G.R. No.

121927 April 22, 1998

ANTONIO W. IRAN (doing business under the n!e nd st"le o# Tones Irn
$nterprises%, petitioner,
vs.
NATIONA& &A'OR R$&ATION( )O**I((ION.
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 Cit, Cebu, emploing truck drivers who double as salesmen, truck helpers,
and non!field personnel in pursuit thereof. Petitioner hired private respondents
"odofredo Petralba, Moreno Cadalso, Celso #abiaga and $ernando Colina as
drivers%salesmen while private respondents Pepito &ecson, Apolinario "imena, 'esus
(andilao, )dwin Martin and *iosdado "on+algo were hired as truck helpers.
*rivers%salesmen drove petitioner,s deliver trucks and promoted, sold and delivered
softdrinks to various outlets in Mandaue Cit. &he truck helpers assisted in the
deliver of softdrinks to the different outlets covered b 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-
.A#).M)/-
&en Centavos 0P1.213 per case of 4egular softdrinks.
&welve Centavos 0P1.253 per case of $amil .i+e softdrinks.
&46C7 8)#P)4.-
)ight Centavos 0P1.193 per case of 4egular softdrinks.
&en Centavos 0P1.213 per case of $amil .i+e softdrinks.
.ometime in 'une 2::2, petitioner, while conducting an audit of his operations,
discovered cash shortages and irregularities allegedl committed b private
respondents. Pending the investigation of irregularities and settlement of the cash
shortages, petitioner required private respondents to report for work everda. &he
were not allowed, however, to go on their respective routes. A few das thereafter,
despite aforesaid order, private respondents stopped reporting for work, prompting
petitioner to conclude that the former had abandoned their emploment.
Consequentl, petitioner terminated their services. 8e also filed on /ovember ;,
2::2, a complaint for estafa against private respondents.
<n the other hand, private respondents, on *ecember =, 2::2, filed complaints
against petitioner for illegal dismissal, illegal deduction, underpament of wages,
premium pa for holida and rest da, holida pa, service incentive leave pa, 2>th
month pa, allowances, separation pa, recover of cash bond, damages and
attorne,s fees. .aid complaints were consolidated and docketed as 4ab ?II!25!
2;:2!:2, 4A( ?II!25!295=!:2 and 4A( ?II!25!295@!:2, and assigned to #abor
Arbiter )rnesto $. Carreon.
&he labor arbiter found that petitioner had validl terminated private respondents,
there being Aust cause for the latter,s dismissal. /evertheless, he also ruled that
petitioner had not complied with minimum wage requirements in compensating
private respondents, and had failed to pa private respondents their 2>th month pa.
&he labor arbiter, thus, rendered a decision on $ebruar 29, 2::>, the dispositive
portion of which reads-
W8)4)$<4), premises considered, Audgment is hereb rendered ordering
the respondent Antonio W. Iran to pa the complainants the following-
2. Celso #abiaga P21,1>>.21
5. "odofredo Petralba 2,5=1.11
>. $ernando Colina 22,;=>.21
B. Moreno Cadalso 22,;=>.21
=. *iosdado "on+algo ;,2=:.1B
@. Apolinario "imena 9,>25.5B
;. 'esus (andilao 2B,;5:.=1
9. Pepito &ecson. :,25@.==
CCCC
Attorne,s $ees 021D3 ;B,22@.@>
of the gross award ;,B22.@@
CCCC
"4A/* &<&A# AWA4* P92,=59.5:
EEEEEEEE
&he other claims are dismissed for lack of merit.
.< <4*)4)*.
1
(oth parties seasonabl appealed to the /#4C, 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. 8e also presented, for
the first time on appeal, vouchers denominated as 2>th month pa signed b private
respondents, as proof that petitioner had alread paid the latter their 2>th month pa.
Private respondents, on the other hand, contested the findings of the labor arbiter
holding that the had not been illegall dismissed, as well as mathematical errors in
computing 'esus (andilao,s wage differentials. &he /#4C, in its decision of
*ecember 52, 2::B, affirmed the validit of private respondent,s dismissal, but found
that said dismissal did not compl with the procedural requirements for dismissing
emploees. $urthermore, it corrected the labor arbiter,s award of wage differentials to
'esus (andilao. &he dispositive portion of said decision reads-
W8)4)$<4), premises considered, the decision is hereb M<*I$I)* in
that complainant 'esus (andilao,s computation for wage differential is
corrected from P2=B.11 to PB,==1.11. In addition to all the monetar claim
0sic3 originall awarded b the #abor Arbiter a quo, P2,111.11 is hereb
granted to each complainants 0sic3 as indemnit fee for failure of respondents
to observe procedural due process.
.< <4*)4)*.
2
Petitioner,s motion for reconsideration of said decision was denied on 'ul >2, 2::=,
prompting him to elevate this case to this Court, raising the following issues-
2. &8) 8</<4A(#) C<MMI..I</ AC&)* WI&8 "4A?) A(6.) <$
*I.C4)&I</ A/* C</&4A4F &< #AW A/* '64I.P46*)/C) I/
A$$I4MI/" &8) *)CI.I</ <$ &8) #A(<4 A4(I&)4 A QUO
)GC#6*I/" &8) C<MMI..I</. 4)C)I?)* (F &8) P4I?A&)
4).P</*)/&. I/ C<MP6&I/" &8)I4 WA").H
5. &8) 8</<4A(#) C<MMI..I</ AC&)* WI&8 "4A?) A(6.) <$
*I.C4)&I</ I/ $I/*I/" P)&I&I</)4 "6I#&F <$ P4<C)*64A#
#AP.). I/ &)4MI/A&I/" P4I?A&) 4).P</*)/&. A/* I/ AWA4*I/"
)AC8 <$ &8) #A&&)4 P2,111.11 A. I/*)M/I&F $))H
>. &8) 8</<4A(#) C<MMI..I</ "4A?)#F )44)* I/ /<&
C4)*I&I/" &8) A*?A/C) AM<6/& 4)C)I?)* (F &8) P4I?A&)
4).P</*)/&. A. PA4& <$ &8)I4 2>&8 M</&8 PAF.
&he petition is impressed with merit.
&he /#4C, in dening petitioner,s claim that commissions be included in determining
compliance with the minimum wage ratiocinated thus-
4espondent 0petitioner herein3 insist assiduousl that the commission should
be included in the computation of actual wages per agreement. We will not
fall pre to this fallacious argument. An emploee should receive the minimum
wage as mandated b law and that the attainment of the minimum wage
should not be dependent on the commission earned b an emploee. A
commission is an incentive for an emploee to work harder for a better
production that will benefit both the emploer and the emploee. &o include
the commission in the computation of wage in order to compl with labor
standard laws is to negate the practice that a commission is granted after an
emploee has alread earned the minimum wage or even beond it.
+
&his holding is unsupported b law and Aurisprudence. Article :;0f3 of the #abor Code
defines wage as follows-
Art. :;0f3 C IWageI paid to an emploee shall mean the remuneration or
earnings, however designated, capable of being eJpressed in terms of
mone, whether fiJed or ascertained on a time, task, piece, or commission
basis, or other method of calculating the same, which is paable b an
emploer to an emploee under a written or unwritten contract of emploment
for work done or to be done, or for services rendered or to be rendered and
includes the fair and reasonable value, as determined b the .ecretar of
#abor, of board, lodging, or other facilities customaril furnished b the
emploer to the emploee.
JJJ JJJ JJJ 0)mphasis supplied3
&his definition eJplicitl includes commissions as part of wages. While commissions
are, indeed, incentives or forms of encouragement to inspire emploees to put a little
more industr on the Aobs particularl 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, eJecutor,
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. &he
nature of the work of a salesman and the reason for such tpe of remuneration for
services rendered demonstrate clearl that commissions are part of a salesman,s
wage or salar.
,
&hus, the commissions earned b 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.
&he /#4C asserts that the inclusion of commissions in the computation of wages
would negate the practice of granting commissions onl after an emploee has
earned the minimum wage or over. While such a practice does eJist, the universalit
and prevalence of such a practice is questionable at best. In truth, this Court has
taken Audicial notice of the fact that some salesmen do not receive an basic salar
but depend entirel on commissions and allowances or commissions alone, although
an emploer!emploee relationship eJists.
-
6ndoubtedl, this salar structure is
intended for the benefit of the corporation establishing such, on the apparent
assumption that thereb its salesmen would be moved to greater enterprise and
diligence and close more sales in the eJpectation of increasing their sales
commissions. &his, however, does not detract from the character of such
commissions as part of the salar or wage paid to each of its salesmen for rendering
services to the corporation.
.
#ikewise, there is no law mandating that commissions be paid onl after the minimum
wage has been paid to the emploee. ?eril, the establishment of a minimum wage
onl sets a floor below which an emploee,s remuneration cannot fall, not that
commissions are eJcluded from wages in determining compliance with the minimum
wage law. &his conclusion is bolstered b Philippine Agricultural Commercial and
Industrial Workers Union vs. NLC,
7
where this Court acknowledged that drivers
and conductors who are compensated purel on a commission basis are
automaticall entitled to the basic minimum pa mandated b 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 eJceed the minimum wage, the
emploer need not pa, in addition, the basic minimum pa prescribed b 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 emploees, the
emploer must furnish the worker with two written notices before the latter can be
legall terminated- 0a3 a notice which apprises the emploee of the particular acts or
omissions !or "hich his dismissal is sought, and 0b3 the subsequent notice which
informs the emploee of the emploer,s decision to dismiss him.
8
0)mphasis ours3
Petitioner asseverates that no procedural lapses were committed b 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. &his instruction b the petitioner to report back
for work and settle their accountabilities served as notices to private
respondents for the latter to eJplain or account for the missing funds held in
trust b them before the disappeared.
9
Petitioner considers this return!to!work order as equivalent to the first notice
apprising the emploee of the particular acts or omissions for which his dismissal is
sought. (ut b petitioner,s own admission, private respondents were never told in
said notice that their dismissal was being sought, onl that the should settle their
accountabilities. In petitioner,s incriminating words-
It should be emphasi+ed here that at the time the misappropriation was
discovered and subsequentl thereafter, the petitioner,s first concern was not
effecting the dismissal of private respondents but the recover of the
misappropriated funds thus the latter were advised to report back to work.
1/
As above!stated, the first notice should inform the emploee 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
&he 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. /ot being mere technicalities but the ver essence of due
process, to which ever emploee is entitled so as to ensure that the emploer,s
prerogative to dismiss is not eJercised arbitraril,
12
these requisites must be
complied with strictl.
Petitioner makes much capital of private respondents, failure to report to work,
construing the same as abandonment which thus authori+ed the latter,s dismissal. As
correctl pointed out b the /#4C, to which the .olicitor "eneral agreed, .ection 5
of (ook ?, 4ule GI? of the <mnibus 4ules Implementing the #abor 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 Aobs, it was
incumbent upon petitioner to compl with this requirement. &his, petitioner failed to
do, entitling respondents to nominal damages in the amount of P=,111.11 each, in
accordance with recent Aurisprudence,
1+
to vindicate or recogni+e their right to
procedural due process which was violated b petitioner.
#astl, petitioner argues that the /#4C gravel erred when it disregarded the
vouchers presented b the former as proof of his pament of 2>th month pa to
private respondents. While admitting that said vouchers covered onl a ten!da
period, petitioner argues that the same should be credited as amounts received b
private respondents as part of their 2>th month pa, .ection >0e3 of the 4ules and
4egulations Implementing P.*. /o. 9=2 providing that the emploer shall pa the
difference when he pas less than 2%25th of the emploee,s basic salar.
1,
While it is true that the vouchers evidencing paments of 2>th month pa were
submitted onl on appeal, it would have been more in keeping with the directive of
Article 552
1-
of the #abor Code for the /#4C to have taken the same into account.
1.
&ime and again, we have allowed evidence to be submitted on appeal, emphasi+ing
that, in labor cases, technical rules of evidence are not binding.
17
#abor officials
should use ever and all reasonable means to ascertain the facts in each case
speedil and obAectivel, without regard to technicalities of law or procedure.
18
It must also be borne in mind that the intent of P.*. /o. 9=2 is the granting of
additional income in the form of 2>th month pa to emploees not as et receiving
the same and not that a double burden should be imposed on the emploer who is
alread paing his emploees a 2>th month pa or its equivalent.
19
An emploer who
pas less than 2%25th of the emploees basic salar as their 2>th month pa is onl
required to pa the difference.
2/
&he foregoing notwithstanding, the vouchers presented b petitioner covers onl a
particular ear. It does not cover amounts for other ears claimed b private
respondents. It cannot be presumed that the same amounts were given on said
ears. 8ence, petitioner is entitled to credit onl the amounts paid for the particular
ear covered b said vouchers.
W8)4)$<4), in view of the foregoing, the decision of the /#4C dated 'ul >2,
2::=, insofar as it eJcludes the commissions received b private respondents in the
determination of petitioner,s compliance with the minimum wage law, as well as its
eJclusion of the particular amounts received b private respondents as part of their
2>th month pa is 4)?)4.)* and .)& A.I*). &his case is 4)MA/*)* to the
#abor Arbiter for a recomputation of the alleged deficiencies. $or non!observance of
procedural due process in effecting the dismissal of private respondents, said
decision is M<*I$I)* b increasing the award of nominal damages to private
respondents from P2,111.11 to P=,111.11 each. /o costs.
SO ORDERED