WAGES

(Reen)

1. Songco, et al. vs. National Labor Relations Commission G.R. Nos. 50999-
51000 (March 23, 1990)

FACTS: F.E. Zuellig (M), Inc., filed with the Department of Labor an application
seeking clearance to terminate the services of Jose Songco, Romeo Cipres, and Amancio
Manuel allegedly on the ground of retrenchment due to financial losses. This application
was seasonably opposed by the employees alleging that the company is not suffering
from any losses.

Songco, Cipres and Manile alleged that they are being dismissed because of their
membership in the union. At the last hearing of the case, they manifested that they are
no longer contesting their dismissal. However, they argued that they should receive
separation pay.

Under the employment contract, each of the dismissed employees receive a monthly
salary of P40,000 plus commissions for every sale they made. On the other hand, the
CBA entered between Zuellig and the union contained the provision that an employee
who is permanent lay-off, should receive an amount equivalent to one month's salary
per year of service. On the other hand, Article 284 of the Labor Code and Implementing
Rules provide that the retrenched employees should receive a separation pay equivalent
to one month pay or at least one-half month pay for every year of service, whichever is
higher.

The dismissed employees alleged that their earned sales commission should be included
in their monthly salary for the purpose of computation of their separation pay.

In defense, Zuellig argued that if it were really the intention of the Labor Code to
include commission in the computation of separation pay, it could have explicitly said
so in clear and unequivocal terms. Furthermore, in the definition of the term "wage",
"commission" is used only as one of the features or designations attached to the word
remuneration or earnings.

The Labor Arbiter ordered the company to pay the dismissed employees their
separation pay equivalent to their one month salary (exclusive of commissions,
allowances, etc.) for every year of service. The NLRC affirmed the Labor Arbiters
decision.

Held:
Transportation and emergency living allowances are included in the computation of
separation pay

1. In the computation of backwages and separation pay, the transportation and

emergency living allowances should also be taken together with the basic salary. (See
Santos v. NLRC)

Earned sales commissions are included in the computation of separation pay

2. Article 97(f) of the Labor Code is explicit that commission is included in the
definition of the term "wage". It has been repeatedly declared that where the law speaks
in clear and categorical language, there is no room for interpretation or construction
but only for application.

3. The words salary and wage are generally refer to one and the same meaning, that
is, a reward or recompense for services performed. Likewise, "pay" is the synonym of
"wages" and "salary". Since the words "wages", "pay" and "salary" have the same
meaning, and commission is included in the definition of "wage", it only follows that in
the computation of the separation pay, the salary base should also include the earned
sales commissions.

4. Whether the commissions were in the form of incentives or encouragement, still

these are direct remuneration services rendered and contributed to the increase of
income of Zuellig .

Judicial Notice: some salesmen do not receive any basic salary but depend on
commissions and allowances or commissions alone

5. Commission is the recompense, 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 commissions are part of their wage or salary.

6. The Supreme Court took 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 relationship exists.

Commissions must be earned by actual market transactions attributable to the employee

7. The commissions also claimed ('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 employee. (See Soriano v. NLRC)

8. In the instant case, since the commissions were earned by actual market transactions
attributable to the employees, 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.

All doubts in the implementation and interpretation of the provisions of the Labor
Code shall be resolved in favor of labor

9. It should always be the final consideration that in carrying out and interpreting the
Labor Code's provisions and its implementing regulations, the workingman's welfare
should be the primordial and paramount consideration. This kind of interpretation gives
meaning and substance to the liberal and compassionate spirit of the law as provided
for in Article 4 of the Labor Code and Article 1702 of the Civil Code that all doubts
in the implementation and interpretation of the provisions of the Labor Code shall be
resolved in favor of labor. (See Abella v. NLRC)

2. Iran v. National Labor Relations Commission, G.R. No. 121927, [April 22,
1998]

FACTS: Antonio Iran is engaged in softdrinks merchandising and distribution. Iran

hired Petralba, Cadalso, Labiaga and Colina as drivers/salesmen while Tecson, Gimena,
Bandilao, Martin and Gonzalgo were hired as truck helpers. As part of their
compensation, the driver/salesmen and truck helpers received commissions per case of
softdrinks .

Iran discovered cash shortages and irregularities allegedly committed by private

respondents. Still, Iran required private respondents to report for work everyday but
they were not allowed to go on their respective routes. A few days thereafter, private
respondents stopped reporting for work, prompting Iran to terminate their
employment on ground of abandonment. He also filed a a complaint for estafa against
private respondents.

On the other hand, private respondents filed complaints against Iran for illegal
dismissal, illegal deduction, underpayment of wages and other benefits.
The labor arbiter found that Iran had validly terminated private respondents.
Nevertheless, he also ruled that Iran had not complied with minimum wage
requirements and had failed to pay private respondents their 13th month pay.

The NLRC affirmed the validity of private respondents dismissal, but found that said
dismissal did not comply with the procedural requirements for dismissing employees.
It also ruled that commissions are not included in determining compliance with the
minimum wage.

Held:

Commissions are part of the wages paid to drivers/salesmen and truck helpers

1. The definition of wage in Art. 97(f) of the Labor Code explicitly includes
commissions as part of wages. While commissions are, indeed, incentives or forms of
encouragement to inspire employees to put a little more industry on the jobs particularly
assigned to them, still these commissions are direct remunerations for services
rendered. In fact, commissions have been defined as 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 clearly that commissions are part of a
salesmans wage or salary.

2. In the instant case, the commissions earned by private respondents in selling

softdrinks constitute part of the compensation or remuneration paid to
drivers/salesmen and truck helpers for serving as such, and hence, must be considered
part of the wages paid them.

3. The Court has taken judicial notice of the fact that some salesmen do not receive any
basic salary but depend entirely on commissions and allowances or commissions alone,
although an employer-employee relationship exists.

4. There is no law mandating that commissions be paid only after the minimum wage
has been paid to the employee. Verily, the establishment of a minimum wage only sets
a floor below which an employees remuneration cannot fall, not that commissions are
excluded from wages in determining compliance with the minimum wage law.
5. Drivers and conductors who are compensated purely on a commission basis are
automatically entitled to the basic minimum pay mandated by law should said
commissions be less than their basic minimum for eight hours work. It can be inferred
that were said commissions equal to or even exceed the minimum wage, the employer
need not pay, in addition, the basic minimum pay prescribed by law. It follows then that
commissions are included in determining compliance with minimum wage
requirements. (See Philippine Agricultural Commercial and Industrial Workers Union
vs. NLRC)

In terminating employees, the employer must furnish the worker with two written
notices

6. In terminating employees, the employer must furnish the worker with two written
notices before the latter can be legally terminated:

(a) a notice which apprises the employee of the particular acts or omissions for which
his dismissal is sought, and

(b) the subsequent notice which informs the employee of the employers decision to
dismiss him.

7. The twin requirements of notice and hearing constitute the essential elements of due
process, and neither of these elements can be disregarded without running afoul of the
constitutional guarantee.

8. In the instant case, Irans return-to-work order is not equivalent to the first notice
apprising the employee of the particular acts or omissions for which his dismissal is
sought. In that notice, private respondents were never told that their dismissal was being
sought, only that they should settle their accountabilities. Its absence in the present case
makes the termination of private respondents defective, for which Iran must be
sanctioned for his non-compliance with the requirements of or for failure to observe
due process.

In cases of abandonment of work, notice should be sent by the employer to the workers
last known address

9. Section 2 of Book V, Rule XIV of the Omnibus Rules Implementing the Labor Code
requires that in cases of abandonment of work, notice should be sent to the workers
last known address.
10. In this case, Iran failed to comply with this requirement if indeed private
respondents had abandoned their jobs. Thus, respondents are entitled to nominal
damages to vindicate or recognize their right to procedural due process which was
violated.

An employer who pays less than 1/12th of the basic salary as 13th month pay is only
required to pay the difference

11. The intent of P.D. No. 851 is the granting of additional income in the form of 13th
month pay to employees not as yet receiving the same and not that a double burden
should be imposed on the employer who is already paying his employees a 13th month
pay or its equivalent. An employer who pays less than 1/12th of the employees basic
salary as their 13th month pay is only required to pay the difference.

12. In the instant case, the vouchers presented by Iran covers only a particular year. It
does not cover amounts for other years claimed by private respondents. It cannot be
presumed that the same amounts were given on said years. Hence, Iran is entitled to
credit only the amounts paid for the particular year covered by said vouchers.

3. Boie-Takeda Chemicals, Inc. v. De La Serna, G.R. No. 92174, 102552,

[December 10, 1993)

FACTS: Labor and Development Officer thru a routine inspection found that Boie-
Takeda had not been including the commissions earned by its medical representatives
in the computation of their 13th month pay.

Boie-Takeda contested the Notice of Inspection Results and expressed the view that
the commission paid to the medical representatives are not to be included in the
computation of the 13th month pay since the law and its implementing rules speak of
Regular or Basic salary and there exclude all other remunerations which are not part of
the Regular Salary. It pointed out that, if no sales are made under the effort of a
particular representative, there is no commission during the period when no sale was
transacted, so that commissions are not and cannot be legally defined as regular in
nature.

DOLE Regional Director directed Boie-Takeda to pay its medical representatives their
13th month pay.

Held:
Sales commissions are not included in the computation of 13th month pay

1. Under Presidential Decree 851 and its implementing rules, the basic salary of an
employee is used as the basis in the determination of his 13th month pay. Any
compensations or remunerations which are deemed not part of the basic pay is excluded
such as overtime pay, earnings and other remunerations in the computation of the 13th
month pay. (See San Miguel Corp. vs. Inciong)

2. The term "basic salary" is to be understood in its common, generally-accepted

meaning, i.e., as a rate of pay for a standard work period exclusive of such additional
payments as bonuses and overtime. Commissions are given for extra efforts exerted in
consummating sales or other related transactions. They do not form part of the "basic
salary."

3. Judicial notice should be taken 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 relationship exists, which speaks of a "basic salary"
apart and distinct from "commissions" and "allowances". (See Songco vs. NLRC)