PEPSI COLA BOTTLING CO., ANTHONY SIAN AND VIRGILIO CASTILLO v. NLRC et al.

|
G.R. 101900 | June 23, 1992

Gutierrez, Jr., J.:

DOCTRINE: Pepsi-Cola Distributors of the Philippines may have ceased business operations and Pepsi-
Cola Products Philippines Inc. may be a new company but it does not necessarily follow that no one may
now be held liable for illegal acts committed by the earlier firm. The complaint was filed when PCD was
still in existence. Pepsi-Cola never stopped doing business in the Philippines. The same soft drinks products
sold in 1988 when the complaint was initiated continue to be sold now. The sale of products, purchases of
materials, payment of obligations, and other business acts did not stop at the time PCD bowed out and
PCPPI came into being. There is no evidence presented showing that PCPPI, as the new entity or purchasing
company is free from any liabilities incurred by the former corporation.

FACTS:
a. Private respondent, Oscar Encabo, is a licensed mechanical and electrical engineer who was
employed by Pepsi Cola Bottling Co. as a maintenance manager of its beverage plant. Sometime
in Jan. 1988, the plant soaker machine needed rehabilitation. A contractor, PREMACOR, offered
to rehabilitate said machine and submitted a quotation. The offer was accepted by petitioner
corporation. Rehabilitation work on the soaker machine was commenced by March 1988 by a crew
from PREMACOR, but supervised by Doromal (maintenance manager of petitioner corporation).
PREMACOR, however, failed to make the soaker machine fully operational.

b. Castillo then asked Encabo to take over the work. Assisted by men directly under him, Encabo did
so and in three weeks’ time, the soaker machine became operational again. The Personnel Manager
of petitioner corporation later informed Encabo that his position may be sacrificed because of the
delay in the rehabilitation of the soaker machine. Disappointed, private respondent went on leave.
About a week after, Encabo had a talk with the personnel manager and was told by the latter to
resign and offered the amount of P 12,000 if he did. Encabo rejected the offer. His leave was
extended by the personnel manager. Susbequently, a letter of termination was sent to Encabo
through the security guard of the company.

c. Private respondent filed a complaint for illegal dismissal and unfair labor practice against
petitioners before the NLRC. LA ruled in favor of Encabo. NLRC dismissed the appeal filed before
it by petitioners. Meanwhile, Pepsi Cola Products Philippines, Inc. (PCCPI) filed a Manifestation
with the NLRC stating that it received a Writ of Execution addressed to Pepsi Cola Bottling
Co.(PBC) and ordering Pepsi Cola Distributors (PCD) to reinstate Encabo. PCCPI stated that it
was returning the writ unsatisfied since it is a corporation separate and distinct from PBC or
PCD, making it an inappropriate party to which the writ of execution should be served. In the
MR filed before the NLRC, petitioners alleged that reinstatement is no longer possible since
petitioner corp (PBC) closed down its business and the new franchise holder (PCCPI) is a new
entity. NLRC – MR denied and the petitioner company and its successor-in-interest were held liable
for reinstatement of Encabo.

ISSUE:
W/N there is illegal dismissal? – YES
W/N PCCPI, successor-in-interest of PCB, may be held liable for the acts of PCB? - YES
HELD:
Petitioners allege that they lost confidence in Encabo’s work proficiency as maintenance manager,
since the latter failed to undertake preventive measures to avoid breakdowns and line stoppages in the
bottling operations. He also failed to supervise the work of an outside contractor who rehabilitated the
Soaker Machine. The financial losses suffered by petitioner corporation are allegedly attributable to the
negligence of Encabo’s performance of his duties and responsibilities as maintenance manager. SC agrees
with the LA in not finding the basis of loss of confidence, considering the evidence presented by both
parties. Regarding the allegation that Encabo did not look closely into the repair of Soaker Machine, the
letter of the contractor would show that the contractor had complete and absolute control over the work
being done. Any outside assistance, other than from the contractor’s own people, would be superfluous, if
not unneccesary. Even so, Encabo made suggestions and comments on the work being done while attending
also to keeping in good running condition the other machines of the plant. His offered suggestions were,
however, brushed aside by the contractor who was supposed to be knowledgeable on those matters and
knew better than complainant. The records would also show that the machine did not work even after the
contractor was supposed to be through with the work. It became operational only after Castillo
acknowledged the contractor’s failure and ultimately requested complainant to take over. Respondents,
Sian and Castillo, feeling that they had probably been remiss in their duties, and blundered costing the
company so much money for a job which could have been well performed by complainant and his people,
must now find a scapegoat for that failure. There is no sufficient basis for petitioner to justify Encabo’s
dismissal on the ground of loss of trust and confidence, it appearing that the dismissal of Encabo was merely
an after-though to cover up management’s embrassment. Encabo was by-passed and ignored in the task of
rehabilitating the soaker machine and is now being punished for the mistake of management and the failure
of its hired contractor and favored supervisor. There is no evidence to show that Encabo was remiss in his
duties. More than that, there is also no showing that the requirements of due process were adequately met
by petitioners. Petitioners failed to furnish Encabo with the required two notices which could have apprised
him of the intention of his employer to dismiss him.

RELEVANT PORTION:
PCCPI claims that NLRC committed GAD in holding it liable for the reinstatement of Encabo
considering that PCCPI is an entirely separate and distinct entity from PCD. It was alleged that PCD had
already ceased operations and PCCPI, a company separate and distinct from PCD, acquired the franchise
to sell Pepsi-Cola products. PCD may have ceased business operations and PCCPI may be a new company
but it does not necessarily follow that no one may be held liable for the illegal acts committed by the earlier
firm. The complaint was filed when PCD was still in existence and Pepsi-Cola never stopped doing business
in the Philippines. The same softdrinks sold in 1988 when the complaint was initiated continues to be sold
now. The sale of products, purchases of materials, payment of obligation and other business acts did not
stop at the time PCD bowed out and PCCPI came into being. There is no evidence presented showing that
PCCPI, as the new entity is free from any liabilities incurred by the former corporation. In fact, in the surety
bond put up by petitioners as appeal bond, both PCD and PCCPI bound themselves to answer the monetary
awards of Encabo in case of an adverse decision. This clearly implies that PCCPI bound itself to answer
for the liability of PCD to its employees, as a result of the transfer of the franchise.

WHEREFORE, the decision and the resolution of the NLRC, dated April 15, 1991 and August 14, 1991
respectively are MODIFIED. Backwages limited to three (3) years are hereby awarded and in lieu of
reinstatement, the private respondent, Oscar T. Encabo is GRANTED separation pay equivalent to one (1)
month for every year of service plus attorney's fees in the amount of P10,000.00 with costs against the
petitioners. The writ of execution dated February 18, 1991 and the alias writ of execution dated November
8, 1991 are hereby NULLIFIED and SET ASIDE. The temporary restraining order issued on November 25,
1991 is made permanent. This judgment is immediately executory.