Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 192571 July 23, 2013

ABBOTT LABORATORIES, PHILIPPINES, CECILLE A. TERRIBLE, EDWIN D. FEIST, MARIA OLIVIA

T. YABUTMISA, TERESITA C. BERNARDO, AND ALLAN G. ALMAZAR, Petitioners,
vs.
PEARLIE ANN F. ALCARAZ, Respondent.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Decision2 dated December 10,2009 and
Resolution3 dated June 9, 2010 of the Court of Appeals (CA) in CA-G.R. SP No. 101045 which
pronounced that the National Labor Relations Commission (NLRC) did not gravely abuse its discretion
when it ruled that respondent Pearlie Ann F. Alcaraz (Alcaraz) was illegally dismissed from her
employment.

The Facts

On June 27, 2004, petitioner Abbott Laboratories, Philippines (Abbott) caused the publication in a major
broadsheet newspaper of its need for a Medical and Regulatory Affairs Manager (Regulatory Affairs
Manager) who would: (a) be responsible for drug safety surveillance operations, staffing, and budget; (b)
lead the development and implementation of standard operating procedures/policies for drug safety
surveillance and vigilance; and (c) act as the primary interface with internal and external customers
regarding safety operations and queries.4 Alcaraz - who was then a Regulatory Affairs and Information
Manager at Aventis Pasteur Philippines, Incorporated (another pharmaceutical company like Abbott) –
showed interest and submitted her application on October 4, 2004.5

On December 7, 2004, Abbott formally offered Alcaraz the abovementioned position which was an item
under the company’s Hospira Affiliate Local Surveillance Unit (ALSU) department. 6 In Abbott’s offer
sheet.7 it was stated that Alcaraz was to be employed on a probationary basis.8 Later that day, she
accepted the said offer and received an electronic mail (e-mail) from Abbott’s Recruitment Officer,
petitioner Teresita C. Bernardo (Bernardo), confirming the same. Attached to Bernardo’s e-mail were
Abbott’s organizational chart and a job description of Alcaraz’s work. 9

On February 12, 2005, Alcaraz signed an employment contract which stated, inter alia, that she was to be
placed on probation for a period of six (6) months beginning February 15, 2005 to August 14, 2005. The
said contract was also signed by Abbott’s General Manager, petitioner Edwin Feist (Feist):10

PROBATIONARY EMPLOYMENT

Dear Pearl,

After having successfully passed the pre-employment requirements, you are hereby appointed as follows:

Position Title : Regulatory Affairs Manager

Department : Hospira

The terms of your employment are:

Nature of Employment : Probationary

Effectivity : February 15, 2005 to August 14, 2005

Basic Salary : ₱110,000.00/ month

It is understood that you agree to abide by all existing policies, rules and regulations of the company, as
well as those, which may be hereinafter promulgated.

Unless renewed, probationary appointment expires on the date indicated subject to earlier termination by
the Company for any justifiable reason.

If you agree to the terms and conditions of your employment, please signify your conformity below and
return a copy to HRD.

Welcome to Abbott!

Very truly yours,

Sgd.
EDWIN D. FEIST
General Manager

CONFORME:

Sgd.
PEARLIE ANN FERRER-ALCARAZ

During Alcaraz’s pre-employment orientation, petitioner Allan G. Almazar (Almazar), Hospira’s Country
Transition Manager, briefed her on her duties and responsibilities as Regulatory Affairs Manager, stating
that: (a) she will handle the staff of Hospira ALSU and will directly report to Almazar on matters regarding
Hopira’s local operations, operational budget, and performance evaluation of the Hospira ALSU Staff who
are on probationary status; (b) she must implement Abbott’s Code of Good Corporate Conduct (Code of
Conduct), office policies on human resources and finance, and ensure that Abbott will hire people who
are fit in the organizational discipline; (c) petitioner Kelly Walsh (Walsh), Manager of the Literature Drug
Surveillance Drug Safety of Hospira, will be her immediate supervisor; (d) she should always coordinate
with Abbott’s human resource officers in the management and discipline of the staff; (e) Hospira ALSU
will spin off from Abbott in early 2006 and will be officially incorporated and known as Hospira,
Philippines. In the interim, Hospira ALSU operations will still be under Abbott’s management, excluding
the technical aspects of the operations which is under the control and supervision of Walsh; and (f) the
processing of information and/or raw material data subject of Hospira ALSU operations will be strictly
confined and controlled under the computer system and network being maintained and operated from the
United States. For this purpose, all those involved in Hospira ALSU are required to use two identification
cards: one, to identify them as Abbott’s employees and another, to identify them as Hospira employees. 11

On March 3, 2005, petitioner Maria Olivia T. Yabut-Misa (Misa), Abbott’s Human Resources (HR)
Director, sent Alcaraz an e-mail which contained an explanation of the procedure for evaluating the
performance of probationary employees and further indicated that Abbott had only one evaluation system
for all of its employees. Alcaraz was also given copies of Abbott’s Code of Conduct and Probationary
Performance Standards and Evaluation (PPSE) and Performance Excellence Orientation Modules
(Performance Modules) which she had to apply in line with her task of evaluating the Hospira ALSU
staff.12

Abbott’s PPSE procedure mandates that the job performance of a probationary employee should be
formally reviewed and discussed with the employee at least twice: first on the third month and second on
the fifth month from the date of employment. The necessary Performance Improvement Plan should also
be made during the third-month review in case of a gap between the employee’s performance and the
standards set. These performance standards should be discussed in detail with the employee within the
first two (2) weeks on the job. It was equally required that a signed copy of the PPSE form must be
submitted to Abbott’s Human Resources Department (HRD) and shall serve as documentation of the
employee’s performance during his/her probationary period. This shall form the basis for recommending
the confirmation or termination of the probationary employment.13

During the course of her employment, Alcaraz noticed that some of the staff had disciplinary problems.
Thus, she would reprimand them for their unprofessional behavior such as non-observance of the dress
code, moonlighting, and disrespect of Abbott officers. However, Alcaraz’s method of management was
considered by Walsh to be "too strict."14 Alcaraz approached Misa to discuss these concerns and was told
to "lie low" and let Walsh handle the matter. Misa even assured her that Abbott’s HRD would support her
in all her management decisions.15

On April 12, 2005, Alcaraz received an e-mail from Misa requesting immediate action on the staff’s
performance evaluation as their probationary periods were about to end. This Alcaraz eventually
submitted.16

On April 20, 2005, Alcaraz had a meeting with petitioner Cecille Terrible (Terrible), Abbott’s former HR
Director, to discuss certain issues regarding staff performance standards. In the course thereof, Alcaraz
accidentally saw a printed copy of an e-mail sent by Walsh to some staff members which essentially
contained queries regarding the former’s job performance. Alcaraz asked if Walsh’s action was the
normal process of evaluation. Terrible said that it was not.17

On May 16, 2005, Alcaraz was called to a meeting with Walsh and Terrible where she was informed that
she failed to meet the regularization standards for the position of Regulatory Affairs
Manager.18 Thereafter, Walsh and Terrible requested Alcaraz to tender her resignation, else they be
forced to terminate her services. She was also told that, regardless of her choice, she should no longer
report for work and was asked to surrender her office identification cards. She requested to be given one
week to decide on the same, but to no avail.19

On May 17, 2005, Alcaraz told her administrative assistant, Claude Gonzales (Gonzales), that she would
be on leave for that day. However, Gonzales told her that Walsh and Terrible already announced to the
whole Hospira ALSU staff that Alcaraz already resigned due to health reasons. 20

On May 23, 2005, Walsh, Almazar, and Bernardo personally handed to Alcaraz a letter stating that her
services had been terminated effective May 19, 2005.21 The letter detailed the reasons for Alcaraz’s
termination – particularly, that Alcaraz: (a) did not manage her time effectively; (b) failed to gain the trust
of her staff and to build an effective rapport with them; (c) failed to train her staff effectively; and (d) was
not able to obtain the knowledge and ability to make sound judgments on case processing and article
review which were necessary for the proper performance of her duties.22 On May 27, 2005, Alcaraz
received another copy of the said termination letter via registered mail. 23

Alcaraz felt that she was unjustly terminated from her employment and thus, filed a complaint for illegal
dismissal and damages against Abbott and its officers, namely, Misa, Bernardo, Almazar, Walsh, Terrible,
and Feist.24 She claimed that she should have already been considered as a regular and not a
probationary employee given Abbott’s failure to inform her of the reasonable standards for her
regularization upon her engagement as required under Article 29525 of the Labor Code. In this relation,
she contended that while her employment contract stated that she was to be engaged on a probationary
status, the same did not indicate the standards on which her regularization would be based. 26 She further
averred that the individual petitioners maliciously connived to illegally dismiss her when: (a) they
threatened her with termination; (b) she was ordered not to enter company premises even if she was still
an employee thereof; and (c) they publicly announced that she already resigned in order to humiliate
her.27

On the contrary, petitioners maintained that Alcaraz was validly terminated from her probationary
employment given her failure to satisfy the prescribed standards for her regularization which were made
known to her at the time of her engagement.28

The LA Ruling

In a Decision dated March 30, 2006,29 the LA dismissed Alcaraz’s complaint for lack of merit.

The LA rejected Alcaraz’s argument that she was not informed of the reasonable standards to qualify as a
regular employee considering her admissions that she was briefed by Almazar on her work during her
pre-employment orientation meeting30 and that she received copies of Abbott’s Code of Conduct and
Performance Modules which were used for evaluating all types of Abbott employees. 31 As Alcaraz was
unable to meet the standards set by Abbott as per her performance evaluation, the LA ruled that the
termination of her probationary employment was justified.32 Lastly, the LA found that there was no
evidence to conclude that Abbott’s officers and employees acted in bad faith in terminating Alcaraz’s
employment.33

Displeased with the LA’s ruling, Alcaraz filed an appeal with the National Labor Relations Commission
(NLRC).

The NLRC Ruling

On September 15, 2006, the NLRC rendered a Decision,34 annulling and setting aside the LA’s ruling, the
dispositive portion of which reads:

WHEREFORE, the Decision of the Labor Arbiter dated 31 March 2006 [sic] is hereby reversed, annulled
and set aside and judgment is hereby rendered:

1. Finding respondents Abbot [sic] and individual respondents to have committed illegal
dismissal;

2. Respondents are ordered to immediately reinstate complainant to her former position without
loss of seniority rights immediately upon receipt hereof;

3. To jointly and severally pay complainant backwages computed from 16 May 2005 until finality
of this decision. As of the date hereof the backwages is computed at

a. Backwages for 15 months - PhP 1,650,000.00

b. 13th month pay - 110,000.00
TOTAL PhP 1,760,000.00

4. Respondents are ordered to pay complainant moral damages of ₱50,000.00 and exemplary
damages of ₱50,000.00.
 5. Respondents are also ordered to pay attorney’s fees of 10% of the total award.

6. All other claims are dismissed for lack of merit.

SO ORDERED.35

The NLRC reversed the findings of the LA and ruled that there was no evidence showing that Alcaraz had
been apprised of her probationary status and the requirements which she should have complied with in
order to be a regular employee.36 It held that Alcaraz’s receipt of her job description and Abbott’s Code of
Conduct and Performance Modules was not equivalent to her being actually informed of the performance
standards upon which she should have been evaluated on.37 It further observed that Abbott did not
comply with its own standard operating procedure in evaluating probationary employees. 38 The NLRC
was also not convinced that Alcaraz was terminated for a valid cause given that petitioners’ allegation of
Alcaraz’s "poor performance" remained unsubstantiated.39

Petitioners filed a motion for reconsideration which was denied by the NLRC in a Resolution dated July
31, 2007.40

Aggrieved, petitioners filed with the CA a Petition for Certiorari with Prayer for Issuance of a Temporary
Restraining Order and/or Writ of Preliminary Injunction, docketed as CA G.R. SP No. 101045 (First CA
Petition), alleging grave abuse of discretion on the part of NLRC when it ruled that Alcaraz was illegally
dismissed.41

Pending resolution of the First CA Petition, Alcaraz moved for the execution of the NLRC’s Decision
before the LA, which petitioners strongly opposed. The LA denied the said motion in an Order dated July
8, 2008 which was, however, eventually reversed on appeal by the NLRC. 42 Due to the foregoing,
petitioners filed another Petition for Certiorari with the CA, docketed as CA G.R. SP No. 111318 (Second
CA Petition), assailing the propriety of the execution of the NLRC decision. 43

The CA Ruling

With regard to the First CA Petition, the CA, in a Decision44 dated December 10, 2009, affirmed the ruling
of the NLRC and held that the latter did not commit any grave abuse of discretion in finding that Alcaraz
was illegally dismissed.

It observed that Alcaraz was not apprised at the start of her employment of the reasonable standards
under which she could qualify as a regular employee.45 This was based on its examination of the
employment contract which showed that the same did not contain any standard of performance or any
stipulation that Alcaraz shall undergo a performance evaluation before she could qualify as a regular
employee.46 It also found that Abbott was unable to prove that there was any reasonable ground to
terminate Alcaraz’s employment.47 Abbott moved for the reconsideration of the aforementioned ruling
which was, however, denied by the CA in a Resolution 48 dated June 9, 2010.

The CA likewise denied the Second CA Petition in a Resolution dated May 18, 2010 (May 18, 2010
Resolution) and ruled that the NLRC was correct in upholding the execution of the NLRC
Decision.49 Thus, petitioners filed a motion for reconsideration.

While the petitioners’ motion for reconsideration of the CA’s May 18, 2010 Resolution was pending,
Alcaraz again moved for the issuance of a writ of execution before the LA. On June 7, 2010, petitioners
received the LA’s order granting Alcaraz’s motion for execution which they in turn appealed to the NLRC
– through a Memorandum of Appeal dated June 16, 2010 (June 16, 2010 Memorandum of Appeal ) – on
the ground that the implementation of the LA’s order would render its motion for reconsideration moot and
academic.50
Meanwhile, petitioners’ motion for reconsideration of the CA’s May 18, 2010 Resolution in the Second CA
Petition was denied via a Resolution dated October 4, 2010.51 This attained finality on January 10, 2011
for petitioners’ failure to timely appeal the same.52 Hence, as it stands, only the issues in the First CA
petition are left to be resolved.

Incidentally, in her Comment dated November 15, 2010, Alcaraz also alleges that petitioners were guilty
of forum shopping when they filed the Second CA Petition pending the resolution of their motion for
reconsideration of the CA’s December 10, 2009 Decision i.e., the decision in the First CA Petition.53 She
also contends that petitioners have not complied with the certification requirement under Section 5, Rule
7 of the Rules of Court when they failed to disclose in the instant petition the filing of the June 16, 2010
Memorandum of Appeal filed before the NLRC.54

The Issues Before the Court

The following issues have been raised for the Court’s resolution: (a) whether or not petitioners are guilty
of forum shopping and have violated the certification requirement under Section 5, Rule 7 of the Rules of
Court; (b) whether or not Alcaraz was sufficiently informed of the reasonable standards to qualify her as a
regular employee; (c) whether or not Alcaraz was validly terminated from her employment; and (d)
whether or not the individual petitioners herein are liable.

The Court’s Ruling

A. Forum Shopping and

Violation of Section 5, Rule 7
of the Rules of Court.

At the outset, it is noteworthy to mention that the prohibition against forum shopping is different from a
violation of the certification requirement under Section 5, Rule 7 of the Rules of Court. In Sps. Ong v.
CA,55 the Court explained that:

x x x The distinction between the prohibition against forum shopping and the certification requirement
should by now be too elementary to be misunderstood. To reiterate, compliance with the certification
against forum shopping is separate from and independent of the avoidance of the act of forum shopping
itself. There is a difference in the treatment between failure to comply with the certification requirement
and violation of the prohibition against forum shopping not only in terms of imposable sanctions but also
in the manner of enforcing them. The former constitutes sufficient cause for the dismissal without
prejudice to the filing of the complaint or initiatory pleading upon motion and after hearing, while the latter
is a ground for summary dismissal thereof and for direct contempt. x x x. 56

As to the first, forum shopping takes place when a litigant files multiple suits involving the same parties,
either simultaneously or successively, to secure a favorable judgment. It exists where the elements of litis
pendentia are present, namely: (a) identity of parties, or at least such parties who represent the same
interests in both actions; (b) identity of rights asserted and relief prayed for, the relief being founded on
the same facts; and (c) the identity with respect to the two preceding particulars in the two (2) cases is
such that any judgment that may be rendered in the pending case, regardless of which party is
successful, would amount to res judicata in the other case.57

In this case, records show that, except for the element of identity of parties, the elements of forum
shopping do not exist. Evidently, the First CA Petition was instituted to question the ruling of the NLRC
that Alcaraz was illegally dismissed. On the other hand, the Second CA Petition pertains to the propriety
of the enforcement of the judgment award pending the resolution of the First CA Petition and the finality of
the decision in the labor dispute between Alcaraz and the petitioners. Based on the foregoing, a judgment
in the Second CA Petition will not constitute res judicata insofar as the First CA Petition is concerned.
Thus, considering that the two petitions clearly cover different subject matters and causes of action, there
exists no forum shopping.

As to the second, Alcaraz further imputes that the petitioners violated the certification requirement under
Section 5, Rule 7 of the Rules of Court58 by not disclosing the fact that it filed the June 16, 2010
Memorandum of Appeal before the NLRC in the instant petition.

In this regard, Section 5(b), Rule 7 of the Rules of Court requires that a plaintiff who files a case should
provide a complete statement of the present status of any pending case if the latter involves the same
issues as the one that was filed. If there is no such similar pending case, Section 5(a) of the same rule
provides that the plaintiff is obliged to declare under oath that to the best of his knowledge, no such other
action or claim is pending.

Records show that the issues raised in the instant petition and those in the June 16, 2010 Memorandum
of Appeal filed with the NLRC likewise cover different subject matters and causes of action. In this case,
the validity of Alcaraz’s dismissal is at issue whereas in the said Memorandum of Appeal, the propriety of
the issuance of a writ of execution was in question.

Thus, given the dissimilar issues, petitioners did not have to disclose in the present petition the filing of
their June 16, 2010 Memorandum of Appeal with the NLRC. In any event, considering that the issue on
the propriety of the issuance of a writ of execution had been resolved in the Second CA Petition – which
in fact had already attained finality – the matter of disclosing the June 16, 2010 Memorandum of Appeal is
now moot and academic.

Having settled the foregoing procedural matter, the Court now proceeds to resolve the substantive issues.

B. Probationary employment;
grounds for termination.

A probationary employee, like a regular employee, enjoys security of tenure. However, in cases of
probationary employment, aside from just or authorized causes of termination, an additional ground is
provided under Article 295 of the Labor Code, i.e., the probationary employee may also be terminated for
failure to qualify as a regular employee in accordance with the reasonable standards made known by the
employer to the employee at the time of the engagement.59 Thus, the services of an employee who has
been engaged on probationary basis may be terminated for any of the following: (a) a just or (b) an
authorized cause; and (c) when he fails to qualify as a regular employee in accordance with reasonable
standards prescribed by the employer. 60

Corollary thereto, Section 6(d), Rule I, Book VI of the Implementing Rules of the Labor Code provides that
if the employer fails to inform the probationary employee of the reasonable standards upon which the
regularization would be based on at the time of the engagement, then the said employee shall be deemed
a regular employee, viz.:

(d) In all cases of probationary employment, the employer shall make known to the employee the
standards under which he will qualify as a regular employee at the time of his engagement. Where no
standards are made known to the employee at that time, he shall be deemed a regular employee.

In other words, the employer is made to comply with two (2) requirements when dealing with a
probationary employee: first, the employer must communicate the regularization standards to the
probationary employee; and second, the employer must make such communication at the time of the
probationary employee’s engagement. If the employer fails to comply with either, the employee is
deemed as a regular and not a probationary employee.
Keeping with these rules, an employer is deemed to have made known the standards that would qualify a
probationary employee to be a regular employee when it has exerted reasonable efforts to apprise the
employee of what he is expected to do or accomplish during the trial period of probation. This goes
without saying that the employee is sufficiently made aware of his probationary status as well as the
length of time of the probation.

The exception to the foregoing is when the job is self-descriptive in nature, for instance, in the case of
maids, cooks, drivers, or messengers.61 Also, in Aberdeen Court, Inc. v. Agustin,62 it has been held that
the rule on notifying a probationary employee of the standards of regularization should not be used to
exculpate an employee who acts in a manner contrary to basic knowledge and common sense in regard
to which there is no need to spell out a policy or standard to be met. In the same light, an employee’s
failure to perform the duties and responsibilities which have been clearly made known to him constitutes a
justifiable basis for a probationary employee’s non-regularization.

In this case, petitioners contend that Alcaraz was terminated because she failed to qualify as a regular
employee according to Abbott’s standards which were made known to her at the time of her engagement.
Contrarily, Alcaraz claims that Abbott never apprised her of these standards and thus, maintains that she
is a regular and not a mere probationary employee.

The Court finds petitioners’ assertions to be well-taken.

A punctilious examination of the records reveals that Abbott had indeed complied with the above-stated
requirements. This conclusion is largely impelled by the fact that Abbott clearly conveyed to Alcaraz her
duties and responsibilities as Regulatory Affairs Manager prior to, during the time of her engagement, and
the incipient stages of her employment. On this score, the Court finds it apt to detail not only the incidents
which point out to the efforts made by Abbott but also those circumstances which would show that
Alcaraz was well-apprised of her employer’s expectations that would, in turn, determine her
regularization:

(a) On June 27, 2004, Abbott caused the publication in a major broadsheet newspaper of its need
for a Regulatory Affairs Manager, indicating therein the job description for as well as the duties
and responsibilities attendant to the aforesaid position; this prompted Alcaraz to submit her
application to Abbott on October 4, 2004;

(b) In Abbott’s December 7, 2004 offer sheet, it was stated that Alcaraz was to be employed on a
probationary status;

(c) On February 12, 2005, Alcaraz signed an employment contract which specifically stated, inter
alia, that she was to be placed on probation for a period of six (6) months beginning February 15,
2005 to August 14, 2005;

(d) On the day Alcaraz accepted Abbott’s employment offer, Bernardo sent her copies of Abbott’s
organizational structure and her job description through e-mail;

(e) Alcaraz was made to undergo a pre-employment orientation where Almazar informed her that
she had to implement Abbott’s Code of Conduct and office policies on human resources and
finance and that she would be reporting directly to Walsh;

(f) Alcaraz was also required to undergo a training program as part of her orientation;

(g) Alcaraz received copies of Abbott’s Code of Conduct and Performance Modules from Misa
who explained to her the procedure for evaluating the performance of probationary employees;
she was further notified that Abbott had only one evaluation system for all of its employees; and
 (h) Moreover, Alcaraz had previously worked for another pharmaceutical company and had
admitted to have an "extensive training and background" to acquire the necessary skills for her
job.63

Considering the totality of the above-stated circumstances, it cannot, therefore, be doubted that Alcaraz
was well-aware that her regularization would depend on her ability and capacity to fulfill the requirements
of her position as Regulatory Affairs Manager and that her failure to perform such would give Abbott a
valid cause to terminate her probationary employment.

Verily, basic knowledge and common sense dictate that the adequate performance of one’s duties is, by
and of itself, an inherent and implied standard for a probationary employee to be regularized; such is a
regularization standard which need not be literally spelled out or mapped into technical indicators in every
case. In this regard, it must be observed that the assessment of adequate duty performance is in the
nature of a management prerogative which when reasonably exercised – as Abbott did in this case –
should be respected. This is especially true of a managerial employee like Alcaraz who was tasked with
the vital responsibility of handling the personnel and important matters of her department.

In fine, the Court rules that Alcaraz’s status as a probationary employee and her consequent dismissal
must stand. Consequently, in holding that Alcaraz was illegally dismissed due to her status as a regular
and not a probationary employee, the Court finds that the NLRC committed a grave abuse of discretion.

To elucidate, records show that the NLRC based its decision on the premise that Alcaraz’s receipt of her
job description and Abbott’s Code of Conduct and Performance Modules was not equivalent to being
actually informed of the performance standards upon which she should have been evaluated on. 64 It,
however, overlooked the legal implication of the other attendant circumstances as detailed herein which
should have warranted a contrary finding that Alcaraz was indeed a probationary and not a regular
employee – more particularly the fact that she was well-aware of her duties and responsibilities and that
her failure to adequately perform the same would lead to her non-regularization and eventually, her
termination.

Accordingly, by affirming the NLRC’s pronouncement which is tainted with grave abuse of discretion, the
CA committed a reversible error which, perforce, necessitates the reversal of its decision.

C. Probationary employment;
termination procedure.

A different procedure is applied when terminating a probationary employee; the usual two-notice rule
does not govern.65 Section 2, Rule I, Book VI of the Implementing Rules of the Labor Code states that "if
the termination is brought about by the x x x failure of an employee to meet the standards of the employer
in case of probationary employment, it shall be sufficient that a written notice is served the employee,
within a reasonable time from the effective date of termination."

As the records show, Alcaraz's dismissal was effected through a letter dated May 19, 2005 which she
received on May 23, 2005 and again on May 27, 2005. Stated therein were the reasons for her
termination, i.e., that after proper evaluation, Abbott determined that she failed to meet the reasonable
standards for her regularization considering her lack of time and people management and decision-
making skills, which are necessary in the performance of her functions as Regulatory Affairs
Manager.66 Undeniably, this written notice sufficiently meets the criteria set forth above, thereby
legitimizing the cause and manner of Alcaraz’s dismissal as a probationary employee under the
parameters set by the Labor Code.67

D. Employer’s violation of
company policy and
procedure.
Nonetheless, despite the existence of a sufficient ground to terminate Alcaraz’s employment and Abbott’s
compliance with the Labor Code termination procedure, it is readily apparent that Abbott breached its
contractual obligation to Alcaraz when it failed to abide by its own procedure in evaluating the
performance of a probationary employee.

Veritably, a company policy partakes of the nature of an implied contract between the employer and
employee. In Parts Depot, Inc. v. Beiswenger,68 it has been held that:

Employer statements of policy . . . can give rise to contractual rights in employees without evidence that
the parties mutually agreed that the policy statements would create contractual rights in the employee,
and, hence, although the statement of policy is signed by neither party, can be unilaterally amended by
the employer without notice to the employee, and contains no reference to a specific employee, his job
description or compensation, and although no reference was made to the policy statement in pre-
employment interviews and the employee does not learn of its existence until after his hiring. Toussaint,
292 N.W .2d at 892. The principle is akin to estoppel. Once an employer establishes an express
personnel policy and the employee continues to work while the policy remains in effect, the policy is
deemed an implied contract for so long as it remains in effect. If the employer unilaterally changes the
policy, the terms of the implied contract are also thereby changed.1âwphi1 (Emphasis and underscoring
supplied.)

Hence, given such nature, company personnel policies create an obligation on the part of both the
employee and the employer to abide by the same.

Records show that Abbott’s PPSE procedure mandates, inter alia, that the job performance of a
probationary employee should be formally reviewed and discussed with the employee at least twice: first
on the third month and second on the fifth month from the date of employment. Abbott is also required to
come up with a Performance Improvement Plan during the third month review to bridge the gap between
the employee’s performance and the standards set, if any. 69 In addition, a signed copy of the PPSE form
should be submitted to Abbott’s HRD as the same would serve as basis for recommending the
confirmation or termination of the probationary employment.70

In this case, it is apparent that Abbott failed to follow the above-stated procedure in evaluating Alcaraz.
For one, there lies a hiatus of evidence that a signed copy of Alcaraz’s PPSE form was submitted to the
HRD. It was not even shown that a PPSE form was completed to formally assess her performance.
Neither was the performance evaluation discussed with her during the third and fifth months of her
employment. Nor did Abbott come up with the necessary Performance Improvement Plan to properly
gauge Alcaraz’s performance with the set company standards.

While it is Abbott’s management prerogative to promulgate its own company rules and even subsequently
amend them, this right equally demands that when it does create its own policies and thereafter notify its
employee of the same, it accords upon itself the obligation to faithfully implement them. Indeed, a
contrary interpretation would entail a disharmonious relationship in the work place for the laborer should
never be mired by the uncertainty of flimsy rules in which the latter’s labor rights and duties would, to
some extent, depend.

In this light, while there lies due cause to terminate Alcaraz’s probationary employment for her failure to
meet the standards required for her regularization, and while it must be further pointed out that Abbott
had satisfied its statutory duty to serve a written notice of termination, the fact that it violated its own
company procedure renders the termination of Alcaraz’s employment procedurally infirm, warranting the
payment of nominal damages. A further exposition is apropos.

Case law has settled that an employer who terminates an employee for a valid cause but does so through
invalid procedure is liable to pay the latter nominal damages.
In Agabon v. NLRC (Agabon),71 the Court pronounced that where the dismissal is for a just cause, the
lack of statutory due process should not nullify the dismissal, or render it illegal, or ineffectual. However,
the employer should indemnify the employee for the violation of his statutory rights. 72 Thus, in Agabon,
the employer was ordered to pay the employee nominal damages in the amount of ₱30,000.00.73

Proceeding from the same ratio, the Court modified Agabon in the case of Jaka Food Processing
Corporation v. Pacot (Jaka)74 where it created a distinction between procedurally defective dismissals due
to a just cause, on one hand, and those due to an authorized cause, on the other.

It was explained that if the dismissal is based on a just cause under Article 282 of the Labor Code (now
Article 296) but the employer failed to comply with the notice requirement, the sanction to be imposed
upon him should be tempered because the dismissal process was, in effect, initiated by an act imputable
to the employee; if the dismissal is based on an authorized cause under Article 283 (now Article 297) but
the employer failed to comply with the notice requirement, the sanction should be stiffer because the
dismissal process was initiated by the employer’s exercise of his management prerogative. 75 Hence, in
Jaka, where the employee was dismissed for an authorized cause of retrenchment76 – as
contradistinguished from the employee in Agabon who was dismissed for a just cause of neglect of
duty77 – the Court ordered the employer to pay the employee nominal damages at the higher amount of
₱50,000.00.

Evidently, the sanctions imposed in both Agabon and Jaka proceed from the necessity to deter employers
from future violations of the statutory due process rights of employees. 78 In similar regard, the Court
deems it proper to apply the same principle to the case at bar for the reason that an employer’s
contractual breach of its own company procedure – albeit not statutory in source – has the parallel effect
of violating the laborer’s rights. Suffice it to state, the contract is the law between the parties and thus,
breaches of the same impel recompense to vindicate a right that has been violated. Consequently, while
the Court is wont to uphold the dismissal of Alcaraz because a valid cause exists, the payment of nominal
damages on account of Abbott’s contractual breach is warranted in accordance with Article 2221 of the
Civil Code.79

Anent the proper amount of damages to be awarded, the Court observes that Alcaraz’s dismissal
proceeded from her failure to comply with the standards required for her regularization. As such, it is
undeniable that the dismissal process was, in effect, initiated by an act imputable to the employee, akin to
dismissals due to just causes under Article 296 of the Labor Code. Therefore, the Court deems it
appropriate to fix the amount of nominal damages at the amount of ₱30,000.00, consistent with its rulings
in both Agabon and Jaka.

E. Liability of individual
petitioners as corporate
officers.

It is hornbook principle that personal liability of corporate directors, trustees or officers attaches only
when: (a) they assent to a patently unlawful act of the corporation, or when they are guilty of bad faith or
gross negligence in directing its affairs, or when there is a conflict of interest resulting in damages to the
corporation, its stockholders or other persons; (b) they consent to the issuance of watered down stocks or
when, having knowledge of such issuance, do not forthwith file with the corporate secretary their written
objection; (c) they agree to hold themselves personally and solidarily liable with the corporation; or (d)
they are made by specific provision of law personally answerable for their corporate action.80

In this case, Alcaraz alleges that the individual petitioners acted in bad faith with regard to the supposed
crude manner by which her probationary employment was terminated and thus, should be held liable
together with Abbott. In the same vein, she further attributes the loss of some of her remaining belongings
to them.81
Alcaraz’s contention fails to persuade.

A judicious perusal of the records show that other than her unfounded assertions on the matter, there is
no evidence to support the fact that the individual petitioners herein, in their capacity as Abbott’s officers
and employees, acted in bad faith or were motivated by ill will in terminating

Alcaraz’s services. The fact that Alcaraz was made to resign and not allowed to enter the workplace does
not necessarily indicate bad faith on Abbott’s part since a sufficient ground existed for the latter to actually
proceed with her termination. On the alleged loss of her personal belongings, records are bereft of any
showing that the same could be attributed to Abbott or any of its officers. It is a well-settled rule that bad
faith cannot be presumed and he who alleges bad faith has the onus of proving it. All told, since Alcaraz
failed to prove any malicious act on the part of Abbott or any of its officers, the Court finds the award of
moral or exemplary damages unwarranted.

WHEREFORE, the petition is GRANTED. The Decision dated December 10, 2009 and Resolution dated
June 9, 2010 of the Court of Appeals in CA-G.R. SP No. 101045 are hereby REVERSED and SET
ASIDE. Accordingly, the Decision dated March 30, 2006 of the Labor Arbiter is REINSTATED with the
MODIFICATION that petitioner Abbott Laboratories, Philippines be ORDERED to pay respondent Pearlie
Ann F. Alcaraz nominal damages in the amount of ₱30,000.00 on account of its breach of its own
company procedure.

SO ORDERED.

ESTELA M. PERLAS-BERNABE
Associate Justice