Abbott Laboratories, Philippines v. Alcaraz

A probationary employee's dismissal for failure to qualify as a regular employee is valid where the employer communicated reasonable regularization standards at the time of engagement and served a written notice of termination; however, where the employer breaches its own internal evaluation procedure, such contractual breach renders the dismissal procedurally infirm and entitles the employee to nominal damages, even though the dismissal itself stands.

Abbott Laboratories, Philippines is a pharmaceutical company that maintained a Hospira Affiliate Local Surveillance Unit (ALSU) department, a transitional body for Hospira, Inc., a U.S.-based corporation then in the process of establishing its own Philippine operations. Respondent Pearlie Ann F. Alcaraz was hired as Regulatory Affairs Manager under the ALSU department on a probationary basis. The individual petitioners were Abbott officers involved in Alcaraz's recruitment, supervision, and termination: Cecille Terrible (former HR Director), Edwin Feist (General Manager), Maria Olivia Yabut-Misa (HR Director), Teresita Bernardo (Recruitment Officer), and Allan Almazar (Country Transition Manager). Kelly Walsh, identified as Manager of Literature Drug Surveillance Drug Safety of Hospira, was Alcaraz's immediate supervisor though not listed as a petitioner.

On June 27, 2004, Abbott Laboratories, Philippines published in a major broadsheet newspaper its need for a Medical and Regulatory Affairs Manager responsible for drug safety surveillance operations, development of standard operating procedures, and interfacing with internal and external customers on safety operations. Pearlie Ann F. Alcaraz, then a Regulatory Affairs and Information Manager at Aventis Pasteur Philippines, submitted her application on October 4, 2004. On December 7, 2004, Abbott formally offered Alcaraz the position under its Hospira Affiliate Local Surveillance Unit (ALSU) department, with the offer sheet stating that she was to be employed on a probationary basis. Alcaraz accepted the offer that same day and received an e-mail from Recruitment Officer Teresita Bernardo confirming the appointment, with copies of Abbott's organizational chart and her job description attached.

On February 12, 2005, Alcaraz signed an employment contract stating that she was to be placed on probation for six months, from February 15, 2005 to August 14, 2005, at a basic salary of ₱110,000.00 per month. The contract was signed by General Manager Edwin Feist and specified that unless renewed, the probationary appointment would expire on the indicated date, subject to earlier termination for any justifiable reason. During her pre-employment orientation, Country Transition Manager Allan Almazar briefed Alcaraz on her duties: she would handle the Hospira ALSU staff, report directly to Almazar on local operations and budget matters, implement Abbott's Code of Good Corporate Conduct and office policies, coordinate with HR officers in staff management, and report to Kelly Walsh as her immediate supervisor. Almazar also informed her that Hospira ALSU would spin off from Abbott in early 2006 and that all ALSU personnel were required to use two identification cards.

On March 3, 2005, HR Director Maria Olivia Yabut-Misa sent Alcaraz an e-mail explaining the procedure for evaluating probationary employees, stating that Abbott had only one evaluation system for all employees. Alcaraz was given copies of Abbott's Code of Conduct and Probationary Performance Standards and Evaluation (PPSE) and Performance Excellence Orientation Modules, which she was to apply in evaluating the Hospira ALSU staff. Abbott's PPSE procedure required that a probationary employee's performance be formally reviewed and discussed at least twice—first on the third month and second on the fifth month from the date of employment—with a Performance Improvement Plan prepared during the third-month review if gaps existed. A signed copy of the PPSE form was to be submitted to the HRD as the basis for recommending confirmation or termination.

During her employment, Alcaraz noticed disciplinary problems among the staff—non-observance of the dress code, moonlighting, and disrespect of Abbott officers—and reprimanded them. Walsh considered Alcaraz's management method "too strict." Alcaraz approached Misa, who told her to "lie low" and let Walsh handle the matter, while assuring her of HRD support. On April 12, 2005, Alcaraz received an e-mail from Misa requesting immediate action on the staff's performance evaluation, which she submitted. On April 20, 2005, during a meeting with former HR Director Cecille Terrible regarding staff performance standards, Alcaraz accidentally saw a printed copy of an e-mail Walsh had sent to staff members containing queries about her job performance. When Alcaraz asked if this was the normal evaluation process, Terrible said it was not.

On May 16, 2005, Alcaraz was called to a meeting with Walsh and Terrible, where she was informed that she had failed to meet the regularization standards for her position. They requested her resignation, failing which they would terminate her services, and told her not to report for work and to surrender her identification cards. She asked for one week to decide, but was refused. The following day, Alcaraz informed her administrative assistant she would be on leave, only to learn that Walsh and Terrible had already announced to the entire Hospira ALSU staff that she had resigned due to health reasons. On May 23, 2005, Walsh, Almazar, and Bernardo personally handed Alcaraz a termination letter effective May 19, 2005, citing her failure to manage time effectively, gain staff trust, train staff effectively, and obtain the knowledge and ability for sound judgment on case processing and article review. Alcaraz received another copy via registered mail on May 27, 2005.

Alcaraz filed a complaint for illegal dismissal and damages, contending that she should have been considered a regular employee because Abbott failed to inform her of reasonable regularization standards at the time of engagement, and that the individual petitioners maliciously connived to dismiss her. The Labor Arbiter dismissed the complaint, crediting Alcaraz's own admissions that she was briefed on her duties during pre-employment orientation and received copies of the Code of Conduct and Performance Modules. The NLRC reversed, finding that Alcaraz was not apprised of regularization standards and that Abbott failed to follow its own evaluation procedure. The Court of Appeals affirmed the NLRC, holding that the employment contract contained no performance standards or stipulation requiring a performance evaluation before regularization.

• Validity of Termination: Petitioners maintained that Alcaraz was validly terminated from her probationary employment for failure to satisfy the prescribed standards for regularization, which were made known to her at the time of her engagement.
• Communication of Standards: Petitioners contended that Abbott had complied with the requirements under Article 295 of the Labor Code by conveying to Alcaraz her duties and responsibilities as Regulatory Affairs Manager prior to and during the time of her engagement, through the newspaper publication, offer sheet, employment contract, pre-employment orientation, job description, Code of Conduct, and Performance Modules.
• No Forum Shopping: Petitioners argued that the First CA Petition and the Second CA Petition covered different subject matters and causes of action—the former questioning the illegality of dismissal, the latter questioning the propriety of execution—and thus did not constitute forum shopping.

• Regular Employee Status: Respondent argued that she should have been considered a regular and not a probationary employee because Abbott failed to inform her of the reasonable standards for her regularization upon her engagement as required under Article 295 of the Labor Code, and that her employment contract did not indicate the standards on which her regularization would be based.
• Malicious Connivance: Respondent contended that the individual petitioners maliciously connived to illegally dismiss her by threatening her with termination, ordering her not to enter company premises while still an employee, and publicly announcing that she had resigned in order to humiliate her.
• Forum Shopping: Respondent alleged 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 in the First CA Petition.
• Certification Violation: Respondent contended that petitioners violated the certification requirement under Section 5, Rule 7 of the Rules of Court by failing to disclose in the instant petition the filing of the June 16, 2010 Memorandum of Appeal before the NLRC.
• Loss of Belongings: Respondent attributed the loss of some of her remaining personal belongings to the individual petitioners.

• Forum Shopping: Whether petitioners are guilty of forum shopping in filing the Second CA Petition and whether they violated the certification requirement under Section 5, Rule 7 of the Rules of Court.
• Probationary Status and Regularization Standards: Whether Alcaraz was sufficiently informed of the reasonable standards to qualify her as a regular employee at the time of her engagement.
• Validity of Termination: Whether Alcaraz was validly terminated from her employment.
• Breach of Company Procedure: Whether Abbott's failure to follow its own PPSE procedure affects the validity of the termination and warrants damages.
• Liability of Individual Petitioners: Whether the individual petitioners, as corporate officers, are personally liable for Alcaraz's dismissal.

• Forum Shopping: No. The two CA petitions covered different subject matters and causes of action—one assailing the illegality of dismissal, the other assailing the propriety of execution—such that a judgment in one would not constitute res judicata in the other. Petitioners likewise did not violate the certification requirement because the issues in the instant petition and the June 16, 2010 Memorandum of Appeal were dissimilar.
• Probationary Status and Regularization Standards: Yes, Alcaraz was sufficiently informed. Abbott communicated her duties and responsibilities through the newspaper publication, offer sheet, employment contract, pre-employment orientation, job description, Code of Conduct, and Performance Modules, and the adequate performance of one's duties is an inherent and implied regularization standard that need not be literally spelled out in every case.
• Validity of Termination: Yes, the termination was valid. A written notice was served on Alcaraz stating the reasons for her termination—failure to meet the reasonable standards for regularization—which satisfies the statutory requirement for terminating a probationary employee under Section 2, Rule I, Book VI of the Implementing Rules of the Labor Code.
• Breach of Company Procedure: Yes, the breach warrants nominal damages. Abbott failed to conduct the third- and fifth-month performance reviews, prepare a Performance Improvement Plan, or submit a signed PPSE form to the HRD, rendering the dismissal procedurally infirm and entitling Alcaraz to ₱30,000.00 in nominal damages under Article 2221 of the Civil Code.
• Liability of Individual Petitioners: No. There was no evidence of bad faith or ill will on the part of the individual petitioners in terminating Alcaraz's services, and bad faith cannot be presumed; he who alleges bad faith bears the onus of proving it.

• Forum Shopping: Forum shopping exists where the elements of litis pendentia are present: identity of parties, identity of rights asserted and relief prayed for founded on the same facts, and identity such that any judgment rendered would amount to res judicata in the other case. The First CA Petition questioned the NLRC's ruling that Alcaraz was illegally dismissed, while the Second CA Petition questioned the propriety of enforcing the judgment award pending resolution of the First CA Petition. Because the two petitions covered different subject matters and causes of action, a judgment in the Second CA Petition would not constitute res judicata in the First. As to the certification requirement, Section 5(b), Rule 7 of the Rules of Court requires disclosure of pending cases involving the same issues; since the instant petition (validity of dismissal) and the June 16, 2010 Memorandum of Appeal (propriety of writ of execution) involved dissimilar issues, no disclosure was required. In any event, the matter had become moot because the issue of execution had been resolved in the Second CA Petition, which had attained finality.

• Probationary Status and Regularization Standards: Under Article 295 of the Labor Code and Section 6(d), Rule I, Book VI of the Implementing Rules, an employer must communicate reasonable regularization standards to a probationary employee at the time of engagement; failure to do so renders the employee a regular employee. The Court found that Abbott complied with this requirement through a series of communications: the newspaper publication of the job description, the December 7, 2004 offer sheet stating probationary status, the February 12, 2005 employment contract specifying the probationary period, Bernardo's e-mail attaching the organizational chart and job description, Almazar's pre-employment orientation briefing on duties and reporting lines, the training program, and Misa's provision of the Code of Conduct and Performance Modules with an explanation of the evaluation procedure. Additionally, Alcaraz had previously worked for another pharmaceutical company and admitted to having "extensive training and background" for her job. The Court held that the adequate performance of one's duties is an inherent and implied regularization standard that need not be literally spelled out or mapped into technical indicators in every case, especially for a managerial employee tasked with vital personnel and departmental responsibilities. The NLRC committed grave abuse of discretion in overlooking these attendant circumstances and relying solely on the premise that receipt of the job description and company policies was not equivalent to being informed of performance standards.

• Validity of Termination: The usual two-notice rule does not govern the termination of probationary employees. Section 2, Rule I, Book VI of the Implementing Rules provides that where termination is brought about by the employee's failure to meet the employer's standards in probationary employment, it is sufficient that a written notice is served within a reasonable time from the effective date of termination. Alcaraz's dismissal was effected through a letter dated May 19, 2005, received on May 23 and May 27, 2005, stating the reasons for termination—her lack of time and people management and decision-making skills necessary for her functions as Regulatory Affairs Manager. This written notice satisfied the statutory criteria, legitimizing the cause and manner of dismissal.

• Breach of Company Procedure: A company policy partakes of the nature of an implied contract between employer and employee, creating an obligation on both parties to abide by it. Abbott's PPSE procedure mandated formal performance reviews on the third and fifth months, a Performance Improvement Plan during the third-month review, and submission of a signed PPSE form to the HRD. Records showed no signed PPSE form was submitted, no PPSE form was completed to formally assess Alcaraz's performance, the evaluation was not discussed with her during the third and fifth months, and no Performance Improvement Plan was prepared. While it is Abbott's management prerogative to promulgate and amend its own rules, once it creates policies and notifies employees of them, it assumes the obligation to faithfully implement them. Drawing from the principle in Agabon vs. NLRC and Jaka Food Processing Corporation vs. Pacot—that an employer who terminates an employee for valid cause but through invalid procedure is liable for nominal damages—the Court extended this principle to an employer's contractual breach of its own company procedure, which has the parallel effect of violating the employee's rights. Since the dismissal process was initiated by an act imputable to the employee (failure to meet regularization standards), analogous to dismissals for just causes under Article 296, nominal damages were fixed at ₱30,000.00, consistent with Agabon.

• Liability of Individual Petitioners: Personal liability of corporate officers attaches only when they assent to patently unlawful acts, act in bad faith or gross negligence, consent to issuance of watered stocks, agree to hold themselves personally liable, or are made personally answerable by specific provision of law. Alcaraz alleged bad faith in the crude manner of termination and attributed the loss of personal belongings to the individual petitioners, but presented no evidence beyond unfounded assertions. That Alcaraz was asked to resign and barred from the workplace did not necessarily indicate bad faith, given that a sufficient ground for termination existed. The Court found no evidence of bad faith or ill will, and bad faith cannot be presumed; the award of moral and exemplary damages was therefore unwarranted.

• Probationary Employment Standards Communication — Under Article 295 of the Labor Code and Section 6(d), Rule I, Book VI of the Implementing Rules, the employer must: (a) communicate the reasonable regularization standards to the probationary employee, and (b) make such communication at the time of engagement. Failure to comply with either requirement renders the employee a regular, not probationary, employee. The Court applied this doctrine by examining the totality of circumstances—including the job publication, offer sheet, employment contract, pre-employment orientation, job description, Code of Conduct, and Performance Modules—and concluding that Abbott had sufficiently communicated the standards.

• Implied Regularization Standard for Managerial Employees — The adequate performance of one's duties is an inherent and implied standard for a probationary employee's regularization; this standard need not be literally spelled out or mapped into technical indicators in every case, especially for managerial employees. The assessment of adequate duty performance is a management prerogative which, when reasonably exercised, should be respected.

• Company Policy as Implied Contract — A company policy partakes of the nature of an implied contract between employer and employee. 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. The employer is bound to faithfully implement its own policies; breach of such policies entitles the employee to damages.

• Nominal Damages for Procedurally Infirm Dismissal — Where an employer terminates an employee for a valid cause but through an invalid procedure, the dismissal is not nullified, but the employer must pay nominal damages to vindicate the violated right. Where the dismissal process is initiated by an act imputable to the employee (analogous to just causes under Article 296), nominal damages are fixed at ₱30,000.00; where the dismissal is based on an authorized cause initiated by the employer's management prerogative (Article 297), nominal damages are fixed at ₱50,000.00. The Court extended this principle to contractual breaches of company procedure, applying the ₱30,000.00 amount because Alcaraz's dismissal was initiated by her own failure to meet regularization standards.

• Personal Liability of Corporate Officers — Corporate officers are not personally liable for corporate acts unless: (a) they assent to a patently unlawful act of the corporation, or are guilty of bad faith or gross negligence in directing its affairs, or there is a conflict of interest resulting in damages; (b) they consent to the issuance of watered down stocks; (c) they agree to hold themselves personally and solidarily liable; or (d) they are made personally answerable by specific provision of law. Bad faith cannot be presumed and must be proven by the party alleging it.

• "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." — This passage states the dual requirement for valid probationary employment, forming the analytical framework for the Court's examination of whether Abbott properly communicated regularization standards.

• "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." — This articulates the doctrine of implied regularization standards, particularly significant for managerial positions where the duties themselves define the expectations, and is frequently cited in subsequent labor jurisprudence on probationary employment.

• "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." — This is the ratio decidendi for the award of nominal damages, establishing that an employer's breach of its own internal evaluation procedure—though not statutory in source—produces the same effect as a statutory due process violation.

• "a company policy partakes of the nature of an implied contract between the employer and employee." — This formulation, drawing from Parts Depot, Inc. vs. Beiswenger, establishes the contractual nature of company policies and the employer's correlative obligation to implement them faithfully, serving as the doctrinal basis for awarding damages when an employer fails to follow its own procedures.

• Sps. Ong vs. CA, 433 Phil. 490 (2002) — Cited for the distinction between the prohibition against forum shopping and the certification requirement under Section 5, Rule 7 of the Rules of Court; the Court applied this distinction to separately analyze whether petitioners engaged in forum shopping and whether they violated the certification requirement.

• Aberdeen Court, Inc. vs. Agustin, 495 Phil. 706 (2005) — Followed for the proposition that the rule on notifying a probationary employee of regularization standards should not be used to exculpate an employee who acts contrary to basic knowledge and common sense, and that failure to perform duties clearly made known constitutes a justifiable basis for non-regularization.

• Parts Depot, Inc. vs. Beiswenger, 170 S.W.3d 354 (Ky. 2005) — A foreign case cited for the doctrine that employer statements of policy can give rise to contractual rights in employees, akin to estoppel; the Court relied on this principle to hold that Abbott's PPSE procedure constituted an implied contract whose breach warranted nominal damages.

• Agabon vs. NLRC, G.R. No. 158693, November 17, 2004, 442 SCRA 573 — Controlling precedent for the rule that where dismissal is for a just cause, lack of statutory due process does not nullify the dismissal but the employer must indemnify the employee with nominal damages; the Court ordered ₱30,000.00, the amount fixed in Agabon for dismissals initiated by an act imputable to the employee.

• Jaka Food Processing Corporation vs. Pacot, 494 Phil. 114 (2005) — Followed and applied for the distinction between procedurally defective dismissals based on just causes (₱30,000.00 nominal damages) versus authorized causes (₱50,000.00); the Court classified Alcaraz's dismissal as analogous to a just-cause dismissal because the process was initiated by her own failure to meet regularization standards.

• Robinsons Galleria/Robinsons Supermarket Corporation vs. Ranchez, G.R. No. 177937, January 19, 2011, 640 SCRA 135 — Cited for the rule that a probationary employee may be terminated for a just cause, an authorized cause, or failure to qualify as a regular employee in accordance with reasonable standards made known by the employer at the time of engagement.

• Carag vs. NLRC, 548 Phil. 581 (2007) — Cited for the hornbook principle on when personal liability of corporate directors, trustees, or officers attaches, which the Court applied to absolve the individual petitioners in the absence of proven bad faith.

• Article 295, Labor Code (formerly Article 281) — Governs probationary employment, providing that a probationary employee may be terminated for failure to qualify as a regular employee in accordance with reasonable standards made known by the employer at the time of engagement. Applied to determine whether Abbott properly communicated regularization standards to Alcaraz.

• Section 6(d), Rule I, Book VI, Implementing Rules of the Labor Code — Provides that the employer shall make known to the probationary employee the standards under which he will qualify as a regular employee at the time of engagement, and that where no standards are made known, the employee shall be deemed a regular employee. Applied as the statutory basis for the dual requirement of communication and timing.

• Section 2, Rule I, Book VI, Implementing Rules of the Labor Code — Provides that where termination is brought about by the failure of an employee to meet the employer's standards in probationary employment, it shall be sufficient that a written notice is served within a reasonable time from the effective date of termination. Applied to uphold the validity of the written notice served on Alcaraz.

• Article 2221, Civil Code — Defines nominal damages as adjudicated to vindicate or recognize a right of the plaintiff which has been violated or invaded, not to indemnify for loss suffered. Applied as the legal basis for awarding ₱30,000.00 in nominal damages for Abbott's breach of its own evaluation procedure.

• Section 5, Rule 7, Rules of Court — Requires the plaintiff or principal party to certify under oath that no other action or claim involving the same issues is pending, or to provide a complete statement of the present status of any such pending case. Applied to determine that petitioners were not required to disclose the June 16, 2010 Memorandum of Appeal because it involved dissimilar issues.

• Article 296, Labor Code (formerly Article 282) — Defines just causes for termination of employment. Referenced in classifying Alcaraz's dismissal as analogous to a just-cause dismissal for purposes of fixing the amount of nominal damages.

• Article 297, Labor Code (formerly Article 283) — Defines authorized causes for termination of employment. Referenced in the Agabon-Jaka distinction for the higher amount of nominal damages (₱50,000.00) applicable to authorized-cause dismissals, contrasted with the ₱30,000.00 applicable here.

Maria Lourdes P. A. Sereno (Chief Justice), Antonio T. Carpio, Presbitero J. Velasco, Jr., Teresita J. Leonardo-De Castro, Diosdado M. Peralta, Lucas P. Bersamin, Mariano C. Del Castillo, Roberto A. Abad, Martin S. Villarama, Jr., Jose Portugal Perez, Jose Catral Mendoza, and Bienvenido L. Reyes.

• Arturo D. Brion — The text of the dissenting opinion is not included in the provided case text; only the notation "See Dissent" appears. Accordingly, the substance of Justice Brion's dissent cannot be summarized from the available text.

• Marvic Mario Victor F. Leonen — Joined Justice Brion's dissent, as indicated by the notation "I join J. Brion in his dissent." The substance of the separate or concurring dissenting reasoning is not included in the provided text.