G.R. No. 228412 & 228439, July 26, 2017
Alaska Milk Corporation and the Estate of Wilfred Uytengsu, Petitioners vs. Ernesto L. Ponce, Respondent; and Ernesto L. Ponce, Petitioner, vs. Alaska Milk Corporation, et al., Respondents

FACTS

Ernesto L. Ponce was hired by Alaska Milk Corporation (AMC) as Manager and later promoted to Director for Engineering Services. In 2009, he was directed to investigate excessive overtime costs. His report uncovered an anomalous lending scheme involving the workers’ union and certain AMC managers, where usurious loans with automatic payroll deductions left workers with minimal take-home pay, incentivizing unnecessary overtime. Ponce recommended a gradual correction, but AMC’s Chairman abruptly stopped the deductions, leading to union threats. Subsequently, AMC charged Ponce with gross negligence and terminated him in February 2010, citing performance issues and, primarily, an email he sent soliciting official receipts from colleagues in exchange for a 5% rebate to claim business allowances.
AMC alleged the solicitation email constituted serious misconduct and fraud. Ponce contended his dismissal was in retaliation for his exposé of the overtime scam, making it illegal. The Labor Arbiter ruled in favor of Ponce, declaring his dismissal illegal. The National Labor Relations Commission (NLRC) reversed, finding the dismissal valid. The Court of Appeals then reinstated the Labor Arbiter’s decision, prompting these consolidated petitions.

ISSUE

Whether the Court of Appeals erred in reversing the NLRC and finding that Ponce was illegally dismissed.

RULING

The Supreme Court granted the petitions, reversed the Court of Appeals, and reinstated the NLRC decision, ruling that Ponce’s dismissal was for a just cause. The legal logic centered on the validity of the grounds for termination and the procedural due process accorded to him. The Court found that Ponce’s act of soliciting official receipts from subordinates and colleagues for a rebate, as detailed in his email, constituted serious misconduct and willful breach of trust. As a high-ranking managerial employee, he owed AMC a duty of loyalty and fidelity. His scheme to reimburse personal expenses as company business allowances was a fraudulent act that eroded the trust essential to his position.
The Court rejected Ponce’s defense that his termination was retaliatory. It held that the investigation into the overtime anomaly and the discovery of his fraudulent solicitation were separate matters. AMC successfully discharged its burden of proving, by substantial evidence, a lawful ground for dismissal. Furthermore, the Court found that Ponce was afforded procedural due process; he was given notice of the charges, an opportunity to explain, and a hearing before termination. Therefore, his dismissal was both substantively and procedurally valid. The reinstatement of the NLRC decision was proper.