G.R. No. 248108 - Pepsi-Cola Products Philippines, Inc. vs. Pacana

Case Summary (G.R. No. 248108)

Factual Background: Pacana’s Employment and the Alleged Irregularities

Pacana claimed that he began working as a sales trainee in the CDO plant on July 16, 2013 and was initially assigned to assist another sales trainee, John Welrey Tuquib (Tuquib). Pacana narrated that Tuquib handled the account of Mega Integrated Agro Livestock Farm Corp (Mega Farm). In September 2013, Tuquib went on absence without leave, and then Sales Manager Ariel Maganto directed Pacana to assume and manage the accounts handled by Tuquib, though, according to Pacana, no proper turnover of accountabilities was made.

On February 16, 2014, Pacana became a KAM, responsible for booking petitioner’s products and collecting sales derived from his bookings, under the supervision of Sales Manager Neil G. Ribagorda (Ribagorda), who replaced Maganto after Maganto resigned. Pacana alleged that Ribagorda showed favoritism affecting his employment conditions.

Pacana also narrated incidents occurring in June 2015, involving a company vehicle that was allegedly used by an officer for personal purposes and only later became “garaged” at the CDO plant. Pacana claimed that management threatened him with dismissal after he reported the accident through counsel, prompting petitioner’s personnel to confront him in the CDO plant.

On August 27, 2015, Pacana was informed he was placed under preventive suspension. During this period, petitioner’s managers allegedly took away and hauled the documents on Pacana’s table without inventory. The following day, August 28, 2015, Pacana attempted to perform his usual duties by going to Mega Farm to collect payments from prior bookings totaling P204,522.00. He asserted that a standard procedure required a Charge Invoice Transmittal (CIT) to be prepared by the Settlement and Credit Officer and transmitted to the Sales Manager, but that his CIT copy had been taken from his table. He executed an Affidavit of Loss to request another copy, but he claimed the request was denied, leading him to believe management intended to dismiss him through “incriminatory machinations.”

The Notice of Administrative Investigation and Preventive Suspension

On August 29, 2015, Pacana received a memorandum dated August 28, 2015 jointly signed by Alova and Ribagorda. The memorandum, styled as a Notice of Specific Charge, also served as a Written Explanation and Notice of Administrative Investigation and Notice of Preventive Suspension, collectively referred to in the record as the NTE.

The NTE imputed several irregularities to Pacana. For a set of transactions with invoice dates June 30, July 13, and July 18, 2015 totaling P204,522.00, Mega Farm allegedly denied the delivery and the signatures appearing on the invoices. The NTE stated that inquiry with third-party delivery personnel revealed that they were not the ones who obtained the signatures from outlet representatives, and it alleged that Pacana obtained the invoices from them and returned them with outlet representatives’ signatures.

For another set of transactions involving July 6, 2015 and invoices totaling P118,561.32 and P143,284.86 (among others), the NTE alleged that Mega Farm had already paid these transactions but that, upon review, Pacana allegedly attached different check vouchers corresponding to different invoices. The NTE further asserted additional unsettled accounts based on settlement and credit records, which Mega Farm allegedly also indicated were already paid, yet different check voucher attachments appeared in the records submitted by Pacana.

Pacana’s Response, Dismissal, and Claim of Constructive Dismissal

Pacana did not submit an answer to the NTE. He contended that he was already placed under preventive suspension from August 28, 2015 to September 26, 2015, and that he was barred from entry and prevented from requesting documents to prove his innocence. He maintained that the administrative hearing conducted on September 4, 2015 was a “mockery” and violated due process.

Pacana also claimed that on September 25, 2015, his preventive suspension was extended to an indefinite date until the administrative case was terminated. He stated that he was dismissed from service in a memorandum dated October 19, 2015.

In his pleadings, Pacana argued that the indefinite extension of preventive suspension amounted to constructive dismissal. He also argued that his continued employment posed no serious and imminent threat to petitioner or co-workers.

Concerning the substantive charges, Pacana denied the irregularities. He argued that the delivery of products and settlement depended on third-party delivery arrangements under petitioner’s contracts, and that he could not be held liable for the non-delivery totaling P204,522.00 since the charge and delivery responsibilities involved Third-Party Delivery personnel and procedures beyond his control. For other transactions, Pacana asserted that the application of payments followed a First In-First Out (FIFO) approach due to the absence of proper turnover from Tuquib, and that management knew and allowed this practice. Thus, he claimed he applied FIFO in good faith and petitioner was not prejudiced.

Petitioner’s Position: Loss of Trust and Confidence, Fraud, and Due Process

Petitioner countered that Pacana’s preventive suspension was justified because it believed his continued employment posed a serious and imminent threat to its property. Petitioner further asserted that during the September 4, 2015 administrative investigation, Pacana admitted falsifying check vouchers, invoices, and official receipts to conceal fraudulent acts, and that while his preventive suspension was extended, he was entitled to wages during the extension period based on petitioner’s memorandum dated September 25, 2015.

Petitioner contended that Pacana had accountabilities totaling P466,368.18 for uncollected amounts from Mega Farm, with P261,846.18 already paid, leaving P204,522.00 as fictitious sales transactions allegedly authored by Pacana. Petitioner argued that booking orders under Mega Farm’s name with deliveries to different outlets, and misapplying Mega Farm’s payments to other invoices, violated company rules against fraud and dishonesty.

Petitioner also argued that it complied with the twin requirements of notice and hearing: the memorandum dated August 28, 2015 apprised Pacana of the charges, and the notice of decision dated October 19, 2015 informed him of his dismissal. Petitioner asserted that Pacana was given ample opportunity to be heard during the administrative proceeding.

Labor Arbiter’s Ruling: Illegal Dismissal, Excessive Penalty, and Lack of Due Process

In its decision dated May 16, 2016, the Labor Arbiter (LA) ruled in Pacana’s favor. The LA held that the dismissal lacked just cause and observance of due process. It also found the penalty of dismissal disproportionate.

The LA reasoned that Pacana’s alleged acts were not shown to have been intentionally committed with a wrongful or perverse attitude that would qualify as serious misconduct, willful disobedience, or breach of trust. The LA emphasized that the charges were unsupported by audit, incident, or confirmatory reports, or sworn statements from Mega Farm, and noted the unexplained absence of such reports from petitioner.

The LA agreed with Pacana that FIFO was allowed in the company and that Pacana could not be faulted since Tuquib’s AWOL and the alleged failure to properly turn over accounts and documents left Pacana to deal with the settlement situation. The LA also found ambiguity regarding the total uncollected amount from Mega Farm, pointing to petitioner’s inconsistent position that Pacana had P466,368.18 in outstanding liability, while petitioner also admitted during the hearing that P261,846.18 was already paid, and only the P204,552.00 (as framed in the LA’s recounting) remained tied to fictitious transactions.

Finally, the LA concluded that Pacana was not given ample opportunity to be heard because only one administrative hearing was held despite numerous documents and substantial evidentiary dispute, and considering that Pacana was under preventive suspension extended pending the administrative investigation. For the due process violation, the LA awarded nominal damages of P30,000.00, separation pay in lieu of reinstatement, illegal deductions, and attorney’s fees, while dismissing moral and exemplary damages and the complaint against the individual respondents for lack of merit.

NLRC and CA Disposition: Affirmance with Modification

Petitioner appealed to the NLRC. In a resolution dated October 26, 2016, the NLRC affirmed the LA’s ruling on illegal dismissal but deleted the award for illegal deductions because Pacana allegedly failed to allege and prove entitlement. The NLRC nonetheless held that Pacana, though a position of trust, should not be dismissed because petitioner failed to establish an act justifying loss of trust warranting dismissal.

On further review, the CA in a decision dated August 31, 2018 agreed with the NLRC. The CA found no grave abuse of discretion and held that petitioner’s ground of loss of trust and confidence lacked factual and legal basis. It echoed the view that petitioner could not stand on an exact and correct total uncollected amount and that there was no record showing that petitioner investigated the individual transactions and corresponding amounts to afford Pacana meaningful opportunity to answer the fictitious sales accusations. The CA also reiterated that Pacana was not given adequate opportunity to be heard. The CA denied petitioner’s motion for reconsideration on May 8, 2019, prompting the petition before the Supreme Court.

Issues and the Supreme Court’s Approach to Factual Review

The central issue was whether the CA erred in finding that Pacana was dismissed without just cause and without due process. The Court acknowledged the general limitation of Rule 45 petitions to pure questions of law and noted its recognized exceptions for r

Case Syllabus (G.R. No. 248108)

Pepsi-Cola Products Phils., Inc. filed a Petition for Review on Certiorari assailing the Court of Appeals (CA) Decision dated August 31, 2018 and Resolution dated May 8, 2019 in CA-G.R. SP No. 07889-MIN.
The CA affirmed the National Labor Relations Commission (NLRC) Resolution dated October 26, 2016, which had affirmed the finding of illegal dismissal on the ground of lack of just cause and lack of due process.
The labor dispute began with the filing by Angelo T. Pacana of a Complaint and Amended Complaint against Pepsi-Cola Products Phils., Inc. and named company officers for alleged illegal dismissal, illegal suspension, illegal deductions, and entitlement to backwages, separation pay, actual, moral, and exemplary damages, and attorney’s fees.

Parties and Procedural Posture

Pacana sued Pepsi-Cola Products Phils., Inc. and its officers, claiming he was dismissed without just cause and without due process.
The Labor Arbiter (LA) ruled for Pacana, declaring the dismissal illegal and awarding separation pay, nominal damages, illegal deductions (later deleted by the NLRC), and attorney’s fees.
The NLRC affirmed the LA’s ruling with modification by deleting the award of illegal deductions due to Pacana’s failure to allege and prove entitlement.
The CA dismissed Pepsi-Cola’s challenge, finding no grave abuse of discretion in the NLRC rulings that the dismissal lacked basis in fact and law and that Pacana was not given ample opportunity to be heard.
The CA later denied Pepsi-Cola’s Motion for Reconsideration, prompting the Petition for Review on Certiorari under Rule 45.

Key Factual Allegations

Pacana claimed he began working as a sales trainee in petitioner’s Cagayan de Oro (CDO) plant on July 16, 2013, and later became a Key Accounts Manager (KAM) on February 16, 2014 with a monthly salary of P20,000.00.
Pacana alleged he assisted accounts handled by another trainee, John Welrey Tuquib, whose clients included Mega Integrated Agro Livestock Farm Corp (Mega Farm).
Pacana asserted that in September 2013, Tuquib went AWOL, and Sales Manager Ariel Maganto directed Pacana to assume and take charge of the accounts without proper turnover of accountabilities.
Pacana alleged he was pressured and threatened after a company vehicle connected to an accident was later found at the plant, which he understood allowed him to infer unauthorized personal use by an officer.
Pacana stated that after his counsel sent a letter regarding the accident, petitioner’s management confronted him and threatened dismissal.
On August 27, 2015, Pacana was placed under preventive suspension, and he alleged that management took away records and documents from his table without inventory during the period relevant to the administrative case.
Pacana asserted that on August 28, 2015, he performed usual duties by collecting payments from Mega Farm for bookings totaling P204,522.00 based on specific invoices dated June 30, 2015, July 14, 2015, and July 19, 2015.
Pacana claimed that because his copy of a completed Charge Invoice Transmittal (CIT) was among the documents taken, he executed an Affidavit of Loss and requested another copy, but his request was denied.
Pacana contended the denial and the taking of documents led him to believe management intended to frame him through “incriminatory machinations.”

Notice and Administrative Charges

On August 29, 2015, Pacana received a memorandum dated August 28, 2015 jointly signed by Alova and Ribagorda, labeled as a Notice of Specific Charge/Written Explanation/Notice of Administrative Investigation/Notice of Preventive Suspension (NTE).
The NTE imputed irregularities discovered during a confirmation of Mega Farm outlets, primarily involving:
- alleged non-delivery of products corresponding to three invoices totaling P204,522.00, supported by Mega Farm’s denial of receipt and denial that the outlet representative signed the relevant invoices; and
- alleged unsettled transactions totaling P118,561.32 and P143,284.86, where Mega Farm allegedly showed payment through specific check voucher numbers and official receipts, yet petitioner’s review allegedly revealed different check voucher applications.
Pacana responded that he failed to file a written answer because the preventive suspension lasted from August 28, 2015 to September 26, 2015, during which he alleged he was barred from the company and prevented from securing documents to support his defenses.
Pacana claimed the administrative hearing on September 4, 2015 was a mockery and violated his right to due process.
Pacana alleged that his preventive suspension was later extended indefinitely until termination of the case and that he was ultimately dismissed through a memorandum dated October 19, 2015.

Parties’ Main Contentions

Pacana argued that indefinite extension of preventive suspension amounted to constructive dismissal and that his presence did not pose a serious and imminent threat to life or property of petitioner or co-workers.
Pacana insisted that the alleged ghost deliveries totaling P204,522.00 were attributable to the Third-Party Delivery (TPD) system under a TPD contract, and he argued that demanding turnover would be extortion and unjust enrichment because the amount was never in his possession.
Pacana explained that for other unsettled transactions, he applied an operational practice he described as FIFO, which he claimed was necessitated by the lack of proper turnover after Tuquib’s AWOL.
Pacana asserted that petitioner managers knew of and allowed the practice and that he acted in good faith without prejudice to petitioner.
Petitioner maintained that Pacana was dismissible for loss of trust and confidence, alleging he engaged in fraudulent acts including ghost deliveries, falsification of documents (including check vouchers, invoices, and official receipts), and deceit in applying payments.
Petitioner argued it complied with the twin notice requirements by issuing the NTE to apprise him of charges and later serving a Notice of Decision dated October 19, 2015 informing him of dismissal.
Petitioner relied on Pacana’s admissions during the administrative investigation, including admissions that he used a method he described as FIFO but conceded deviation from proper procedure, and admissions that he falsified documents to conceal misconduct.
Petitioner added that the administrative investigation showed Pacana had standing accountabilities totaling P466,368.18, broken down into P204,522.00 (ghost deliveries) and P261,846.18 (paid amounts not properly applied to Mega Farm invoices).

LA, NLRC, and CA Findings

The LA held that the penalty of dismissal was unjustified because the charges were not supported by audit, incident, co