JOSE SONGCO, ROMEO CIPRES, and AMANCIO MANUEL

vs

NLRC, LABOR ARBITER FLAVIO AGUAS, and

F.E. ZUELLIG (M), INC.

G.R. No. L-50999

March 23, 1990

Facts: F. E. Zuellig (M) Inc. (Zuellig)

- engaged in the distribution of pharmaceutical products in

the Philippines.

Jose Songco, Romeo Cipres and Amancio Manuel

- worked as salesmen in Zuellig

Zuellig filed with the DOLE an application to terminate the petitioners on the ground of retrenchment due to financial losses.

It was first opposed by the petitioners but at the day of the last hearing they no longer contested their dismissal. The parties agreed that the sole issue to be resolved is the basis of separation pay.

The CBA entered by the two parties that an employee entitled to separation pay shall be equivalent to one (1) month salary per year of service.

Facts:

The Labor Arbiter ruled that the petitioners should be paid with 1 month salary for every year of service exclusive of commissions and allowances

ISSUE:

WON earned sales commissions and allowances should be included in the monthly salary

Ruling: The SC ruled that the allowances are included in computing

separation pay as already settled in other jurisprudence.

The SC did not agree with the decisions of L.A and NLRC:

L.A

although commission is considered a wage as shown by Art. 97(f) of the Labor Code, there is no indication that it is part of salary.

Sec. 10, Rule 1, Book 6 of implementing rules specifically states that the basis for termination pay s his latest salary rates

NLRC

Wage is used in its generic sense to be ascertained on time, task, commission basis but it does not mean that commission allowances necessarily forms part of salary.

This will prevent employee from insisting ECOLA, 13th MP, Overtime pay, premium pay and other fringe benefits to be added to the computation of their separation pay.

Ruling: Salary means recompense or consideration made to a person for his pain or industry in anothers mans business.

It can be said that wages and salary are in essence synonymous.

Hence, it follows that in computation of separation pay the salary base should include their earned sales commission.

Another justification raised by SC, the commissions in this case were direct remuneration services rendered which contributed to the increase of income of Zuellig and were earned actual market transactions attributable to petitioners.

If the opposite is to be followed, since the salesmen do not receive any basic salary it will mean that these salesmen are not entitled to separation pay.

The Supreme Court granted the petition and ordered the inclusion of allowances and commissions in the separation pay.

Ruling: