Songco, et al. vs.

NLRC
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
ollective !argaining "greements between Zuelig and the union of which Songco were
members had the provision# $"ny employee who is separated from employment due to old
age, sic%ness, death or permanent lay&off, not due to the fault of said employee, shall receive
from the company a retirement gratuity in an amount e'uivalent to one ()* month+s salary per
year of service.$ The ,abor "rbiter ordered Zuelig to pay separation pay e'uivalent to their
one month salary (e-clusive of commissions, allowances, etc.* for every year of service with
the company. The .ational ,abor /elations ommission sustained the "rbiter.
ISSUE: 0hether 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.
HELD & RATIONALE:
1n the computation of bac%wages and separation pay, basic salary of the employee and
transportation and emergency living allowances must be ta%en in account.
These commissions are direct remunerations for services rendered which contributed to the
increase of income of the employee. ommission is the recompense compensation or reward
of an agent, salesman, e-ecutor, trustee, receiver, factor, bro%er 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 wor% 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.
1f 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 %ind 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.
1n Soriano vs. NLRC ()22 S/" )34*, 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 mar%et transactions
attributable to the petitioner 4salesman5. Since the commissions in the present case were
earned by actual transactions attributable to Songco, et al., these should be included in their
separation pay. 1n the computation thereof, what should be ta%en into account is the average
commission earned during their last year of employment.
FACTS:
Zuelig terminated 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 computation of separation pay.
The employees as salesmen received monthly salaries of at least 400 and
commission for every sale made
The collective bargaining agreements between Zuelig and the union of which
Songco et al were members contained the following provision#
o 6any employee who is separated from employment due to old age,
sic%ness, death or, permanent lay&off, not due to fault of said employee,
shall receive from the company a retirement gratuity in an amount
e'uivalent to one months salary per year of service.
The labor arbiter ordered Zuelig to pay Songco et al separation pay e'uivalent to
their one month salary for every year of service with the company
The national labor arbiter sustained the arbiter
ISSUE:
0hether the 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:
1n the computation of bac%wages and separation pay, account must be ta%en not only of the
basic salary of the employee but also of the transportation and emergency living allowances.
7ven 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 the 8obs particularly assigned to
them, still these commissions are direct remunerations for services rendered which
contributed to the increase of income of the employer
9ta%en from the boo%.