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Abbott v. Alcaraz, G.R. No. 192571, 23 July 2013

♦ Decision, Perlas Bernabe [J]
♦ Dissenting Opinion, Brion [J]

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 Resolution48 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. (Emphasis and underscoring supplied.)
1âwphi1

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

WE CONCUR:

MARIA LOURDES P. A. SERENO

Chief Justice

ANTONIO T. CARPIO PRESBITERO J. VELASCO, JR.

Associate Justice Associate Justice

See Dissent:
TERESITA J. LEONARDO-DE CASTRO
 Associate Justice ARTURO D. BRION
Associate Justice

DIOSDADO M. PERALTA LUCAS P. BERSAMIN

Associate Justice Associate Justice

MARIANO C. DEL CASTILLO ROBERTO A. ABAD

Associate Justice Associate Justice

MARTIN S. VILLARAMA, JR. JOSE PORTUGAL PEREZ

Associate Justice Associate Justice

JOSE CATRAL MENDOZA BIENVENIDO L. REYES

Associate Justice Associate Justice

I join J. Brion in his dissent

MARVIC MARIO VICTOR F. LEONEN
Associate Justice

CERTIFICATION

I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned
to the writer of the opinion of the Court.

MARIA LOURDES P. A. SERENO

Chief Justice

Footnotes

1 Rollo (G.R.No.192571),pp. 14-58.

2 Id. at 1040-1054. Penned by Associate Justice Isaias Dicdican, with Associate Justices Remedios A.
Salazar-Fernando and Romeo F. Barza, concurring.

3 Id. at 1139-1140.

4 Id. at 74.

5 Id. at 75-76.

6 Id. at 51-52. Based on Abbott’s organizational structure, the Regulatory Affairs Manager was under the
umbrella of Hospira ALSU, a sub-department in Abbott’s Hospital Care Division. ALSU serves as a transition
body of Hospira, Inc., a corporation based in the United States of America, while it is in the process of
organization in the Philippines. Abbott intended to cede the qualified employees under ALSU to Hospira once
the latter obtained its own legal personality to engage in business in the Philippines.

7 Id. at 165-168. Abbott sent Alcaraz an initial offer sheet on December 1, 2004. The compensation contained
therein was re-negotiated and thus, the increased offer as per the offer sheet dated December 7, 2004.

8 Id. at 167-168.

9 Id. at 127, 169-172.

10 Id. at 174.

11 Id. at 127-128.
12 Id. at 1042-1043.

13 Id.

14 Id. at 1044.

15 Id.

16 Id.

17 Id. at 1044-1045.

18 Id. at 1045.

19 Id.

20 Id. at 1046.

21 Id. at 1047.

22 Id. at 19-21, 78, and 80-81.

23 Id. at 1047.

24 Id. at 255. See Labor Arbiter (LA) Decision dated March 30, 2006.

25 Formerly, Article 281 of the Labor Code; renumbered pursuant to Republic Act No. 10151.

26 Rollo (G.R. No. 192571), p. 267.

27 Id. at 261-262.

28 Id. at 263-267.

29 Id. at 255-274. Penned by Labor Arbiter Jovencio Ll. Mayor, Jr.

30 Id. at 269.

31 Id. at 270.

32 Id. at 271-272.

33 Id. at 273.

34 Id. at 356-378. Penned by Commissioner Romeo L. Go, with Commissioners Benedicto Ernesto R. Bitonio,
Jr. (on leave) and Perlita B. Velasco, concurring.

35 Id. at 377-378.

36 Id. at 367.

37 Id. at 368.

38 Id. at 369.

39 Id. at 370-373.

40 Id. at 413-416. Penned by Commissioner Romeo L. Go, with Presiding Commissioner Gerardo C.
Nograles and Commissioner Perlita B. Velasco, concurring.

41 Id. at 417-450.

42 Id. at 1403.

43 Id.

44 Id. at 1040-1054.

45 Id at 1052.

46 Id.

47 Id. at 1053.

48 Id. at 1139-1140.

49 Id. at 1218.

50 Id.

51 Id. at 1219.

52 Rollo (G.R. No. 193976), p. 30.

53 Rollo (G.R. No. 192571), pp.1223-1228.

54 Id. at 1224.

55 433 Phil. 490, 501-502 (2002).

56 Id. at 501-502. (Citations omitted)

57 Republic v. Mangotara, G.R. Nos. 170375, 170505, 173355-56, 173401, 173563-64, 178779 & 178894,
July 7, 2010, 624 SCRA 360, 428, citing NBI-Microsoft Corporation v. Hwang, 499 Phil. 423, 435-436 (2005).

58 Sec. 5. Certification against forum shopping. —The plaintiff or principal party shall certify under oath in the
complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification annexed thereto
and simultaneously filed therewith: (a) that he has not theretofore commenced any action or filed any claim
involving the same issues in any court, tribunal or quasi-judicial agency and, to the best of his knowledge, no
such other action or claim is pending therein; (b) if there is such other pending action or claim, a complete
statement of the present status thereof; and (c) if he should thereafter learn that the same or similar action or
claim has been filed or is pending, he shall report that fact within five (5) days therefrom to the court wherein
his aforesaid complaint or initiatory pleading has been filed.

xxxx

59 Robinsons Galleria/Robinsons Supermarket Corporation v. Ranchez, G.R. No. 177937, January 19, 2011,
640 SCRA 135, 142.

60 Id.

61 Id. at 145.

62 495 Phil. 706, 716-717 (2005).

63 Rollo (G.R. No. 192571), p. 1201.

64 Id. at 367-368, 370.

65 Refers to the procedure stated in Article 291(b) of the Labor Code, as renumbered pursuant to Republic
Act No. 10151, viz.:

Article 291. Miscellaneous Provisions. —

xxxx

(b) Subject to the constitutional right of workers to security of tenure and their right to be protected against
dismissal except for a just and authorized cause and without prejudice to the requirement of notice under
Article 283 of this Code, the employer shall furnish the worker whose employment is sought to be terminated
a written notice containing a statement of the cause for termination and shall afford the latter ample
opportunity to be heard and to defend himself with the assistance of his representative if he so desires in
accordance with company rules and regulations promulgated pursuant to guidelines set by the Department of
Labor and Employment.

xxxx

This procedure is also found in Section 2(d), Rule I, Book VI of the Omnibus Rules Implementing the Labor
Code which state:

xxxx

(d) In all cases of termination of employment, the following standards of due process shall be substantially
observed:

For termination of employment based on just causes as defined in Article 282 [now, Article 296] of the Labor
Code:

(i) A written notice served on the employee specifying the ground or grounds for termination, and giving said
employee reasonable opportunity within which to explain his side.

(ii) A hearing or conference during which the employee concerned, with the assistance of counsel if he so
desires is given opportunity to respond to the charge, present his evidence, or rebut the evidence presented
against him.

(iii) A written notice of termination served on the employee, indicating that upon due consideration of all the
circumstances, grounds have been established to justify his termination.

66 Rollo, pp. 78-81.

67 Id. at 1047.

68 170 S.W.3d 354 (Ky. 2005).

69 Rollo (G.R. No. 192571), p. 1052.

70 Id. at 1043.

71 G.R. No. 158693, November 17, 2004, 442 SCRA 573.

72 Id. at 616.

73 Id. at 620.

74 494 Phil. 114, 119-121 (2005).

75 Id. at 121.
 76 Id. at 122.

77 Supra note 71, at 605.

78 Id. at 617.

79 Article 2221. Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated
or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the
plaintiff for any loss suffered by him.

80 Carag v. NLRC, 548 Phil. 581, 605 (2007), citing McLeod v. NLRC, 541 Phil. 214, 242 (2007).

81 Rollo (G.R. No. 192571), pp. 262, 1046.

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