Songco, et al. vs.

National Labor Relations Commission

G.R. Nos. 50999-51000
(March 23, 1990)
MEDIALDEA, J.:
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 months 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 allowances should be
included in the monthly salary of petitioners for the purpose of computation
of their separation pay.

Held:
The petition is granted, Decision of NLRC is modified.
Article 4 of labor code
"all doubts in the implementation and interpretation of the provisions of the
Labor code including its implementing rules and regulations shall be resolved
in favor of labor."

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 living allowances.
In the issue of whether commission should be included in the
computation of their separation pay, it is proper to define first commission.
Blacks 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 and allowances 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.