Title
Supreme Court
Stradcom Corporation vs. Orpilla
Case
G.R. No. 206800
Decision Date
Jul 2, 2018
A managerial employee was dismissed for loss of trust due to dishonesty in handling company funds and misuse of resources. The Supreme Court upheld the dismissal but awarded nominal damages for procedural due process violations.

Case Summary (A.M. No. 09-6-1-SC)

Procedural and Factual Background

Joyce Anabelle L. Orpilla was employed as HRAD Head on a probationary basis with a monthly salary of ₱60,000. Her duties involved administrative and training responsibilities. A company reorganization was announced on January 2, 2003, by petitioner Chua, which included spinning off the Training Section and altering reporting lines. Following the reorganization, petitioner Stradcom management, led by Chua, expressed loss of trust and confidence in Orpilla, insisting that she resign. The respondent refused, offering to undergo investigation if formal charges were presented, but none were forthcoming. Subsequent discussions and settlement offers were made, involving the company’s Chief Legal Officer, Atty. Pilapil. Despite assurances, respondent was denied entry to the workplace on January 13, 2003, and was informed her January 15 salary, including a pro rata 13th month pay, was final. She subsequently filed a complaint for constructive dismissal with monetary claims.

Petitioners' Version of Events and Grounds for Dismissal

Petitioners recounted several incidents demonstrating fault on Orpilla’s part, including mishandling of the 2002 company Christmas party, specifically her exclusion of affiliate employees and overpricing catering services. Evidence showed that the food price she represented (₱250 per head) was inflated compared to the actual price (₱200 per head) charged by the caterer, indicating dishonesty. Further, Orpilla was found to have engaged in moonlighting activities and used company resources for purposes unrelated to Stradcom’s business without authorization. After investigation and several conferences, petitioners determined these acts constituted loss of trust and confidence, a valid just cause for dismissal under Article 297(c) of the Labor Code. The management regarded formal investigation as unnecessary after Orpilla initially offered to resign but retracted her decision.

Labor Arbiter’s Ruling

The Labor Arbiter ruled in favor of the respondent, declaring her dismissal illegal due to violation of due process and notice requirements. The petitioners were ordered to pay Orpilla separation pay, backwages, moral and exemplary damages, and attorney’s fees, holding both Stradcom and Chua jointly liable.

NLRC Decision

The NLRC partially granted the petitioners’ appeal, modifying the Labor Arbiter’s findings. It ruled that Orpilla’s dismissal was valid on just cause (loss of trust and confidence), awarding only her unpaid salary from January 16 to April 16, 2003 (the time before formal notice of termination), and attorney’s fees. The NLRC found that petitioners had complied with due process considering the circumstances.

Court of Appeals Ruling

The Court of Appeals reversed the NLRC decision, reinstating the Labor Arbiter’s ruling that Orpilla was illegally dismissed. It found that petitioners failed to observe procedural due process and that Orpilla’s demotion during the reorganization was unjustified. The CA also maintained that petitioner Chua was solidarily liable with Stradcom.

Issues Presented Before the Supreme Court

  1. Whether Orpilla was validly dismissed for just cause (loss of trust and confidence)
  2. Whether petitioner complied with procedural due process in dismissal, including notice and opportunity to be heard
  3. Whether the company’s reorganization was a valid exercise of management prerogative
  4. Whether Orpilla voluntarily resigned
  5. The propriety of the imposition of joint and solidary liability on Chua
  6. Whether Orpilla is entitled to monetary claims such as backwages, separation pay, moral damages, and attorney’s fees

Supreme Court Ruling on Valid Just Cause for Dismissal

The Court affirmed that loss of trust and confidence is a recognized just cause for termination under Article 297(c) of the Labor Code, which requires: (1) that the employee holds a position of trust and confidence, and (2) that there is a valid ground justifying such loss. Orpilla held a managerial position as HRAD Head, performing key functions and reporting directly to top management, fulfilling the status requirement. Petitioners proved specific acts of dishonesty and mismanagement, including deliberate overpricing in the Christmas party budget, confirmed by third-party affidavits, and unauthorized use of company materials for personal purposes, constituting valid grounds for loss of trust.

The Court emphasized that for managerial employees the employer’s reasonable belief suffices and proof beyond reasonable doubt is not required. Accordingly, the dismissal was founded on just cause.

Supreme Court Ruling on Procedural Due Process

Despite finding just cause, the Court held that petitioners failed to comply with the procedural due process requirements mandated by law. The Labor Code and established jurisprudence require two written notices: one to inform the employee of the allegations and another to communicate the decision to dismiss. The Court noted that no such formal notices were furnished to Orpilla prior to dismissal. Considering the valid cause was due to employee fault, and the dismissal was essentially employee-initiated but employer-enforced, the Court awarded nominal damages of ₱30,000 to Orpilla for violation of due process rights.

On the Validity of Reorganization and Voluntariness of Resignation

The reorganization was recognized as a valid exercise of management prerogative. However, the employee did not voluntarily

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