Facts:

The case involves two consolidated petitions for review on certiorari filed by Alaska Milk Corporation (AMC) and the Estate of Wilfred Uytengsu against Ernesto L. Ponce. The events leading to the case began on April 1, 2008, when AMC hired Ponce, a licensed mechanical engineer, as Manager for Engineering Services at its Milk Powder Plant and Ultra High Temperature Plant, with a monthly salary of P120,000. He was promoted to Director for Engineering Services on May 1, 2009, earning P200,000 monthly until his termination on February 25, 2010. The conflict arose when Ponce investigated AMC's overtime costs, which had surged alarmingly despite stable production levels. His findings implicated the Alaska Milk Workers Union (AMWU) in a scheme involving usurious loans to employees, which led to unnecessary overtime work. Ponce's recommendations to limit salary deductions were ignored, and he faced threats from AMWU after AMC ceased automatic deductions for loan payments. Sub...

Facts:

Employment and Position

• Alaska Milk Corporation (AMC) hired Ernesto L. Ponce on April 1, 2008 as Manager for Engineering Services at its Milk Powder and Ultra High Temperature Plants.
• Ponce was promoted on May 1, 2009 to Director for Engineering Services with a higher monthly salary.
• He was terminated on February 25, 2010 after a series of disputes and performance evaluations.

Dispute and Investigation of Overtime Costs

• Ponce investigated AMC’s surge in overtime costs from 2006 to 2008, which had raised concerns, especially with a reported expense of P34.1 million.
• His May 4, 2009 report revealed that excessive overtime was linked to:
• The Alaska Milk Workers Union’s (AMWU) scheme of granting personal loans at usurious rates.
• A collusion involving AMC’s HR, payroll, and Production Management Departments along with union officers, where automatic payroll deductions financed the union’s lending operations.

Management’s Response and Subsequent Developments

• Chairman Wilfredo Uytengsu, Sr. halted the automatic payroll deductions instead of implementing Ponce’s recommended phase-in limit.
• The decision adversely affected both the union’s cash collections and implicated AMC’s corporate managers.
• In response, AMWU issued death threats to AMC’s management, including Ponce.

Alleged Misconduct and Performance Issues

• Ponce was accused of:
• Exhibiting abrasive behavior, as observed by AMC’s President and CEO, Wilfred Steven Uytengsu, Jr.
• Failing to provide timely updates on engineering projects and obtaining necessary approvals.
• Sending an email (the “R/A e-mail”) to 12 colleagues soliciting official receipts in exchange for a 5% rebate on business-related expenses.

- The email contained detailed “rules” directing colleagues on how to submit receipts—such as requirements for proper designation of “Alaska Milk Corporation” on receipts, specific submission periods, and strict prohibitions on tampering.

Disciplinary Proceedings and Dismissal

• On February 16, 2010, AMC issued a First Performance Evaluation Memorandum asking Ponce to explain his actions and alleged neglect.
• After Ponce’s unsatisfactory explanation and subsequent receipt of a Second Performance Evaluation Memorandum, AMC terminated his employment.
• Ponce then filed a complaint for illegal dismissal on April 14, 2010, seeking reinstatement along with backwages and various monetary awards.

Procedural History

• The Labor Arbiter (LA) ruled on January 30, 2013 that Ponce was illegally dismissed, holding that the evidence did not warrant dismissal for gross and habitual neglect.
• The National Labor Relations Commission (NLRC) reversed the LA’s ruling on July 29, 2013, finding that the solicitation of receipts constituted dishonesty and loss of trust.
• The Court of Appeals (CA) subsequently reversed the NLRC, holding that there was insufficient evidence to prove gross and habitual neglect, and that dismissal was too harsh.
• AMC and Uytengsu, Sr. elevated the issue to the Supreme Court on certiorari, which ultimately granted their petition, vacated the CA ruling, and reinstated the LA’s decision regarding illegal dismissal on the grounds of loss of trust and confidence.

Issue:

Whether Ponce’s dismissal was justified under Article 297 (formerly Article 282) of the Labor Code.

• Whether the evidence supports a finding of gross and habitual neglect of duties as charged.
• Whether the misconduct involving the R/A e-mail constituted a valid basis for the loss of trust and confidence.
• Whether an employer may dismiss a managerial employee based solely on a basis for believing that the employee has breached the employer’s trust.
• The adequacy of AMC’s due process, including the issuance of performance evaluation memoranda and timeliness of disciplinary warnings prior to termination.
• The propriety of equating the act of soliciting receipts for a 5% rebate with fraud or willful breach of trust sufficient to justify dismissal.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)