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;

(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.

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.

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

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 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 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?

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.

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.

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

RESULT: CA reversed. In favor of Abbott.