G.R. No. 151370 - Asia Pacific Chartering Inc. vs. Farolan

Petitioner Asia Pacific Chartering (Phils.) Inc. served as the general sales agent (GSA) for the Scandinavian Airline System (SAS) until 1996.
Respondent Maria Linda R. Farolan was hired as Sales Manager for the passenger and cargo operations related to SAS on December 16, 1992, following a letter-offer detailing her salary, housing, transportation, and meal allowances.

The letter-offer from petitioner confirmed her appointment, and her immediate involvement in SAS operations was emphasized.
Respondent attended several training sessions and seminars—including a Customer Service Seminar in Bangkok, a Regional Sales Meeting, and a course on the Amadeus computer reservation system—to enhance her marketing and sales skills.

In September 1993, respondent submitted a report outlining the decline in SAS’s sales revenues for the period January to July 1993, attributing the drop primarily to market forces and external factors.
The report provided detailed figures comparing 1993 to 1992, explained various factors such as competitive pricing by on-line carriers, and recommended strategies to improve future performance.

Due to the marked decline in revenues, petitioner instructed its officer Roberto Zozobrado in January 1994 to investigate the issue and propose corrective measures.
Although respondent retained her title and salary, Mr. Zozobrado informally assumed control over some of the sales and marketing functions, indicating a lack of confidence in her managerial capability.

On May 21, 1994, a congratulatory message from SAS’s General Manager, Soren Jespersen, praised the sales results, noting that targets were exceeded in parts of the sales operations.
On July 18, 1994, another message noted mixed performance—while one class did not meet targets, the other showed satisfactory results—and encouraged continued efforts.

Despite these positive notes, internal assessments pointed to shortcomings in her strategies and management approach.

On July 18, 1994, petitioner issued a termination letter citing “loss of confidence” in respondent’s managerial and marketing capabilities.
The termination letter referenced unfavorable comparisons in revenue performance between 1993 and 1994, indicating significant shortfalls and blaming respondent for the diminished results.
Respondent challenged her dismissal by filing a complaint for illegal dismissal, alleging that she was terminated without being afforded due process and proper explanation.

The Labor Arbiter, upon detailed analysis, found respondent’s dismissal to be without just cause, awarding separation pay, backwages, as well as moral, exemplary, and nominal damages.
The National Labor Relations Commission (NLRC) later reversed the Labor Arbiter’s decision, upholding the management’s prerogative to dismiss based on loss of trust and confidence.
On appeal, the Court of Appeals set aside the NLRC decision, reinstated certain awards (with modifications such as reducing the attorney’s fees and striking nominal damages), and affirmed the original Labor Arbiter ruling to the extent that respondent was illegally dismissed.
Petitioner then filed a motion for reconsideration, which was denied, leading to the present Petition for Review.

Whether respondent’s dismissal for “loss of confidence” was legally justified.
Whether proper procedural due process was observed in terminating her employment.

Whether the management’s assertion of loss of trust and confidence, due to alleged inefficiency and absence of effective sales strategies, constitutes a valid ground for dismissal.
Whether sufficient evidence exists to demonstrate a willful breach of duty or misconduct on the part of the respondent.

Whether the awards for separation pay, backwages, and moral and exemplary damages are appropriate given the circumstances.
Whether the adjustments made by the Court of Appeals regarding damages were correct or an abuse of discretion by the NLRC.

Whether the respondent was deprived of the opportunity to be heard as required by law.
Whether the lack of a written explanation for the termination violated established labor procedural requirements.