Abbott Laboratories v Alcaraz

G.R. No. 192571 July 23, 2013 Perlas-Bernabe DILAG

petitioners Abbott Laboratories, Philippines, Cecille A. Terrible, Edwin D. Feist, Maria Olivia T. Yabut–Misa,
Teresita C. Bernardo, and Allan G. Almazar
respondents Pearlie Ann F. Alcaraz
summary Summary of facts and ratio. Doctrine. Relationship to syllabus topic.

facts of the case

June 27, 2004: Abbott Laboratories 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. Alcaraz - who was then a Regulatory Affairs and Information Manager at Aventis Pasteur
Philippines, Incorporated – showed interest and submitted her application on October 4, 2004. She was then
formally offered1 with a job on a probationary basis, which she accepted later that day.
During Alcaraz’s pre­employment orientation, petitioner Almazar 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 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. Misa, Abbott’s 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.
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." 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.
April 20: Alcaraz had a meeting with petitioner Cecille 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.
May 16: 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. Thereafter, they requested

1Nature of Employment : Probationary

Effectivity : February 15, 2005 to August 14, 2005
Basic Salary : P110,000.00/ month

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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 ID cards.
She requested to be given one week to decide on the same, but to no avail.
May 17: Alcaraz told her administrative assistant that she would be on leave for that day. However, the
latter told her that Walsh and Terrible already announced to the whole Hospira ALSU staff that Alcaraz
already resigned due to health reasons.
May 23: Walsh, Almazar, and Bernardo personally handed to Alcaraz a letter stating that her services had
been terminated effective May 19, 2005. 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.
May 27: Alcaraz received another copy of the said termination letter via registered mail.

Because Alcaraz felt that she was unjustly terminated from her employment, she filed a complaint for
illegal dismissal and damages against Abbott and its officers. 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 295 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. 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.
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.

LA: Dismissed Alcaraz’s complaint for lack of merit.

NLRC: Annulled and set-aside the LA’s ruling. 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. 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. It further observed that Abbott did not comply with its own
standard operating procedure in evaluating probationary employees. 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.
CA: Affirmed the NLRC decision.

issue
WON Alcaraz was sufficiently informed of the reasonable standards to qualify her as a regular employee. YES.
WON Alcaraz was validly terminated from her employment. YES.
WON the individual petitioners herein are liable. NO.

ratio
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. 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.

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 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. Test: 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. 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.
As applied: 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 agreed,
stating that the records reveal 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.

Probationary employment; termination procedure.

A different procedure is applied when terminating a probationary employee; the usual two-notice rule does not govern. 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 applied: 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. 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.

Employer’s violation of company policy and procedure.

A company policy partakes of the nature of an implied contract between the employer and employee. According to jurisprudence,
company personnel policies create an obligation on the part of both the employee and the employer to abide by the same.
As applied: 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. 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.
In this case, it is apparent that Abbott failed to follow the above-stated procedure in evaluating Alcaraz. Check the following:
(a) There lies a hiatus of evidence that a signed copy of Alcaraz’s PPSE form was submitted to the HRD.
(b) It was not even shown that a PPSE form was completed to formally assess her performance.
(c) Neither was the performance evaluation discussed with her during the third and fifth months of her employment.
(d) 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.

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.
According to the cases of Agabon and Jaka, 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.
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. Here, 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.
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

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deems it appropriate to fix the amount of nominal damages at the amount of P30,000.00, consistent with its rulings in both Agabon and
Jaka.

[CORPO RELATED] 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.

Alcaraz: 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.

SC: NO.
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 (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 P30,000.00 on account of its breach of its own company
procedure.