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352 Phil. 261
THIRD DIVISION
[ G.R. No. 121927, April 22, 1998 ]
ANTONIO W. IRAN (DOING
BUSINESS UNDER THE NAME AND STYLE OF TONES IRAN ENTERPRISES), PETITIONER,
VS. NATIONAL LABOR RELATIONS COMMISSION (FOURTH DIVISION), GODOFREDO O.
PETRALBA, MORENO CADALSO, PEPITO TECSON, APOLINARIO GOTHONG GEMINA, JESUS
BANDILAO, EDWIN MARTIN, CELSO LABIAGA, DIOSDADO GONZALGO, FERNANDO M. COLINA, RESPONDENTS.
D E C I S I O N
ROMERO, J.:
Whether or not
commissions are included in determining compliance with the minimum wage
requirement is the principal issue presented in this petition.
Petitioner
Antonio Iran is engaged in softdrinks merchandising and distribution in Mandaue
City, Cebu, employing truck drivers who double as salesmen, truck helpers, and
non-field personnel in pursuit thereof. Petitioner hired private respondents Godofredo Petralba, Moreno Cadalso,
Celso Labiaga and Fernando Colina as drivers/salesmen while private respondents
Pepito Tecson, Apolinario Gimena, Jesus Bandilao, Edwin Martin and Diosdado
Gonzalgo were hired as truck helpers. Drivers/salesmen drove petitioner’s
delivery trucks and promoted, sold and delivered softdrinks to various outlets
in Mandaue City. The truck helpers assisted in the delivery of softdrinks to
the different outlets covered by the
driver/salesmen.
As part of their
compensation, the driver/salesmen and truck helpers of petitioner received
commissions per case of softdrinks sold at the following rates:
SALESMEN:
Ten Centavos (P0.10) per case of Regular softdrinks.
Twelve Centavos (P0.12) per case of Family Size softdrinks.
TRUCK HELPERS:
Eight Centavos (P0.08) per case of Regular softdrinks.
Ten Centavos (P0.10) per case of Family Size softdrinks.
Sometime in June
1991, petitioner, while conducting an audit of his operations, discovered cash
shortages and irregularities allegedly committed by private respondents. Pending the investigation of irregularities
and settlement of the cash shortages, petitioner required private respondents
to report for work everyday. They were not allowed, however, to go on their
respective routes. A few days thereafter, despite aforesaid order, private
respondents stopped reporting for work, prompting petitioner to conclude that
the former had abandoned their employment. Consequently, petitioner terminated
their services. He also filed on
November 7, 1991, a complaint for estafa against private respondents.
On the other
hand, private respondents, on December 5, 1991, filed complaints against
petitioner for illegal dismissal, illegal deduction, underpayment of wages,
premium pay for holiday and rest day, holiday pay, service incentive leave pay,
13th month pay, allowances, separation
pay, recovery of cash bond, damages and attorney’s fees. Said complaints were consolidated and
docketed as Rab VII-12-1791-91, RAB VII-12-1825-91 and RAB VII-12-1826-91, and
assigned to Labor Arbiter Ernesto F. Carreon.
The labor
arbiter found that petitioner had validly terminated private respondents, there
being just cause for the latter’s dismissal. Nevertheless, he also ruled that petitioner had not complied with
minimum wage requirements in compensating private respondents, and had failed
to pay private respondents their 13th month pay. The labor arbiter,
thus, rendered a decision on February 18, 1993, the dispositive portion of
which reads:
“WHEREFORE, premises considered, judgment is hereby rendered ordering the respondent Antonio W. Iran to pay the complainants the following:
1. Celso LabiagaP10,033.10
2. Godofredo Petralba 1,250.00
3. Fernando Colina 11,753.10
4. Moreno Cadalso 11,753.10
5. Diosdado Gonzalgo 7,159.04
6. Apolinario Gimena 8,312.24
7. Jesus Bandilao 14,729.50
8. Pepito Tecson 9,126.55
---------------
74,116.63
Attorney’s Fees (10%)
of the gross award 7,411.66
-------------
GRAND TOTAL AWARDP81,528.29
========
The other claims are dismissed for lack of merit.
SO ORDERED.”[1]
Both parties
seasonably appealed to the NLRC, with petitioner contesting the labor arbiter’s
refusal to include the commissions he paid to private respondents in
determining compliance with the minimum wage requirement. He also presented, for the first time on
appeal, vouchers denominated as 13th month pay signed by private respondents, as proof that petitioner had
already paid the latter their 13th month pay. Private respondents,
on the other hand, contested the findings of the labor arbiter holding that
they had not been illegally dismissed, as well as mathematical errors in
computing Jesus Bandilao’s wage differentials. The NLRC, in its decision of December 21, 1994, affirmed the validity of
private respondent’s dismissal, but found that said dismissal did not comply
with the procedural requirements for dismissing employees. Furthermore, it corrected the labor
arbiter’s award of wage differentials to Jesus Bandilao. The dispositive
portion of said decision reads:
“WHEREFORE, premises considered, the decision is hereby MODIFIED in that complainant Jesus Bandilao’s computation for wage differential is corrected from P154.00 to P4,550.00. In addition to all the monetary claim (sic) originally awarded by the Labor Arbiter a quo, P1,000.00 is hereby granted to each complainants (sic)as indemnity fee for failure of respondents to observe procedural due process.
SO ORDERED.”[2]
Petitioner’s
motion for reconsideration of said decision was denied on July 31, 1995, prompting
him to elevate this case to this Court, raising the following issues:
1. THE HONORABLE COMMISSION ACTED WITH GRAVE ABUSE OF DISCRETION AND CONTRARY TO LAW AND JURISPRUDENCE IN AFFIRMING THE DECISION OF THE LABOR ARBITER A QUO EXCLUDING THE COMMISSIONS RECEIVED BY THE PRIVATE RESPONDENTS IN COMPUTING THEIR WAGES;
2. THE HONORABLE COMMISSION ACTED WITH GRAVE ABUSE OF DISCRETION IN FINDING PETITIONER GUILTY OF PROCEDURAL LAPSES IN TERMINATING PRIVATE RESPONDENTS AND IN AWARDING EACH OF THE LATTER P1,000.00 AS INDEMNITY FEE;
3. THE HONORABLE COMMISSION GRAVELY ERRED IN NOT CREDITING THE ADVANCE AMOUNT RECEIVED BY THE PRIVATE RESPONDENTS AS PART OF THEIR 13TH MONTH PAY.
The petition is
impressed with merit.
The NLRC, in
denying petitioner’s claim that commissions be included in determining
compliance with the minimum wage ratiocinated thus:
“Respondent (petitioner herein) insist assiduously that the commission should be included in the computation of actual wages per agreement. We will not fall prey to this fallacious argument. An employee should receive the minimum wage as mandated by law and that the attainment of the minimum wage should not be dependent on the commission earned by an employee. A commission is an incentive for an employee to work harder for a better production that will benefit both the employer and the employee. To include the commission in the computation of wage in order to comply with labor standard laws is to negate the practice that a commission is granted after an employee has already earned the minimum wage or even beyond it.”[3]
This holding is
unsupported by law and jurisprudence. Article 97(f) of the Labor Code defines wage as follows:
Art. 97(f) — “Wage” paid to any employee shall mean the remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered and includes the fair and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the employee.
x x x x x x x x x.” (Emphasis supplied)
This definition
explicitly includes commissions as part of wages. While commissions are, indeed, incentives or forms of
encouragement to inspire employees to put a little more industry on the jobs
particularly assigned to them, still these commissions are direct remunerations
for services rendered. In fact, commissions have been defined as the
recompense, compensation or reward of an agent, salesman, executor, trustee,
receiver, factor, broker or bailee, when the same is calculated as a percentage
on the amount of his transactions or on the profit to the principal. The nature of the work of a salesman and the
reason for such type of remuneration for services rendered demonstrate clearly
that commissions are part of a salesman’s wage or salary.[4]
Thus, the
commissions earned by private respondents in selling softdrinks constitute part
of the compensation or remuneration paid to drivers/salesmen and truck helpers
for serving as such, and hence, must be considered part of the wages paid them.
The NLRC asserts
that the inclusion of commissions in the computation of wages would negate the
practice of granting commissions only after an employee has earned the minimum
wage or over. While such a practice does exist, the universality and prevalence
of such a practice is questionable at best. In truth, this Court has taken judicial notice of the fact that some
salesmen do not receive any basic salary but depend entirely on commissions and
allowances or commissions alone, although an employer-employee relationship
exists.[5] Undoubtedly, this salary structure
is intended for the benefit of the corporation establishing such, on the
apparent assumption that thereby its salesmen would be moved to greater
enterprise and diligence and close more sales in the expectation of increasing
their sales commissions. This, however, does not detract from the character of
such commissions as part of the salary or wage paid to each of its salesmen for
rendering services to the corporation.[6]
Likewise, there
is no law mandating that commissions be paid only after the minimum wage has
been paid to the employee. Verily, the establishment of a minimum wage only
sets a floor below which an employee’s remuneration cannot fall, not that
commissions are excluded from wages in determining compliance with the minimum
wage law. This conclusion is bolstered
by Philippine Agricultural Commercial and Industrial Workers Union vs. NLRC,[7] where this Court acknowledged that
drivers and conductors who are compensated purely on a commission basis are
automatically entitled to the basic minimum pay mandated by law should said
commissions be less than their basic minimum for eight hours work. It can, thus, be inferred that were said
commissions equal to or even exceed the minimum wage, the employer need not
pay, in addition, the basic minimum pay prescribed by law. It follows then that commissions are
included in determining compliance with minimum wage requirements.
With regard to
the second issue, it is settled that in terminating employees, the employer
must furnish the worker with two written notices before the latter can be
legally terminated: (a) a notice which apprises the employee of the particular
acts or omissions for which his dismissal is sought, and (b) the
subsequent notice which informs the employee of the employer’s decision to
dismiss him.[8] (Italics ours) Petitioner
asseverates that no procedural lapses were committed by him in terminating
private respondents. In his own words:
“…when irregularities were discovered, that is, when the misappropriation of several thousands of pesos was found out, the petitioner instructed private respondents to report back for work and settle their accountabilities but the latter never reported for work. This instruction by the petitioner to report back for work and settle their accountabilities served as notices to private respondents for the latter to explain or account for the missing funds held in trust by them before they disappeared.”[9]
Petitioner
considers this return-to-work order as equivalent to the first notice apprising
the employee of the particular acts or omissions for which his dismissal is
sought. But by petitioner’s own
admission, private respondents were never told in said notice that their
dismissal was being sought, only that they should settle their
accountabilities. In petitioner’s
incriminating words:
“It should be emphasized here that at the time the misappropriation was discovered and subsequently thereafter, the petitioner’s first concern was not effecting the dismissal of private respondents but the recovery of the misappropriated funds thus the latter were advised to report back to work.”[10]
As above-stated,
the first notice should inform the employee that his dismissal is being
sought. Its absence in the present case
makes the termination of private respondents defective, for which petitioner
must be sanctioned for his non-compliance with the requirements of or for
failure to observe due process.[11] The twin requirements of notice and
hearing constitute the essential elements of due process, and neither of these
elements can be disregarded without running afoul of the constitutional
guarantee. Not being mere technicalities
but the very essence of due process, to which every employee is entitled so as
to ensure that the employer’s prerogative to dismiss is not exercised
arbitrarily,[12] these requisites must be complied
with strictly.
Petitioner makes
much capital of private respondents’ failure to report to work, construing the
same as abandonment which thus authorized the latter’s dismissal. As correctly pointed out by the NLRC, to
which the Solicitor General agreed, Section 2 of Book V, Rule XIV of the
Omnibus Rules Implementing the Labor Code requires that in cases of abandonment
of work, notice should be sent to the worker’s last known address. If indeed private respondents had abandoned
their jobs, it was incumbent upon petitioner to comply with this requirement. This,
petitioner failed to do, entitling respondents to nominal damages in the amount
of P5,000.00 each, in accordance with recent jurisprudence,[13] to vindicate or recognize their
right to procedural due process which was violated by petitioner.
Lastly,
petitioner argues that the NLRC gravely erred when it disregarded the vouchers
presented by the former as proof of his payment of 13th month pay to private respondents.
While admitting that said vouchers covered only a ten-day period, petitioner
argues that the same should be credited as amounts received by private
respondents as part of their 13th month pay, Section 3(e) of the Rules and Regulations Implementing P.D.
No. 851 providing that the employer shall pay the difference when he pays less
than 1/12th of the employee’s basic salary.[14]
While it is true
that the vouchers evidencing payments of 13th month pay were submitted only on appeal, it would have been
more in keeping with the directive of Article 221[15] of the Labor Code for the NLRC to
have taken the same into account.[16] Time and again, we have allowed
evidence to be submitted on appeal, emphasizing that, in labor cases, technical
rules of evidence are not binding.[17] Labor officials should use every
and all reasonable means to ascertain the facts in each case speedily and
objectively, without regard to technicalities of law or procedure.[18]
It must also be
borne in mind that the intent of P.D. No. 851 is the granting of additional
income in the form of 13th month
pay to employees not as yet receiving the same and not that a double burden
should be imposed on the employer who is already paying his employees a 13th month pay or its equivalent.[19] An employer who pays less than 1/12th of the employees basic salary as
their 13th month pay is only required to pay
the difference.[20]
The foregoing
notwithstanding, the vouchers presented by petitioner covers only a particular
year. It does not cover amounts for
other years claimed by private respondents. It cannot be presumed that the same amounts were given on said
years. Hence, petitioner is entitled to
credit only the amounts paid for the particular year covered by said vouchers.
WHEREFORE, in view of the foregoing, the
decision of the NLRC dated July 31, 1995, insofar as it excludes the commissions
received by private respondents in the determination of petitioner’s compliance
with the minimum wage law, as well as its exclusion of the particular amounts
received by private respondents as part of their 13th month pay is REVERSED and SET
ASIDE. This case is REMANDED to the Labor Arbiter for a
recomputation of the alleged deficiencies. For non-observance of procedural due
process in effecting the dismissal of private respondents, said decision is MODIFIED
by increasing the award of nominal damages to private respondents from
P1,000.00 to P5,000.00 each. No costs.
SO ORDERED.
[1] Rollo, p.
40-41.
[2] Ibid., p.
45.
[3] Id., p.
32.
[4] Philippine Duplicator’s, Inc. vs. NLRC, 227
SCRA 747 (1993).
[5] Songco vs. NLRC, 183 SCRA 610 (1990).
[6] Supra,
Note 4.
[7] 247 SCRA 256 (1995).
[8] Malaya Shipping vs. NLRC, G.R. No. 121698,
March 26, 1998.
[9] Rollo, p.
18-19.
[10] Ibid., p.
19.
[11] Sebuguero vs. NLRC, 248 SCRA 532 (1995).
[12] Supra,
Note 8.
[13] Better Buildings, Inc. vs. NLRC, G.R. No.
109714, December 15, 1997; see also Note 8.
[14] “Section 3(e)– x x x x
x x x x x
The term ‘its equivalent’ as used in paragraph (c) hereof shall include
Christmas bonus, mid-year bonus, profit-sharing payments and other cash bonuses
amounting to not less than 1/12th of the basic
salary but shall not include cash and stock dividends, cost of living
allowances and all other allowances regularly enjoyed by the employee, as well
as non-monetray benefits. Where an employer pays less than 1/12th of the employees basic salary, the employer shall
pay the difference.”
[15] Art. 221. Technical rules not binding and prior
resort to amicable development.– In any proceeding before the Commission or any
of the Labor Arbiters, the rules of evidence prevailing in courts of law or
equity shall not be controlling and it is the spirit and intention of this Code
that the Commission and its members and the Labor Arbiters shall use every and
all reasonable means to ascertain the facts in each case speedily and
objectively and without regard to technicalities of law and procedure, all in
the interest of due process.
x x x x x x x x x.”
[16] Columbia Development Corporation vs. Minister
of Labor and Employment, 146 SCRA 421 (1986).
[17] Bristol Laboratories Employees Association vs.
NLRC, 187 SCRA 118 (1990); PT&T vs. NLRC, 183 SCRA 451 (1990);
Haverton Shipping Ltd. vs. NLRC, 135 SCRA 685 (1985).
[18] De Ocampo vs. NLRC, 213 SCRA 653 (1992).
[19] NFSW vs. Ovejera, 114 SCRA 354 (1982).
[20] Dole Philippines vs. Leogardo, Jr., 117 SCRA
938 (1982).