Philippine Theo Law Gee

Serious misconduct, according to Article 282 of the Labor Code, is one of the just causes for termination of an employee by an employer. The question, however, is: What precisely is meant by serious misconduct? The Supreme had occasion to discuss the matter of serious misconduct in the very recent consolidated cases of MICHAEL J. LAGROSAS vs. BRISTOL-MYERS SQUIBB (PHIL.), INC., et al. (G.R. No.l68637) and BRISTOL-MYERS SQUIBB (PHIL.), INC./MEAD JOHNSON PHIL., vs. COURT OF APPEALS and MICHAEL J. LAGROSAS (G.R. No. 170684) both promulgated just a week ago (i.e., September 12, 2008).

Lagrosas was employed by Bristol-Myers as a Territory Manager in its Medical Sales Force Division. His former girlfriend, Ma. Dulcinea S. Lim, was also a Territory Manager. On February 4, 2000 Lim attended a meeting of territory managers at McDonald’s Alabang Town Center. After the meeting she dined out with her friends. She left her car at McDonald’s and rode with Cesar R. Menquito, Jr. (presumably her new boyfriend). When they returned to McDonald’s Lagrosas approaced them and hit Menquito with a metal steering wheel lock. When Lim tried to intervene, Lagrosas accidentally hit her head. Bristol-Myers subsequently dismissed Lagrosas, having determined that he was guilty of serious misconduct.

In the process of resolving the issue of whether or not Lagrosas’s dismissal was legal, the Supreme Court made the following points regarding serious misconduct:

“On the first issue, serious misconduct as a valid cause for the dismissal of an employee is defined simply as 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 of judgment. To be serious within the meaning and intendment of the law, the misconduct must be of such grave and aggravated character and not merely trivial or unimportant. However serious such misconduct, it must, nevertheless, be in connection with the employee’s work to constitute just cause for his separation. The act complained of must be related to the performance of the employee’s duties such as would show him to be unfit to continue working for the employer.”

It then summarized the elements of serious misconduct as follows:

“Thus, for misconduct or improper behavior to be a just cause for dismissal, it (a) must be serious; (b) must relate to the performance of the employee’s duties; and (c) must show that the employee has become unfit to continue working for the employer.”

On the basis of the foregoing guidelines the Supreme Court concluded that Lagrosas was not guilty of serious misconduct:

First, because the incident occurred outside of the company premises and after office hours.

Second, because Lagrosas intended to hit Menquito only (incidentally, Menquito was not an employee). Although Lagrosas also hit Lim, a fellow employee, he did so only accidentally.

Third, Lagrosas was not performing official work at the time of the incident.

Hence, the Supreme Court failed to see how Lagrosas’ action could have reflected his unfitness to continue working for Bristol Myers.

July of this year saw a slew of Supreme Court decisions on labor law, some of which are quite significant. Take for example CENTRAL PHILIPPINES BANDAG RETREADERS, INC. vs. PRUDENCIO J. DIASNES (G.R. No. 163607, July 14, 2008) which deals with Separation Pay.

The issue in this case was WHETHER OR NOT A VALIDLY AND LEGALLY SEPARATED EMPLOYEE MAY BE ENTITLED TO SEPARATION PAY. In resolving said issue the Supreme Court gave a very helpful discussion of the topic, the main points of which I shall try to outline below:

1. Definition of separation pay. Separation pay is defined as “the amount that an employee receives at the time of his severance and is designed to provide an employee with the wherewithal during the period he is looking for another employment.”

2. When is separation pay authorized?

a) In situations dealt with in Art. 283 (Closure of Establishment and Reduction of Personnel) and 284 (Disease as Ground for Termination) of the Labor Code, but not in terminations of employment based on instances enumerated in Art. 282 (Just Causes for Termination by Employer). As held by the Court in Eastern Paper Mills, Inc. v. NLRC (February 24, 1989) –
“The only cases when separation pay shall be paid, although the employee was lawfully dismissed, are when the cause of termination was not attributable to the employee’s fault but due to:

(1) the installation of labor saving devices,
(2) redundancy,
(3) retrenchment,
(4) cessation of employer’s business, or
(5) when the employee is suffering from a disease and his continued employment is prohibited by law or is prejudicial to his health and to the health of his co-employees (Articles 283 and 284, Labor Code.) Other than these cases, an employee who is dismissed for a just and lawful cause is not entitled to separation pay even if the award were to be called by another name.”

b) In lieu of reinstatement if reinstatement is no longer possible, as when the relationship between the employer and employee has become strained.

c) In some cases, as a measure of social justice. As held by the Court in PLDT vs. NLRC (August 23, 1988) –
“We hold that henceforth separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. Where the reason for the valid dismissal is, for example, habitual intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not be required to give the dismissed employee separation pay, or financial assistance, or whatever other name it is called, on the ground of social justice.”

In the above-mentioned CENTRAL PHILIPPINES BANDAG RETREADERS, INC. case the Supreme Court concluded its discussion of separation pay with these strong words: “It is unthinkable to award separation pay or financial assistance to any unworthy employee who exploited and took advantage of his employer’s past generosity and accomodation.” Thus, it denied Diasnes separation pay “since the cause for the termination of his employment amounts to gross and habitual neglect of his duties.”*

(This article was published in the Sept. 8-9, 2008 issue of the Negros Times. Click here.)

A basic concept in labor law is that of “employer-employee relationship”. When is an employer-employee relationship deemed to exist? The Supreme Court had once again occasion to answer this question in the case of TELEVISION AND PRODUCTION EXPONENTS, INC. and/or ANTONIO P. TUVIERA versus ROBERTO C. SERVAÑA,   (G.R. No.  167648, January 28, 2008).

The case involves a complaint for illegal dismissal and nonpayment of benefits filed by Servana against TAPE.  Servana alleged that he was first connected with Agro-Commercial Security Agency but was later on absorbed by TAPE as a regular company guard.

On its part TAPE contended that Servana was merely a “talent” and/or independent contractor.

In resolving the issue of employer-employee relationship the Supreme Court made use of the four-fold test:

“Jurisprudence is abound [sic] with cases that recite the factors to be considered in determining the existence of employer-employee relationship, namely: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer’s power to control the employee with respect to the means and method by which the work is to be accomplished. The most important factor involves the control test. Under the control test, there is an employer-employee relationship when the person for whom the services are performed reserves the right to control not only the end achieved but also the manner and means used to achieve that end.”

The Court further observed that these factors were present in the case.

First, as to the selection and engagement of the employee:

“Clearly, respondent was hired by TAPE. Respondent presented his identification card to prove that he is indeed an employee of TAPE. It has been in held that in a business establishment, an identification card is usually provided not just as a security measure but to mainly identify the holder thereof as a bona fide employee of the firm who issues it.”

Second, as to the payment of wages:

“Respondent claims to have been receiving P5,444.44 as his monthly salary while TAPE prefers to designate such amount as talent fees.  Wages, as defined in the Labor Code, are remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for service rendered or to be rendered.  It is beyond dispute that respondent received a fixed amount as monthly compensation for the services he rendered to TAPE.”

Thirdly, as to the power of dismissal:

“The Memorandum informing respondent of the discontinuance of his service proves that TAPE had the power to dismiss respondent.”

And finally, as to the power of control, which is the most important test:

“Control is manifested in the bundy cards submitted by respondent in evidence.  He was required to report daily and observe definite work hours.”

What is significant are the concrete objects which for the Supreme Court served as evidences for the existence of an employer-employee relationship between the parties, namely:

(1) The identification card;

(2) The fixed amount as monthly compensation;

(3) The Memorandum of discontinuance; and

(4) The bundy cards.

Where these or similar evidences are present the conclusion is well-nigh inevitable that an employer-employee relationship exists

(This article was published in the Sept. 3, 2008 edition of the Negros Times, in my column “Law and Management”. Click here.)