Asia Pacific Chartering, Inc. v. Maria Linda R.

Farolan
GR No. 1511370
Carpio-Morales, J:
FACTS: Petitioner was a general sales agent (GSA) which sold passenger and cargo spaces for airlines
operated by Scandinavian Airline System (an offline international airline company). On December 16,
1992, petitioner hired respondent as Sales Manager for its passenger and cargo operations. In a report
given by respondent sometime in September 1993, she expressed that the company was performing
poorly because of several market forces beyond her control. To remedy the situation, petitioner directed
its high-ranking official, Roberto Zozobrado, to conduct an investigation. As a result, Zozobrado
informally took over some of respondents marketing and sales responsibilities because allegedly the
former found out that the respondent did not adopt any sales strategy to develop other sources of revenue
for SAS. However, respondent presented in evidence a message from Soren Jespersen, the General
Manager of SAS in Hongkong, congratulating the respondent for reaching and exceeding the target by
50% for the month of May 1994. On June 18, 1994, respondent received a letter of termination from the
petitioner on the ground of loss of trust and confidence. Respondent then filed a case before the Labor
Arbiter for illegal dismissal against petitioner. She further claims that she was not accorded due process
and was not given an opportunity to be heard and answer claims against her. The Labor Arbiter decided
the case in favor of respondent, finding that she was illegally dismissed. On appeal, the NLRC reversed
the decision of LA, stating that it was the right of petitioner to dismiss employees based on loss of trust,
which was management prerogative. The CA reinstated the decision of the LA, finding that the
respondent was deprived of due process.
(1)ISSUE: Whether or not the petitioner was illegally dismissed
HELD: YES. The requisites for a valid dismissal of an employee are: (1) the employee must be afforded
due process (i.e. he must be given the opportunity to be heard and to defend himself) and (2) dismissal
must be for a valid cause as provided in Art. 282 of the Labor Code, or any of the authorized causes
under Art. 283 and 284 of the same. The Court found that respondent was not afforded the opportunity to
be heard and to present evidence in her defense and was not given any notice constituting the grounds for
her dismissal. As regards the second requisite, the employer bears the onus of proving that the dismissal is
for just cause.
(2)ISSUE: Whether or not the doctrine of loss of trust and confidence can be applied to the case at bar
HELD: NO. The Supreme Court did not uphold the petitioners defense in averring the application of the
doctrine of loss of trust as management prerogative. With respect to rank and file personnel, loss of trust
and confidence as a ground for valid dismissal requires proof of involvement in the alleged events in
question and that mere uncorroborated assertions and accusations by the employer will not be sufficient.
But as regards managerial employees, the mere existence of a basis for believing that such employee has
breached the trust of his employer would suffice for his dismissal. The Court determined that respondent
was not a managerial employee (despite the fact that she was designated as a manager) because it is the
job description that determines the nature of the employment. Furthermore, the Court considered the
requisites for an employee to be a managerial employee, which requires the presence of all of the
following: (1) their primary duty consists of the management of the establishment in which they are
employed or a department or a subdivision thereof; (2) they customarily and regularly direct the work of
two or more employees therein; and (3) they have the authority to hire or fire other employees of lower
rank; or their suggestions and recommendations as to the hiring and firing and as to the promotion or any
other change of status of other employees are given particular weight. The Court found that the
respondents function dealt mainly with servicing of existing clientele; hence, she could not be considered
as a managerial employee. As such, her dismissal, to be valid, requires proof that the respondent failed to

observe standards of work or was inefficient. The petitioner was not able to show such evidence. Thus,
the doctrine of loss of trust and confidence cannot be appreciated in favor of the petitioner.