G.R. No. 221493 - Sterling Paper Products Enterprises, Inc. vs. KMM-Katipu

On July 29, 1998, petitioner Sterling Paper Products Enterprises, Inc. hired respondent Raymond Z. Esponga as a machine operator.
Prior to the incident in question, in June 2006, Sterling suspended several employees—including Esponga—for allegedly participating in a wildcat strike, warning that any repetition of such behavior could result in termination.

While on duty, Esponga and his co-employees were found resting on the sheeter machine contrary to safety protocols; they were later relocated to an area near the staff house.
Supervisor Mercy Vinoya, enforcing safety rules, instructed them to refrain from napping on the machine.
As Vinoya passed by the staff house, she heard Esponga issue the remark, "Huwag maingay, puro bawal," immediately followed by a verbal confrontation once Vinoya approached.
In response, Esponga retorted disrespectfully, saying, "Puro kayo bawal, bakit bawal ba magpahinga?" and, further, made an obscene gesture (giving the “dirty finger”) along with a taunting remark, "Wala ka pala eh, puro ka dakdak," in full view of his co-employees.
The incident was initially witnessed and documented by Mylene Pesimo, who executed a handwritten account of the occurrence.

Later on June 26, 2010, records show that Esponga failed to operate his assigned machine from 2:20 to 4:30 in the afternoon, choosing instead to converse with co-workers Bobby Dolor and Ruel Bertulfo.
Additionally, Esponga neglected to submit his daily reports for a period from June 21 to June 29, 2010.

A Notice to Explain, dated July 26, 2010, was served on Esponga on July 30, 2010, requiring a written explanation and attendance at an administrative hearing scheduled for August 9, 2010.
Esponga submitted a written explanation, denying the charges by claiming he was not present at the scene of the confrontation and that he was elsewhere at the time of his observed absence from duty.
An amendment in the Notice to Explain was made on August 16, 2010 due to an error in the date stated for the incident, scheduling a new hearing on August 23, 2010.
Esponga failed to submit the required explanation or attend any of the several rescheduled hearings, with the final hearing set on October 4, 2010, which he again did not attend.

Based on Esponga’s absence from the administrative proceedings and the evidence of his misconduct, Sterling terminated his employment via a notice dated November 15, 2010, citing gross and serious misconduct, gross disrespect to a superior, and habitual negligence.
In response, Esponga, joined by KMM-Katipunan, filed a complaint for illegal dismissal, unfair labor practices, damages, and attorney’s fees against Sterling, prompting a series of legal proceedings from the Labor Arbiter (LA) to the National Labor Relations Commission (NLRC) and ultimately the Court of Appeals (CA).

Laboratory Arbiter (May 5, 2011) - Ruled in favor of Esponga, finding that Sterling failed to establish a just cause for his dismissal due to lack of submission of the company’s code of conduct as evidence.
NLRC (November 15, 2011) - Reversed the LA decision, holding that Esponga’s actions on June 26, 2010 constituted a valid cause for termination.
CA (December 22, 2014 Decision) - Reinstated the LA ruling by considering Esponga’s utterances and gesture as simple misconduct rather than serious misconduct, attributing them to an error in judgment possibly stemming from feeling wronged.
CA (October 27, 2015 Resolution) - Denied Sterling’s motion for reconsideration, prompting Sterling to file the present petition for review on certiorari.

Whether the acts committed by Esponga on June 26, 2010 (i.e., utterance of foul language, obscene gesture, and failure to perform assigned duties) amount to serious misconduct justifying dismissal.
Whether Sterling, as the employer, discharged its burden of proving that Esponga’s dismissal was based on a valid and authorized cause under the Labor Code.
Whether the evidence, including the conflicting testimony of witness Pesimo (with her initial statement versus her subsequent recantation), should affirm the finding of serious misconduct.
Whether Esponga’s failure to comply with administrative proceedings (i.e., not submitting a written explanation and failing to attend hearings) compounded his alleged misconduct sufficiently to warrant termination.