G.R. No. 205278 , June 11, 2014
Philippine Spring Water Resources Inc. / Danilo Y. Lua, Petitioners, vs. Court of Appeals and Juvenstein B. Mahilum, Respondents.

FACTS

Petitioner Philippine Spring Water Resources, Inc. (PSWRI) hired respondent Juvenstein B. Mahilum as Vice-President for Sales and Marketing. He was designated as the over-all chairman for the company’s Bulacan plant inauguration and Christmas party on December 19, 2004. A few days after his designation, Mahilum called a meeting for committee chairpersons, but it was reset as he met with visitors to discuss sensitive legal issues concerning the company’s water drilling. The next day, Mahilum requested Vice-President for Administration and Finance Vicky Evangelista to take charge of the meeting if he was delayed, as he had an appointment with clients. Evangelista later postponed the meetings. Subsequent meetings were conducted without Mahilum, with Evangelista taking the lead. On the inaugural day, Mahilum was not supervising the program as he was entertaining company visitors, delegating the task to Evangelista. Petitioner Danilo Lua, PSWRI’s President and CEO, became furious because he was not recognized during the program and was not called to deliver his inaugural speech. The emcees were not informed of Lua’s decision to speak, as he had previously declined participation, making his speech appear “optional” in the printed program. The following day, Mahilum was required to explain and was placed under a 30-day preventive suspension. After submitting his explanation and an investigation, his suspension ended, but he was prevented from returning to work. In March 2005, he received a Memorandum dated January 31, 2005, terminating his services effective February 1, 2005. On February 9, 2005, he received ₱43,998.56 and executed a Release, Waiver and Quitclaim. Mahilum filed a complaint for illegal dismissal. The Labor Arbiter dismissed the complaint, upholding the quitclaim. The NLRC reversed the decision, declaring the dismissal illegal and awarding separation pay, backwages, commissions, and damages. The Court of Appeals initially reversed the NLRC, upholding the quitclaim, but upon reconsideration, issued an Amended Decision finding the dismissal illegal and declaring the quitclaim void for lack of consideration.

ISSUE

The primary issue resolved by the Supreme Court pertains to the propriety of the petition for certiorari under Rule 65. The Court also addressed the substantive issues raised by petitioners, including: (1) whether Mahilum was a contractual employee and if Article 279 of the Labor Code applied; (2) whether due process was observed in his termination; (3) the propriety of awarding commission on cash sales as part of backwages; and (4) the basis for awarding moral and exemplary damages.

RULING

The Supreme Court dismissed the petition. Firstly, the Court held that petitioners resorted to a wrong mode of appeal. The proper remedy to assail a decision of the Court of Appeals is a petition for review under Rule 45, not a petition for certiorari under Rule 65. Certiorari is not a substitute for a lost appeal. Petitioners received the assailed CA Resolution on December 17, 2012, but filed the Rule 65 petition on February 5, 2013, beyond the 15-day period for a Rule 45 petition. The Court noted exceptions where a Rule 65 petition may be allowed despite the availability of appeal, such as when public welfare and the advancement of public policy dictate, when the broader interest of justice so requires, or when the writs issued are null. However, petitioners failed to substantiate that any of these exceptions applied. Consequently, the Court declined to relax the rules. On the substantive issues, the Court found no grave abuse of discretion in the CA’s Amended Decision. The CA correctly applied Article 279 of the Labor Code, as Mahilum was a regular employee, not a contractual one. His failure in his duties as chairman did not constitute willful disobedience or breach of trust to warrant dismissal. The CA also correctly ruled that the quitclaim was void for lack of consideration, as the amount Mahilum received constituted only benefits legally due to him (salaries, 13th month pay, commissions), not a settlement for his separation. The award of the 0.25% commission as part of backwages was proper, as commissions were part of his compensation. The award of moral and exemplary damages was also upheld, as the dismissal was tainted with bad faith. The Court affirmed the CA’s award with modification, imposing legal interest on the total monetary award at the rate of 6% per annum from finality of judgment until full payment. Attorney’s fees equivalent to 10% of the total monetary award were also granted.