1

CASE DIGEST: Abbott Laboratories Phil. et.al. v. Pearlie Ann F. Alcaraz

[G.R. No. 192571, July 23, 2013]

Subject: Labor Law – Probationary employees – Standards to qualify as a

regular employee

Decision (Perlas-Bernarbe, J.)

Dissent (Brion, J.)

FACTS:

On June 27, 2004, Abbott Laboratories, Philippines (Abbott) caused the

publication in a major broadsheet newspaper of its need for a Medical and
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 (another pharmaceutical company
like Abbott) – showed interest and submitted her application on October 4, 2004.

On December 7, 2004, Abbott formally offered Alcaraz the above-mentioned

position which was an item under the company’s Hospira Affiliate Local
Surveillance Unit (ALSU) department.

In Abbott’s offer sheet, it was stated that Alcaraz was to be employed on a

probationary basis.

Later that day, she accepted the said offer and received an electronic mail (e-mail)
from Abbott’s Recruitment Officer, 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.

On February 12, 2005, Alcaraz signed an employment contract which stated

that she was to be placed on probation for a period of six (6) months
beginning February 15, 2005 to August 14, 2005.

During Alcaraz’s pre-employment orientation, Allan G. Almazar, Hospira’s

Country Transition Manager, briefed her on her duties and responsibilities as
Regulatory Affairs Manager:

(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;
 2

(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) Kelly 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; 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.

On March 3, 2005, Maria Olivia T. Yabut-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.

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.

On April 20, 2005, Alcaraz had a meeting with 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.
 3

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. 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.

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.

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. 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.

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. 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.
 4

Abbott 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.

The Labor Arbiter ruled in Abbott’s favor. The NLRC reversed, upholding
Alcaraz’s allegations. The CA affirmed the NLRC decision.

ISSUES:

1) WON Alcaraz was sufficiently informed of the reasonable standards to

qualify her as a regular employee
2)

HELD:

MAJORITY: YES. 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 (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
 5

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.

Considering the totality of the above-stated circumstances, 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.

DISSENT (Brion, J.): NO. The Offer Sheet was designed to inform Alcaraz of
the compensation and benefits package offered to her by Abbott and can in no
way be read as a statement of the applicable probationary employment
standard. It was communicated even prior to engagement when the parties were
negotiating, not at the point of engagement as the law requires.

The pre-employment orientation on Alcaraz’s duty to implement Abbott’s Code

of Conduct, office policies and training program likewise cannot be
characterized as performance standards; they simply related to activities
aimed at acquainting and training Alcaraz on her duties and not for the
purpose of informing her of the performance standards applicable to her.
What stands out is that they do not pertain specifically to Alcaraz and the
required performance standard applicable for her qualification for regular
employment; they related to the staff Alcaraz managed and supervised.
Additionally, these were all relayed prior to or after Alcaraz was engaged by
Abbott.

An important distinction to remember at this point is that Alcaraz’s knowledge

of the duties that her work entailed, and her knowledge of the employer’s
performance standard, are two distinct matters separately requiring the
presentation of independent proof.

MAJORITY: Keeping with [the Omnibus Rules Implementing the Labor Code],
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 to
accomplish during the trial 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. Also in Aberdeen
Court, Inc v. Agustin, it has been held that the rule on notifying a probationary
 6

employee of the standards of regularization should not be used to exculpate an

employee 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.

DISSENT (Brion, J.): Based on these premises, the ponencia then deftly argues
that because the duties and responsibilities of the position have been explained
to Alcaraz, an experienced human resource specialist, she should have known
what was expected for her to attain regular status. The ponencia’s reasoning,
however, is badly flawed.

1st. The ponencia impliedly admits that no performance standards were expressly
given but argues that because Alcaraz had been informed of her duties and
responsibilities (a fact that was and is not disputed), she should be deemed to know
what was expected of her for purposes of regularization. This is a major flaw that
the ponencia satisfies only via an assumption. The ponencia apparently forgets
that knowledge of duties and responsibilities is different from the measure of
how these duties and responsibilities should be delivered. They are separate
elements and the latter element is missing in the present case.

2nd. The ponencia glosses over the communication aspect. Not only must there be
express performance standards; there must be effective communication. If no
standards were provided, what would be communicated?

3rd. The ponencia badly contradicts itself in claiming that actual communication
of specific standards might not be necessary “when the job is self-descriptive in
nature, for instance, in the case of maids, cooks, drivers, or messengers.” Alcaraz,
in the first place, was never a maid, cook, driver or a messenger and cannot be
placed under this classification; she was hired and employed as a human
resources manager, in short, a managerial employee. Plain and common sense
reasoning by one who ever had been in an employment situation dictates that the
job of a manager cannot be self-explanatory, in the way the ponencia implied;
the complexity of a managerial job must necessarily require that the level of
performance to be delivered must be specified and cannot simply be assumed
based on the communication of the manager’s duties and responsibilities.

4th. The ponencia also forgets that what these “performance standards” or
measures cannot simply be assumed because they are critically important in
this case, or for that matter, in any case involving jobs whose duties and
responsibilities are not simple or self-descriptive. If Alcaraz had been evaluated
or assessed in the manner that the company’s internal rules require, these standards
would have been the basis for her performance or lack of it. Last but not the least,
Alcaraz’s services were terminated on the basis of the performance standards that,
by law, the employer set or prescribed at the time of the employee’s engagement.
If none had been prescribed in the first place, under what basis could the
employee then be assessed for purposes of termination or regularization?
 7

2) WON Alcaraz was validly terminated from her employment

MAJORITY: NO. 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.

The Court modified Agabon v. NLRC in the case of Jaka Food Processing
Corporation v. Pacot 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.

If the dismissal is based on a just cause under Article 296 of the Labor Code 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 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.

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
P30,000.00, consistent with its rulings in both Agabon and Jaka.

DISSENT (Brion, J.): YES. Alcaraz was dismissed as she “failed to qualify as
regular employee in accordance with the prescribed standards set by the
Company.” Even granting for the sake of argument that Abbott had apprised
Alcaraz of an applicable performance standard, the evidence failed to show that
Alcaraz did not meet this standard in a manner and to the extent equivalent to
the “just cause” that the law requires.

In defense of Abbott’s failure to observe the two-notice requirement, the ponencia

argues that a different procedure applies when terminating a probationary
employee; the usual two-notice requirement does not govern, citing for this
purpose Section 2, Rule I, Book VI of the Implementing Rules of the Labor Code.
The ponencia, however, forgets that the single notice rule applies only if the
employee is validly on probationary basis; it does not apply where the
employee is deemed a regular employee for the company’s failure to provide
and to communicate a prescribed performance standard applicable to the
probationary employee.
 8

3) WON the individual petitioners herein are liable

MAJORITY: NO. 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.

DISSENT (Brion, J.): YES. The NLRC exhaustively discussed Abbott’s bad
faith, as demonstrated by the actions of the individual petitioners:

First, Alcaraz was pressured to resign:

(1) she was threatened with termination, which will surely damage her reputation
in the pharmaceutical industry;

(2) she was asked to evacuate her Commission and ordered not to enter the
Company’s premises even if she was still an Abbott employee; and

(3) Terrible and Walsh made a public announcement to the staff that
Alcaraz already resigned even if in reality she did not.

The CA also described in detail the abrupt and oppressive manner in which
Alcaraz’s employment was dismissed by Abbott:

On May 23, 2005, Alcaraz still reported for work since Abbott had not yet handed
the termination notice to her. However, the security guard did not allow her to
enter the Hospira ALSU office pursuant to Walsh[’s] instruction. She
requested Walsh that she be allowed to enter the company premises to retrieve her
last remaining things in her office which are mostly her personal belongings. She
was allowed to enter. However, she was surprised to see her drawers already
unlocked and, when she opened the same, she discovered that her small brown
envelope x x x, white pouch containing the duplicate keys, and the staff’s final
evaluation sheets were missing.Alcaraz informed Bernardo about the incident.
The latter responded by saying she was no longer an employee of the company
since May 19, 2005.

Alcaraz reported the matter to the Pasig Police Station and asked for help regarding
the theft of her properties. The Pasig Police incident report stated as follows:

x x x x When confronted by the suspect, in the presence of one SOCO officer and
staff, named Christian Perez, Kelly Walsh allegedly admitted that she was the one
who opened the drawer and got the green folders containing the staff evaluations.
The Reportee was told by Kelly Walsh that her Rolex wristwatch will be returned
to her provided that she will immediately vacate her office.
 9

On the same date, Alcaraz’s termination letter dated May 19, 2005 was handed to
her by Walsh, Almazar and Bernardo.