground for dismissal

Whether or not the company is liable for nominal damages for absence of notice to an employee who was considered dismissed for just cause

Whether or not a validly dismissed employee is entitled to backwages

SC Ruling:

The SC found merit in the petition.

Among the just causes for termination is the employer’s loss of trust and confidence in its employee. Article 297 (c) [formerly Article 282] of the Labor Code provides that an employer may terminate the services of an employee for fraud or willful breach of the trust reposed in him/her.

Labor Code of the Philippines 2018 Edition (re-numbered and updated)

The SC held that in order for fraud or willful breach of trust to be properly invoked, however, certain requirements must be complied with, namely: (1) the employee concerned must be holding a position of trust and confidence; and (2) there must be an act that would justify the loss of trust and confidence. The two classes of positions of trust were enunciated in the case of Alaska Milk Corporation, et al. vs. Ponce, one of which is the managerial employee.

The SC ruled that the mere existence of a basis for believing that such managerial employee has breached the trust of his employer would suffice for his dismissal. Hence, in the case of managerial employees, proof beyond reasonable doubt is not required, it being sufficient that there is some basis for such loss of confidence, such as when the employer has reasonable ground to believe that the employee concerned is responsible for the purported misconduct, and the nature of his participation therein renders him unworthy of the trust and confidence demanded by his position.

It is undisputed that at the time of Orpilla’s dismissal, she was holding a managerial position, which was HRAD Head of Stradcom and directly reported to the President, herein Chua and other high-ranking officials of Stradcom. Likewise, Orpilla performed key and sensitive functions, as her duties and responsibilities included the administration, personnel and training matters of the company. Orpilla held a trust and critical position which required the conscientious observance of the company rules and procedures.

The presence of the first requisite is thus certain. Anent to the second requisite, the Court finds that Stradcom, et al. meet their burden of proving that Orpilla’s dismissal was for a just cause.

The acts alleged to have caused the loss of trust and confidence of Stradcom, et al. in Orpilla was her mishandling of Stradcom’s 2002 Christmas party, dishonesty in preparing the budget thereof, misrepresentation in her application for employment, and using company personnel and resources for purposes not beneficial to the interest of Stradcom. The evidence on record support Stradcom’s claims. There was substantial evidence to support that Orpilla overpriced the food for the 2002 Christmas party.

Furthermore, Orpilla was proven to have engaged in moonlighting activities and used company personnel and resources for purposes not in line with the business interest of Stradcom. In fact, Orpilla admitted that she actually took home some of the training materials owned by the company without the latter’s prior clearance and without disclosed purpose. Such dishonesty on the part of Orpilla in carrying out her duties is prejudicial to the interest of Stradcom and constitutes just cause to terminate her employment.

The SC agreed with the findings of the NLRC that there was a just cause for Orpilla’s dismissal. The dismissal of a dishonest employee is to the best interest not only of the management but also of labor. Stradcom, as an employer in the exercise of self-protection, cannot be compelled to continue employing an employee who is guilty of acts inimical to its interest.

The SC held further that even if there is a just cause to terminate Orpilla’s employment, her right to due process was not satisfied. On the matter of procedural due process, it is well-settled that the employer must furnish the employee with two written notices before termination of employment can be legally effected. The first apprises the employee of the particular acts or omissions for which dismissal is sought. The second informs the employee of the employer’s decision to dismiss him.

Learn more about dismissal due to dishonesty, fraud, loss of trust and confidence, and willful breach of trust from the book Guide to Valid Dismissal of Employees Second Edition

Here, the cause for termination was loss of trust and confidence, thus due to the employee or Orpilla’s fault, but Stradcom failed to comply with the twin-notice requirement. Thus, as a measure of equity, the SC ordered Stradcom to pay Orpilla nominal damages in the amount of P30,000.

Orpilla was not illegally dismissed hence, she is not entitled to backwages. Backwages may be granted only when there is a finding that the dismissal is illegal. Orpilla’s monetary claims for backwages, separation pay, moral and exemplary damages, as well as attorney’s fees must necessarily fail as a consequence of the finding that her dismissal was for a just cause and that Stradcom, et al. acted in good faith when they terminated her services.

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