G.R. No. L-11872 and L-14922; August 31, 1959
FRANCO J. ALTOMONTE, plaintiff-appellant, vs. PHILIPPINE-AMERICAN DRUG COMPANY, defendant-appellee.

FRANCO J. ALTOMONTE, plaintiff-appellee, vs. PHILIPPINE-AMERICAN DRUG COMPANY, defendant-appellant.

FACTS

On July 21, 1948, Franco J. Altomonte was appointed manager of the Philippine-American Drug Company’s Legaspi branch without a definite period of employment, with a monthly salary of P600 and a 1% commission on gross receipts. He was transferred to the Cebu branch on June 1, 1951, with an increased monthly salary of P1,000 and the same commission. On March 14, 1953, the company, citing unfavorable business conditions and losses, terminated his services effective the same date, offering him his salary for March 16-31, one month’s termination pay, and one-half month’s salary for 1952 vacation leave, totaling P1,758.50 after tax. Altomonte received the termination letter on March 16, 1953, and cashed the check on April 1, 1953, but under protest. He filed a complaint seeking reinstatement, backpay, commissions, accrued leave, bonus, transportation expenses, moral damages, and attorney’s fees. The defendant countered that it had the right to terminate due to loss of confidence, inefficiency, incompetence, import allocation cuts, and losses, and that the 1% commission had been discontinued as of May 1, 1952. The trial court declared the separation unjustified and illegal but denied reinstatement, awarding accrued commissions of P3,283.87 and P2,000 in attorney’s fees. Upon reconsideration, it added P758.06 (salary for March 16-23 and 1952 vacation pay). Both parties appealed.

ISSUE

1. Whether the dismissal of Altomonte was arbitrary, unjustified, and illegal, warranting reinstatement and damages.
2. Whether Altomonte was entitled to the 1% commission on gross sales after its alleged discontinuance.
3. Whether the award of attorney’s fees was proper.
4. Whether the additional award of P758.06 was correct given the prior voluntary payment by the company.

RULING

The Supreme Court modified the trial court’s judgment.
1. On Dismissal: The Court found the trial court’s declaration that the separation was “unjustified, arbitrary and illegal” unwarranted and in conflict with its denial of damages. Altomonte’s contract was without a fixed period. While Article 302 of the Code of Commerce (requiring one-month notice) was repealed by the New Civil Code effective August 30, 1950, the employer retained the right to dismiss for a valid and justifiable cause, such as loss of confidence, inefficiency, incompetence, or retrenchment due to business losses. The defendant had provided separation pay. Therefore, the finding of illegality was stricken from the judgment.
2. On Commissions: The Court upheld the award of accrued 1% commission (P3,283.87). The defendant’s advice to discontinue the commission starting May 1, 1952, was not acquiesced to by Altomonte’s silence, which was satisfactorily explained and did not constitute legal consent.
3. On Bonus and Other Claims: Altomonte was not entitled to a bonus, as there was no showing it was granted periodically or regularly to become part of wages. Other claims for damages and full attorney’s fees were denied.
4. On Additional Award (P758.06): This part of the judgment was stricken out. The defendant had already voluntarily paid Altomonte P1,758.50, covering his salary for March 16-31 (P500), one month’s separation pay (P1,000), and 1952 vacation leave (P500), less tax. Since Altomonte cashed the check, this amount was deemed received.
5. On Attorney’s Fees: The award of P2,000 in attorney’s fees was affirmed as reasonable.
DISPOSITIVE:
The judgment was modified. The finding that the separation was “unjustified, arbitrary and illegal” was stricken out. The award of an additional P758.06 was deleted. The award of accrued commissions (P3,283.87) with legal interest and attorney’s fees (P2,000) was affirmed. Costs were imposed on the defendant.