Songco vs. NLRC [G.R. No. L-50999 March 23, 1990] Post under case digests, labor law at Monday, April 09, 2012 Posted by Schizophrenic Mind Facts: Zuellig (M) Inc. filed with the Department of Labor (Regional Office No. 4) a clearance to terminate the services of petitioners Jose Songco, Romeo Cipres and Amancio Manuel due to alleged financial losses. However, the petitioners argued that the company is not suffering any losses and the real reason for their termination was their membership in the union. At the last hearing of the case, the petitioner manifested that they no longer contesting their dismissal, however, they argued that they should be granted a separation pay. Each of the petitioners was receiving a monthly salary of P40, 000.00 plus commissions for every sale they made. Under the CBA entered by the Zuellig Inc. and the petitioners, in Article XIV, Section 1(a), Any employee, who is separated from employment due to old age, sickness, death or permanent lay-off not due to the fault of said employee shall receive from the company a retirement gratuity in an amount equivalent to one month’s salary per year of service. One month of salary as used in this paragraph shall be deemed equivalent to the salary at date of retirement; years of service shall be deemed equivalent to total service credits, a fraction of at least six months being considered one year, including probationary employment. Other basis for petitioners’ contention are Article 284 of the Labor Code with regards to reduction of personnel and Sections 9(b) and 10 of Rule 1, Book VI of the Rules Implementing the Labor Code. The Labor Arbiter rendered his decision directing the company to pay the complainants separation pay equivalent to their one month salary (exclusive of commissions,allowances, etc.) for every year of service that they have worked with the company. The petitioners appealed to the NLRC but it was denied. Petitioner Romeo Cipres filed a Notice of Voluntary Abandonment and Withdrawal of petition contending that he had received, to his full and complete satisfaction, his separation pay. Hence, this petition.
Issue: Whether or not earned sales commissions and allowancesshould be included in the monthly salary of petitioners for the purpose of computation of their separation pay.
Held: The petition is granted. Petitioners’ contention that in arriving at the correct and legal amount of separation pay due to them, whether under the Labor Code or the CBA, their basic salary, earned sales commissions and allowances should be added together. Insofar as whether the allowances should be included in the monthly salary of petitioners for the purpose of computation of their separation pay is concerned, this has been settled in the case of Santos vs. NLRC, 76721, in the computation of backwages and separation pay, account must be taken not only of the basic salary of petitioner but also of her transportation and emergency livingallowances. In the issue of whether commission should be included in the computation of their separation pay, it is proper to define first commission. Black’s Law Dictionary defined commission as the recompensed, compensation or reward of an agent, salesman, executor, trustees, receiver, factor, broker or bailee, when the same is calculated as a percentage on the amount of his transactions or on the profit to the principal. The nature of the work of a salesman and the reason for such type of remuneration for services rendered demonstrate clearly that the commission are part of petitioners’ wage and salary. Some salesmen do not receive any basic salary but depend on commission and allowances or commissions alone, are part of petitioners’ wage and salary. Some salesman do not received any basic salary but depend on
commission andallowances or commissions alone, although an employer-employee relationship exist. In Soriano v. NLRC, it is ruled then that, the commissions also claimed by petitioner (override commission plus net deposit incentive) are not properly includible in such base figure since such commissions must be earned by actual market transactions attributable to petitioner. Applying this by analogy, since the commissions in the present case were earned by actual market transactions attributable to petitioners, these should be included in their separation pay. In the computation thereof, what should be taken into account is the average commissions earned during their last year of employment.
Songco, et al. vs. National Labor Relations Commission G.R. Nos. 50999-51000 (March 23, 1990)
FACTS: Zuelig filed an application for clearance to terminate the services of Songco, and others, on the ground of retrenchment due to financial losses. During the hearing, the parties agreed that the sole issue to be resolved was the basis of the separation pay due. The salesmen received monthly salaries of at least P400.00 and commission for every sale they made.
The Collective Bargaining Agreements between Zuelig and the union of which Songco, et al. were members contained the following provision: "Any employee who is separated from employment due to old age, sickness, death or permanent lay-off, not due to the fault of said employee, shall receive from the company a retirement gratuity in an amount equivalent to one (1) month's salary per year of service."
The Labor Arbiter ordered Zuelig to pay Songco et al., separation pay equivalent to their one month salary (exclusive of commissions, allowances, etc.) for every year of service with the company.
The National Labor Relations Commission sustained the Arbiter.
ISSUE: Whether or not earned sales commissions and allowances should be included in the monthly salary of Songco, et al. for the purpose of computing their separation pay.
RULING:
In the computation of backwages and separation pay, account must be taken not only of the basic salary of the employee, but also of the transportation and emergency living allowances.
Even if the commissions were in the form of incentives or encouragement, so that the salesman would be inspired to put a little more industry on jobs particularly assigned to them, still these commissions are direct remunerations for services rendered which contributed to the increase of income of the employee. Commission is the recompense compensation or reward of an agent, salesman, executor, trustee, receiver, factor, broker or bailee, when the same is calculated as a percentage on the amount of his transactions or on the profit to the principal. The nature of the work of a salesman and the reason for such type of remuneration for services rendered demonstrate that commissions are part of Songco, et al's wage or salary.
The Court takes judicial notice of the fact that some salesmen do not receive any basic salary, but depend on commissions and allowances or commissions alone, although an employer-employee relationships exists.
If the opposite view is adopted, i.e., that commissions do not form part of the wage or salary, then in effect, we will be saying that this kind of salesmen do not receive any salary and, therefore, not entitled to separation pay in the event of discharge from employment. This narrow interpretation is not in accord with the liberal spirit of the labor laws, and considering the purpose of separation pay which is, to alleviate the difficulties which confront a dismissed employee thrown to the streets to face the harsh necessities of life.
In Soriano vs. NLRC (155 SCRA 124), we held that the commissions also claimed by the employee (override commission plus net deposit incentive) are not properly includible in such base figure since such commissions must be earned by actual market transactions attributable to the petitioner [salesman]. Since the commissions in the present case were earned by actual transactions attributable to Song, et al., these should be included in their separation pay. In the computation thereof, what should be taken into account is the average commission earned during their last year of employment.
