Lagrosas vs. Bristol-Myers Squibb (Phil.), Inc./Mead Johnson Phil.

For misconduct to constitute a just cause for dismissal, it must be (a) serious, (b) related to the performance of the employee's duties, and (c) of such character as to show that the employee has become unfit to continue working for the employer; an assault committed outside company premises and after office hours, not intentionally directed against a co-employee, and unconnected to the employee's work fails the second and third requisites. An injunction bond is intended as security for damages sustained by reason of the injunction, not as security for the judgment award in the main case.

Michael J. Lagrosas worked as a Territory Manager in the Medical Sales Force Division of Bristol-Myers Squibb (Phil.), Inc./Mead Johnson Phil. from January 6, 1997, and Ma. Dulcinea S. Lim held the same position at the company and was Lagrosas's former girlfriend. The company's Code of Discipline for Territory Managers did not cover the offense of assaulting a co-employee outside business hours, but provided that "other infractions not provided for herein shall be penalized in the most appropriate manner at the discretion of management." The dispute therefore required the SC to test the company's exercise of that discretion against the statutory requisites of serious misconduct as a just cause for dismissal.

On February 4, 2000, Ma. Dulcinea S. Lim, a Territory Manager, attended a district meeting of territory managers at McDonald's Alabang Town Center. After the meeting, she dined out with her friends, leaving her car at McDonald's and riding with Cesar R. Menquito, Jr. When they returned to McDonald's, Lim saw the car of Michael J. Lagrosas, also a Territory Manager, parked beside her own. Lim told Menquito not to stop his car, but Lagrosas followed them and slammed Menquito's car three times. Menquito and Lim alighted, and Lagrosas approached them and hit Menquito with a metal steering wheel lock; when Lim tried to intervene, Lagrosas accidentally hit her on the head, knocking her unconscious.

Upon learning of the incident, Bristol-Myers required Lagrosas to explain in writing why he should not be dismissed for assaulting a co-employee outside of business hours. In his memorandum, Lagrosas admitted that he accidentally hit Lim when she tried to intervene, and explained that he did not intend to hit her, as shown by the fact that he never left the hospital until he was assured that she was all right. In the disciplinary hearing that followed, it was established that Lagrosas and Lim had physical confrontations prior to the incident, although Lagrosas denied saying that he might not be able to control himself and hurt Lim and her boyfriend if he saw them together. On March 23, 2000, Bristol-Myers dismissed Lagrosas effective immediately.

Lagrosas then filed a complaint for illegal dismissal, non-payment of vacation and sick leave benefits, 13th month pay, attorney's fees, damages, and the fair market value of his Team Share Stock Option Grant. On February 28, 2002, Labor Arbiter Renaldo O. Hernandez declared the dismissal illegal, noting that while Lagrosas committed a misconduct, it was not connected with his work — the incident occurred outside company premises and office hours, and the misconduct was not directed against a co-employee who just happened to be accidentally hit in the process. The Labor Arbiter nonetheless imposed a penalty of three months' suspension or forfeiture of pay and ordered reinstatement with full backwages, the monetary value of accrued and unused sick and vacation leave, the fair market value of the stock option grant, and attorney's fees.

On appeal, the NLRC set aside the Labor Arbiter's decision on September 24, 2002, holding that Lagrosas was validly dismissed for serious misconduct, the gravity of which was clear from the fact that he deliberately waited for Lim and Menquito to return to McDonald's, and that the misconduct was committed in connection with his duty as Territory Manager since it occurred immediately after the district meeting of territory managers. On Lagrosas's motion for reconsideration, however, the NLRC reversed itself on May 7, 2003, reasoning that the incident was not work-related since it occurred only after the district meeting, and affirmed the Labor Arbiter's decision in toto. Bristol-Myers's motion for reconsideration was denied in an Order dated February 4, 2004.

Labor Arbiter Hernandez thereafter issued a writ of execution, and notices of garnishment were served on Philippine British Assurance Co., Inc. for the supersedeas bond posted by Bristol-Myers and on the Bank of the Philippine Islands for the balance of the judgment award. Bristol-Myers moved to quash the writ on the ground that it had timely filed a petition for certiorari with the CA, which gave due course to the petition and issued a temporary restraining order enjoining enforcement of the writ and the notices of garnishment; upon the expiration of the TRO, the CA issued a writ of preliminary injunction dated September 17, 2004. Bristol-Myers then moved to discharge and release the TRO cash bond, arguing that since it had posted an injunction cash bond, the TRO cash bond should be discharged and released.

• Legality of the Termination: Lagrosas argued that the CA, in declaring his termination legal, decided a question of substance in a way not in accord with the labor laws and jurisprudence and departed from the accepted and usual course of judicial proceedings as to call for the exercise of the SC's power of review.
• Harshness of the Penalty: Lagrosas argued that the CA, in imposing the penalty of dismissal, imposed a penalty too harsh in the case, again deciding a question of substance in a way not in accord with the labor laws and jurisprudence.

• Release of the Injunction Bond: Bristol-Myers raised the issue of whether the CA committed grave abuse of discretion amounting to lack or excess of jurisdiction in disallowing the release and discharge of its injunction bond.

• Serious Misconduct: Whether the CA erred in finding the dismissal of Lagrosas legal.
• Injunction Bond: Whether the CA erred in disallowing the discharge and release of the injunction cash bond.

• Serious Misconduct: Yes. The CA erred. Lagrosas was not guilty of serious misconduct as a just cause for dismissal because his act was not work-related and did not show him unfit to continue working for Bristol-Myers.
• Injunction Bond: Yes. The CA erred. The injunction bond secures only damages sustained by reason of the injunction, and since the CA had already ruled that Lagrosas had no right to the monetary awards, the bond should be discharged and released.

• Serious Misconduct: Serious misconduct is improper or wrong conduct — a transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, implying wrongful intent and not mere error of judgment. To be serious within the meaning of the law, the misconduct must be of such grave and aggravated character and not merely trivial or unimportant; and however serious, it must be in connection with the employee's work to constitute just cause for separation, the act complained of being related to the performance of the employee's duties such as would show him unfit to continue working for the employer. The SC laid down the three requisites: (a) the misconduct must be serious; (b) it must relate to the performance of the employee's duties; and (c) it must show that the employee has become unfit to continue working for the employer. Measured against these standards, Lagrosas was not guilty of serious misconduct. The injury sustained by Lim may have been serious, having rendered her unconscious and caused cerebral contusion requiring hospitalization for several days, but the SC could not see how the misconduct could be characterized as work-related and reflective of Lagrosas's unfitness to continue working for Bristol-Myers. While the SC has recognized that fighting within company premises may constitute serious misconduct, it has also held that not every fight within company premises in which an employee is involved would automatically warrant dismissal — more so here, where the incident occurred outside company premises and office hours and was not intentionally directed against a co-employee. First, the incident occurred outside company premises and after office hours, since the district meeting Lim attended at McDonald's had long been finished; McDonald's may be considered an extension of Bristol-Myers's office and any business conducted there as within office hours, but the moment the district meeting concluded, that ceased, and when Lim dined with her friends it was no longer part of the district meeting or considered official time. Second, Bristol-Myers itself admitted that Lagrosas intended to hit Menquito only, its March 23, 2000 Memorandum stating that he got out of his car holding an umbrella steering wheel lock and proceeded to hit Menquito, and that Lim tried to intervene but was accidentally hit on the head and knocked unconscious — so the misconduct was not directed against a co-employee who unfortunately got hit in the process. Third, Lagrosas was not performing official work at the time of the incident and was not even a participant in the district meeting, so his action could not have reflected his unfitness to continue working for Bristol-Myers. In light of Bristol-Myers's failure to adduce substantial evidence that Lagrosas was guilty of serious misconduct, it could not use that ground to justify his dismissal, and the dismissal was without factual and legal basis.
• Injunction Bond: The purpose of a preliminary injunction is to prevent threatened or continuous irremediable injury to some of the parties before their claims can be thoroughly studied and adjudicated, and its sole aim is to preserve the status quo until the merits can be heard fully. A preliminary injunction may be granted only when, among other things, the applicant, not explicitly exempted, files with the court where the action or proceeding is pending a bond executed to the party or person enjoined, in an amount fixed by the court, to the effect that the applicant will pay that party or person all damages he may sustain by reason of the injunction or temporary restraining order if the court should finally decide that the applicant was not entitled thereto; upon approval of the requisite bond, a writ of preliminary injunction shall issue. The injunction bond is intended as a security for damages in case it is finally decided that the injunction ought not to have been granted; its principal purpose is to protect the enjoined party against loss or damage by reason of the injunction, and the bond is usually conditioned accordingly. Here, the CA issued the writ of preliminary injunction to enjoin the implementation of the writ of execution and notices of garnishment "pending final resolution of this case or unless the [w]rit is sooner lifted by the Court." By its Decision dated January 28, 2005, the CA disposed of the case by granting Bristol-Myers's petition and reinstating the September 24, 2002 NLRC Decision dismissing the complaint, and it also ordered the discharge of the TRO cash bond and injunction cash bond — thus both conditions of the writ of preliminary injunction were satisfied. The CA ruled that Lagrosas had no right to the monetary awards granted by the labor arbiter and the NLRC, and that the implementation of the writ of execution and notices of garnishment was properly enjoined; this in effect amounted to a finding that Lagrosas did not sustain any damage by reason of the injunction. The injunction bond is intended to protect Lagrosas against loss or damage by reason of the injunction only and, contrary to his claim, is not a security for the judgment award by the labor arbiter. The CA therefore erred in disallowing the discharge and release of the injunction cash bond.

• Serious Misconduct as a Just Cause for Dismissal — Serious misconduct is improper or wrong conduct: a transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, implying wrongful intent and not mere error of judgment. To be serious within the meaning of the law, it must be of grave and aggravated character and not merely trivial or unimportant. The SC applied this definition to hold that Lagrosas's assault, though violent, did not amount to serious misconduct as a just cause.
• The Three Requisites of Misconduct as Just Cause — 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. The SC found the second and third requisites absent because the incident occurred outside company premises and office hours and Lagrosas was not performing official work.
• Work-Relatedness of the Misconduct — However serious the misconduct, it must be in connection with the employee's work to constitute just cause for separation; the act complained of must be related to the performance of the employee's duties such as would show him unfit to continue working for the employer. The SC applied this by noting that the district meeting had long concluded when the assault took place and that Lagrosas was not even a participant in that meeting.
• Fighting Within Company Premises Is Not Automatically Dismissible — While fighting within company premises may constitute serious misconduct, not every fight within company premises in which an employee is involved automatically warrants dismissal from service. The SC applied this a fortiori where the incident occurred outside company premises and office hours and was not intentionally directed against a co-employee.
• Purpose of the Injunction Bond — A preliminary injunction preserves the status quo until the merits are heard, and the bond required of the applicant is intended as security for damages in case it is finally decided that the injunction ought not to have been granted; its principal purpose is to protect the enjoined party against loss or damage by reason of the injunction. The SC applied this to hold that the bond is not security for the judgment award, so the CA erred in refusing to discharge it after ruling that Lagrosas had no right to the awards.

• "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." — This states the threshold for seriousness and the independent work-relatedness requirement that defeated Bristol-Myers's dismissal case.
• "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." — The canonical three-part test for misconduct as just cause, the framework the SC applied to the facts.
• "The injunction bond is intended as a security for damages in case it is finally decided that the injunction ought not to have been granted. Its principal purpose is to protect the enjoined party against loss or damage by reason of the injunction, and the bond is usually conditioned accordingly." — The definition of the injunction bond's function that controlled the second issue.
• "Contrary to Lagrosas' claim, it is not a security for the judgment award by the labor arbiter." — The precise point of distinction: the bond answers for injunction-caused damages, not for the underlying monetary judgment, which is why its discharge was proper.

• Villamor Golf Club vs. Pehid, G.R. No. 166152, October 4, 2005, 472 SCRA 36 — Cited for the definition of serious misconduct as improper or wrong conduct, a transgression of an established rule of action, willful in character, and implying wrongful intent.
• Samson vs. National Labor Relations Commission, G.R. No. 121035, April 12, 2000, 330 SCRA 460 — Cited together with Villamor Golf Club for the same definition of serious misconduct.
• Lopez vs. National Labor Relations Commission, G.R. No. 167385, December 13, 2005, 477 SCRA 596 — Cited for the requisites of misconduct as a just cause for dismissal.
• Fujitsu Computer Products Corporation of the Philippines vs. Court of Appeals, G.R. No. 158232, March 31, 2005, 454 SCRA 737 — Cited with Lopez for the same requisites.
• Supreme Steel Pipe Corporation vs. Bardaje, G.R. No. 170811, April 24, 2007, 522 SCRA 155 — Cited for the rule that not every fight within company premises in which an employee is involved automatically warrants dismissal.
• Medina vs. Greenfield Development Corporation, G.R. No. 140228, November 19, 2004, 443 SCRA 150 — Cited for the purpose of a preliminary injunction: to prevent threatened or continuous irremediable injury and to preserve the status quo pending full hearing.
• Limitless Potentials, Inc. vs. Court of Appeals, G.R. No. 164459, April 24, 2007, 522 SCRA 70 — Cited for the bond requirement for preliminary injunction and for the rule that the injunction bond protects the enjoined party against loss or damage by reason of the injunction.