G.R. No. 50999 March 23, 1990
JOSE SONGCO, ROMEO CIPRES, and AMANCIO MANUEL, petitioners, vs NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION), LABOR ARBITER FLAVIO AGUAS, and F.E. ZUELLIG (M), INC., respondents.

FACTS

Private respondent F.E. Zuellig (M), Inc. filed an application for clearance to terminate the services of petitioners Jose Songco, Romeo Cipres, and Amancio Manuel on the ground of retrenchment. Petitioners initially opposed the dismissal but later agreed not to contest it, leaving the sole issue of the proper basis for computing their separation pay. Petitioners were sales personnel receiving substantial monthly salaries plus sales commissions. The applicable Collective Bargaining Agreement provided for a retirement gratuity equivalent to one month’s salary per year of service for separations like permanent lay-off. The Labor Arbiter and, on appeal, the National Labor Relations Commission, ordered Zuellig to pay separation pay based on one month’s salary per year of service, explicitly excluding commissions and allowances from the computation.

ISSUE

Whether earned sales commissions and allowances should be included in the “monthly salary” base for computing the separation pay due to petitioners.

RULING

Yes, commissions and allowances should be included. The Court applied Article 97(f) of the Labor Code, which defines “wage” broadly to include remuneration capable of being expressed in money, whether fixed or ascertained on a commission basis. The legal logic proceeds from a liberal interpretation favoring labor. The purpose of separation pay is to alleviate the economic difficulties faced by a dismissed employee. Excluding commissions, which were integral to petitioners’ earnings from actual sales transactions, would lead to an absurd result, especially for sales personnel who may rely solely on commissions. Such a narrow interpretation contradicts the compassionate spirit of labor laws. The Court took judicial notice that some salesmen work without a basic salary, depending entirely on commissions. To hold commissions excludable would mean such employees receive no separation pay despite an employer-employee relationship, an untenable outcome. Following the principle that all doubts in interpreting labor provisions shall be resolved in favor of labor, the Court ruled that the average commissions earned during the last year of employment must be included in the salary base for computation. The NLRC decision was modified accordingly, and the case was remanded to the Labor Arbiter for proper recomputation including allowances and commissions.