G.R. No. 198662; September 12, 2012
RADIO MINDANAO NETWORK, INC. and ERIC S. CANOY, Petitioners, vs. DOMINGO Z. YBAROLA, JR. and ALFONSO E. RIVERA, JR., Respondents.

FACTS

Respondents Domingo Ybarola, Jr. and Alfonso Rivera, Jr., long-time account managers for Radio Mindanao Network, Inc. (RMN), were terminated on September 15, 2002, due to corporate restructuring. They received separation pay and subsequently executed release and quitclaim affidavits in December 2002. Dissatisfied, they later filed complaints for illegal dismissal and monetary claims, asserting their monthly salaries were ₱60,000 and ₱40,000, respectively. RMN contested these figures, presenting payrolls showing a base salary of only ₱9,177 monthly, and argued the quitclaims were valid settlements.
The Labor Arbiter dismissed the illegal dismissal complaint but awarded additional separation pay, computing it based on the respondents’ annual income as reflected in their Certificates of Compensation Payment/Tax Withheld, which included allowances and commissions. The NLRC reversed this, ruling that commissions should not be included in separation pay computation as they are not earned without actual market transactions, and upheld the validity of the quitclaims. The Court of Appeals reinstated the Labor Arbiter’s award, holding the commissions were part of the salary and declaring the quitclaims invalid for being unconscionable and involuntarily executed. The Supreme Court initially denied RMN’s petition, prompting this motion for reconsideration.

ISSUE

The core issues for reconsideration were: (1) whether the quitclaim affidavits were valid and barred further claims; (2) whether commissions should be included in computing separation pay; and (3) whether corporate officer Eric Canoy could be held personally liable.

RULING

The Supreme Court denied the motion for reconsideration, affirming the CA’s decision. On the quitclaim issue, the Court distinguished the cited case of Talam v. NLRC. While both involved educated employees, the factual circumstances differed materially. In Talam, the settlement was for a short service period and provided valuable consideration without shortchanging the employee. Here, the respondents, with 25 and 19 years of service respectively, were deficiently paid by at least ₱400,000 each, receiving roughly only half their legal entitlement. This constituted an unconscionable settlement. The Court agreed with the CA that the respondents, jobless and with families to support, signed the documents out of dire necessity after a three-month delay, indicating a lack of genuine voluntariness.
Regarding the separation pay computation, the Court sustained the inclusion of commissions. The legal principle that commissions must be earned through actual market transactions attributable to the employee was satisfied. The respondents, as account managers, earned their commissions precisely through such attributable transactions, making these earnings part of their regular compensation and a proper base for separation pay. Finally, the Court held that the petitioners were estopped from raising the issue of Canoy’s personal liability, as this argument was not timely raised in the proceedings before the NLRC or the CA. The denial of the motion was declared final.