G.R. No. 160233 ; August 8, 2007
ROGELIO REYES, Petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, Fifth Division, and UNIVERSAL ROBINA CORPORATION GROCERY DIVISION, Respondents.

FACTS

Petitioner Rogelio Reyes was employed by Universal Robina Corporation (URC) from 1977 until his retirement in 1997, having last served as a unit manager. Upon retirement, URC tendered a check representing his separation benefits, computed with retirement pay and 13th month pay based solely on his basic salary of ₱10,919.22. Reyes refused the tender, contending that his average monthly sales commission of ₱31,846.97 should be included in the computation of these benefits, thereby raising his total average monthly salary to ₱42,766.19. He subsequently filed a complaint before the Labor Arbiter.
The Labor Arbiter ruled in favor of Reyes, holding that sales commissions form part of basic salary. On appeal, the NLRC modified the decision, excluding the overriding commissions from the computation of retirement benefits and 13th month pay. The Court of Appeals affirmed the NLRC’s decision, prompting Reyes to elevate the case to the Supreme Court via a petition for review on certiorari.

ISSUE

Whether the petitioner’s average monthly sales commission should be included in the computation of his retirement benefits and 13th month pay.

RULING

The Supreme Court denied the petition and affirmed the assailed decisions. The Court held that the petitioner’s overriding commissions are not part of his basic salary for the purpose of computing retirement benefits and 13th month pay. The legal logic rests on the distinction between commissions that are directly tied to an employee’s own sales performance and those classified as “overriding commissions” earned by a supervisory employee like a unit manager.
The Court clarified its jurisprudence, particularly the ruling in Philippine Duplicators, Inc. v. NLRC, which included commissions in basic salary. That case involved salesmen whose commissions were a predetermined percentage of their own sales, constituting a fundamental part of their compensation. In contrast, the petitioner, as a unit manager, earned overriding commissions derived from the sales of the salesmen under his supervision, not from his own direct sales transactions. Such commissions are considered supplementary incentives for supervisory efforts, not a regular component of the basic salary. Consequently, they are excluded from the computation base for retirement pay under the Labor Code and for 13th month pay under Presidential Decree No. 851. The Court emphasized that factual findings of quasi-judicial agencies, when affirmed by the Court of Appeals, are generally binding.