G.R. No. 169299 ; June 16, 2006
EASTERN TELECOMMUNICATIONS PHILS., INC., Petitioner, vs. MARIA CHARINA DIAMSE, Respondent.

FACTS

Respondent Maria Charina Diamse, as Head of Building Services for petitioner Eastern Telecommunications Philippines, Inc. (ETPI), obtained a P150,000 cash advance in January 2001 to renew company business permits. Company policy required liquidation within 15 days after project completion, with automatic salary deductions for failure to comply. Diamse made payments totaling P97,151, with the last on February 26, 2001. She submitted a liquidation report on August 13, 2001, but the Finance Department refused it as late and commenced salary deductions. Simultaneously, upon the Finance Department’s advice, she filed a reimbursement request for the P97,151, which was approved and credited to her account on January 3, 2002.
However, ETPI’s Internal Audit Department (IAD), unaware of these transactions, conducted spot audits on January 2 and 3, 2002. The IAD required Diamse to withdraw and remit funds from her account, which she complied with. Subsequently, on January 4, 2002, ETPI charged Diamse with dishonesty and willful breach of trust for the delayed liquidation and alleged unauthorized fund diversion, dismissing her on February 5, 2002.

ISSUE

Whether Diamse was illegally dismissed based on loss of trust and confidence.

RULING

Yes, Diamse was illegally dismissed. For dismissal based on loss of trust and confidence to be valid, the breach of trust must be willful, founded on clear and established facts, and not merely due to carelessness or poor judgment. The employer bears the burden of proving just cause.
The Supreme Court upheld the Court of Appeals, finding ETPI failed to prove willful breach. Diamse’s actions demonstrated good faith and lack of fraudulent intent. She submitted a liquidation report, albeit late, and diligently followed the Finance Department’s contradictory instructions—enduring salary deductions while simultaneously processing a reimbursement request which the company itself approved. Her compliance with the IAD’s directives for immediate fund remittance further negated any dishonest motive. The delay and procedural confusion were primarily attributable to ETPI’s own internal miscommunication between its Finance and Internal Audit departments, not to a deliberate wrong by Diamse.
Consequently, her actions did not constitute the willful breach required for a loss of trust dismissal. The Court affirmed the award of separation pay in lieu of reinstatement and full backwages, remanding the case to the Labor Arbiter for final computation.