9. Abbot Laboratories vs.

Alcaraz 701 SCRA 682

DOCTRINE:
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.

FACTS:
Respondent Alcaraz submitted her application as a Regulatory Affairs Manager to Petitioner Abbott.
Abbott formally offered Alcaraz the position which was 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.

Alcaraz accepted the offer and received an email from Abbott’s Recruitment Officer, confirming the same.
Attached to the email were Abbott’s organizational chart and a job description of Alcaraz’s work. Alcaraz
signed an employment contract which stated, among others, 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.

During Alcaraz’s preemployment orientation, petitioner Almazar, Hospira’s Country Transition Manager,
briefed her on her duties and responsibilities as Regulatory Affairs Manager.

Petitioner Misa, Abbott’s Human Resources (HR) Director, sent Alcaraz an email 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 Modules which she had to apply in line with her task of evaluating the Hospira ALSU
staff.

The 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. 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.

While working, Alcaraz noticed that some of the staff had disciplinary problems. Thus, she would
reprimand them for their unprofessional behavior. However, Alcaraz’s method of management was
considered by her immediate supervisor Walsh to be "too strict." Alcaraz approached Misa to discuss
these concerns and was told to "lie low" and let Walsh handle the matter.

Alcaraz had a meeting with petitioner Terrible (Terrible), Abbott’s former HR Director, to discuss certain
issues regarding staff performance standards. While in the meeting, Alcaraz accidentally saw a printed
copy of an email sent by Walsh to some staff members which essentially contained queries regarding the
Alcaraz’s job performance. She asked if Walsh’s action was the normal process of evaluation. Terrible
said that it was not.

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. They requested Alcaraz to
tender her resignation otherwise, they would be forced to terminate her services. They following day,
Alcaraz told her administrative assistant,, that she would be on leave for that day. However, the assistant
to her that Walsh and Terrible already announced to the whole Hospira ALSU staff that Alcaraz already
resigned due to health reasons.

Walsh, Almazar, and Bernardo personally handed to Alcaraz a letter stating that her services had been
terminated. 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 received another copy of the said termination letter via registered mail. 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. 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 on. She said the individual petitioners maliciously connived to illegally dismiss her. 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.

Labor Arbiter Ruling - the termination of her probationary employment was justified
NLRC Ruling - reversed and set aside LA ruling; 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.
CA Ruling - Upheld NLRC decision

ISSUE: Whether or not the individual petitioners herein are liable. – NO.

RULING:
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.

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.

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.