G.R. No. 152514 . July 12, 2005.
LIMKETKAI SONS MILLING, INC., et al., Petitioners, vs. EDITHA C. LLAMERA, Respondent.

FACTS

Respondent Editha Llamera was employed as a laboratory analyst by petitioner Limketkai Sons Milling, Inc. (LSMI). In March 1994, LSMI received reports that some of its cooking oil products had visible impurities and a rancid taste. The company directed employees, including Llamera, to explain the adulteration. Llamera, who was on maternity leave at the time, was placed under preventive suspension along with others. Upon her return, she denied any involvement in the incident. Subsequently, LSMI terminated her services on June 6, 1994, for alleged loss of trust and confidence.
Llamera filed a complaint for illegal dismissal. The Labor Arbiter ruled in her favor, declaring the dismissal illegal and awarding monetary benefits. The National Labor Relations Commission (NLRC) reversed this decision, deleting the awards for backwages and damages, finding the dismissal valid. On appeal, the Court of Appeals modified the NLRC ruling, affirming the award of separation pay under the Collective Bargaining Agreement but additionally declaring the dismissal illegal and reinstating the award of full backwages and attorney’s fees.

ISSUE

Whether the Court of Appeals erred in ruling that respondent Llamera was illegally dismissed.

RULING

The Supreme Court denied the petition and affirmed the Decision of the Court of Appeals. The Court held that the dismissal was illegal due to the petitioners’ failure to prove a valid cause. For dismissal based on loss of trust and confidence to be valid, the breach must be willful, founded on clearly established facts, and the employee must hold a position of trust. Petitioners merely alleged that Llamera’s failure to report a substandard batch showed connivance to sabotage the business. The Court found this logic flawed, characterizing it as a non sequitur—an allegation without proven factual basis is insufficient to constitute willful breach of trust.
As the employer, LSMI bore the burden of proving by substantial evidence that the dismissal was for a just or authorized cause. It failed to discharge this burden. Consequently, the dismissal was contrary to the Labor Code. An illegally dismissed employee is entitled to reinstatement and full backwages. However, due to the strained relations between the parties, reinstatement was no longer feasible. Thus, separation pay in lieu of reinstatement, full backwages, and attorney’s fees equivalent to ten percent of the total monetary award were correctly awarded.