Santos vs. Court of Appeals

A certification against forum shopping must be executed personally by the petitioner when the petitioner is a natural person; execution by counsel is not substantial compliance absent a showing of reasonable cause for the failure to personally sign. The rule admits of an exception only where the petitioner is a juridical person that can act solely through natural persons. Additionally, the one-month notice to the worker and the DOLE required by Art. 283 of the Labor Code is rendered unnecessary by the worker's consent to his termination, and factual findings of the NLRC, when coinciding with those of the Labor Arbiter and supported by substantial evidence, are accorded respect and finality.

Private respondent Pepsi Cola Products Phils., Inc. (PEPSI) is a domestic corporation engaged in the production, distribution and sale of beverages. Petitioners Ismael V. Santos and Alfredo G. Arce were employed by PEPSI as Complimentary Distribution Specialists (CDS) with monthly salaries of P7,500.00 and P10,000.00, respectively, while petitioner Hilario M. Pastrana was employed as Route Manager with a monthly salary of P7,500.00. The dispute is governed by Art. 283 of the Labor Code, which permits an employer to terminate employment due to redundancy upon serving written notice on the worker and the Ministry (now Department) of Labor and Employment at least one month before the intended date of termination.

Private respondent Pepsi Cola Products Phils., Inc. (PEPSI) is a domestic corporation engaged in the production, distribution and sale of beverages. At the time of their termination, petitioners Ismael V. Santos and Alfredo G. Arce were employed by PEPSI as Complimentary Distribution Specialists (CDS) with monthly salaries of P7,500.00 and P10,000.00, respectively, while petitioner Hilario M. Pastrana was employed as Route Manager with a monthly salary of P7,500.00.

In a letter dated 26 December 1994, PEPSI informed its employees that, due to the poor performance of its Metro Manila Sales Operations, it would restructure and streamline certain physical and sales distribution systems to improve its warehousing efficiency. Certain positions, including those of petitioners, were declared redundant and abolished, and employees holding the affected positions were terminated. On 15 January 1995 petitioners left their respective positions, accepted their separation pays, and executed the corresponding releases and quitclaims. Before the end of that year, however, petitioners learned that PEPSI had created new positions called Account Development Managers (ADM) with substantially the same duties and responsibilities as the CDS.

Aggrieved, on 15 April 1996 petitioners filed a complaint with the Labor Arbiter for illegal dismissal with a prayer for reinstatement, back wages, moral and exemplary damages and attorney's fees. In their complaint, petitioners alleged that the creation of the new positions belied PEPSI's claim of redundancy; that the qualifications for both the CDS and ADM positions were similar; and that the employees hired for the latter positions were even less qualified than they were. They likewise claimed that while they were notified of their termination, PEPSI had not shown that the Department of Labor and Employment (DOLE) was also notified as mandated by Art. 283 of the Labor Code.

PEPSI, for its part, maintained that termination due to redundancy was a management prerogative the wisdom and soundness of which were beyond the discretionary review of the courts, and that it had the right to manage its affairs and decide which position was no longer needed for its operations. It further maintained that the redundancy program was made in good faith and was not implemented to purposely force certain employees out of their employment, and claimed that a close perusal of the job descriptions of both the CDS and ADM positions would show that the two were very different in terms of the nature of their functions, areas of concern, responsibilities and qualifications.

The Labor Arbiter dismissed the complaint for lack of merit and ruled that the one-month written notice prior to termination required by Art. 283 was complied with. On appeal, the NLRC affirmed the ruling, but found that the Establishment Termination Report was submitted to the DOLE only on 5 April 1995, or two months after the termination had already taken place, thereby effectively reversing the Labor Arbiter's finding that the required one-month notice had been complied with; it nonetheless dismissed the appeal, citing International Hardware, Inc. vs. NLRC. The NLRC elaborated on the differences between the two positions, finding that CDS report to a CD Manager whereas ADMs do not, that CDS are field personnel who drive assigned vehicles and deliver stocks to dealers while ADMs are not required to drive trucks or physically deliver stocks to wholesale dealers, and that the main thrust of the ADM job is to ensure that softdrink products are marketed in accordance with "Pepsi-Way standards." Petitioners then filed a special civil action for certiorari with the Court of Appeals, which dismissed the petition outright for the procedural defects already noted.

• Verification and Certification Against Forum Shopping: Petitioners argued that while it may be true that they are in the best position to know whether they have commenced an action or not, this information may be divulged to their attorney and there is nothing anomalous or bizarre about such disclosure; they further maintained that they executed a Special Power of Attorney specifically to authorize their counsel to execute the certification on their behalf.
• Material Dates: Petitioners countered that in the body of the petition for certiorari filed in the Court of Appeals, it was explicitly stated that the NLRC Resolution dated 11 May 1999 was received by petitioners through counsel on 30 July 1999, a contention they reiterated in their Reply.
• Administration of Justice: Petitioners argued that the outright dismissal of the petition would defeat the administration of justice, there being very important issues such as their livelihood and the well-being and future of their families.
• Grave Abuse of Discretion: Petitioners imputed grave abuse of discretion on the part of the NLRC for holding that the CDS and ADM positions were dissimilar, and for concluding that the redundancy program of PEPSI was undertaken in good faith and that International Hardware vs. NLRC was applicable.
• Business Judgment: Petitioners argued that it is more logical to implement new procedures in physical distribution, sales quotas, and other policies aimed at improving the performance of the division rather than to reduce the number of employees and create new positions.
• Voluntariness of Consent: Petitioners assailed the voluntariness of their consent by stating that had they known of PEPSI's bad faith they would not have agreed to their termination, nor would they have signed the corresponding releases and quitclaims.
• Fair and Reasonable Criteria: Petitioners claimed that their termination was illegal since PEPSI did not employ fair and reasonable criteria in implementing its redundancy program.

• Management Prerogative: PEPSI maintained that termination due to redundancy was a management prerogative the wisdom and soundness of which were beyond the discretionary review of the courts, and that it had the right to manage its affairs and decide which position was no longer needed for its operations.
• Good Faith: PEPSI maintained that the redundancy program was made in good faith and was not implemented to purposely force certain employees out of their employment.
• Dissimilarity of Positions: PEPSI claimed that a close perusal of the job descriptions of both the CDS and ADM positions would show that the two were very different in terms of the nature of their functions, areas of concern, responsibilities and qualifications.
• Prior Compliance by Petitioners: PEPSI, in its Comment, stated that it was petitioners themselves who executed the verification and certification requirements in all their previous pleadings.

• Certification Against Forum Shopping: Whether the certification against forum shopping executed by petitioners' counsel, pursuant to a Special Power of Attorney, complied with Sec. 3, Rule 46, in relation to Sec. 1, Rule 65, of the 1997 Rules of Civil Procedure.
• Material Dates: Whether the petition for certiorari failed to comply with the requirement of specifying the material dates from which the timeliness of the petition may be determined.
• Redundancy and Management Prerogative: Whether the NLRC committed grave abuse of discretion in holding that the CDS and ADM positions were dissimilar and in concluding that PEPSI's redundancy program was undertaken in good faith.
• Notice to the DOLE: Whether the one-month notice to the worker and the DOLE required by Art. 283 of the Labor Code was necessary notwithstanding the worker's consent to his termination.
• Fair and Reasonable Criteria: Whether the issue of whether PEPSI employed fair and reasonable criteria in implementing its redundancy program may be raised for the first time on appeal.

• Certification Against Forum Shopping: No. The certification must be made by petitioner himself and not by counsel, since it is petitioner who is in the best position to know whether he has previously commenced any similar action involving the same issues in any other tribunal or agency.
• Material Dates: No. The petition failed to indicate the material dates showing its timeliness, specifically the date of receipt of the impugned NLRC Decision and the date of filing of the motion for reconsideration.
• Redundancy and Management Prerogative: No grave abuse of discretion. The findings of the NLRC are supported by substantial evidence, and the soundness of PEPSI's business judgment is beyond discretionary review absent a showing of violation of law or arbitrary and malicious action.
• Notice to the DOLE: No. The one-month notice to the worker and the DOLE is rendered unnecessary by the consent of the worker himself, the worker thereby acknowledging the existence of a valid cause for termination.
• Fair and Reasonable Criteria: No. The issue was not raised before the Labor Arbiter nor with the NLRC, and it would be offensive to the basic rules of fair play and justice to allow a party to raise a question which has not been passed upon by both administrative tribunals.

• Certification Against Forum Shopping: Section 3, Rule 46 of the 1997 Rules of Civil Procedure explicitly requires the petitioner to submit, together with the petition, a sworn certification that he has not theretofore commenced any other action involving the same issues in the Supreme Court, the Court of Appeals or different divisions thereof, or any other tribunal or agency; if there is such other action or proceeding, he must state the status of the same; and if he should thereafter learn that a similar action or proceeding has been filed or is pending, he undertakes to promptly inform the aforesaid courts and other tribunal or agency thereof within five days therefrom. The provision is clear that the certification must be made by petitioner himself and not by counsel, since it is petitioner who is in the best position to know whether he has previously commenced any similar action. While the Court has held that there is substantial compliance as regards verification if the same is executed by an attorney, the same does not apply to the certification against forum shopping. The Court distinguished BA Savings Bank vs. Sia, where a certification signed by an authorized lawyer with personal knowledge of the facts was upheld, on the ground that the complainant there was a corporation, a juridical person that can only act through natural persons; physical actions such as signing and delivery of documents may be performed on behalf of the corporate entity only by specifically authorized individuals. In the instant case, petitioners are all natural persons and there is no showing of any reasonable cause to justify their failure to personally sign the certification. That PEPSI itself noted that petitioners had personally executed the verification and certification in all their previous pleadings only weakened their position, since at the outset no justifiable reason yet existed for counsel to substitute for petitioners in signing the certification; in the case of natural persons, the policy of executing a Special Power of Attorney to meet any contingency serves no legal purpose, and convenience cannot be made the basis for a circumvention of the Rules. Nor would outright dismissal defeat the administration of justice, since every petition filed with a judicial tribunal is sure to affect, even tangentially, either the well-being and future of the petitioner himself or that of his family, and this does not warrant disregarding the Rules.

• Material Dates: There are three essential dates that must be stated in a petition for certiorari brought under Rule 65: first, the date when notice of the judgment or final order or Resolution was received; second, when a motion for new trial or reconsideration was filed; and third, when notice of the denial thereof was received. Petitioners failed to show the first and second dates, namely, the date of receipt of the impugned NLRC Decision as well as the date of filing of their motion for reconsideration. The requirement of setting forth the three dates is for the purpose of determining the timeliness of the petition, which is required to be filed not later than sixty days from notice of the judgment, order or Resolution sought to be assailed. That the petition for certiorari was filed forty-one days from receipt of the denial of the motion for reconsideration is hardly relevant; the Court of Appeals was not in any position to determine when this period commenced to run and whether the motion for reconsideration itself was filed on time since the material dates were not stated, and it should not be assumed that in no event would the motion be filed later than fifteen days. Technical rules of procedure are not designed to frustrate the ends of justice but are provided to effect the proper and orderly disposition of cases and thus effectively prevent the clogging of court dockets; utter disregard of the Rules cannot justly be rationalized by harking on the policy of liberal construction.

• Redundancy and Management Prerogative: Even if the procedural lapses were dispensed with, the petition must still fail on the merits. The question of whether the duties and responsibilities of the CDS and ADM positions are similar is a question properly belonging to both the Labor Arbiter and the NLRC, and the Court is not a trier of facts. The NLRC merely affirmed the finding of the Labor Arbiter on this point and further elaborated on the differences between the two positions. Factual findings of the NLRC, particularly when they coincide with those of the Labor Arbiter, are accorded respect, even finality, and will not be disturbed for as long as such findings are supported by substantial evidence, defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. The job descriptions submitted by PEPSI are replete with information and are an adequate basis to compare and contrast the two positions. The two positions being different, it follows that the redundancy program instituted by PEPSI was undertaken in good faith; petitioners have not established that the title Account Development Manager was created in order to maliciously terminate their employment, nor have they shown that PEPSI had any ill motive against them. The restructuring and streamlining of PEPSI's distribution and sales systems were an honest effort to make the company more efficient. Redundancy exists when the service capability of the work force is in excess of what is reasonably needed to meet the demands of the enterprise; a redundant position is one rendered superfluous by a number of factors, such as overhiring of workers, decreased volume of business, dropping of a particular product line previously manufactured by the company, or phasing out of a service previously undertaken by the business. Based on the fact that PEPSI's Metro Manila Sales Operations were not meeting their sales targets, and on the fact that new positions were subsequently created, it is evident that PEPSI wanted to restructure its organization to include more complex positions that would either absorb or render completely unnecessary the positions it had previously declared redundant. While management may not, under the guise of invoking its prerogative, ease out employees and defeat their constitutional right to security of tenure, the same must be respected if clearly undertaken in good faith and if no arbitrary or malicious action is shown. As in Wiltshire File Co., Inc. vs. NLRC, the characterization of an employee's services as no longer necessary or sustainable, and therefore properly terminable, is an exercise of business judgment on the part of the employer, the wisdom or soundness of which is not subject to discretionary review so long as no violation of law or arbitrary and malicious action is indicated. No such violation or arbitrary action was established by petitioners, and the subject matter being well beyond the discretionary review allowed by law, the Court must steer clear of the realm properly belonging to business experts.

• Notice to the DOLE: The Court agreed with the NLRC in its application of International Hardware vs. NLRC that the one-month notice prior to termination given to the worker and the DOLE is rendered unnecessary by the consent of the worker himself. Petitioners assailed the voluntariness of their consent by stating that had they known of PEPSI's bad faith they would not have agreed to their termination, nor would they have signed the corresponding releases and quitclaims; however, having established PEPSI's good faith in undertaking the assailed redundancy program, there was no need to rule on this contention.

• Fair and Reasonable Criteria: Petitioners' contention that their termination was illegal because PEPSI did not employ fair and reasonable criteria in implementing its redundancy program was not raised before the Labor Arbiter nor with the NLRC. As it would be offensive to the basic rules of fair play and justice to allow a party to raise a question which has not been passed upon by both administrative tribunals, it was too late to entertain the issue.

• Certification Against Forum Shopping by Natural Persons — The certification against forum shopping required by Sec. 3, Rule 46 of the 1997 Rules of Civil Procedure must be executed personally by the petitioner, since it is the petitioner who is in the best position to know whether he has previously commenced any similar action involving the same issues in any other tribunal or agency. Execution by counsel is not substantial compliance where the petitioner is a natural person, absent a showing of reasonable cause for the failure to personally sign. The exception recognized in BA Savings Bank vs. Sia applies only where the petitioner is a juridical person that can act solely through natural persons; convenience cannot justify circumvention of the Rules.

• Substantial Compliance with Verification — Verification is substantially complied with when executed by an attorney, it being presumed that the facts alleged by him are true to his knowledge and belief. This rule, however, does not extend to the separate requirement of a certification against forum shopping.

• Material Dates in a Petition for Certiorari — A petition for certiorari under Rule 65 must state three essential dates: (a) the date when notice of the judgment, final order or Resolution was received; (b) the date when a motion for new trial or reconsideration was filed; and (c) the date when notice of the denial thereof was received. These dates are required to determine the timeliness of the petition, which must be filed not later than sixty days from notice of the judgment, order or Resolution sought to be assailed. Failure to state them deprives the appellate court of any basis to assess timeliness.

• Redundancy — Redundancy exists when the service capability of the work force is in excess of what is reasonably needed to meet the demands of the enterprise. A redundant position is one rendered superfluous by a number of factors, such as overhiring of workers, decreased volume of business, dropping of a particular product line previously manufactured by the company, or phasing out of a service previously undertaken by the business.

• Management Prerogative and Business Judgment — While management may not, under the guise of invoking its prerogative, ease out employees and defeat their constitutional right to security of tenure, the exercise of business judgment must be respected if clearly undertaken in good faith and if no arbitrary or malicious action is shown. The characterization of an employee's services as no longer necessary or sustainable, and therefore properly terminable, is an exercise of business judgment not subject to discretionary review on the part of the Labor Arbiter or the NLRC so long as no violation of law or arbitrary and malicious action is indicated.

• Notice to the DOLE Under Art. 283 — The one-month notice to the worker and the DOLE required by Art. 283 of the Labor Code prior to termination is rendered unnecessary by the consent of the worker himself, the worker thereby acknowledging the existence of a valid cause for termination of his employment.

• Finality of NLRC Factual Findings — Factual findings of the NLRC, particularly when they coincide with those of the Labor Arbiter, are accorded respect, even finality, and will not be disturbed for as long as such findings are supported by substantial evidence, defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.

• Raising New Issues on Appeal — It is offensive to the basic rules of fair play and justice to allow a party to raise a question which has not been passed upon by both administrative tribunals; an issue not raised before the Labor Arbiter nor with the NLRC cannot be entertained for the first time on appeal.

• "It is clear from the above-quoted provision that the certification must be made by petitioner himself and not by counsel since it is petitioner who is in the best position to know whether he has previously commenced any similar action involving the same issues in any other tribunal or agency." — This passage states the ratio decidendi on the procedural issue, establishing the general rule that the certification against forum shopping is personal to the petitioner and cannot be delegated to counsel.

• "However, BA Savings Bank must be distinguished from the case at bar because in the former, the complainant was a corporation, and hence, a juridical person. Therefore, that case made an exception to the general rule that the certification must be made by the petitioner himself since a corporation can only act through natural persons." — This passage delimits the exception to the personal-execution rule, confining it to juridical persons and thereby clarifying that natural-person petitioners cannot invoke it.

• "Redundancy exists when the service capability of the work force is in excess of what is reasonably needed to meet the demands of the enterprise." — This is the canonical formulation of redundancy applied by the Court in upholding PEPSI's restructuring, and it is frequently cited in subsequent labor jurisprudence.

• "While it is true that management may not, under the guise of invoking its prerogative, ease out employees and defeat their constitutional right to security of tenure, the same must be respected if clearly undertaken in good faith and if no arbitrary or malicious action is shown." — This passage articulates the balance between management prerogative and the constitutional right to security of tenure, and supplies the standard against which the redundancy program was sustained.

• International Hardware, Inc. vs. NLRC, G.R. No. 80770, 10 August 1989, 176 SCRA 256 — Cited and applied; held that if an employee consented to his retrenchment or voluntarily applied for retrenchment due to the installation of labor-saving devices, redundancy, closure or cessation of operation, or to prevent financial losses, the required previous notice to the DOLE is not necessary, the employee thereby acknowledging the existence of a valid cause for termination.
• BA Savings Bank vs. Sia, G.R. No. 131214, 27 January 2000 — Distinguished; recognized an exception permitting an authorized lawyer to sign the certification against forum shopping where the complainant is a corporation, a juridical person that can act only through natural persons.
• Wiltshire File Co., Inc. vs. NLRC, G.R. No. 82249, 7 February 1991, 193 SCRA 665 — Followed; held that the characterization of an employee's services as no longer necessary or sustainable, and therefore properly terminable, is an exercise of business judgment not subject to discretionary review so long as no violation of law or arbitrary and malicious action is indicated.
• Valentin vs. Court of Appeals, G.R. No. 127393, 4 December 1998, 209 SCRA 708 — Cited; held that the attestation in the certification on non-forum shopping requires personal knowledge by the party who executed the same, and that petitioners must show reasonable cause for failure to personally sign the certification and must convince the Court that outright dismissal would defeat the administration of justice.
• Far Eastern Shipping Company vs. Court of Appeals and Philippine Ports Authority, G.R. No. 130068, 1 October 1998, 297 SCRA 30 — Cited in support of the rule that the certification against forum shopping must be made by petitioner himself.
• Guerra Enterprises Company, Inc. vs. CFI of Lanao del Sur, No. L-28310, 17 April 1970, 32 SCRA 314 — Cited; source of the rule that verification is substantially complied with when executed by an attorney.
• Asian Alcohol Corporation vs. NLRC, G.R. No. 131108, 25 March 1999, 305 SCRA 416 — Cited for the definition of redundancy as existing when the service capability of the work force is in excess of what is reasonably needed to meet the demands of the enterprise.
• St. Martin Funeral Homes vs. NLRC, G.R. No. 130866, 16 September 1998, 295 SCRA 494 — Cited as the basis for filing the special civil action for certiorari with the Court of Appeals.
• Labor Congress of the Philippines vs. NLRC, G.R. No. 116839, 13 July 1998, 292 SCRA 469 — Cited for the rule that a question not passed upon by both administrative tribunals cannot be raised for the first time on appeal.
• Government Service Insurance System vs. Court of Appeals, G.R. No. 128523, 25 September 1998, 296 SCRA 514 — Cited for the definition of substantial evidence as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.

• Art. 283, Labor Code — Closure of Establishment and Reduction of Personnel. The employer may terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses, or the closing or cessation of operation of the establishment or undertaking, unless the closing is for the purpose of circumventing the provisions of the title, by serving a written notice on the worker and the Ministry of Labor and Employment at least one month before the intended date thereof. The Court held that the one-month notice to the worker and the DOLE is rendered unnecessary by the worker's consent to his termination.
• Sec. 3, Rule 46, 1997 Rules of Civil Procedure, in relation to Sec. 1, Rule 65 — Requires the petitioner to submit, together with the petition, a sworn certification that he has not theretofore commenced any other action involving the same issues in the Supreme Court, the Court of Appeals or different divisions thereof, or any other tribunal or agency; if there is such other action or proceeding, he must state the status of the same; and if he should thereafter learn that a similar action or proceeding has been filed or is pending, he undertakes to promptly inform the aforesaid courts and other tribunal or agency thereof within five days therefrom. The Court applied this provision in holding that the certification must be executed by the petitioner himself and not by counsel.
• Sec. 4, Rule 65, 1997 Rules of Civil Procedure — The petition for certiorari is required to be filed not later than sixty days from notice of the judgment, order or Resolution sought to be assailed. The Court cited this provision in explaining why the three material dates must be stated in the petition to determine its timeliness.

Mendoza, Buena, and De Leon, Jr., JJ., concurred in the decision.