G.R. No. 145901. December 15, 2005.
EASYCALL COMMUNICATIONS PHILS., INC., Petitioner, vs. EDWARD KING, Respondent.

FACTS

Petitioner Easycall Communications Phils., Inc. hired respondent Edward King as assistant to the general manager in May 1992. He was promoted to Vice President for Nationwide Expansion by December 1992, responsible for sales and rentals in expansion areas. In March 1993, management reviewed his performance, finding his sales at 78% of his commitment and 70% of his target, and noted he spent only about 40% of working days in the field. After discussions, respondent received a notice of termination dated April 19, 1993, stating management had lost confidence in him as the right manager for his position.
Respondent filed an illegal dismissal complaint. The Labor Arbiter and the National Labor Relations Commission (NLRC) upheld the dismissal on the ground of loss of confidence, though the NLRC awarded indemnity for due process violation. On appeal, the Court of Appeals reversed, declaring the dismissal illegal and awarding backwages, separation pay, and attorney’s fees. Petitioner elevated the case, arguing the NLRC lacked jurisdiction as respondent was a corporate officer, and that the dismissal was valid.

ISSUE

The primary issues were: (1) whether the NLRC had jurisdiction over the illegal dismissal case, and (2) whether respondent was illegally dismissed.

RULING

The Supreme Court affirmed the CA decision, ruling that the NLRC had jurisdiction and that the dismissal was illegal. On jurisdiction, the Court held that respondent was not a corporate officer. A corporate officer is one appointed or elected as specified in the corporation’s bylaws or by the board of directors, pursuant to the Corporation Code. Respondent’s appointment as Vice President was a mere managerial position, not created by the bylaws or board resolution, thus falling under the NLRC’s jurisdiction over employer-employee relations.
On the merits, the Court found the dismissal invalid. Loss of confidence, to be a valid cause for dismissal of a managerial employee, must be based on willful breach of trust founded on clearly established facts. Petitioner failed to substantiate this. The notice of termination merely expressed a loss of confidence without stating specific acts constituting breach of trust. Alleged poor sales performance and infrequent field visits, without evidence of fraud or willful neglect, were insufficient. Performance shortcomings, absent a showing of willfulness or bad faith, do not equate to a breach of trust warranting dismissal. Consequently, respondent was illegally dismissed and entitled to reinstatement, full backwages, and attorney’s fees.