Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&view=article&id=83081:57064&catid=1584&Itemid=566
Timestamp: 2019-04-19 11:18:53+00:00

Document:
PHILIPPINE SPRING WATER RESOURCES INC. /DANILO Y. LUA , Petitioners, v. COURT OF APPEALS AND JUVENSTEIN B. MAHILUM, Respondent.
This petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure assails the July 23, 2010 Amended Decision1 and the October 31, 2012 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 02636, which reversed its own September 30, 2008 Decision3 on reconsideration by respondent Juvenstein B. Mahilum (Mahilum).
Petitioner Philippine Spring Water Resources, Inc. (PSWRI), engaged in the business of manufacturing, selling and distributing bottled mineral water, hired Mahilum as Vice-President for Sales and Marketing for the Bulacan-South Luzon Area, for a monthly salary of P15,000.00 plus 0.25% commission on every cash on delivery and another 0.25% on new accounts from July to August, 2004.
Sometime in November 2004, the inauguration of PSWRI’s Bulacan plant would be celebrated at the same time with the company’s Christmas party. Mahilum was designated as over-all chairman of the affair to be held on December 19, 2004. A few days after his designation, Mahilum called all committee chairpersons to a meeting for the program of action and budget plan. The meeting, however, was reset to the following day as some visitors arrived without prior appointment. Mahilum and his guests discussed sensitive legal issues relative to PSWRI’s water drilling inside the plant over the protest of nearby residents and the local water district.
The next day, Mahilum requested Ms. Vicky Evangelista (Evangelista), Vice-President for Administration and Finance, to take charge of the meeting for the inauguration should he fail to come back on time. He attended a prior appointment with major clients in Makati City. Later, Mahilum learned that Evangelista postponed the meetings because she accompanied the daughter of petitioner Danilo Lua (Lua), President and Chief Executive Officer (CEO), to Bulacan.
Thereafter, meetings on the program of activities for the inauguration and Christmas party were conducted without Mahilum’s presence. Evangelista took charge and assumed the lead role until the day of the affair.
On the inaugural day, Mahilum was not seen around to supervise the program proper as he entertained some visitors of the company. According to him, he delegated the task to Evangelista.
Mahilum’s attention was, however, called when Lua got furious because he was not recognized during the program. He was not mentioned in the opening remarks or called to deliver his inaugural speech. Upon inquiry from the emcees of the program, Mahilum learned that they were not apprised of Lua’s decision to deliver the speech considering that he previously declined to have a part in the program as he would be very busy during the affair. Thus, Lua’s speech appeared to be “optional” in the printed program during the affair.
On the following day, Mahilum was required to explain why Lua was not recognized and made to deliver his speech. At the same time, he was placed under preventive suspension for thirty (30) days. Mahilum submitted his written explanation. Subsequently, an investigation was conducted.
When his 30-day suspension ended, Mahilum reported for work but was prevented from entering the workplace. Sometime in the first week of March 2005, he received a copy of the Memorandum, dated January 31, 2005, terminating his services effective the next day or on February 1, 2005. On February 9, 2005, a clearance certificate was issued to Mahilum. He received the amount of ?43,998.56 and was made to execute the Release, Waiver and Quitclaim in favor of the company and Lua.
Mahilum filed a complaint for illegal dismissal with prayer for reinstatement, payment of back wages and damages. He argued that he was illegally suspended and, thereafter, dismissed constructively from the service. He also claimed that he was forced to sign the waiver.
We are not impressed by the submission of the complainant that he was merely forced to sign the said Release, Waiver and Quitclaim because of sheer necessity in trying to justify that the execution of the said document was involuntary on his part…It is our view that the said document was voluntarily signed by the complainant and the same was also based on a reasonable consideration hence binding between the parties.
Aggrieved, Mahilum appealed the decision to the National Labor Relations Commission (NLRC). In its October 11, 2006 Decision, 5 the NLRC ruled in his favor on the ground that the subject quitclaim did not bar the institution of the case for illegal dismissal. It held that while not all waivers and quitclaims were invalid as against public policy, the LA’s consideration of the waiver did not constitute a reasonable settlement of his cause of action. The amount he received from the company consisted of his 13th month pay, salaries for the period subsequent to his preventive suspension and earned commissions. These were benefits which Mahilum had earned by virtue of his employment and not in consideration of his separation from service.
Moreover, although Mahilum voluntarily signed the quitclaim, it was highly possible that he might have been constrained to assent to its execution considering that he had not received any salary for more than one (1) month due to his preventive suspension.
WHEREFORE, premises considered, the appeal of complainant is hereby GRANTED. The Decision dated 25 April 2006 of Executive Labor Arbiter Violeta Bantug is REVERSED and SET ASIDE. Another one is entered declaring that the dismissal of complainant was illegal.
Respondent Philippine Spring Water Resources, Inc. is then directed to pay complainant’s separation pay of Fifteen Thousand (P15,000.00) plus backwages, inclusive of salary and 0,25% commission on cash on delivery from February 1, 2005 up to the finality of the Decision. In addition, respondent should pay complainant of moral and exemplary damages in the amount of P100,000.00.
With their motion for reconsideration denied,7 PSWRI and Lua filed a petition for certiorari with the CA.
On September 30, 2008, the CA reversed the NLRC decision. It ruled that Mahilum’s conduct during the inauguration did not constitute wilful disobedience or breach of trust, hence, rendering his termination as illegal and without cause. However, it upheld the validity of the executed quitclaim. As a top executive of the company, Mahilum could not have been an unsuspecting or gullible person who misunderstood the import of the document. There was no showing either that the execution of the quitclaim was tainted with deceit or coercion. Further, the amount represented therein was the total amount of benefits owing to Mahilum at the time of his termination and for his six- month stint with the company, which he received and contested as he made a general allegation that he was not given remuneration arising from his illegal discharge from service.
The rule is that only when termination is declared to be illegal that an employee is entitled to claim separation pay in lieu of reinstatement. In this case, Mahilum, in effect, demanded for such pay prior to a declaration of the illegality of dismissal. Had he refused to execute the assailed document, he would have been entitled to receive what he bemoaned. Regrettably, he unwittingly discharged the company from its liability as well as waived any recompense when he signed the quitclaim.
In a motion for reconsideration, Mahilum argued that the ruling ran counter to the underlying policy for the grant of the reliefs outlined in Article 279 of the Labor Code.8 Following the logic espoused therein, no employee could ever expect any benefit from his complaint for illegal dismissal because at the time of its filing, there was, as of yet, no declaration of the termination’s illegality.
On July 23, 2010, the CA reconsidered and issued the assailed Amended Decision after finding merit in Mahilum’s arguments. Finding Mahilum to have been indeed illegally dismissed from employment, the CA ruled that he was entitled to full backwages and separation pay in lieu of reinstatement, in view of the strained relations between Mahilum and Lua. With respect to the quitclaim, the CA declared it to be void for having no consideration at all. All that Mahilum received by virtue of the said document amounted to what he was legally entitled like salaries and wages, 13th month pay and commissions. These could not be considered as reasonable and credible consideration for a quitclaim. By receiving only what he was lawfully entitled to, there was, in effect, no consideration at all for the quitclaim, rendering it void and ineffective to bar an action for illegal dismissal.
1] The CA gravely abused its discretion when it applied Article 279 of the Labor Code in determining the legality of Mahilum’s dismissal. Mahilum is a contractual employee and the period of probation depended on the stipulation of the Memorandum of Agreement entered into by the parties.
2] Both substantive and procedural due process was observed in Mahilum’s termination from employment with PSWRI.
3] It was error to award the 0.25% commission on the cash sales of the company from February 1, 2005 up to the finality of the decision. A commission is an incentive and must be earned. It is not a benefit that is mandated. The commission is given to salesmen and other officials as incentive, out of the liberality and generosity of the employer.
4] The award of moral and exemplary damages has no basis.
The Court resolves the issues in seriatim.
In the case at bench, the petitioners received the assailed Resolution of the CA on December 17, 2012. The subject petition for certiorari was filed on February 5, 2013, evidently beyond the 15-day period to file an appeal under Rule 45. In fact, even if a 30-day extension would be considered, the petition for certiorari was still filed out of time.
Although the petitioners’ cause is purportedly grounded on grave abuse of discretion, they still cannot avail of the Rule 65 remedy because an appeal is available under Rule 45. One of the requisites of certiorari is that there be no available appeal or any plain, speedy and adequate remedy. Where an appeal is available, certiorari will not prosper, even if the ground therefor is grave abuse of discretion.
At any rate, in accordance with the liberal spirit pervading the Rules of Court and in the interest of substantial justice, this Court has before treated a petition for certiorari as a petition for review on certiorari, particularly (1) if the petition for certiorari was filed within the reglementary period within which to file a petition for review on certiorari; (2) when errors of judgment are averred; and (3) when there is sufficient reason to justify the relaxation of the rules.11 In this case, considering the monetary awards to Mahilum, the Court opts to resolve said issue.
6. THAT SECOND PARTY upon appointment shall be in a Probationary status for the next six (6) months and may be extended a permanent appointment only if he can satisfactorily perform his duties and functions as defined in the Personnel’s Manual/Company House Rules on Discipline.
It is the petitioners’ theory that Mahilum, who was hired in June 2004, was not a regular employee at the time of his dismissal because his probationary status would end only if he could satisfactorily perform his duties and functions as defined in the Personnel’s Manual/Company House Rules of Discipline. This suspensive condition failed to arise.
Contrary to the claims of the petitioners, Mahilum was correctly considered by the NLRC and CA as a regular employee. No grave abuse of discretion may be attributed for the application of Article 279 of the Labor Code13 in determining the legality of Mahilum’s dismissal.
As applied to the petitioner’s arguments, it would seem that PSWRI and Lua now invoke the first and third ground for Mahilum’s termination. The Court, however, cannot subscribe to the premise that Mahilum failed to qualify as a regular employee when he failed to perform at par with the standards made known by the company to him. In this case, it is clear that the primary cause of Mahilum’s dismissal from his employment was borne out of his alleged lapses as chairman for the inauguration of the Bulacan plant company’s Christmas party. In fact, the termination letter to him cited “loss of trust and confidence” as a ground for his dismissal. Under the circumstances, the petitioners may not be permitted to belatedly harp on its choice not to extend his alleged probationary status to regular employment as a ground for his dismissal. Besides, having been allowed to work after the lapse of the probationary period, Mahilum became a regular employee. He was hired in June 2004 and was dismissed on February 5, 2005. Thus, he served the company for eight (8) months. This is in consonance with CALS Poultry Supply Corporation v. Roco, 15 where the Court ruled that the computation of the 6-month probationary period was reckoned from the date of appointment up to the same calendar date of the 6th month following.
According to the petitioners, Mahilum’s behavior during the inauguration/party was allegedly tantamount to: 1] serious misconduct, as displayed by a drinking binge with his own visitors causing the shame and humiliation of Lua; and 2] willful disobedience, as shown by his refusal to carry out legitimate orders.
As previously explained, Mahilum was a regular employee who was entitled to security of tenure. Thus, he could only be dismissed from service for causes provided in Article 282 of the Labor Code.16 At this point, it bears stressing that the NLRC and the CA, in their decisions, both found Mahilum to have been illegally dismissed.
The well-entrenched rule, especially in labor cases, is that findings of fact of quasi-judicial bodies, like the NLRC, are accorded with respect, even finality, if supported by substantial evidence. Particularly when passed upon and upheld by the CA, they are binding and conclusive upon the Court and will not normally be disturbed. Although this doctrine is not without exceptions, the Court finds that none is applicable to the present case. Here, the CA affirmed the ruling of the NLRC and adopted as its own the latter's factual findings as to Mahilum’s illegal dismissal. Consequently, the Court finds no reason to depart from the finding that Mahilum’s failure to effectively discharge his assignment as the over-all chairman of the festivities was due to mere inadvertence and the mistaken belief that he had properly delegated the details of the program to another officer.
Even as jurisprudence has distinguished the treatment of managerial employees or employees occupying positions of trust and confidence from that of rank-and-file personnel, insofar as the application of the doctrine of trust and confidence is concerned, such is inapplicable to the instant case since as above-stated, private respondent’s lapse was justified, unintentional, without deliberate intent and unrelated to the duty for which he was engaged.
Likewise, warranting the agreement of the Court is the finding of the CA in its Amended Decision that the quitclaim executed by Mahilum did not operate to bar a cause of action for illegal dismissal. That the amounts received by Mahilum were only those owing to him under the law indeed bolstered the fact that the quitclaim was executed without consideration. Suffice it to say, the subject quitclaim may not be considered as a valid and binding undertaking.
Mahilum, as a regular employee at the time of his illegal dismissal, is entitled to separation pay and backwages, computed from the time of his dismissal up to the finality of the decision. As correctly ruled by the NLRC,19 reinstatement is no longer viable considering the circumstances of animosity between Mahilum and Lua.
Be that as it may, the Court resolves to delete the inclusion of 0.25% commission on cash and delivery sales as part of Mahilum’s backwages.
It is well-established in jurisprudence that the determination of whether or not a commission forms part of the basic salary depends upon the circumstances or conditions for its payment. In Phil Duplicators, Inc. v. NLRC,21 the Court held that commissions earned by salesmen form part of their basic salary. The salesmen’s commissions, comprising a pre-determined percentage of the selling price of the goods sold by each salesman, were properly included in the term basic salary for purposes of computing the 13th month pay. The salesmen’s commissions are not overtime payments, nor profit-sharing payments nor any other fringe benefit, but a portion of the salary structure which represents an automatic increment to the monetary value initially assigned to each unit of work rendered by a salesman. On the other hand, in Boie-Takeda Chemicals, Inc. v. De la Serna,22 the so-called commissions paid to or received by medical representatives were excluded from the term basic salary because these were paid to the medical representatives and rank-and-file employees as productivity bonuses, which were generally tied to the productivity, or capacity for revenue production, of a corporation and such bonuses closely resemble profit-sharing payments and had no clear direct or necessary relation to the amount of work actually done by each individual employee.
In Mahilum’s case, Phil. Duplicator cannot be automatically applied without considering his position as Vice-President for sales and marketing of the PSWRI’s Bulacan-South Luzon Area. This factor constrains the Court to hold that Mahilum’s 0.25% commission based on the monthly sales and 0.25% commission for cash payments must be taken to come in the nature of overriding commission, not sales commission. The latter is not properly includable in the basic salary as it must be earned by actual market transactions attributable to the claimant. Curiously, Mahilum did not comment on the petitioners’ objection to the award. Not being a salesman who directly effected any sale of a product, the commission embodied in the agreement partook of the nature of profit-sharing business based on quota. In fine, the alleged commissions were profit-sharing payments and had no clear, direct or necessary relation to the amount of work he actually performed.
Finally, the Court resolves to delete the award for moral and exemplary damages in favor of Mahilum. Worth reiterating is the rule that moral damages are recoverable where the dismissal of the employee was attended by bad faith or fraud or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs, or public policy. Likewise, exemplary damages may be awarded if the dismissal was effected in a wanton, oppressive or malevolent manner.24 No evidence thereof was presented in this case.
WHEREFORE, the petition is PARTIALLY GRANTED. The July 23, 2010 Amended Decision and the October 31, 2012 Resolution of the Twentieth Division of the Court of Appeals in CA G.R. SP No. 02636 are AFFIRMED with MODIFICATION.
Accordingly, Philippine Spring Water Resources Inc. is hereby ordered to pay Juvenstein B. Mahilum, his separation pay, full backwages inclusive of his basic salary, proportionate 13th month pay, and unused leave credits, to be computed based on his salary at the time of his illegal termination and attorney’s fees.
These payments shall earn legal interest at the rate of six (6%) percent per annum reckoned from their due date.
1Rollo, pp. 31-39. Penned by Associate Justice Edgardo L. Delos Santos and concurred in by Associate Justices Agnes Reyes-Carpio and Eduardo B. Peralta Jr. of the Twentieth Division, Manila.
5 Id. at 54-59. Penned by Presiding Commissioner Gerardo C. Nograles, and concurred in by Commissioners Oscar S. Uy and Aurelio D. Menzoa, of the Fourth Division, Cebu City.
7 Id. at 60-62. Resolution dated February 16, 2007.
8 Article 279. Security of tenure. – In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.
9Rollo, pp. 29-30. Resolution dated October 31, 2012.
10VMC Rural Electric Service Cooperative, Inc. v. Court of Appeals, 535 Phil. 345 (2006).
11Tagle v. Equitable PCIBank, 575 Phil. 384 (2008).
13 Art. 279. Security of Tenure — In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or other monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.
14Mylene Carvajal v. Luzon Development Bank and/or Oscar Z. Ramirez, G.R. No. 186169, August 1, 2012, citing Robinsons Galleria/Robinsons Supermarket Corporation v. Ranchez, G.R. No. 177937, January 19, 2011, 640 SCRA 135, 142.
15 434 Phil. 720 (2002).
17Robinsons Galleria v. Ranchez, G.R. No. 177937, January 19, 2011, citing Coca-Cola Bottlers Phils., Inc. v. Daniel, 499 Phil. 491, 511 (2005).
18Siemens v. Domingo, 582 Phil. 86 (2008).
20Equitable Banking Corporation v. Sadac, 523 Phil. 781 (2006).
21 G.R. No. 110068, November 11, 1993, 227 SCRA 747.
22 G.R. Nos. 92174 and 102552, December 10, 1993, 228 SCRA 329.
23Nacar v. Gallery Frames, G.R. No. 189871, August 13, 2013, 703 SCRA 439.
24Triple Eight Integrated Services, Inc. v. NLRC, 359 Phil. 955, 970-971 (1998).
25 1. In cases of unlawful withholding of wages, the culpable party may be assessed attorney’s fees equivalent to ten percent of the amount of wages recovered.
2. It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings for the recovery of wages, attorney’s fees which exceed ten percent of the amount of wages recovered.
26Exodus International Construction Corp. v. Biscocho, G.R. No. 166109, February 23, 2011, 644 SCRA 76, 91.

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