MANILA ELECTRIC COMPANY v.

QUISUMBING

FACTS

Dissatisfied with the terms of the Collective Bargaining Agreement of petitioner Manila Electric
Company, members of private respondent union filed for a motion for intervention and a
motion for reconsideration of the January 27, 1999, decision regarding the amount of wages
and the retroactivity of the CBA arbitral awards.

Petitioners Manila Electric Company argue that if the proposed wage increases of P2,200 per
month were to be followed, the company would have to increase its charge to its consumers
through an increase in the rate of electricity. The Court argued that the petitioner’s argument
holds no water. An increase in the prices of electric currents needs approval of the appropriate
government agency and does not automatically result from a mere increase in the wages of the
petitioner’s employees.

ISSUE/S:

WHETHER OR NOT MATTERS OF SALARY INCREASES ARE COVERED BY MANAGEMENT

PREROGATIVE.

HELD

WHETHER OR NOT MATTERS OF SALARY INCREASES ARE COVERED BY MANAGEMENT

PREROGATIVE.

Yes. There is no need to consult the Secretary of Labor in cases involving contracting out for 6
months or more as it is part of management prerogative. However, a line must be drawn
between management prerogatives regarding business operations per se and those which
affect the rights of employees, and in treating the latter, the employer should see to it that its
employees are at least properly informed of its decision or modes of action in order to attain a
harmonious labor-management relationship and enlighten the workers concerning their rights.
Hiring of workers is within the employer's inherent freedom to regulate and is a valid exercise
of its management prerogative subject only to special laws and agreements on the matter and
the fair standards of justice.24 The management cannot be denied the faculty of promoting
efficiency and attaining economy by a study of what units are essential for its operation. It has
the ultimate determination of whether services should be performed by its personnel or
contracted to outside agencies. While there should be mutual consultation, eventually
deference is to be paid to what management decides.
DECISION

WHEREFORE, the motion for reconsideration is PARTIALLY GRANTED and the assailed Decision
is MODIFIED as follows: (1) the arbitral award shall retroact from December 1, 1995, to
November 30, 1997; and (2) the award of wage is increased from the original amount of One
Thousand Nine Hundred Pesos (P1,900.00) to Two Thousand Pesos (P2,000.00) for the years
1995 and 1996. This Resolution is subject to the monetary advances granted by petitioner to its
rank-and-file employees during the pendency of this case assuming such advances had actually
been distributed to them. The assailed Decision is AFFIRMED in all other respects.
 ABBOTT LABORATORIES V. PEARLIE ANN F. ALCARAZ

FACTS

Assailed in this petition for review on certiorari are the decisions dated December 10, 2009 and
resolution dated June 9, 2010 of the Court of Appeals which pronounced that the National
Labor Relations Commission (NLRC) DID NOT gravely abuse its discretion when it ruled that
respondent Alcaraz was illegally dismissed from her employment.

JUNE 27, 2004 – Abbott Laboratories caused the publication in a major broadsheet newspaper
of its need for a Medical and Regulatory Affairs Manager.

DECEMBER 7, 2004 – Abbott formally offered Alcaraz the abovementioned position. Alcaraz
was hired on a probationary basis.

FEBRUARY 12, 2005 – Alcaraz signed an employment contract stating 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, petitioner Allan G. Almazar (Almazar), Hospira’s

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

MARCH 3, 2005 – Petitioner Maria Olivia T. Yabut-Misa (Misa), Abbott’s HR Director, sent
Alcaraz an e-mail which contained an explanation of the procedure for evaluating the
performance of probationary employees and further indicated that Abbott had only on
evaluation system for all of its employees.

Abbott’s Performance Excellence Orientation Modules or 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.

During the course of her employment, Alcaraz disciplined staff that had disciplinary problems.
Walsh then commented that Alcaraz’s method of management was “too strict.”

APRIL 12, 2005 – Alcaraz received and e-mail from Misa requesting immediate action on the
staff’s performance evaluation as their probationary periods were bout to end.

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.

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.
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.

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. On May 27, 2005, Alcaraz received another copy of the said
termination letter via registered mail.

Alcaraz felt she was unjustly terminated and thus, filed a complaint for illegal dismissal and
damages against Abbott and its officers. Alcaraz further argued that she was not properly
informed of the reasonable standards to qualify as a regular employee and was thus considered
a regular employee.

LA RULING

Alcaraz’s complaint was dismissed for lack of merit. The LA Rejected Alcaraz’s argument for
failing to provide evidence that Abbott’s officers acted in bad faith in terminating Alcaraz’s
employment.

THE NLRC RULING

The NLRC rendered a decision annulling and setting aside the LA’s ruling. 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.

The NLRC argued that Alcaraz’s mere receipt of her job description and Abbott’s Code of
Conduct and Performance Modules were not sufficient. Furthermore, it was found that Abbott
did not comply with its own standard operating procedure in evaluating employees. The NLRC
was also not convinced that Alcaraz was terminated for a valid excuse given that Abbott’s
allegation of Alcaraz’s poor performance were without proof.

THE CA RULING

With regard to the First CA Petition, the CA 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.

Alcaraz was not appraised at the start of her employment of the reasonable standards under
which she could qualify as a regular employee.

It also found that Abbott was unable to prove that there was any reasonable ground to
terminate Alcaraz’s employment.

Abbott moved for the reconsideration of the aforementioned ruling which was, however,
denied by the CA in a Resolution dated June 9, 2010.

The CA likewise denied the Second CA Petition and ruled that the NLRC was correct in
upholding the executing of the NLRC Decision.
Abbott filed for a motion for reconsideration.

ISSUE/S:

WHETHER OR NOT ALCARAZ’S TERMINATION FROM HER EMPLOYMENT WAS VALID.

WHETHER OR NOT ALCARAZ’S TERMINATION WAS DONE WITH DUE PROCESS

HELD

WHETHER OR NOT ALCARAZ’S TERMINATION FROM HER EMPLOYMENT WAS VALID.

YES. Alcaraz’s dismissal must stand since Abbott duly complied with the requirements set forth
by the Implementing Rules of the Labor Code pertaining to probationary employees.
Furthermore, the Court finds that the NLRC committed a grave abuse of discretion and thus
reversed the decision committed by the CA.

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 addition
ground is provided under Article 295 of the Labor Code, i.e., the probationary employee may
also be terminated for failure to qualify as a regular employee in accordance with the
reasonable standards made known by the employer to the employee at the time of the
engagement.

Thus, services of a probationary employee may be terminated for any of the following:

1. A just cause and authorized cause.

2. When said employee fails to qualify as a regular employee in accordance with the
reasonable standards prescribed by the employer.

Furthermore, 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.”

Employer must comply with two requirements when dealing with a probationary employee:

1. The employer must communicate the regularization standards to the probationary

employee.
2. 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.

However, the exception to the abovementioned is when the job is self-descriptive in nature, for
instance in the case of maids, cooks, drivers, or messengers.

Furthermore, 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 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.

Furthermore, A different procedure is applied when terminating a probationary employee; the

usual two-notice rule does not govern. Section 2, Rule I, Book VI of the Implementing Rules of
the Labor Code states that:

"If the termination is brought about by the 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. 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.

WHETHER OR NOT ALCARAZ’S TERMINATION WAS DONE WITH DUE PROCESS

NO. Although a different procedure is applied when terminating a probationary employee,

Abbott failed to follow their own policy regarding the evaluation of probationary employees.
While it is Abbott’s management prerogative to promulgate its own company rules and even
subsequently amend them, this right equally demands that when it does create its own policies
and thereafter notify its employee of the same, it accords upon itself the obligation to faithfully
implement them.

In this light, while there lies due cause to terminate Alcaraz’s probationary employment for her
failure to meet the standards required for her regularization, and while it must be further
pointed out that Abbott had satisfied its statutory duty to serve a written notice of termination,
the fact that it violated its own company procedure renders the termination of Alcaraz’s
employment procedurally infirm, warranting the payment of nominal damages. 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.

As provided in Agabon v. NLRC, 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. Thus, in
Agabon, the employer was ordered to pay the employee the nominal damages in the amount of
P30,000.

DECISION

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.