G.R. No.

221493, August 02, 2017

STERLING PAPER PRODUCTS ENTERPRISES, INC., Petitioner, v. KMM-

KATIPUNAN AND RAYMOND Z. ESPONGA, Respondents.

DECISION

MENDOZA, J.:

This is a petition for review on certiorari seeking to reverse and set aside the December
22, 2014 Decision1 and October 27, 2015 Resolution2 of the Court of Appeals (CA) in
CA-G.R. SP No. 124596, which nullified the November 15, 2011 Decision3 and March 2,
2012 Resolution4 of the National Labor Relations Commission (NLRC) in NLRC CN. RAB-
III-11-17024-10/ NLRC LAC No. 09-002429-11. The NLRC reversed and set aside the
May 5, 2011 Decision5 of the Labor Arbiter (LA).

The Antecedents

On July 29, 1998,6 petitioner Sterling Paper Products Enterprises, Inc. (Sterling) hired
respondent Raymond Z. Esponga (Esponga), as machine operator.

In June 2006, Sterling imposed a 20-day suspension on several employees including

Esponga, for allegedly participating in a wildcat strike. The Notice of Disciplinary Action
contained a warning that a repetition of a similar offense would compel the
management to impose the maximum penalty of termination of services.7

Sterling averred that on June 26, 2010, their supervisor Mercy Vinoya (Vinoya), found
Esponga and his co-employees about to take a nap on the sheeter machine. She called
their attention and prohibited them from taking a nap thereon for safety reasons.8

Esponga and his co-employees then transferred to the mango tree near the staff house.
When Vinoya passed by the staff house, she heard Esponga utter, "Huwag maingay,
puro bawal." She then confronted Esponga, who responded in a loud and disrespectful
tone, "Puro kayo bawal, bakit bawal ba magpahinga?"9

When Vinoya turned away, Esponga gave her the "dirty finger" sign in front of his co-
employees and said "Wala ka pala eh, puro ka dakdak. Baka pag ako nagsalita hindi mo
kayanin." The incident was witnessed by Mylene Pesimo (Pesimo), who executed a
handwritten account thereon.10

Later that day, Esponga was found to have been not working as the machine assigned
to him was not running from 2:20 to 4:30 in the afternoon. Instead, he was seen to be
having a conversation with his co-employees, Bobby Dolor and Ruel Bertulfo.
Additionally, he failed to submit his daily report from June 21 to June 29, 2010.11

Hence, a Notice to Explain, dated July 26, 2010, was served on Esponga on July 30,
2010, requiring him to submit his written explanation and to attend the administrative
hearing scheduled on August 9, 2010.

On August 9, 2010, Esponga submitted his written explanation denying the charges
against him. He claimed that he did not argue with Vinoya as he was not in the area
where the incident reportedly took place. Esponga further reasoned that during the
time when he was not seen operating the machine assigned to him, he was at the
Engineering Department and then he proceeded to the comfort room.

The July 26, 2010 Notice to Explain, however, indicated a wrong date when the incident
allegedly happened. Thus, an amended Notice to Explain, dated August 16, 2010, was
issued to Esponga requiring him to submit his written explanation and to attend the
administrative hearing scheduled on August 23, 2010. Esponga, however, failed to
submit his written explanation and he did not attend the hearing.

In view of Esponga's absence, the administrative hearing was rescheduled. The hearing
was reset several more times because of his failure to appear. The hearing was finally
set on October 4, 2010. Esponga and his counsel, however, still failed to attend.

Having found Esponga guilty of gross and serious misconduct, gross disrespect to
superior and habitual negligence, Sterling sent a termination notice, dated November
15, 2010. This prompted Esponga and KMM-Katipunan (respondents) to file a complaint
for illegal dismissal, unfair labor practice, damages, and attorney's fees against
Sterling.

The LA Ruling

In its May 5, 2011 Decision, the LA ruled that Esponga was illegally dismissed. It held
that Sterling failed to discharge the burden of proof for failure to submit in evidence the
company's code of conduct, which was used as basis to dismiss Esponga.
The fallo reads:chanRoblesvirtualLawlibrary

WHEREFORE, premises considered, respondents are found to have failed to discharge

their burden of proof, therefore, there is illegal dismissal.

Consequently, respondent corporation is hereby ordered to reinstate complainant to his

former position without loss of seniority rights and other privileges, with full backwages
initially computed at this time at P51,148.36.

The reinstatement aspect of this decision is immediately executory even as respondents

are hereby enjoined to submit a report of compliance therewith within ten (10) days
from receipt hereof.

Respondent corporation is likewise assessed 10% attorney's fee in favor of the

complaint in the sum of P5,114,84.

All other claims are hereby dismissed for lack of merit.

SO ORDERED.12
Not in conformity, Sterling elevated an appeal before the NLRC.

The NLRC Ruling

In its November 15, 2011 Decision, the NLRC reversed and set aside the LA ruling. It
declared that Esponga's dismissal was valid. The NLRC observed that as a result of the
June 26, 2010 incident, Esponga no longer performed his duties and simply spent the
remaining working hours talking with his co-workers. It opined that Esponga
intentionally did all these infractions on the same day to show his defiance and
displeasure with Vinoya, who prohibited him from sleeping on the sheeter machine. It
concluded that these were all violations of the Company Code of Conduct and
Discipline, and constituted a valid cause for termination of employment under the Labor
Code. The NLRC disposed the case in this wise: chanRoblesvirtualLawlibrary

WHEREFORE, premises considered, the appeal is GRANTED. The Decision appealed from
is REVERSED and SET ASIDE, and a new one issued DISMISSING the complaint.

SO ORDERED.13
Undeterred, respondents filed a motion for reconsideration. In its March 2, 2012
Resolution, the NLRC denied the same.

Aggrieved, the respondents filed a petition for certiorari with the CA.

The CA Ruling

In its assailed December 22, 2014 Decision, the CA reinstated the LA ruling. It held that
the utterances and gesture did not constitute serious misconduct. The CA stated that
Esponga may have committed an error of judgment in uttering disrespectful and
provocative words against his superior and in making a lewd gesture, but it could not
be said that his actuations were motivated by a wrongful intent. It adjudged that
Esponga's utterances and gesture sprung from the earlier incident which he perceived
as unfairly preventing him from taking a rest from work. As such, the CA ruled that
Esponga's actuations could only be regarded as simple misconduct. The dispositive
portion reads: chanRoblesvirtualLawlibrary

WHEREFORE, the Petition is GRANTED. The Decision dated November 15, 2011 and
Resolution dated March 2, 2012 of the National Labor Relations Commission are SET
ASIDE. The Decision dated May 5, 2011 of LAbor Arbiter Leandro Jose is REINSTATED
in full.

SO ORDERED.14
Sterling moved for reconsideration, but the CA denied its motion in its assailed October
27, 2015 Resolution.

Hence, this petition for review.

ISSUE

WHETHER THE CAUSE OF ESPONGA'S DISMISSAL AMOUNTS TO SERIOUS

MISCONDUCT

Sterling argues that Esponga's utterance of foul and abusive language against his
supervisor, demonstrating a dirty finger, and defiance to perform his duties undeniably
constitute serious misconduct. It added that Esponga's acts were not only serious, but
they also related to the performance of his duties. Further, Sterling asserts that he was
motivated by wrongful intent.

In his Comment,15 dated September 30, 2016, Esponga replied that Sterling failed to
establish the validity of his dismissal by clear and convincing evidence. He insisted that
if doubts exist between the evidence presented by the employer and the employee, the
scales of justice must be tilted in favor of the latter because the employer must
affirmatively show rationally adequate evidence that the dismissal was for a justifiable
cause.

In its Reply,16 dated January 30, 2017, Sterling contended that Esponga's failure to
participate in the administrative investigation conducted on his infraction was a clear
manifestation of his lack of discipline. It asserted that the existence of just and valid
cause for Esponga's dismissal and its compliance with the due process requirements
had been proven by clear, convincing and substantial evidence on record. Sterling
reasoned that an employer has free rein and enjoys wide latitude of discretion to
regulate all aspects of employment, including the prerogative to instil discipline in its
employees and to impose penalties, including dismissal, upon erring employees.

The Court's Ruling

The petition is meritorious.

Pesimo's retraction has no probative value

In cases of illegal dismissal, the employer bears the burden of proof to prove that the
termination was for a valid or authorized cause.17 In support of its allegation, Sterling
submitted the handwritten statement of Pesimo who witnessed the incident between
Esponga and Vinoya on June 26, 2010. Pesimo, however, recanted her statement.

A recantation does not necessarily cancel an earlier declaration.18 The rule is settled

that in cases where the previous testimony is retracted and a subsequent different, if
not contrary, testimony is made by the same witness, the test to decide which
testimony to believe is one of comparison coupled with the application of the general
rules of evidence. A testimony solemnly given in court should not be set aside and
disregarded lightly, and before this can be done, both the previous testimony and the
subsequent one should be carefully compared and juxtaposed, the circumstances under
which each was made, carefully and keenly scrutinized, and the reasons and motives
for the change discriminately analysed.19

In this case, Pesimo's earlier statement was more credible as there was no proof, much
less an allegation, that the same was made under force or intimidation. It must be
noted that Pesimo's recantation was made only after Esponga came to see
her.20 Nevertheless, in a text message she sent to Vinoya on January 24, 2011, Pesimo
did not deny the contents of her earlier statement. She merely expressed concern over
Esponga's discovery that she had executed a sworn statement corroborating Vinoya's
narration of the incident.21 Thus, her earlier statement prevails over her subsequent
recantation.

Dismissal from employment on the ground of serious misconduct

Under Article 282 (a) of the Labor Code, serious misconduct by the employee justifies
the employer in terminating his or her employment.
Misconduct is defined as an improper or wrong conduct. It is a transgression of some
established and definite rule of action, a forbidden act, a dereliction of duty, willful in
character, and implies wrongful intent and not mere error in judgment. To constitute a
valid cause for the dismissal within the text and meaning of Article 282 of the Labor
Code, the employee's misconduct must be serious, i.e., of such grave and aggravated
character and not merely trivial or unimportant.22

Additionally, the misconduct must be related to the performance of the employee's

duties showing him to be unfit to continue working for the employer.23 Further, and
equally important and required, the act or conduct must have been performed with
wrongful intent.24

To summarize, for misconduct or improper behavior to be a just cause for dismissal,

the following elements must concur: (a) the misconduct must be serious; (b) it must
relate to the performance of the employee's duties showing that the employee has
become unfit to continue working for the employer; and (c) it must have been
performed with wrongful intent.25

In the case at bench, the charge of serious misconduct is duly substantiated by the
evidence on record.

Primarily, in a number of cases, the Court has consistently ruled that the utterance of
obscene, insulting or offensive words against a superior is not only destructive of the
morale of his co-employees and a violation of the company rules and regulations, but
also constitutes gross misconduct.26

In de La Cruz v. National Labor Relations Commission,27 the dismissed employee

shouted, "Sayang ang pagka-professional mo!" and "Putang ina mo" at the company
physician when the latter refused to give him a referral slip.

Likewise, in Autobus Workers' Union (AWU) v. National Labor Relations

Commission,28 the dismissed employee told his supervisor "Gago ka" and taunted the
latter by saying, "Bakit anong gusto mo, tang ina mo."

Moreover, in Asian Design and Manufacturing Corporation v. Deputy Minister of

Labor,29 the dismissed employee made false and malicious statements against the
foreman (his superior) by telling his co-employees: "If you don't give a goat to the
foreman, you will be terminated. If you want to remain in this company, you have to
give a goat." The dismissed employee therein likewise posted a notice in the comfort
room of the company premises, which read: "Notice to all Sander — Those who want to
remain in this company, you must give anything to your foreman."

In Reynolds Philippines Corporation v. Eslava,30 the dismissed employee circulated

several letters to the members of the company's board of directors calling the executive
vice-president and general manager a "big fool," "anti-Filipino" and accusing him of
"mismanagement, inefficiency, lack of planning and foresight, petty favoritism,
dictatorial policies, one-man rule, contemptuous attitude to labor, anti-Filipino
utterances and activities."

Hence, it is well-settled that accusatory and inflammatory language used by an

employee towards his employer or superior can be a ground for dismissal or
termination.31

Further, Esponga's assailed conduct was related to his work. Vinoya did not prohibit him
from taking a nap. She merely reminded him that he could not do so on the sheeter
machine for safety reasons. Esponga's acts reflect an unwillingness to comply with
reasonable management directives.32

Finally, contrary to the CA's pronouncement, the Court finds that Esponga was
motivated by wrongful intent. To reiterate, Vinoya prohibited Esponga from sleeping on
the sheeter machine. Later on, when Vinoya was passing by, Esponga uttered "Huwag
maingay, puro bawal." When she confronted him, he retorted "Puro kayo bawal, bakit
bawal ba magpahinga?" Not contented, Esponga gave her supervisor the "dirty finger"
sign and said "Wala ka pala eh, puro ka dakdak. Baka pag ako nagsalita hindi mo
kayanin." It must be noted that he committed all these acts in front of his co-
employees, which evidently showed that he intended to disrespect and humiliate his
supervisor.

"An aggrieved employee who wants to unburden himself of his disappointments and
frustrations in his job or relations with his immediate superior would normally approach
said superior directly or otherwise ask some other officer possibly to mediate and
discuss the problem with the end in view of settling their differences without causing
ferocious conflicts. No matter how the employee dislikes his employer professionally,
and even if he is in a confrontational disposition, he cannot afford to be disrespectful
and dare to talk with an unguarded tongue and/or with a baleful pen."33

Time and again, the Court has put emphasis on the right of an employer to exercise its
management prerogative in dealing with its affairs including the right to dismiss its
erring employees. It is a general principle of labor law to discourage interference with
an employer's judgment in the conduct of his business. As already noted, even as the
law is solicitous of the welfare of the employees, it also recognizes the employer's
exercise of management prerogatives. As long as the company's exercise of judgment
is in good faith to advance its interest and not for the purpose of defeating or
circumventing the rights of employees under the laws or valid agreements, such
exercise will be upheld.34

WHEREFORE, the petition is GRANTED. The December 22, 2014 Decision and the
October 27, 2015 Resolution of the Court of Appeals in CA-G.R. SP No. 124596 are
hereby REVERSED and SET ASIDE. The November 15, 2011 Decision and the March
2, 2012 Resolution of the National Labor Relations Commission is REINSTATED.

SO ORDERED.

Carpio, (Chairperson), Leonen, Jardeleza,* and Martires, JJ., concur.

Endnotes:

*
 Per Raffle dated March 13, 2017.
1
 Penned by Associate Justice Francisco P. Acosta with Associate Justice Fernanda
Lampas Peralta and Associate Justice Myra V. Garcia-Fernandez, concurring; rollo, pp.
50-58-A.

2
 Id. at 59.

3
 Penned by Presiding Commissioner Leonardo L. Leonida with Commissioner Dolores M.
Peralta-Beley and Commissioner Mercedes R. Posada-Lacap, concurring; id. at 133-140.

4
 Id. at 142-145.

5
 Penned By Labor Arbiter Leandro M. Jose; id. at 86-95.

6
 January 29, 1999, as claimed by Sterling.

7
Rollo, p. 87.

8
 Id. at 88.

9
 Id.

10
 Id. at 88-89.

11
 Id. at 89.

12
 Id. at 94-95.

13
 Id. at 140.

14
 Id. at 58.

15
 Id. at 153-158.

16
 Id. at 167-181.
17
Ledesma, Jr. v. National Labor Relations Commission, 562 Phil. 939, 951 (2007).

18
Santos v. People, 443 Phil. 618, 626 (2003).

19
Firaza v. People, 547 Phil. 573, 584 (2007).