JOSE SONGCO v. NLRC, GR NOs.
50999-51000, 1990-03-23
Facts:
This is a petition for certiorari seeking to modify the decision of the National
Labor Relations Commission... which dismissed the appeal of petitioners
herein and in effect affirmed the decision of the Labor Arbiter... ordering
private respondent to pay petitioners separation pay equivalent to their one
month salary (exclusive of commissions, allowances, etc.) for every year of
service.
Private respondent F.E. Zuellig (M), Inc.,... filed with the Department of
Labor... an application seeking clearance to terminate the services of
petitioners Jose Songco, Romeo Cipres, and Amancio Manuel... allegedly on
the ground of retrenchment due to financial losses.
application was seasonably opposed by petitioners alleging that the company
is not suffering from any losses. They alleged further that they are being
dismissed because of... their membership in the union.
At the last hearing of the case, however, petitioners manifested that they are
no longer contesting their dismissal.
The parties then agreed that the sole issue to be resolved is the basis of the
separation pay due to petitioners.
Petitioners, who were in the sales force of Zuellig received monthly salaries of method of calculating the same
at least P400.00. In addition, they received commissions for every sale they
made.
ARTICLE XIV Retirement Gratuity... receive from the company a retirement
gratuity in an amount equivalent to one (1) month's salary per year of...
service.
Art. 284. Reduction of personnel.
The termination of employment of any employee due to the installation of labor in Soriano v. NLRC, et al., supra
saving-devices, redundancy, retrenchment to prevent losses, and other similar
causes, shall entitle the employee affected thereby to... separation pay.
In case of retrenchment... to prevent losses and other similar causes, the
separation pay shall be equivalent to one (1) month pay or at least one-half
(1/2) month pay for every year of service, whichever is higher.
June 26, 1978, the Labor Arbiter rendered a decision... respondent should be
as it is hereby, ordered 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.
Issues:
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.
Ruling:
Petitioners' position was that... under the Labor Code or the CBA, their basic
salary, earned sales commissions and allowances should be added together.
Article 97(f) of the Labor Code
'Wage' paid to any employee shall mean the remuneration or earnings,
however designated, capable of being expressed in terms of money, whether
fixed or ascertained on a time, task, piece, or commission basis, or other
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 (Black's Law Dictionary, 5th Ed., citing Weiner v. Swales,
217 Md. 123, 141 A.2d 749, 750). The nature of the work of a salesman and
the reason for such type of remuneration for... services rendered demonstrate
clearly that commissions are part of petitioners' wage or salary.
"The commissions also claimed by petitioner ('override commission' plus 'net of at least six months being considered one year, including probationary
deposit incentive') are not properly includible in such base figure since such employment. Other basis for petitioners’ contention are Article 284 of the
commissions must be earned by actual market transactions attributable to Labor Code with regards to reduction of personnel and Sections 9(b) and 10 of
petitioner." Rule 1, Book VI of the Rules Implementing the Labor Code. The Labor Arbiter
rendered his decision directing the company to pay the complainants
This kind of interpretation gives meaning and substance to the liberal... and separation pay equivalent to their one month salary (exclusive of
compassionate spirit of the law as provided for in Article 4 of the Labor Code commissions,allowances, etc.) for every year of service that they have worked
which states that "all doubts in the implementation and interpretation of the with the company. The petitioners appealed to the NLRC but it was denied.
provisions of the Labor Code including its implementing rules and regulations Petitioner Romeo Cipres filed a Notice of Voluntary Abandonment and
shall be resolved in favor of labor"... and Article 1702 of the Civil Code which Withdrawal of petition contending that he had received, to his full and
provides that "in case of doubt, all labor legislation and all labor contracts shall complete satisfaction, his separation pay. Hence, this petition.
be... construed in favor of the safety and decent living for the laborer.
Issue: Whether or not earned sales commissions and allowancesshould be
ACCORDINGLY, the petition is hereby GRANTED. The decision of the included in the monthly salary of petitioners for the purpose of computation of
respondent National Labor Relations Commission is MODIFIED by including their separation pay.
allowances and commissions in the separation pay of petitioners Jose Songco
and Amancio Manuel. 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
Principles: Labor Code or the CBA, their basic salary, earned sales commissions and
allowances should be added together. Insofar as whether the allowances
Songco vs. NLRC [G.R. No. L-50999 March 23, 1990] 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
Post under case digests, labor law at Monday, April 09, 2012 Posted by case of Santos vs. NLRC, 76721, in the computation of backwages and
Schizophrenic Mind Facts: Zuellig (M) Inc. filed with the Department of Labor separation pay, account must be taken not only of the basic salary of petitioner
(Regional Office No. 4) a clearance to terminate the services of petitioners but also of her transportation and emergency livingallowances. In the issue of
Jose Songco, Romeo Cipres and Amancio Manuel due to alleged financial whether commission should be included in the computation of their separation
losses. However, the petitioners argued that the company is not suffering any pay, it is proper to define first commission. Black’s Law Dictionary defined
losses and the real reason for their termination was their membership in the commission as the recompensed, compensation or reward of an agent,
union. At the last hearing of the case, the petitioner manifested that they no salesman, executor, trustees, receiver, factor, broker or bailee, when the same
longer contesting their dismissal, however, they argued that they should be is calculated as a percentage on the amount of his transactions or on the profit
granted a separation pay. Each of the petitioners was receiving a monthly to the principal. The nature of the work of a salesman and the reason for such
salary of P40, 000.00 plus commissions for every sale they made. Under the type of remuneration for services rendered demonstrate clearly that the
CBA entered by the Zuellig Inc. and the petitioners, in Article XIV, Section commission are part of petitioners’ wage and salary. Some salesmen do not
1(a), Any employee, who is separated from employment due to old age, receive any basic salary but depend on commission and allowances or
sickness, death or permanent lay-off not due to the fault of said employee commissions alone, are part of petitioners’ wage and salary. Some salesman
shall receive from the company a retirement gratuity in an amount equivalent do not received any basic salary but depend on
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; commission andallowances or commissions alone, although an employer-
years of service shall be deemed equivalent to total service credits, a fraction 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.
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 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 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. 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 and allowances or commissions alone, although an
employer-employee relationship exist.
In Soriano v. NLRC, it is ruled then that, the commissions RULING:
also claimed by petitioner (override commission plus net deposit
incentive) are not properly includible in such base figure since In the computation of backwages and separation pay, account must be taken
such commissions must be earned by actual market transactions not only of the basic salary of the employee, but also of the transportation and
attributable to petitioner. Applying this by analogy, since the emergency living allowances.
commissions in the present case were earned by actual market
transactions attributable to petitioners, these should be Even if the commissions were in the form of incentives or encouragement, so
included in their separation pay. In the computation thereof, that the salesman would be inspired to put a little more industry on jobs
what should be taken into account is the average commissions particularly assigned to them, still these commissions are direct remunerations
earned during their last year of employment. for services rendered which contributed to the increase of income of the
employee. Commission is the recompense compensation or reward of an
Songco, et al. vs. National Labor Relations Commission agent, salesman, executor, trustee, receiver, factor, broker or bailee, when the
G.R. Nos. 50999-51000 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
(March 23, 1990) reason for such type of remuneration for services rendered demonstrate that
commissions are part of Songco, et al's wage or salary.
FACTS: Zuelig filed an application for clearance to terminate the services of
Songco, and others, on the ground of retrenchment due to financial losses. The Court takes judicial notice of the fact that some salesmen do not receive
During the hearing, the parties agreed that the sole issue to be resolved was any basic salary, but depend on commissions and allowances or commissions
the basis of the separation pay due. The salesmen received monthly salaries alone, although an employer-employee relationships exists.
of at least P400.00 and commission for every sale they made.
If the opposite view is adopted, i.e., that commissions do not form part of the
The Collective Bargaining Agreements between Zuelig and the union of which wage or salary, then in effect, we will be saying that this kind of salesmen do
Songco, et al. were members contained the following provision: "Any not receive any salary and, therefore, not entitled to separation pay in the
employee who is separated from employment due to old age, sickness, death event of discharge from employment. This narrow interpretation is not in
or permanent lay-off, not due to the fault of said employee, shall receive from accord with the liberal spirit of the labor laws, and considering the purpose of
the company a retirement gratuity in an amount equivalent to one (1) month's separation pay which is, to alleviate the difficulties which confront a dismissed
salary per year of service." employee thrown to the streets to face the harsh necessities of life.
The Labor Arbiter ordered Zuelig to pay Songco et al., separation pay In Soriano vs. NLRC (155 SCRA 124), we held that the commissions also
equivalent to their one month salary (exclusive of commissions, allowances, claimed by the employee (override commission plus net deposit incentive) are
etc.) for every year of service with the company. not properly includible in such base figure since such commissions must be
earned by actual market transactions attributable to the petitioner [salesman].
The National Labor Relations Commission sustained the Arbiter. 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
ISSUE: Whether or not earned sales commissions and allowances should be the computation thereof, what should be taken into account is the average
included in the monthly salary of Songco, et al. for the purpose of computing commission earned during their last year of employment.
their separation pay.