Labor Review Thursday Class Research Paper On Commission Based Employees PDF

LABOR LAW REVIEW
st
1 Semester, AY 2018-2019
Assignment on
Commission based Employees
Submitted by:
Aguilar, Cherry Kerr P.

2013-0593
Submitted to:
Atty. Porfirio DG. Panganiban, Jr.

COMMISSION BASED EMPLOYEES
A. General Concept
Commission is a form of compensation based on a percentage of or some

other amount based on sales or orders. As such, the more sales made, the more
money the employee takes home. Consequently, commission based employee’s
earning could vary from month to month. In addition, they may or may not have a
fixed working hour.
Commission based workers may or may not be regular employees of a

company. In several cases, the Supreme Court ruled that mode of compensation is
not determinative of the status and nature of employment (Labor Congress of the
Philippins vs NLRC, et. al., GR No. 123938, May 21, 1998). As elaborated by Azucena
(2016):
The presence or absence of employer-employee relationship is not

determined by the basis of the employee’s compensation. The
compensation, whether called wage, salary, commission or other name
may be computed on the basis of time spent on the job or it may be based
on the quality and/or quantity of the work done. It may further be
dependent on skills possessed, seniority earned, or performance and
initiative shown by the employee.
An employee may be paid according to how much time he stays on the job
or how much product units he finished. Much in the same way, a non-
employee, perhaps, a businessman or a practicing professional, may be
paid according to how much time he spends with his client or how difficult
the task is, or how voluminous is the work done.
In the case of San Miguel Jeepney Service vs. NLRC (GR No. 92772, November
28, 1996), the Supreme Court had the opportunity to directly answer whether or not
workers who are paid on commission basis be considered regular employees.
Specifically, the Supreme Court ruled as follows:
The mere fact that they were paid on commission basis does not affect or
change their status as regular employees. The test for determining whether
an employee is regular or casual has nothing to do with the manner of
computing or paying a employee's wages or compensation… On the other
hand, we should hasten to add that while in this particular case, these
"commission-basis" employees involved were regular employees (by
operation of law, plus of course, the fact that their status as employees had
never been challenged at any stage of the present case), it does not follow
that every employee paid (whether wholly or partly) on commission basis
Page 1 of 5
can be considered a regular employee, or an employee at all, for that
matter.
It is therefore clear that to determine whether or not commission based

workers are considered as regular employees, the four-fold test and other expanded
tests of employee-employer relationship must be employed.
B. Classification and Examples
Commission based employees may also receive fixed salary or compensation

aside from the commission. On this basis, commission based employees may be
classified as follows:
i. Those receiving purely commission based compensation; and
ii. Those receiving both fixed salary and commission, or partially-

commission based.
In the Philippines, there are various examples of jobs involving commission

based workers. Some of them are the following:
1. Bus/Jeepney drivers
2. Debt collector agents
3. Gym trainers
4. Parking attendants
5. Real estate broker/agents
6. Hair Salon/Spa personnel (e.g. Manicurists, Hair stylists)
7. Car dealers
8. Insurance brokers
9. Physical therapists in Rehabilitation Centers
10. Product distributors
Page 2 of 5
C. Benefits/Entitlements
Considering the nature of their work, commission based workers may have
less statutory benefits compared with other employees, except when they are
considered as regular employees, or when they are only partially-commission based.
While companies may provide benefits beyond the minimum standards prescribed
under the law, provided below is a summary of the applicability of regular
entitlements on commission based workers.
i. Minimum Wage
 Republic Act No. 6727 (also known as the “Wage
Rationalization Act”) mandates the fixing of the minimum
wages applicable to different industrial sectors, namely, non-
agriculture, agriculture plantation, and non-plantation,
cottage/handicraft, and retail/service, depending on the
number of workers or capitalization or annual gross sales in
some sectors.
 This does not apply to purely commission based workers.
ii. Holiday Pay

 Holiday pay refers to the payment of the regular daily wage for
any unworked regular holiday.
 Several types of workers are not entitled to a holiday pay
including – “Field personnel and other employees whose time
and performance is unsupervised by the employer, including
those who are engaged on task or contract basis, purely
commission basis or those who are paid a fixed amount for
performing work irrespective of the time consumed in the
performance thereof.”
iii. Premium Pay and Overtime Pay

 Premium pay refers to the additional compensation for work
performed within eight (8) hours on non-work days, such as
rest days and special days. On the other hand, overtime pay
refers to the additional compensation for work performed
beyond eight (8) hours a day.
 These benefits are not applicable to the following:
o Workers who are paid by results, including those who are

paid on piece rate, takay, pakyaw, or task basis, and other
nontime work, if their output rates are in accordancewith
the standards prescribed in the regulations, or where such
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rates have been fixed by the Secretary of Labor and
Employment; and
o Field personnel, if they regularly perform their duties away

from the principal or branch office or place of business of
the employer and whose actual hours of work in the field
cannot be determined with reasonable certainty.
iv. Night Shift Differential

 Night Shift Differential (NSD) refers to the additional
compensation of ten percent(10%) of an employee’s regular
wage for each hour of work performed between 10 p.m. and 6
a.m.
 This benefit does not apply to “field personnel and those
whose time and performance are unsupervised by the
employer.”
v. Service Incentive Leave

 Every employee who has rendered at least one (1) year of
service is entitled to Service Incentive Leave (SIL) of five (5)
days with pay.
 Similar with Nigh Shift Differential, this benefit does not apply
to “field personnel and those whose time and performance
are unsupervised by the employer.”
vi. 13th month pay

 All employers are required to pay their rank and file
employees thirteenth-month pay, regardless of the nature of
their employment and irrespective of the methods by which
their wages are paid, provided they worked for at least one
(1)month during a calendar year. The thirteenth-month pay
should be given to the employees not later than December 24
of every year.
 This, however, does not apply to “employers of those who are
paid on purely commission, boundary or task basis, and those
who are paid a fixed amount for performing specific work,
irrespective of the time consumed in the performance thereof
(except those workers who are paid on piece-rate basis, in which
case their employer shall grant them thirteenth-month pay).”
Page 4 of 5
vii. Separation Pay
 Applicability would depend on whether or not commission
based employees are considered as regular employees.
viii. Retirement Pay

 For covered workers who are paid by results and do not have a
fixed monthly salary rate, the basis for the determination of
the salary for fifteen (15) days shall be their average daily
salary (ADS). The ADS is derived by dividing the total salary or
earnings for the last twelve months reckoned from the date of
retirement by the number of actual working days in that
particular period, provided that the determination of rates of
payment by results are in accordance with the established
regulations.
References:
The Labor Code of the Philippines
Bureau of Working Conditions. (2018). Handbook on Worker’s Statutory Monetary Benefits.

Retrieved from: bwc.dole.gov.ph.
Azucena, C. (2016). The Labor Code with Comments and Cases Volume I. Manila: Rex Book
Store.
San Miguel Jeepney Service vs. NLRC (GR No. 92772, November 28, 1996)
Page 5 of 5
MARIA TERESA L. ALARCON Labor Review | Thursday 6:00-9:00pm
ATTY. PORFIRIO PANGANIBAN JR.
Wages is defined as:
"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 and
Employment, of board, lodging, or other facilities customarily
furnished by the employer to the employee. "Fair and reasonable
value" shall not include any profit to the employer, or to any person
affiliated with the employer.1
The Supreme Court emphasized that the definition above explicitly includes
commissions as part of wages.2 Commissions are 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.3
The Supreme Court in discussed that in remunerative schemes consisting of a fixed or

guaranteed wage plus commission, the fixed or guaranteed wage is patently the ‘basic
salary’ for this is what the employee receives for a standard work period. Commissions
are given for extra efforts exerted in consummating sales or other related transactions.
They are, as such, additional pay, which this Court has made clear do not form part of
the ‘basic salary.’ 4
It also explained that if bonus or commission forms part of wages depends upon the
circumstances or condition for its payment. If it is an additional compensation which
the employer promised and agreed to give without any conditions imposed for its
payment, such as success of business or greater production or output, then it is part of
the wage. But if it is paid only if profits are realized or a certain amount of productivity
achieved, it cannot be considered part of the wages. In the case at bar, it is not payable
to all but to laborers only. It is also paid on the basis of actual production or actual work
accomplished. If the desired goal of production is not obtained or the amount of actual
work accomplished, the bonus does not accrue. It is evidence that under the
1 Art. 97(f), Labor Code

2 Iran v. NLRC , G.R. No. 121927. April 22, 1998
3 Iran v. NLRC, G.R. No. 121927, April 22, 1998
4 Boie-Takeda Chemicals, Inc v. De la Serna, G.R. No. 92174, December 10, 1993
circumstances it is paid only when the labor becomes more efficient or more productive.
It is only an inducement for efficiency, a prize therefor, not a part of the wage. 5
Thus, when the regular wage includes the commissions, the employee is entitled to
overtime, holiday, night-shift differential, 13th month, and other additional pay.
On the other hand, Employees or workers who are paid on purely commission basis are
not entitled to holiday pay,6 night-shift differential,7 service incentive leave,8 and 13th
month pay.9
When a worker is paid guaranteed wage plus commission, the fixed or guaranteed wage
is patently the ‘basic salary’,10 thus, forms part of the computation of 13th month pay.
The Department of Labor and Employment has regulated the rules on compensation of
PUB bus drivers and conductors through Department Order 118-12, Series of 2012.
These workers are entitled to compensation of not lower than the minimum-wage for.
They are also entitled to overtime pay, premium pay, 13 th month pay, and holiday pay.
Paid leaves such as SIL, Maternity, Paternity, Parental, VAWC, Magna Carta of Women,
etc. are given to PUB drivers and conductors.11 They are also entitled to a performance-
based component based on safety performance and business performance such as
ridership, revenues, and other related parameters.12
In Iran v. NLRC,13 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.
Thus forms part of the computation of additional pay such as overtime, holiday pay, etc.
These employees (sales personnel) are evaluated by the result of their work and not by
the actual hours of field work which are hardly susceptible to determination. 14 The
Supreme Court in UFE v. Vivar15citing San Miguel Brewery, Inc. v. Democratic Labor
Organization16 stated that the reasons for excluding an outside salesman are fairly
apparent. Such a salesman, to a greater extent, works individually. There are no
restrictions respecting the time he shall work and he can earn as much or as little, within
the range of his ability, as his ambition dictates. In lieu of overtime he ordinarily
receives commissions as extra compensation. He works away from his employer's place
5 Atok-Big Wedge Mining Co., Inc. v. Atok-Big Wedge Mutual Benefit Association, G.R. No. L-5276,
March 3, 1953
6 Par. (e), Sec. 1, Rule IV, Omnibus Rules Implementing the Labor Code
7 Par. (e), Sec. 1, Rule II, Omnibus Rules Implementing the Labor Code
8 Par. (d), Sec. 1, Rule V, Omnibus Rules Implementing the Labor Code
9 IRR of PD 851
10 Boie-Takeda Chemicals, Inc v. De la Serna, G.R. No. 92174, December 10, 1993
11 Sec. 2., Rule II, Department Order 118-12, Series of 2012, Department of Labor and Employment
12 Par. b., Sec. 2., Rule III, Department Order 118-12, Series of 2012, Department of Labor and
Employment
13 G.R. No. 121927. April 22, 1998
14 UFE v. Vivar, GR no. 79255, January 20, 1992
15 GR no. 79255, January 20, 1992
16 8 SCRA 613 [1963]
of business, is not subject to the personal supervision of his employer, and his employer
has no way of knowing the number of hours he works per day. In this case, the Court
applied the rule on exempting these workers from payment of overtime pay to the
exclusion from holiday pay. It must be noted that the Court considered the employees in
this case as field personnel.
AUSTRIA, Don Rodel A. Labor Law Review
2015 – 0472 13 September 2018
COMMISSION – BASED EMPLOYEES
DEFINITION
It refers to those persons working for the establishment and are paid on the basis
of a certain percentage of money received in a transaction. They may receive basic pay
depending on their working arrangement with the establishment.1
CLASSIFICATION
1.) Regular Employee – refers to those who have been “engaged to perform
activities which are usually necessary or desirable in the usual business or trade
of the employer”.2
2.) Project Employee – refers to those “whose employment has been fixed for a
specific project or undertaking, the completion or termination of which has been
determined at the time of the engagement of the employee”.3
3.) Seasonal Employee – refers to those who work or perform services which are
seasonal in nature, and the employment is for the duration of the season.4
4.) Casual Employee – refers to those who are not regular, project, or seasonal
employees.5
5.) Fixed-term Employee – refers to those who work for a fixed term.6
KINDS OF SALARY
1.) Full Commission
2.) Half Salary, Half Commission
ENTITLEMENT: WAGE or SALARY/BENEFITS

1.) Holiday Pay
2.) Premium Pay
3.) 13th Month Pay
4.) Service Incentive Leave
5.) Retirement Pay
1
Philippine Statistics Authority “Definition of Terms – Part A”. Retrieved from
[https://psa.gov.ph/philippine-industry-yls/data-
source/Employment%20of%20Specific%20Groups%20of%20Workers] on 12 September 2018.
2
Chan, J.G. (2017) Bar Reviewer on Labor Law: Annotation Based on the Topics in the Latest Supreme Court-
Prescribed Syllabus for Labor Law. Post Employment, Page 224.
3
Ibid 2
4
Ibid 2
5
Ibid 2
6
GMA Network, Inc. v. Pabriga, G.R. No. 176419, 27 November 2013
1|Page
2015 – 0472 13 September 2018
DIFFERENCE BETWEEN FULL COMMISSION AND HALF SALARY,
HALF COMMISSION BASED EMPLOYEES IN RELATION TO
ENTITLEMENT
ENTITLEMENT FULL COMMISSION HALF SALARY,
HALF COMMISSION
1.) Holiday Pay Not Entitled Entitled
2.) Premium Pay Case to Case Basis Entitled
3.) 13th Month Pay Not Entitled Entitled
4.) Service Incentive Leave Not Entitled Entitled
5.) Retirement Pay Entitled: Entitled
1.) 15 days salary for every 1.) 22.5 days salary for
year of service if it is a field every year of service
personnel or whose
performance is
unsupervised by the
employer
2.) 22.5 days salary for
every year of service if it is
supervised by the
employer
Holiday Pay
All employees are entitled to and covered by the law on holiday pay, except
those who are engaged on task that is purely commission basis.7
Premium Pay
Refers to the additional compensation required by law to be paid for work
performed within the regular eight (8) hours on non-working days, such as rest days,
regular and special holidays.8
The law is silent on whether or not a purely commission based employees is

exempted from Premium Pay in terms of rest days and special holidays.
However, purely commission based employees are exempted from holiday pay. 9
13th Month Pay

Employers of those who are paid on purely commission are not covered by the
13th month pay law.10
7
Article 82, Labor Code of the Philippines; Section 1, Rule IV, Book III, Rules to Implement the Labor Code; No.
II[A], DOLE Handbook on Workers Statutory Monetary Benefits.
8
No. III, DOLE Handbook on Workers Statutory Monetary Benefits.
9
Ibid 7
10 th
Presidential Decree No. 851 (1975); No.2 [d]. Revised Guidelines on the Implementation of the 13 Month Pay
Law, formerly Section 3 [e], Rules and Regulations Implementing Presidential Decree No. 851.
2|Page
2015 – 0472 13 September 2018
Service Incentive Leave
All employees are covered by the rule on service incentive leave, except those
who are engaged on task that is purely commission basis.11
Retirement Pay
Components of retirement pay are as follows:
1.) 15 days salary based on his latest salary rate;
2.) Cash equivalent of five (5) days of service of service incentive leave;
3.) One – twelfth (1/12) of the 13th month pay or 2.5 days; and
4.) All other benefits that the employer and employee may agree upon what
should be included in the computation of the employee’s retirement pay. 12
Field Personnel or employees whose performance is unsupervised by the

employer is subject only to the 1st and 4th enumeration of the component of retirement
pay.13
Commission based employees whose performance is supervised by the

employer, such as, but not limited to, bus conductors, is subject to all of the above
components of retirement pay.14
EXAMPLES OF EMPLOYEES BASED ON THEIR CLASSIFICATION

AND KIND OF SALARY
CLASSIFICATION KIND OF SALARY EMPLOYEE
Regular Full Commission 1.) Taxi Driver15
2.) Barber16
Half Commission, Half Pay 1.) Bus Passenger Ticket
Conductor17
2.) Caretaker18
Project Full Commission 1.) Middleman
Half Commission, Half Pay 1.) Construction Worker
2.) Architects
3.) Engineers
Seasonal Full Commission 1.)Farmers
2.) Fruit/Vegetable
Harvesters
3.) Animal Pastors
Half Commission, Half Pay 1.)Farmers
11
Article 82, Labor Code of the Philippines; Section 1, Rule V, Book III, Rules to Implement the Labor Code; No. VI
[A], DOLE Handbook on Workers Statutory Monetary Benefits.
12
Article 302, Labor Code; Section 5.2, Rule II, Implementing Rules of the Retirement Pay Law.
13
G.R. No. 155214, R&E Transport, Inc. v. Latag, 13 February 2004.
14
G.R. No. 187698, Serrano v. Severino Santos Transit, 9 August 2010.
15
Ibid 13
16
G.R. No. 121605, Jo v. NLRC, 2 February 2000
17
G.R. No. 156367, Autobuy Transport System, Inc. v. Bautista, 16 May 2005
18
Ibid 16
3|Page
2015 – 0472 13 September 2018
2.) Fruit/Vegetable
Harvesters
3.) Animal Pastors
Casual Full Commission 1.) Jeep Drivers
Half Commission, Half Pay 1.) Jeep Dispatchers19
Fixed-Term Full Commission 1.) Sales Person (e.g.
Jewelry)20
Half Commission, Half Pay 1.) Sales Person
19
G.R. 92772, San Miguel Jeepney Service v. NLRC, 28 November 1996
20
AM MTJ-00-1309, Dayawon v. Judge Badilla, 6 September 2000; G.R. 159890, Abante v. Lamadrid Bearing and
Parts Corp., 29 May 2004
4|Page
Bacurio, Kenneth Bernard N.
2016-0609
Commission-Based Employee
Commission is the recompense, compensation, reward of an employee, 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 of the principal.
The Supreme Court ruled in Philippine Agricultural Commercial and Industrial Workers Union v. National
Labor Relations Commission, G.R. No. 107994 that while commissions may be in the form of incentives
or encouragement to inspire said bus drivers and conductors to put a little more zeal and industry on
their jobs, still, it is safe to say that the same are direct remunerations for services rendered, given the
small remuneration they receive for the services they render, which is precisely the reason why private
respondent allowed the drivers and conductors a guaranteed minimum wage. The conclusion is
ineluctable that said commissions are part of their salary.
As to Employer-Employee relationship:
An employer-employee relationship exists between a jeepney-owner and a driver under a

"boundary system" — namely, the fact that the driver does not receive a fixed wage but gets only the
excess of the amount of fares collected by him over the amount he pays to the jeep-owner, and that
the gasoline consumed by the jeeps is for the account of the driver — are not sufficient to withdraw
the relationship between them from that of employer and employee. Consequently, the jeepney-
owner is subsidiary liable as employer (URBANO MAGBOO and EMILIA C. MAGBOO vs. DELFIN
BERNARDO).
In Martinez v. National Labor Relations Commission, citing National Labor Union v. Dinglasan, the Court
ruled that:
The relationship between jeepney owners/operators and jeepney drivers under the boundary system is
that of employer-employee and not of lessor-lessee because in the lease of chattels the lessor loses
complete control over the chattel leased although the lessee cannot be reckless in the use thereof,
otherwise he would be responsible for the damages to the lessor. In the case of jeepney
owners/operators and jeepney drivers, the former exercises supervision and control over the latter. The
fact that the drivers do not receive fixed wages but get only that in excess of the so-called "boundary"
[that] they pay to the owner/operator is not sufficient to withdraw the relationship between them from
that of employer and employee.
As to Entitlement to Cost of Living Allowance (COLA):
In EM TRANSPORT, INC. vs. THE HONORABLE JACOBO C. CLAVE, records reveal that complainants-
appellees are taxi drivers of the company who were then paid on commission basis which was
subsequently changed to boundary system pursuant to the collective bargaining agreement. The main
issue to be resolved is whether or not complainants-appellees are entitled to emergency cost of living
allowance under PD 525.
Section 2 of the Rules and Regulations Implementing PD 525 which pertinently states:
'Section 2. Employees Covered. (a) The Decree shall apply to all employees of covered employers,
regardless of their position, designation or employment status, and irrespective of the method by which
their wages are paid, including temporary, casual, probationary, and seasonal employees and workers.'
It is therefore clear that 'irrespective of the method by which their wages are paid,' whether on
commission basis and later on converted to boundary system as in the case at bar, the taxi drivers are
covered by the provisions of said Decree (COLA).
The payment of emergency allowance is mandatory. It applies to all employers. The only exemption is "a
severely distressed industry or branch thereof, or enterprise therein, as defined by the Department of
Labor.
As to Entitlement to Retirement Benefits:
The case of RODOLFO J. SERRANO versus SEVERINO SANTOS TRANSIT discussed the following:
The Implementing Rules of Republic Act No. 7641 provides:

RULE II: Retirement Benefits
SECTION 1. General Statement on Coverage. This Rule shall apply to all employees in the private sector,
regardless of their position, designation or status and irrespective of the method by which their wages
are paid, except to those specifically exempted under Section 2 hereof.
SECTION 5: Retirement Benefits.

5.1 In the absence of an applicable agreement or retirement plan, an employee who retires pursuant to
the Act shall be entitled to retirement pay equivalent to at least one-half (―) month salary for every
year of service, a fraction of at least six (6) months being considered as one whole year.
5.2 Components of One-half (―) Month Salary. For the purpose of determining the minimum retirement
pay due an employee under this Rule, the term one-half month salary shall include all of the following:
(a) Fifteen (15) days salary of the employee based on his latest salary rate. As used herein, the term
salary includes all remunerations paid by an employer to his employees for services rendered during
normal working days and hours, whether such payments are fixed or ascertained on a time, task, piece
of commission basis, or other method of calculating the same, and includes the fair and reasonable
value, as determined by the Secretary of Labor and Employment, of food, lodging or other facilities
customarily furnished by the employer to his employees. The term does not include cost of living
allowances, profit-sharing payments and other monetary benefits which are not considered as part of or
integrated into the regular salary of the employees.
(b) The cash equivalent of not more than five (5) days of service incentive leave;
(c) One-twelfth of the 13th month pay due the employee.
(d) All other benefits that the employer and employee may agree upon that should be included
in the computation of the employees retirement pay.
Admittedly, petitioner worked for 14 years for the bus company which did not adopt any retirement
scheme. Even if petitioner as bus conductor was paid on commission basis then, he falls within the
coverage of R.A. 7641 and its implementing rules. As thus correctly ruled by the Labor Arbiter,
petitioners retirement pay should include the cash equivalent of the 5-day SIL and 1/12 of the 13th month
pay.
As to Entitlement to Service Incentive Leave:
In the case of AUTO BUS TRANSPORT SYSTEMS, INC., vs. ANTONIO BAUTISTA, the right to SIL of
employee paid in commission basis was discussed, to wit:
Art. 95. RIGHT TO SERVICE INCENTIVE LEAVE –

(a) Every employee who has rendered at least one year of service shall be entitled to a yearly service
incentive leave of five days with pay.
Book III, Rule V: SERVICE INCENTIVE LEAVE

SECTION 1. Coverage. This rule shall apply to all employees except:
(d) Field personnel and other employees whose performance is unsupervised by the employer including
those who are engaged on task or contract basis, purely commission basis, or those who are paid in a
fixed amount for performing work irrespective of the time consumed in the performance thereof; . . .
According to the Implementing Rules, Service Incentive Leave shall not apply to employees classified as
field personnel. The phrase other employees whose performance is unsupervised by the employer must
not be understood as a separate classification of employees to which service incentive leave shall not be
granted. Rather, it serves as an amplification of the interpretation of the definition of field personnel
under the Labor Code as those whose actual hours of work in the field cannot be determined with
reasonable certainty.
The same is true with respect to the phrase those who are engaged on task or contract basis, purely
commission basis. Said phrase should be related with field personnel, applying the rule on ejusdem
generis that general and unlimited terms are restrained and limited by the particular terms that they
follow. Hence, employees engaged on task or contract basis or paid on purely commission basis are not
automatically exempted from the grant of service incentive leave, unless, they fall under the
classification of field personnel.
Therefore, petitioners contention that respondent is not entitled to the grant of service incentive leave
just because he was paid on purely commission basis is misplaced. What must be ascertained in order to
resolve the issue of propriety of the grant of service incentive leave to respondent is whether or not he
is a field personnel.
Name of Student: Cherry Anjell L. Balbarino
Subject: Labor Law Review
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. However,
there are no employer –employee relationship on the commission based employee.
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.
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.
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. An
employer who pays less than 1/12th of the employee’s basic salary as their 13th month pay is only required
to pay the difference. (Iran vs. NLRC)
Bayot, Kristine Valerie S.
2013-0001
“COMPREHENSIVE RESEARCH on Commission-Based Employees”
Question: Whether they are entitled to Wage/Salary, Sick Incentive Leave,

Overtime, Separation/Retirement Pay?
Answer:
Jurisprudence:
The Supreme Court held in the case of Villamaria v. CA, G.R. No. 165881, 19
April 2006, J. Callejo, Sr. by reiterating the case of National Labor Union v.
Dinglasan which distinctly identifies the boundary system to be an employer-employee
relationship as opposed to a lessor-lessee relationship. It also provided other supporting
analogies found in Magboo v. Bernardo and Lantaco, Sr. v. Llamas, to highlight that an
employer-employee relationship likewise existed in relationships between an auto-
calesa owner/operator and driver, a bus owner/operator and conductor, and a taxi
owner/operator and driver.
It ruled in the case ofVillamaria v. CA, G.R. No. 165881, 19 April 2006, J.
Callejo, Sr. that the boundary system is a scheme by an owner/operator engaged in
transporting passengers as a common carrier to primarily govern the compensation of
the driver, that is, the latter’s daily earnings are remitted to the owner/operator less the
excess of the boundary which represents the driver’s compensation. Under this system,
the owner/operator exercises control and supervision over the driver. It is unlike a lease
of chattels where the lessor loses complete control over the chattel leased but the lessee
is still ultimately responsible for the consequences of its use. The management of the
business is still in the hands of the owner/operator, who, being the holder of the
certificate of the public convenience, must see to it that the driver follows the route
prescribed by the franchising and regulatory authority, and the rules promulgated with
regard to the business operations. The fact that the driver does not receive fixed wages
but only the excess of the “boundary” given to the owner/operator is not sufficient to
change the relationship between them. Indubitably, the driver performs activities which
are usually necessary or desirable in the usual business or trade of the owner/operator.
Auto Bus Transport Systems, Inc. vs. Bautista 458 SCRA 578 , May 16, 2005
The Supreme Court held in this case that what must be ascertained in order to
resolve the issue of propriety of the grant of service incentive leave to respondent
Antonio Bautista which has been employed by petitioner Auto Bus Transport Systems,
Inc. (Autobus), as driver-conductor is whether or not he is a field personnel.
According to Article 82 of the Labor Code, “field personnel” shall refer to non-
agricultural employees who regularly perform their duties away from the principal place
of business or branch office of the employer and whose actual hours of work in the field
cannot be determined with reasonable certainty.
At this point, it is necessary to stress that the definition of a “field personnel” is

not merely concerned with the location where the employee regularly performs his
duties but also with the fact that the employee’s performance is unsupervised by the
employer. Thus, in order to conclude whether an employee is a field employee, it is also
necessary to ascertain if actual hours of work in the field can be determined with
reasonable certainty by the employer. In so doing, an inquiry must be made as to
whether or not the employee’s time and performance are constantly supervised by the
employer.
In the case at bench, respondent is not a field personnel but a regular employee
who performs tasks usually necessary and desirable to the usual trade of petitioner’s
business. Accordingly, respondent is entitled to the grant of service incentive leave.
Thus, A bus driver-conductor, not being a field personnel but a regular

employee who performs tasks usually necessary and desirable to the usual trade of the
company’s business, is entitled to the grant of service incentive leave.
As correctly observed by the Labor Arbiter in this case, it is of judicial notice that
along the routes that are plied by these bus companies, there are its inspectors assigned
at strategic places who board the bus and inspect the passengers, the punched tickets,
and the conductor’s reports. There is also the mandatory once-a-week car barn or shop
day, where the bus is regularly checked as to its mechanical, electrical, and hydraulic
aspects, whether or not there are problems thereon as reported by the driver and/or
conductor. They too, must be at specific place as [sic] specified time, as they generally
observe prompt departure and arrival from their point of origin to their point of
destination. In each and every depot, there is always the Dispatcher whose function is
precisely to see to it that the bus and its crew leave the premises at specific times and
arrive at the estimated proper time. These, are present in the case at bar. The driver, the
complainant herein, was therefore under constant supervision while in the performance
of this work. He cannot be considered a field personnel.
Therefore, as correctly concluded by the appellate court, respondent is not a field

personnel but a regular employee who performs tasks usually necessary and desirable to
the usual trade of petitioner’s business. Accordingly, respondent is entitled to the grant
of service incentive leave.
Serrano vs. Severino Santos Transit 627 SCRA 483 , August 09, 2010
The Supreme Court ruled that Republic Act No. 7641 which was enacted on
December 9, 1992 amended Article 287 of the Labor Code by providing for retirement
pay to qualified private sector employees in the absence of any retirement plan in the
establishment; Bus conductors paid on commission basis fall within the coverage of
Republic Act No. 7641 and its implementing rules.
In this case that petitioner Rodolfo J. Serrano worked for 14 years for respondent
Severino Santos Transit, a bus company owned and operated by its correspondent
Severino Santos, which did not adopt any retirement scheme. Even if petitioner as bus
conductor was paid on commission basis then, he falls within the coverage of R.A. 7641
and its implementing rules. As thus correctly ruled by the Labor Arbiter, petitioner’s
retirement pay should include the cash equivalent of the 5-day SIL and 1/12 of the 13th
month pay.
The affirmance by the appellate court of the reliance by the NLRC on R & E
Transport, Inc. is erroneous. In said case, the Court held that a taxi driver paid
according to the “boundary system” is not entitled to the 13th month and the SIL pay,
hence, his retirement pay should be computed on the sole basis of his salary.
For purposes, however, of applying the law on SIL, as well as on retirement, the
Court notes that there is a difference between drivers paid under the “boundary system”
and conductors who are paid on commission basis.
In practice, taxi drivers do not receive fixed wages. They retain only those sums in
excess of the “boundary” or fee they pay to the owners or operators of the vehicles.
Conductors, on the other hand, are paid a certain percentage of the bus’ earnings for the
day.
It bears emphasis that under P.D. 851 or the SIL Law, the exclusion from its
coverage of workers who are paid on a purely commission basis is only with respect to
field personnel. The more recent case of Auto Bus Transport Systems, Inc., v. Bautista
clarifies that an employee who is paid on purely commission basis is entitled to SIL.
Duterte vs. Kingswood Trading Co., Inc. 534 SCRA 607 , October 04, 2007
The Supreme Court held in this case that to determine whether an employee is a
field employee, it is also necessary to ascertain if actual hours of work in the field can
be determined with reasonable certainty by the employer. If required to be at specific
places at specific times, employees, including drivers, cannot be said to be field
personnel despite the fact that they are performing work away from the principal office
of the employer. In so doing, an inquiry must be made as to whether or not the
employee’s time and performance are constantly supervised by the employer.
Guided by the foregoing norms, petitioner Roque S. Duterte hired as truck/trailer

driver was definitely a regular employee of respondent Kingswood Trading Company,
Inc. (KTC) of which co-respondent Filemon Lim is the company President and not its
field personnel, as the term is used in the Labor Code. As it were, he was based at the
principal office of the respondent company. His actual work hours, i.e., from 6:00 a.m.
to 6:00 p.m., were ascertainable with reasonable certainty. He averaged 21 trips per
month. And if not driving for the company, he was paid P125.00 per day for cleaning
and maintaining KTC’s equipment. Not falling under the category of field personnel,
petitioner is consequently entitled to both holiday pay and service incentive leave pay, as
mandated by Articles 94 and 95 of the Labor Code.
Philippine Agricultural Commercial and Industrial Workers Union vs. National Labor
Relations Commission247 SCRA 256 , August 14, 1995
The Supreme Court decided in this case that every employee receiving a
commission in addition to a fixed or guaranteed wage or salary, is entitled to a 13th
month pay.
For purposes of entitling rank and file employees a 13thmonth pay, it is

immaterial whether the employeesconcerned are paid a guaranteed wage plus
commission ora commission with guaranteed wage inasmuch as the bottom line is that
they receive a guaranteed wage. This iscorrectly construed in the MOLE Explanatory
Bulletin No. 86-12.
In the case at bench, while the bus drivers and conductors of respondent Vallacar
Transit, Inc. company are considered by the latter as being compensated on a
commission basis, they are not paid purely by what they receive as commission. As
admitted by respondent company, the said bus drivers and conductors are automatically
entitled to the basic minimum pay mandated by law in case the commissions they
earned be less than their basic minimum for eight (8) hours work. Evidently therefore,
the commissions form part of the wage or salary of the bus drivers and conductors. A
contrary interpretation would allow an employer to skirt the law and would result in an
absurd situation where an employee who receives a guaranteed minimum basic pay
cannot be entitled to a 13th month pay simply because he is technically referred to by his
employer per the CBA as an employee compensated on a purely commission basis. Such
would be a narrow interpretation of the law, certainly not in accord with the liberal
spirit of our labor laws.
Moreover, what is controlling is not the label attached to the remuneration that
the employee receives but the nature of the remuneration7 and the purpose for which
the 13th month pay was given to alleviate the plight of the working masses who are
receiving low wages.
In sum, the 13th month pay of the bus drivers and conductors who are paid a
fixed or guaranteed minimum wage in case their commissions be less than the statutory
minimum, and commissions only in case where the same is over and above the statutory
minimum, must be equivalent to one-twelfth (1/12) of their total earnings during the
calendar year.
King of Kings Transport, Inc. vs. Mamac 526 SCRA 116 , June 29, 2007
The Supreme Court ruled in this case that it was erroneous for the CA to apply
the case of Philippine Agricultural Commercial and Industrial Workers Union. Notably
in the said case, it was established that the drivers and conductors praying for 13th-
month pay were not paid purely on commission. Instead, they were receiving a
commission in addition to a fixed or guaranteed wage or salary. Thus, the Court held
that bus drivers and conductors who are paid a fixed or guaranteed minimum wage in
case their commission be less than the statutory minimum, and commissions only in
case where they are over and above the statutory minimum, are entitled to a 13th-month
pay equivalent to one-twelfth of their total earnings during the calendar year.
In the present case, petitioner KKTI maintains that respondent Mamac was paid
on purely commission basis; thus, the latter is not entitled to receive the 13th-month pay
benefit. However, applying the ruling in Philippine Agricultural Commercial and
Industrial Workers Union v. NLRC, the CA held that respondent is entitled to the said
benefit.
Besides, respondent admitted that he was paid on commission only. Moreover,

this fact is supported by his pay slips which indicated the varying amount of
commissions he was receiving each trip. Thus, he was excluded from receiving the 13th-
month pay benefit.
Iran vs. NLRC (Fourth Division) 289 SCRA 433 , April 22, 1998
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 drivers/salesmen.
As part of their compensation, the drivers/salesmen and truck

helpers of petitioner received commissions per case of softdrinks sold at
certain rates.
The Supreme Court ruled that the commissions earned by private

respondents in selling softdrinks constitute part of the compensation or re
muneration paid to drivers/salesmen and truck helpers for serving as
such, and hence, must be considered part of the wages paid them.
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 This conclusion is bolstered by Philippine Agricultural
Commercial and Industrial Workers Union vs. NLRC, 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.
D.O. 118-12:
In year 2012, the former Labor and Employment Secretary Rosalinda Dimapilis-
Baldoz (DOLE) has issued Department Order No. 118-12, Series of 2012 which
establishes the rules and regulations governing the employment and working conditions
of drivers and conductors in the public utility bus transport industry. D.O. 118-12 was
published on January 17, 2012 in a newspaper of national circulation.
She said that “This is a novel scheme which drastically changes an age-old
commission-based pay practice. D.O. 118-12 will improve the working conditions in the
bus transport sector through the implementation of labor standards including monetary
and social benefits and workplace safety and health measures which will ensure the
health and fitness of drivers and conductors,” said Baldoz, adding that the department
order will draw support from its tripartite partners in the monitoring of compliance with
D.O. 118-12.”
She explained that the National Wages and Productivity Commission (NWPC) is
mandated by the law to fix and determine the applicable minimum wage, not only on
regional and provincial level, but also on industry level.
D.O. 118-12, which outlines the minimum compensation and social welfare
benefits, including PhilHealth, Social Security System (SSS), and Pag-Ibig; wage-related
benefits; and training and development for workers in the said sector, will initially cover
the public utility bus transport plying in Metro Manila. It will apply to other public
utility bus companies by July 2012.
Bus drivers and conductors will have “part-fixed and part performance-based”
wage/compensation system to ensure income security which will also reduce the risk-
taking behavior of drivers with a purely commission-based system. Under D.O. 118-12,
the fixed wage component will be based on an amount mutually agreed by the owner
and the drivers/conductors. The amount agreed will not be lower than the applicable
minimum wage for normal work hours and days. The performance-based component
will be based on safety performance, business performance, and other related
parameters.
Department Order No. 118-12, s. 2012, assures that all public utility drivers and
conductors will be entitled to minimum wage rates which will be paid at least once every
two weeks or twice a month, at intervals not exceeding 16 days. The workers in the said
industry will also be entitled to wage-related benefits, holiday pay, overtime pay, night
shift differential, service incentive leave, 13th month pay, paternity and maternity leave,
and other statutory monetary benefits under the labor code and other labor-related
laws.
Based on D.O. 118-12, drivers and workers will have the right to security of tenure
and due process as provided by law. This means bus drivers and conductors can only be
terminated from work for just or authorized causes based on the provisions of the Labor
Code.
The bus owners and operators will also adopt, implement, and promote
occupational safety and health programs with the provisions of the occupational safety
and health standards (OSHS), and other DOLE-related issuances including the
prevention and control of tuberculosis, HIV and AIDS, hepatitis B, and drugs in the
workplace.
Bus companies are also encouraged to create a labor-management committee and

labor-management mechanism which will be composed of representatives from
management and drivers/conductors. The committee will be tasked to develop and
implement labor-management schemes and welfare programs for the workers.
Meanwhile, the NWPC will issue the operational guidelines to implement the
compensation scheme including the formula to be used by bus companies. Companies
may submit their proposed compensation scheme to respective Regional Tripartite
Wages and Productivity Board on or before March 31, 2011.
The Technical Education and Skills Development Authority (TESDA), in

coordination with the Land Transportation Office (LTO), Land Transportation
Franchising Regulatory Board (LTFRB), and the Metro Manila Development Authority
(MMDA) shall implement an assessment and certification program for professional
drivers. The assessment will focus on knowledge, attitude, and skills.
The certificate from TESDA is one of the requirements in getting Certificates of

Public Convenience from the LTFRB. In the first six months but not later than one year
from effectivity, the provisions of the D.O. shall be liberally construed to enable
compliance by the bus companies.
However later on by deciding to favor the bus companies’ appeal against the
DOLE and LTFRB order, the Supreme Court issued a Status Quo Ante-Order. The SC
ruled the order unconstitutional, therefore null and void.As a result the same dangerous
bus-operation conditions since time immemorialhave remained unreformed.
Source link: https://www.dole.gov.ph/news/view/1632
House Bill 3611:
In year 2013, former Speaker Feliciano Belmonte Jr. endorsed the bill filed by
members of the House of Representatives requiring owners of bus companies to pay a
fixed monthly salary to their drivers.
At that time, they were moved by the death of 18 persons when a Don Mariano
Transit Corp. bus that appeared to be running faster than the Skyway speed limit hit the
guard rail and fell off the Skyway in Parañaque City. Investigation revealed that the bus
driver had been driving for 19 hours virtually nonstop and without sleep and rest
because he had to make sure he earned enough money. That tragedy was not the first
time a bus fell off the Skyway.
On June 26, 2011, a Dimples Star Transport bus fell off the Skyway. 3 persons
died.
The bill would also require employers to give bus drivers overtime pay.Therefore, the
bill also requires bus company owners to assign fix working hours to drivers.
Meanwhile, Bayan Muna party-list Reps. Carlos Zarate and NeriColmenares,

together with Anakpawis party-list Rep. Fernando Hicap, are the authors of House Bill
3611. It seeks to regulate the compensation of public utility bus drivers and conductors
by requiring bus operators to pay them fixed monthly salaries and working hours.
Violators would be fined.
The bill’s authors have been guided by the Metro Manila Accident Reporting and
Analysis System (MMARAS) which reports that throughout our country from January to
December 2011 6,940 bus accidents were recorded. This means a daily average of 19
accidents involving buses. The report finds that bus accidents accounted for 34 fatalities
and 6,095 damage to property instances out of the 6, 940 accidents recorded.The
MMARAS report shows that most fatal accidents occur at morning and noontime rush
hours.
People who have studied the problem including the three congressmen authors of
this commendable bill see that the bus drivers’ poor working conditions, the unjust
“boundary” and commission-based systems, are the root causes of these fatal accidents.
Moreover, drivers and conductors fiercely compete with their counterparts for
passengers. Many work for up to or more than 20 hours a day nonstop. During that
time, the majority of Metro Manila bus drivers get a commission of 9.0 percent of the
gross income of the day. The bus conductors get 7 percent.But every bus’ driver and
conductor must meet the revenue quota set by company or owner/operator. Whenever
they don’t meet the quota they would not get the usual 9 percent of gross and would
even be made to pay for a part, often half, the cost of the fuel used during the day.Some
bus drivers and conductors work three days a week, others five days a week, for 10 hours
or more a day. Some, usually the relievers, work less than three days a week. To make
enough money for their needs, they work longer hours without rest during the two days
when they are employed.
Source link: https://www.manilatimes.net/proper-working-hours-and-fixed-salaries-

for-bus-drivers/73242/
BODOPOL, ADOLFO JR. B LABOR LAW REVIEW
2014-0563 Sept. 13, 2018
A Comprehensive Research Paper on the Employment Status and Conditions of

Commission-Based Bus and Truck Drivers
In an article entitled “A Commission-Based Salary”, by Lisa Magloff, she

discussed the reasons why a number of people (both employee and employer) resort to
a commission based pay scheme. “Many sales jobs pay on a commission basis. This is
because sales personnel contribute directly to company revenue. The more sales made,
the more money the company makes. The concept behind paying on a commission basis
is that sales representatives will work harder to make sales if their income depends on
it. Paying based on commission is also a way for companies to keep payroll costs down,
since the amount paid to sales representatives is directly related to the amount of
revenue generated. This also means that companies are not spending a lot of money
paying for salespeople who are ineffective.”1
In the case of Auto Bus Transport Systems Inc. v. Bautista, the court ruled that
bus drivers and conductors could not be considered as field personnel, having been
supervised and whose actual work hours are monitored.
As a general rule, field personnel are those whose performance of their

job/service is not supervised by the employer or his representative, the workplace
being away from the principal office and whose hours and days of work cannot be
determined with reasonable certainty; hence, they are paid specific amount for
rendering specific service or performing specific work. If required to be at specific places at
specific times, employees including drivers cannot be said to be field personnel despite the fact
that they are performing work away from the principal office of the employee.”2 Being
considered non- field personnel workers, they are treated as regular employees who
perform tasks usually necessary and desirable to the usual trade of petitioners business
and are entitled to the grant of service incentive leave.3 A careful perusal of said
provisions of law will result in the conclusion that the grant of service incentive leave
has been delimited by the Implementing Rules and Regulations of the Labor Code to
1
https://smallbusiness.chron.com/commissionbased-salary-11999.html (Accessed June 30, 2018)
2
BWC advisory opinion to Philippine Technical-Clerical Commercial Employees Association, April 6, 1989.
3
Auto Bus Transport Systems Inc. v. Bautista, G.R. No. 156367, May 16, 2005, 497 PHIL 863-878
apply only to those employees not explicitly excluded by Section 1 of Rule V. According
to the Implementing Rules, Service Incentive Leave shall not apply to employees
classified as field personnel. 4
The existence of the employer-employee relationship is essential in that it

comprises as the jurisdictional basis for recovery under the law. Only cases arising from
the said relationship are cognizable by the labor courts.5 As discussed by the Supreme
Court in the case of Lazaro v. Social Security Commission, “Neither does it follow that a
person who does not observe normal hours of work cannot be deemed an
employee. In Cosmopolitan Funeral Homes, Inc. v. Maalat, the employer similarly denied
the existence of an employer-employee relationship, as the claimant according to it, was
a supervisor on commission basis who did not observe normal hours of work. This
Court declared that there was an employer-employee relationship, noting that [the]
supervisor, although compensated on commission basis, [is] exempt from the
observance of normal hours of work for his compensation is measured by the number
of sales he makes. 6
The relationship between jeepney owners/operators on one hand and jeepney

drivers on the other under the boundary system is that of employer-employee and not
of lessor-lessee. x x x In the lease of chattels, the lessor loses complete control over the
chattel leased x x x. In the case of jeepney owners/operators and jeepney drivers, the
former exercise supervision and control over the latter. The fact that the drivers do not
receive fixed wages but get only the excess of that so-called boundary they pay to the
owner/operator is not sufficient to withdraw the relationship between them from that
of employer and employee.7
The primary standard of determining a regular (as against casual) employment is

the reasonable connection between the particular activity performed by the employee in
relation to the usual business or trade of the employer. The test is whether the former is
usually necessary or desirable in the usual business or trade of the employer. The
connection can be determined by considering the nature of the work performed and its
relation to the scheme of the particular business or trade in its entirety. Also, if the
employee has been performing the job for at least one year, even if the performance is
not continuous or merely intermittent, the law deems the repeated and continuing need
4
Ibid.
5
Bar Reviewer on Labor Law, 3rd Revised Edition, Chan, p. 223
6
Lazaro v. Social Security Commission, G.R. No. 138254, July 30, 2004.
7
Martinez v. National Labor Relations Commission, 272 SCRA 793, May 29, 1997
for its performance as sufficient evidence of the necessity if not indispensability of that
activity to the business. Hence, the employment is also considered regular, but only
with respect to such activity and while such activity exists.8
Considering these drivers and truck drivers as regular employees, having

established an employer-employee relationship with their operators, the Labor Code
provides that they should be accorded full benefits and entitlements for being such.
Under Art. 98 of Title II, Book III of the Labor Code, persons excluded from the
application of minimum wage statutes are those in farm tenancy or leasehold, domestic
service and persons working in their respective homes in needle work or in any cottage
industry duly registered in accordance with law. Since the drivers, dispatchers and
mechanic in this case are not excluded by law, and moreover are considered as non-
agricultural workers within the scope of Art. 99 of the same Code, they are entitled to
payment of minimum wage. Moreover, the Supreme Court in the case of San Miguel
Jeepney Service and Mamerto Galacevs. National Labor Relations Commission, held
that regular employees “regular employees are entitled to security of tenure and their
services may be terminated only for causes provided by law. Likewise, they are also to
be accorded the benefits provided under the Labor Code, including inter alia separation
pay for loss of employment resulting from retrenchment to prevent losses or
closure/cessation of operation not due to serious business losses.9
Correspondingly, it can be conscientiously deduced that the cause of action of an

entitled employee to claim his service incentive leave pay accrues from the moment the
employer refuses to remunerate its monetary equivalent if the employee did not make
use of said leave credits but instead chose to avail of its commutation. Accordingly, if
the employee wishes to accumulate his leave credits and opts for its commutation upon
his resignation or separation from employment, his cause of action to claim the whole
amount of his accumulated service incentive leave shall arise when the employer fails to
pay such amount at the time of his resignation or separation from employment.10
8
De Leon vs. National Labor Relations Commission, 176 SCRA 615. 621, August 21, 1989, cited in Baguio Country Club Corporation vs. NLRC, 206
SCRA 643, February 28, 1992. See also Ferrochrome Phils., Inc. vs. NLRC, 236 SCRA 315, September 5, 1994.
9
San Miguel Jeepney Service and MamertoGalacevs. National Labor Relations Commission, G.R. No. 92772. November 28, 1996
10
BONQUIN, JEZRAEL B. 13 September 2018
2014-0150 LABOR REVIEW
COMMISSION-BASED EMPLOYEES:
A COMPRHENSIVE RESEARCH
Prefatory Statement
Generally, our Labor Code covers all employees in all establishments, whether
operated for profit or not. However, the government employees, managerial
employees, other officers or members of a managerial staff, domestic workers
or kasambahay and persons in the personal service of another, workers paid by
results, non-agricultural field personnel, and members of the family of the
employer, are excluded from the coverage of the Labor Code by reason of the
different circumstances arising from the nature of their work as indicated in
their contractual agreement with their employer.
The worker’s right to security of tenure, humane conditions of work, and a

living wage are primarily guaranteed by our 1987 Philippine Constitution,
seconded by the Labor Code and other rules and regulations. An employee may
be terminated from work only for just or authorized causes and upon the
observance of due process.
Be as it may be the case, the Supreme Court laid down in long line of cases the
four-fold test to determine the existence of employer-employee relationship.
These are:
1. The selection and engagement of the employee;

2. The payment of wages;
3. The power of dismissal; and
4. The power to control the employee’s conduct.
The 4th Test is called control test, and is commonly regarded as the most
crucial and determinative indicator of the presence or absence of an employer-
employee relationship. Under the control test, the employer has reserved the
right to control the employee not only as to the result of the work to be done
but also to the means and methods by which the same is to be accomplished.
(David vs. Macasio, G.R. No. 1954661, July 2, 2014)
The Supreme Court, in the case of Francisco vs. NLRC, added another tests
which is called the Two-Tiered Test. These are 1) the putative employers power
to control the employee with respect to the means and methods by which the
work is to be accomplished; and 2) the underlying economic realities of the
activity or relationship (broader economic reality test).
For purposes of this Research, our main subjects are the bus, jeepney, truck
and/or taxi drivers which their compensation are based purely from boundary
system.
Are they entitled to Wage/Salary?
Yes. It is 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.
The boundary system is a scheme by an owner/operator engaged in

transporting passengers as a common carrier to primarily govern the
compensation of the driver, that is, the latter’s daily earnings are remitted to
the owner/operator less the excess of the boundary which represents the
drivers compensation. Under this system, the owner/operator exercises control
and supervision over the driver. It is unlike in lease of chattels where the lessor
loses complete control over the chattel leased but the lessee is still ultimately
responsible for the consequences of its use. The management of the business is
still in the hands of the owner/operator, who, being the holder of the certificate
of public convenience, must see to it that the driver follows the route
prescribed by the franchising and regulatory authority, and the rules
promulgated with regard to the business operations. The fact that the driver
does not receive fixed wages but only the excess of the boundary given to the
owner/operator is not sufficient to change the relationship between
them. Indubitably, the driver performs activities which are usually necessary or
desirable in the usual business or trade of the owner/operator. (Jardin vs.
NLRC, G.R. No. 119268, February 23, 2000)
Are they entitled to Service Incentive Leave?
No. Those who are engaged on task or contract basis, purely commission basis,
or those who are paid in a fixed amount for performing work irrespective of the
time consumed in the performance thereof, are excluded from the coverage.
These drivers are considered employees whose performance is unsupervised by
their owner/operator which excludes them from SIL and 13th Month Pay.
Are they entitled to 13th Month Pay?
No. Employers of those who are paid on purely commission, boundary, or task
basis, and those who are paid a fixed amount for performing a specific work,
irrespective of the time consumed in the performance thereof, except where the
workers are paid on piece-rate basis, in which case, the employer shall be
covered by the Revised Guidelines insofar as such workers are concerned.
Are they entitled to Overtime Pay?
No. The nature of their compensation depends on the boundary share set by
the owner/operator. Hence, even though they rendered less than or beyond the
normal 8 hours of work, as long as they hit the target boundary share, they are
not entitled to overtime pay.
Chen, Timothy Charles O.
2015-0203
Labor Review
Atty. Panganiban
Full Commission based salary
Not entitled to wages/salaries
Not entitled to holiday pay
Not entitled to Service Incentive Leave based Handbook Workers’ Statutory

Monetary Benefits (2018) as published by DOLE. They are field personnel therefore
excluded from the benefits
Entitled to Separation/Retirement pay (Miguel Jeepney Vs NLRC G.R. No. 92772

November 28, 1996)
Not entitled to overtime pay. Considered as field personnel therefore there is no

overtime pay to avail of and that their work is primarily unsupervised.
Half Commission Half salary
Entitled to wages/salaries
-At least half of the minimum wage


November 28, 1996)

Full Salary
Entitled to wages/salaries
-Entitled to minimum wage as provided for by law


November 28, 1996)

De Guzman, Joey Albert P.
2015-0394
LABOR LAW REVIEW: Thursday, 6:00-9:00pm
COMPREHENSIVE RESEARCH ON
COMMSSIONED-BASED EMPLOYEES
Commisioned-based employees are those whose compensation is based

on a percentage of or some other amount based upon sales or services
completed. They are synonymous with the Fixed and Performance-based
Compensation Employees.
Fixed and Performance-based Compensation Scheme as per Department

Order 118-12, implemented by the DOLE refers to compensation scheme for bus
and conductors wherein the fixed component shall be based on an amount
mutually agreed upon by the owner/ operator and the driver/ conductor, which
shall in no case be lower than the applicable minimum wage. The performance
based component shall be based on safety performance, business performance
and other related parameters.
Department Order 118-12 in July 1, 2012, otherwise known as 'Rules and

Regulations Governing the Employment and Working Conditions of Drivers and
Conductors in the Public Utility Bus Transport Industry" implemented by the
DOLE, provided the following:
Public utility bus drivers and conductors are entitled to the following
benefits:
a.) Wages for all actual work during the normal work hours and days
not lower than the applicable minimum wage rates. Wages shall be paid at
least once every two weeks or twice a month at intervals not exceeding 16
days.
b.) A Holiday pay of 100 percent of the minimum wage even without
reporting to work and 200 percent when required to work on a holiday.
c.) A Rest day of 24 consecutive hours for every six consecutive

working days. If they are required to work on a rest day, an additional
premium pay of 30 percent of minimum basic wage should be paid to them.
d.) An Overtime pay equivalent to at least 25 percent of the basic wage

on ordinary days and 30 percent on regular holidays, special days and rest
De Guzman, Joey Albert P.
2015-0394
LABOR LAW REVIEW: Thursday, 6:00-9:00pm
days for work beyond eight hours per day would also apply. An additional 10
percent of the daily basic wage is required for night shifts, if work is between 10
p.m. and 6 a.m. of the following day. Incentive leave of five days per year of
service should also be observed.
e.) A 13th month pay pursuant to Presidential Decree No. 851, as

amended, which entitles the employee to receive an amount equivalent to 1/12
of the total basic salary earned within the calendar year, not later than
December 24 of each year.
f.) Other incentives for a regular employee such as maternity leave for
both male and female, parental leave for solo parents, and retirement pay upon
reaching the age of 60 or more are also applicable.
On the other hand, as for cases that fall on workers on purely commission
basis, our jurisprudence provides that despite such workers may still be entitled
to service incentive pay. As held in the case of SERRANO vs. SEVERINO
SANTOS TRANSIT and/or SEVERINO SANTOS, G.R. No. 187698, even if
petitioner as bus conductor was paid on commission basis then, he falls within
the coverage of R.A. 7641 and its implementing rules. Further, it held that in
practice, taxi drivers do not receive fixed wages. They retain only those sums in
excess of the boundary or fee they pay to the owners or operators of the vehicles.
Conductors, on the other hand, are paid a certain percentage of the bus earnings
for the day. Thus, it bears emphasis that under P.D. 851 or the SIL Law, the
exclusion from its coverage of workers who are paid on a purely commission
basis is only with respect to field personnel. under P.D. 851 or the SIL Law, the
exclusion from its coverage of workers who are paid on a purely commission
basis is only with respect to field personnel.
As to separation pay, in the case of SAN MIGUEL JEEPNEY SERVICE and

MAMERTO GALACE vs. NATIONAL LABOR RELATIONS COMMISSION, G.R.
No. 92772, November 28, 1996, the court held that the mere fact that they were
paid on commission basis does not affect or change their status as regular
employees. Thus, the employees are entitled to separation pay as long as they are
considered to be a regular employee.
J. Paulo R. Elauria Labor Review
Commission – based employees
These employees are part of the exclusions under Article 82 of the Labor Code
of the Philippines as they are considered workers who are paid by results. Their salary
is dependent on the quantity of their sales which has the possibility of exceeding the
minimum statutory wage or even being less than such. Some companies give
commission – based employees an allowance every month to fuel their hunt for sales in
the field outside their offices. They are not affected by overtime rates, night shift
differentials, etc., for their salaries are dependent upon their performances on their
work.
Bus Drivers / Jeepney Drivers / Taxi Drivers
of the Philippines as they are considered field personnel of a company. The company of
such land transportation are offering such vehicles as rent to the drivers for a fixed rate
popularly known as “quota” which are usually paid weekly, depending on the company.
Excess of the weekly “quota” required by such companies are given to the drivers
themselves as their personal income for the week. The drivers will shoulder expenses in
the trip such as, but not limited to, food expenses, fuel expenses, etc. If the drivers
should however cause an injury to another person or property, the company shoulders
such liability, and usually ends up with the driver’s services being terminated.
Grab Drivers
of the Philippines as they are considered field personnel of a company. These drivers,
unlike bus drivers, jeepney drivers, and taxi drivers, do not have a “quota” on their
services; instead, such grab drivers get their income from the fares charged by the
company. The company, on such fares, gets a fixed percentage of their daily transports,
the remainder of which will be given to the driver. The remainder given to the driver will
be used for expenses of the driver which includes, but not limited to, food expenses,
fuel expenses, etc. If the drivers should however cause an injury to another person or
Page 1|2
J. Paulo R. Elauria Labor Review
property, the company shoulders such liability, and usually ends up with the driver’s
services being terminated.
Truck Drivers
These employees are part of those employees under a job – only contracting
with a principal company. They are not performing jobs in a regular basis but instead
only performs such trucking services whenever they are called upon by companies to
deliver goods to other companies, which are usually retailers. The company fixes rates
upon their service charge to such companies and, occasionally depending on the load,
adjusts their prices on the transportation of such goods for them to obtain profits and at
the same time capable of giving salaries to their drivers. They are not affected by
overtime rates, night shift differentials, etc., for their services are contractual based and
they are on – call by their companies whenever there are services that are needed to be
rendered. If the drivers should however cause an injury to another person or property,
the company shoulders such liability, and usually ends up with the driver’s services
being terminated.
Page 2|2
Gonzales, Van Angelo G. Labor Law Review
2018-0150 Thursday 6:00-9:00 pm
Labor is a primary social and economic force in which the State has vital interest to
protect and develop. It is one of the driving force to which the State relies for its development. A
State without a labor force would encounter severe underdevelopment and social unrest that may
threaten its existence. Thus a State give primordial importance for the protection of labor and
sustain its development that would primarily benefit the society. A good labor program is
essential for a State to prosper and affords its citizen an orderly society and high standard of
living. To develop a labor force of a State, it must be given adequate protection and incentives
both for the capital and labor to co-exist in harmony. This is done through laws and policy of
enacted of the State. The ultimate beneficiary of the harmonious relations of capital and labor is
the society, the people and the State. In this jurisdiction, the Supreme Court of the Philippines
espouse the social justice principle as the primary bedrock of the relationship in all strata of the
society including labor force. It states “Social Justice is neither communism, nor despotism, nor
atomism, nor anarchy, but the humanization of laws and the equalization of social and economic
forces by the State so that justice in its rational and objectively secular conception may at least
be approximated”1. This concept is an age old doctrine which has transcend time and still the
foundation of the State in its pursuit of economic and social development which will be the end
goal of the society. Through this aspiration, the State creates policies relating to all elements of
the strata which includes labor to achieve it. The intricate composition which compels each
elements of labor to be analyzed to afford greater view of its components. An essential
component of labor is the workforce which categorize it. This is the different workers or
employees that make up the labor force. This discussion will center around a particular work
force which is the commissioned based employees.
Commissioned based employees are employees who work for the benefit of the employer
in which their wages or salary is paid through percentage in the overall amount work they render
or sale of such products. This is not limited to such percentage as these kinds of employees may
be paid like a regular employee in which they are entitled to a full payment of wages and benefits
given by laws in connection with labor. In reference to a commissioned based employee to be
1
Calalang v Williams, G. R. No. 47800. December 2, 1940.
considered as regular employee, there must be an employer-employee relationship to be
established. The test whether there is an employer-employee relationship are 1.) the selection and
engagement of the employee 2.) power of payment of wages 3.) power of dismissal and 4.) the
power to control the conduct of the employee or the control test2. The control test being the most
important element as it determines the employer employee relationship.
By establishing the relationship between the employer and the employee with regard to a
commissioned based employee, the benefits provided by law would become applicable to him.
He is deemed a regular employee in which the law affords full protection and benefits in its
relationship with the capital. But the determination of payment of wages whether in whole or
partial in a commissioned based employee is not the sole indicator whether he is a regular
employee of the employer. It must be in consonance with the relationship of the employee to the
employer which pertains to the circumstance regarding their interaction and other matters which
limits it to avoid occurring obligation that the law affords to a regular employee. Payment by
commission or percentage to an employee does not give it a blanket that he is a regular employee
since such is only a mode of payment3. This is important since commissioned based employees
are not in entirety are regular employees but due to the circumstances and limitations in
agreements between parties may not bring an employer and employee relationship. Examples of
commissioned based employees which are not regular employees are independent contractors.
Independent contractors are types of employees which their services are rendered by the capital
through agreement in which they performed activities for the former but within the limitation of
an agreement set by the contracting parties. The agreement may include such work or services to
be done without the control of the employer thus it will not create employer-employee
relationship4.
Commissioned based employees are sometimes not entitled to all benefits of provided by
law. This is because the circumstance affecting such relationship with the capital such as their
agreement as well as the mode of payment of wages. In one case decided by the Supreme Court
of the Philippines wherein an employee is paid purely paid by commissioned was excluded for
2
Atok Big Wedge Company Inc. v Gison, G.R. No. 169510. August 8, 2011.
3
San Miguel Jeepney Service v NLRC, G.R. No. 91772. November 28, 1996.
4
Singer Sewing Machine Company v Hon. Drilon, G.R. No. 91307. January 24, 1991.
entitlement of the 13th month pay5. This was due to a law namely Presidential Decree No. 851
which provides exception to the coverage of payment of the 13th month pay. In which is stated
below.
SEC. 3. Employers covered.The Decree shall apply to all employers except to:
xxxx
e) Employers of those who are paid on purely commission, boundary, or task basis, and
those who are paid a fixed amount for performing a specific work, irrespective of the time
consumed in the performance thereof, except where the workers are paid on piece-rate
basis in which case the employer shall be covered by this issuance insofar as such
workers are concerned.
In another case decided by the Supreme Court, employees who were paid in fixed or
guaranteed minimum wage in which the commission they receive is less than the statutory
minimum were entitled to a 13th month pay equivalent to one-twelfth of their total earnings
during a calendar year6. The difference between the two types of commissioned based employees
is that one is deriving its payment of wages through commissions while the other due to the
circumstance of the relationship with the capital in which they have a regular wage were entitled
to the 13th month pay in addition with their commission they are receiving.
A commissioned based employee would be entitled to the benefits provided by law such
as the service incentive leave, overtime payment and retirement benefits by analyzing the
relationship he has with the employer. It means that the commissioned based employee must be a
regular employee of the employer to become entitled to such benefits. This is because all the
benefits provided by law is conferred to such kind employees. Whether such commissioned
based employees are paid in whole or in partial in terms of wages would depend on the basis
whether they are regular employees. Regular employees are those employees whose nature of
work is for benefit of the employer. As such nature of his work, would be recompense through
entitlement of regular wages in addition to his commissions due to the nature of his work. The
Labor code of the Philippines art. 97 (f) provides the basis in conferment of wages which
includes commission based as stated:
5
King of Kings Transport Inc. v Santiago O. Macmac, G.R. No. 166208. June 29, 2007.
6
Philippine Agricultural Commercial and Industrial Workers Union v NLRC, G.R. No. 107994.
August 14, 1995.
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.
The law allows commissioned based employees to be entitled to a wage in accordance to

the structure of their relationship with the capital. Even being a commissioned base employee,
they such is still part of their wages since such commission may serve as incentive by the
company for the employees to work effectively due to the business structure7. Some examples of
commissioned based employees are agents, salesman, executor, trustee, receiver, factor, broker
or bailee8,
By being a regular employee they are integral part of the industry or service they render
work for. They are considered as part of the company not an alien worker under a contract
agreement. Thus workers under contract agreement are different and governed by the contract
which the contracting parties agreed to. Unless there are stipulations between parties such as in
the collective bargaining agreement which would provide additional benefits for all types of
employees, commissioned based employees are entitled to benefits provided by law as long as
they are not limited by the nature and contract they are placed in.
7
Antonio W. Iran v NLRC, G.R. No. 121927. April 22, 1997
8
Ibid.
COMMISSION-BASED EMPLOYEES IN THE
PHILIPPINES
A Comprehensive Research Presented to
Atty. Porfirio Panganiban
School of Law
Arellano University
In Partial Fulfillment
Of the Requirements for Labor Law Review
By
Gumtang, Lianne Meredith T.
2015-0395
September 14, 2018

INTRODUCTION
Commission is the recompense, compensation, reward of an employee, 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 of the principal.1
Commission Workers refer to those persons working for the establishment and are paid
on the basis of a certain percentage of money received in a transaction. They may receive basic
pay depending on their working arrangement with the establishment. It refers to those workers
paid on the basis of a certain percentage of money received for a transaction. These persons may
be part of employment of the establishment (on regular payroll) or paid purely on commission
(not part of establishment employment).2
EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP
In determining the existence of an employer-employee relationship, the following

elements are considered: (1) the selection and engagement of the employee; (2) the payment of
wages; (3) the power of dismissal, and (4) the power to control the employee's conduct, with the
control test generally assuming primacy in the overall consideration. The power of control refers
to the existence of the power and not necessarily to the actual exercise thereof. It is not essential,
in other words, for the employer to actually supervise the performance of duties of the employee;
it is enough that the former has the right to wield the power.3
In the case of San Miguel Jeepney Service vs. NLRC where certain individuals who
worked as drivers, dispatchers and mechanics for up to 8 years with SMJS and were paid in
commission basis. The issue is this case is whether they are not entitled to minimum wage law,
plus 13th month pay, legal holiday pay, overtime pay, service incentive leave pay and separation
pay. The Supreme Court ruled that there exist an employer-employee relationship where
complainants/private respondents were unarguably performing work necessary and desirable in
the business of SMJS. However, it is still needful to stress that there are many lines of business
legally and legitimately engaging the services of workers, who are paid on commission basis to
1
PACIWU-TUCP vs. NLRC and Vallacar Transit, Inc. G. R. No. 107994. August 14, 1995.
2
Ibid.
3
MAM Realty Development Corporation v. NLRC, 244 SCRA 797.
2
perform activities desirable and necessary for such businesses, without creating any kind of
employer-employee relationship at any time. 4
REGULARIZATION AS EMPLOYEES
ART. 280 of the Labor Code provides that an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer, except where the employment has been
fixed for a specific project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the work or service to be
performed is seasonal in nature and the employment is for the duration of the season.5
In the case of SMJS vs. NLRC, the Supreme Court ruled that the respondents are regular
employees. The rationale for this ruling is simply that the complainants/private respondents were
unarguably performing work necessary and desirable in the business of SMJS. Without the
services rendered by private respondents, petitioners could not have conducted their business of
providing transportation services within the naval base. This plus the fact that private
respondents had each rendered from two to eight years of service cause them to come squarely
within the ambit of Art. 280 of the Labor Code; beyond dispute, they were not only employees,
but regular employees. The mere fact that they were paid on commission basis does not affect or
change their status as regular employees. The test for determining whether an employee is
regular or casual has nothing to do with the manner of computing or paying a employees wages
or compensation.
The test for determining whether an employee is regular or casual has nothing to do with
the manner of computing or paying a employees wages or compensation. Rather, the primary
standard of determining a regular (as against casual) employment is the reasonable connection
between the particular activity performed by the employee in relation to the usual business or
trade of the employer. The test is whether the former is usually necessary or desirable in the
usual business or trade of the employer. The connection can be determined by considering the
nature of the work performed and its relation to the scheme of the particular business or trade in
4
San Miguel Jeepney Service vs. NLRC, G.R. No. 92772. November 28, 1996.
5
The Labor Code Of The Philippines Presidential Decree No. 442, As Amended.
3
its entirety. Also, if the employee has been performing the job for at least one year, even if the
performance is not continuous or merely intermittent, the law deems the repeated and continuing
need for its performance as sufficient evidence of the necessity if not indispensability of that
activity to the business. Hence, the employment is also considered regular, but only with respect
to such activity and while such activity exists.
On the other hand, it does not follow that every employee paid (whether wholly or partly)
on commission basis can be considered a regular employee, or an employee at all, for that
matter. It is still needful to stress that there are many lines of business legally and legitimately
engaging the services of workers, who are paid on commission basis to perform activities
desirable and necessary for such businesses, without creating any kind of employer-employee
relationship at any time.6
ENTITLEMENT UNDER MINIMUM WAGE LAW
Under Art. 98 of the Labor Code, persons excluded from the application of minimum
wage statutes are those in farm tenancy or leasehold, domestic service and persons working in
their respective homes in needle work or in any cottage industry duly registered in accordance
with law.7
Art. 99 of the Labor Code provides that the minimum wage rates for agricultural and non-
agricultural employees and workers in each and every region of the country shall be those
prescribed by the Regional Tripartite Wages and Productivity Boards.8
In the case of SMJS vs. NLRC, since the drivers, dispatchers and mechanic in this case are
not excluded by law, and moreover are considered as non-agricultural workers within the scope
of Art. 99 of the Labor Code, they are entitled to payment of minimum wage. In addition, the
Solicitor General in his Comment suggested that, being regular employees, they are likewise
entitled to the protection of minimum wage status.9
Moreover, in the case of PACIWU-TUCP vs. NLRC, where in the petitioners are bus
drivers and conductors receiving commission basis, the Supreme Court ruled that while the bus
6
SMJS, Supra note 4.
7
Art. 98 of Title II, Book III of the Labor Code.
8
Art. 99 of Title II, Book III of the Labor Code (As amended by Section 3, Republic Act No. 6727, June 9, 1989).
9
SMJS, supra note 4.
4
drivers and conductors of respondent company are considered as being compensated on a
commission basis, they are not paid purely by what they receive as commission. The said bus
drivers and conductors are automatically entitled to the basic minimum pay mandated by law in
case the commissions they earned be less than their basic minimum for eight [8] hours work.
Evidently, therefore, the commissions form part of the wage or salary of the bus drivers and
conductors.
While said commissions may be in the form of incentives or encouragement to inspire
said bus drivers and conductors to put a little more zeal and industry on their jobs, still, it is safe
to say that the same are direct remunerations for services rendered, given the small remuneration
they receive for the services they render, which is precisely the reason why private respondent
allowed the drivers and conductors a guaranteed minimum wage. The conclusion is ineluctable
that said commissions are part of their salary.10
13th MONTH PAY
As a general rule, P.D. 815 provides at all employers are covered except… (e) Employers
of those who are paid on purely commission, boundary, or task basis, and those who are paid a
fixed amount for performing a specific work, irrespective of the time consumed in the
performance thereof, except where the workers are paid on piece-rate basis in which case the
employer shall be covered by this issuance insofar as such workers are concerned.11
However, as an exemption, as provided for in the case of PACIWU-TUCP vs. NLRC
citing MOLE Explanatory Bulletin No. 86, item no. [5]: “Employees who are paid a fixed or
guaranteed wage plus commission are also entitled to the mandated 13th-month pay, based on
their total earnings during the calendar year, i.e., on both their fixed and guaranteed wage and
commission.”12
The petitioners in the case are drivers and conductors who are compensated on a
commission basis and the sole issue was whether or not the bus drivers and conductors are
entitled to 13th-month. The Supreme Court ruled in the affirmative. For purposes of entitling
rank and file employees a 13th-month pay, it is immaterial whether the employees concerned are
10
PACIWU, supra note 1.
11
Rules Implementing The 13th-Month Pay Law. Presidential Decree No. 851
12
MOLE Explanatory Bulletin No. 86-12 on November 24, 1986.
5
paid a guaranteed wage plus commission or a commission with guaranteed wage inasmuch as the
bottom line is that they receive a guaranteed wage.
What is controlling is not the label attached to the remuneration that the employee
receives but the nature of the remuneration and the purpose for which the 13th-month pay was
given, to alleviate the plight of the working masses who are receiving low wages. In sum, their
13th month pay must be equivalent to 1/12 of their total earnings during the calendar year.13
SEPARATION PAY
Entitlement to separation pay is dependent whether the commission based employee

could be considered as a regular employee.
As ruled in the SMJS vs. NLRC case, the respondents who were commission based
employees, as such found to be regular employees, the Supreme Court ruled that they are entitled
to security of tenure and their services may be terminated only for causes provided by law.
Likewise, they are also to be accorded the benefits provided under the Labor Code, including
inter alia separation pay for loss of employment resulting from retrenchment to prevent losses or
closure/cessation of operation not due to serious business losses.14
Moreover, in the case of Jo vs. NLRC, the NLRC ruled that with respect to separation
pay, even workers paid on commission are given separation pay as they are considered
employees of the company.15
LEGAL HOLIDAY PAY
As provided for under the Implementing Rules of the Labor Code, the following are not
entitled to legal holiday pay: (a) the casual dispatchers have no fix (sic) day of work, they
merely act as substituted (sic); and (b) the drivers-complainants, who are purely on commission
basis.16
13
PACIWU-TUCP, Supra note 1.
14
SMJS, supra note 4.
15
Paz Martin Jo and Cesar Jo vs. National Labor Relations Commission and Peter Mejila. G.R. No. 121605. February
2, 2000.
16
Rule IV, Holiday Pay, Sec. 1 (e), Implementing Rules of the Labor Code.
6
OVERTIME PAY
The Labor Code provides that any employee covered by the Rule who is permitted or
required to work beyond eight (8) hours on ordinary working days shall be paid an additional
compensation for the overtime work in the amount equivalent to his regular wage plus at least
twenty-five percent (25%). 17
In SMJS case, the Labor Arbiter ruled that the drivers, dispatcher and mechanics as
complainants cannot claim overtime pay because they control their own time. The amount of
their percentages depend on how industrious they are in looking for paying passengers. Hence,
complainants control their pay, not the respondents.18
SERVICE INCENTIVE PAY

The Labor Cod Implementing Rules and Regulations of the Labor Code provides that
every employee who has rendered at least one year of service shall be entitled to a yearly service
incentive leave of five days with pay. 19
This is not applicable to the complainants who are purely on commission basis. 20
17
Rule I, Overtime Pay, Sec. 8, Implementing Rules of the Labor Code.
18
SMJS, supra note 4.
19
Rule V, Sec. 1 (d), Implementing Rules and Regulations of the Labor Code.
20
SMJS, supra note 4.
7
Gusi, Audrey Rose B.
2014-0544
Assignment No. 1
Labor Law Review
Commission – recompense, compensation or reward of an employee, 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 of the principal (Phil. Agricultural Commercial and Industrial Workers
Union vs. NLRC, G.R. No. 107994, August 14,1995).
Commissions do not form part of the daily wage, unles agreed upon through a written agreement (Arms
Taxi vs. NLRC, 219 SCRA 306).
Commission-Based Employees – may either be those who in addition to a guaranteed fixed wage earn
commission as a direct remuneration for service rendered or those who earn it in the form of an incentive
or encouragement to ensure productivity.
GENERAL RULE:
Employees paid on a purely commission basis are not entitled to 13th month pay. They are expressly
excluded from the coverage of PD 851.
EXCEPTION:
Employees paid on partly commission basis, i.e., those guaranteed with a fixed wage aside from the
commission, are entitled to 13th month pay.
In the computation of the basic salary of employees paid partly on commission basis, we must
distinguish between the two types of commission:
a) Commission as an incentives or encouragement to ensure productivity, i.e., productivity bonus;

and
b) Commission as a direct remuneration for service rendered.
Commission that take the form of an incentives or encouragement to ensure productivity, e.g.,
productivity bonus, does not form part of the basic salary. As such, it may be excluded from the
computation of 13th month pay.
Only the fixed or guaranteed wage is required to be included in the computation (Boie-Takeda
Chenicals, Inc. vs. Dela Serna, G.R. No. 92174, Dec.10, 1993).
Basic salary = Fixed wage (commission is excluded)

On the other hand, commission that takes the form of a direct remuneration for services rendered should
be included in the computation of the basic salary. That is, it should be added to the guaranteed wage
of the employee in computing his “basic salary” (Phil. Duplicators, Inc. vs NLRC, G.R. No. 110068,
Februarry 15, 1995).
Basic salary = Fixed wage + Commission
1
JURISPRUDENCE
 Employees paid according to “boundary” system are not entitled to 13th mo pay. Boundary
system is where the employees do not receive fixed wages, but retain only those sums in excess
of the “boundary” or fee they pay to the owners or operators of their vehicles. They are akin to
employees paid on purely commission basis (R & E TRANSPORT, INC., and HONORIO
ENRIQUEZ. vs. AVELINA P. LATAG, representing her deceased husband, PEDRO M.
LATAG.G.R. No. 155214. February 13, 2004).
 Drivers who are paid on commission basis, but with guaranteed minimum wage in case their
commission be less than their basic minimum, are entitled to 13th month pay (PHILIPPINE
AGRICULTURAL COMMERCIAL AND INDUSTRIAL WORKERS UNION (PACIWU)-
TUCP,vs.NATIONAL LABOR RELATIONS COMMISSION AND VALLACAR TRANSIT, INC.G.R.
No. 107994.August 14, 1995).
May workers who are paid on commission basis be considered regular employees, and therefore
entitled to separation pay?
The mere fact that they were paid on commission basis does not affect or change their status as regular
employees. The test for determining whether an employee is regular or casual has nothing to do with the
manner of computing or paying a employee's wages or compensation [SAN MIGUEL JEEPNEY
SERVICE and MAMERTO GALACE, vs. NATIONAL LABOR RELATIONS COMMISSION, EDELBERTO
PADUA and 23 OTHERS. G.R. No. 92772 November 28, 1996]
Inclusion of Commission in the Computation of Separation Pay
GENERAL RULE: Commissions earned and received from actual transactions of salesmen who were
terminated due to retrenchment should be included in the monthly salary (Songco vs. NLRC, GR Nos.
50999 – 51000, March 23, 1990).
EXCEPTION: Commissions dependent on the earnings of the employee through actual marketing
transactions taken by him (Soriano vs NLRC, G.R. No. L-75510, October 27, 1987).
JURISPRUDENCE
 In the 2010 case of Serrano v. Severino Santos Transit, this involves a bus conductor (petitioner)
who worked for 14 years for respondent bus company which did not adopt any retirement
scheme. It was held herein that even if petitioner as bus conductor was paid on commission
basis, he falls within the coverage of R.A.7641 (Retirement Pay Law, now Article 287 of Labor
Code). This means that his retirement pay should include the cash equivalent of the 5-day SIL
and 1/12 of the 13th month pay for a total of 22.5 days. The affirmance by the Court of Appeals
of the reliance by the NLRC on R & E Transport case was held erroneous. For purposes of
applying the law on SIL as well as on retirement, there is a difference between drivers paid
under the “boundary system” and conductors paid on commission basis. This is so because in
practice, taxi drivers do not receive fixed wages. They retain only those sums in excess of the
“boundary” or fee they pay to the owners or operators of the vehicles. Conductors, on the other
hand, are paid a certain percentage of the bus’ earnings for the day. It bears emphasis that
2
under P.D. No. 851 and the SIL Law, the exclusion from its coverage of workers who are paid on
a purely commission basis is only with respect to field personnel.
 Payment on commission basis alone does not prove that A is field personnel. There must be
proof that A is left to perform his work unsupervised by his employer. Otherwise, he is not a field
personnel, thus entitled to commutable service incentive leave (SIL) credits [Auto Bus v.
Bautista, 458 SCRA 578 [2005]).
 In computing separation pay, the monthly salary should include commissions because
commissions received by a salesman are part of his salary. But for allowances to be included as
part of salary, they should be for services rendered or to be rendered, like a cost of living
allowance. But transportation and representation allowances are not considered as part of salary
because they are to meet expenses for transportation and representation. Thu s. cost of living
allowances, but not transportation or representation allowances, shall be included as part of
salary in the computation of separation pay. Allowances as part of salary, in Santos us. NLRC,
154 SCRA 166, the Supreme Court said: "in the computation of back wages and separation pay,
account must be taken not only of basic salary but also her transportation and emergency living
allowances."
3
Research on Commission Based
Employees
Submitted to:
Submitted by:
Joel Malcolm D. Jabal

2014-0512
Thursday
6:00 - 9:00 PM
I. What is a Commission based employee?
Commission based employees are those employees which are paid commissions upon completion of
a task or of a job. They may either be full commission or those with a salary and commission.
II. What are examples of commission based employees?
a. Insurance Agents
b. Stock brokers
c. real estate agents
d. Medical representatives
e. Bus driver/Truck drivers
f. Financial Advisors
g. Sales Agents
III. What are the types of commission based employees?
They may either be:
a. Full or Straight Commission – The Salary is purely by commission.
b. Half Salary and Half Commission – The employee will have a small basic salary and a Commission
c. Salary based – The employee gets a monthly basic salary but the employee is expected to perform to meet
and exceed it.
IV. Are commission based employees entitled to the following?
A. SERVICE INCENTIVE LEAVES
General Rule: Yes, they are entitled to Service incentive leaves if they have complied with the
requirement under Art. 95 of the Labor Code.
Exception: Those who works on a purely commission basis.

B. WAGES/SALARY
YES, as defined in the labor code “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 and Employment, of board, lodging or other facilities customarily furnished by the
employer to the employee. "Fair and reasonable value" shall not include any profit to the employer or to any
person affiliated with the employer.
C. OVERTIME PAY
NO, an employee who is paid on a purely commission basis is not entitled to overtime pay as such
employee is exempt from the observance of normal hours of work for his compensation is measured by the
number of sales he makes.
D. SEPARATION PAY
YES, as long as the employee is a regular employee he or she will be entitled to a separation pay.
E. 13TH MONTH PAY
NO, Despite the mandatory nature of 13th month pay, the law provides that employees paid on a
purely commission basis are not entitled to 13th month pay, because they are expressly excluded from the
law’s coverage. However, those employees who are only partly paid on commission basis, i.e., those
guaranteed with a fixed wage aside from the commission, are entitled to 13th month pay, but only insofar as
their basic salary is concerned.
F. HOLIDAY PAY
General Rule: YES, All Employees are entitled to holiday pay under IRR, Book III, Rule IV, Sec.1
Exception: But one of the exception is if the employee is paid on a purely commission bases.
G. RETIREMENT PAY
YES. Under IRR, Book VI, Rule II, Sec.1 All Employees in the private sector are covered by the
retirement benefit regardless of their position, designation or status; and Irrespective of the method by which
their wages are paid.
Anton Kristoffer Lim
Commission Based Employees
Examples:
 Real Estate agents – either Full Commission, Half-Salary/Half-

Commission
 Operations Manager of Security Agencies – either Half-Salary/Half-
Commission or Salary Based
 Financial Advisers – Full Commission
 Insurance Agents – Full Commission
 A person who looks for an employee required by a certain company or
commonly known as head hunters – Full Commission
 Dispatchers(Bus/Jeep) - Full Commission
 Spa employees - either Full Commission, Half-Salary/Half-Commission
 Debt Collectors – may be either Full Commission, Half-Salary/Half-
Commission or Salary Based
 Car Dealers – Half-Salary/Half-Commission
Concept
Commission is a payment based on the amount of sales an employee

makes. Commission is usually based on a percentage of total sales, so the
more sales made, the more money the employee takes home. Many
commission-based salaries also pay a base salary, although the percent of
salary made up of commission can vary from just a few percent to almost
the entire salary.
Types
There are two basic ways to set commission. One is a flat

commission. This is usually a percentage, such as 5 percent, on any sale
the representative makes. Businesses can also use a ramped commission,
where the percentage of commission rises as sales representatives hit
certain targets. For example, the representative may earn a 10 percent
commission on the first P50,000 worth of goods or services, a 15 percent
commission on the next P50,000 and a 20 percent commission on anything
above P100,000. Ramped commission may also be based on targets, such as

a 10 percent commission on any sales up to a set target, then a 20 percent
commission on any sales after that.
Entitlements
Wages (As for Debt Collectors)
Collectors Paid with Wage and Commission
Collection entity or agency shall ensure that the daily

applicable rate of collectors paid with wage and commission shall
be determined in accordance with the following:
1. The wage shall be based on an amount mutually agreed

upon by the collection entities or agencies and the
collectors.
2. The commission shall be computed based on the actual
amount collected or cured by the collector or agency’s
collection fee.
For this purpose, the computation of applicable daily rate

ad wage0related benefits shall include all amount received by
the collector.
Commission-Based Collectors
Collection entity or agency and commission-based collector

shall agree on appropriate commission-based collector shall
agree on appropriate commission and on the parameters for the
grant of the same considering industry standards and practice.
For this purpose, the collection industry shall come up with

an industry standard formula, subject to the approval of the
Secretary of the Labor and Employment, within three (3) months
from the issuances of the Rules.
Minimum Benefits
The regular collectors and collectors paid with wage and

commission are entitled to the following benefits, as provided for by
the Labor Code, as amended, and other labor laws:
a.) Wages for actual work during the normal work hours and
days shall not be lower than the applicable minimum wage
rates. Wages shall be paid at least once every two weeks or
twice a month at intervals not exceeding 16 days;
b.) Twelve (12) regular Holidays with pay pursuant to Republic
Act No. 9849. The colletor shall be paid holiday pay of 100%
of the minimum wage even if he did not report for work. If
the collector is required to work on said holiday, he shall be
paid 200% of the minimum wage;
c.) Rest Day of 24 consecutive hours for every 6 consecutive
working days. Of the collector is required to work on a rest
day, he shall be paid an additional premium pay of 30% of
the basic wage for work on special days under RA 9849 and
rest days. Whenever work is performed on a rest day, which
happens to be also a special day, he/she is entitled to an
additional 50% of the basic wage;
d.) Overtime Pay equivalent to at least 25% of the basic wage on
ordinary days and 30% on regular holidays, special days
andrest days for work beyond 8 hours per day;
e.) Night shift pay of an additional 10% of the basic wage for
work between 10pm and 6am of the following day;
f.) Paid service incentive leave of 5 days for every year of
service;
g.) 13th month pay pursuant to PD 851
h.) Paid maternity leave pursuant to RA 8282
i.) Paid paternity leave pursuant to RA 8187
j.) Paid parental leave for solo parents pursuant to RA 8972
k.) Paid leave for victims of VAWC pursuant to RA 9262
l.) Paid special leave for women who underwent surgery caused
by gynecological disorders pursuant to RA 9710
m.) Retirement pay pursuant to RA 7641
n.) Safe and healthful working conditions.
Social Welfare Benefits
Without prejudice to established company policy, collective

bargaining agreement or other applicable employment agreement, all
collectors shall be entitled to coverage for social welfare benefits such
as Pag-IBIG Fund, PhilHealth, Employee Compensation Law, Social
Security Law and other applicable laws.
Livelihood Program and Support
The DOLE, through its Regional Offices, shall facilitate the access
of collectors and members of their families to livelihood and temporary
employment and income opportunities under the DOLE Integrated
Livelihood and Emergency employment Program, subject to
compliance to the requirement under Dept. Order No. 137-14.
Productivity or Performance Based Pay
Collection entity or agency and its collectors are encouraged to

mutually agree on a productivity or performance-based incentive
scheme which may take into consideration safety and business
performance, accident prevention, cost-savings and attainment of
quota/targets.
The grant of productivity or performance-based pay shall not

diminish existing gain sharing arrangements, other forms of bonus and
incentive being given to collectors and those provided under collective
bargaining agreement.
Reference
Department Order No. 155-16
https://smallbusiness.chron.com/commissionbased-salary-11999.html
COMMISSIONED
BASED
WORKERS
Benefits to which they are entitled under Labor Code and Special Laws
Submitted by:
FATIMA C. MAMANGON
2014-0016
Submitted to:
ATTY. PORFIRIO PANGANIBAN, JR. DG.

Labor Law Review
9/13/2018
COMMISSION BASED WORKERS
I. WAGE OR SALARY
 PURELY COMMISSION BASED WORKERS are not entitled to wage or salary as defined under
1
the Labor Code .
 BOUNDARY BASED EMPLOYEES such as Jeepney Driver and Taxi Driver are also not
entitled to wage or salary.
In a case of jeepney drivers, the Court said: “The fact that the drivers do not receive fixed wages but get
only that in excess of the so-called “boundary” they pay to the owner/operator is not sufficient to withdraw
2
the relationship between them from that of employer and employee.”
Under Book III, governing “Conditions of Employment” of the Labor Code, Article 82 provides the
employees covered by the provisions provided therein. However, said provisions do not apply to workers
paid by results or field personnel.
In correlation with the Omnibus Rules of Implementing Rules and Regulations the Labor Code, under
Book III, those who are paid in purely commission basis may be found under worker paid by result or field
personnel. Hence, in view thereof, by analogy, those paid by purely commission basis are not entitled to
wage or salary.
However, a worker paid by commission basis may be entitled for wage or salary depending on how the
commission is paid.
3
Article 97 [f] of the Labor Code defines the term "wage" [which is equivalent to
"salary," as used in P. D. No. 851 and Memorandum Order No. 28] in the following
terms:
[f] "Wage" paid to any employee shall mean the remuneration or earnings,
however designated, capable of being expressed in term of money, 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 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. "Fair and reasonable
value" shall not include any profit to the employer or to any person affiliated with
the employer.
Under the Labor Code, “commission” is included as part of wage or basis salary.
However, depending on how the commission is given, commission may be deemed as part of wage or
salary of the commission based employee. The determination of how the commission is paid is important
th
determination of the 13 month pay.
1
Article 97 [f] Labor Code
2
Labor Standards and Welfare, Azucena, Vol. I
3
Article 97 [f] Labor Code
1
4
The types of commissions are as follows:
 FOR EMPLOYEES THAT ARE PAID WITH
a) FIXED OR GUARANTEED WAGE PLUS COMMISSION; OR

b) FIXED WAGE
1. Commission is paid as an incentive or encouragement to ensure productivity, i.e., productivity

bonus; or
Commission that takes the form of an incentive or encouragement to ensure productivity does
not form part of the basic salary. In compensation schemes consisting of a fixed or guaranteed
wage plus commission, the fixed or guaranteed wage is clearly the “basic salary” for this is what
the employee receives for a standard work period. Commissions are given for extra efforts
exerted in consummating sales or other related transactions. They are, as such, additional pay,
5
which this Court has made clear do not form part of the „basic salary‟ .
 FOR EMPLOYEES THAT ARE PAID WITH A SMALL FIXED WAGE AND GREATER PART IS
PAID WITH THEIR COMMISSION EARNED (I.E. SALES AGENT)
2. Commission is paid as a direct remuneration for service rendered.
Commission that takes the form of a direct remuneration for services rendered should be
included in the computation of the basic salary. That is, it should be added to the guaranteed
6
wage of the employee in computing his “basic salary. ”
II. 8-HOURS WORK, OVERTIME PAY, MEAL AND REST PERIOD
 FIELD PERSONNEL PAID BY PURELY COMMISSION BASIS

 WORKERS PAID WITH FIXED WAGE PLUS COMMISSION (Commission as incentive)
 WORKERS PAID WITH FIXED WAGE (Commission as incentive)
7
In the case of San Miguel Brewery, Inc. vs. Democratic Labor Organization , in case of field personnel
workers, similar to those paid by commission basis regardless of the time employed, it is held that the
Eight-hour Labor Law has no application to said outside or field sales personnel and that they are not
entitled to overtime compensation.
The philosophy behind this exemption is that his earnings in the form of commission is based on the
gross receipts of the day. His participation depends upon his industry so that the more hours he employs
in the work, the greater are his gross returns and the higher his commission. There are no restrictions
respecting the time he shall work and he can earn as much or as little, within the range of his ability, as
his ambition dictates.
In lieu of overtime, he ordinarily receives commissions as extra compensation. He works away from his
employer‟s place of business, is not subject to the personal supervision of his employer, and his employer
has no way of knowing the number of hours he works per day.
4
https://www.alburovillanueva.com/applicability-13th-month-pay-commissions
5
Boie-Takeda Chemicals, Inc., Hon. Dionisio De La Serna, G.R. No. 92174 December 10, 1993
6 PHILIPPINE DUPLICATORS, INC vs. NLRC, G.R. No. 110068 February 1995
7 San Miguel Brewery, Inc. vs. Democratic Labor Organization et al., G.R. No.
L-18353, July 31, 1963
2
 WORKERS PAID BY COMMISSION BASIS (PURELY OR PARTLY) IF WORK AND TIME IS
SUPERVISED OR IS REQUIRED TO BE AT SPECIFIC PLACE
This type of workers paid by commission such as drivers are not considered as field-personnel and thus
may be entitled to overtime pay if their work such as time and performance is supervised. This includes
drivers, jeepney drivers, taxi drivers etc. as their routes and time of work are supervised.
If required to be at specific places at specific times, employees including drivers cannot be said to be
field personnel despite the fact that they are performing work away from the principal office of the
employer. If usage of work hours is supervised, the employee is not a “field personnel.” Same rule applies
to commissioned based employees.
MEAL AND REST PERIOD
As to meal periods, if considered as field-personnel, then they are NOT entitled to rest periods and meal
periods as their time of hours worked are not quantified.
If not considered as field-personnel and work is supervised as to time of work and performance thereof,
they are entitled.
th
III. 13 MONTH PAY
In connection with the discussion on wages, workers paid by commission basis may or may not be
th
entitled to 13 month pay.
8
The Rules and Regulations of PD 851 of Section 2(a) define the terms thirteenth-month pay and basic
salary:
"Thirteenth-month pay" shall mean one twelfth (1/12) of the basic salary of an employee within a calendar
year.
 PURELY COMMISSION BASED WORKERS

9
As provided under Section 3(e) of the Rules and Regulations of PD 851 , Section 3(e), purely
th
commission based workers are not entitled to 13 month pay for being expressly excluded.
Section 3. Employers covered The Decree shall apply to all employers except to:
(e) Employers of those who are paid on purely commission, boundary, or task basis, and those
who are paid a fixed amount for performing a specific work, irrespective of the time consumed in
the performance thereof, except where the workers are paid on piece-rate basis in which case the
employer shall be covered by this issuance insofar as such workers are concerned.
 WORKERS PAID WITH FIXED SALARY WITH COMMISSION AS INCENTIVE
10
In Boie-Takeda Chemicals, Inc., Hon. Dionisio De La Serna , those workers who are employed with a
th
fixed or guaranteed salary with commission given as incentive are entitled to 13 -month pay with the
“basic salary” based on the fixed wage and the commission excluded.
8
RULES AND REGULATIONS IMPLEMENTING PRESIDENTIAL DECREE NO. 851, Section 2(a)
9
RULES AND REGULATIONS IMPLEMENTING PRESIDENTIAL DECREE NO. 851, Section 3(e)
3
 WORKERS PAID WITH FIXED SALARY AND COMMISSION AS PART OF RENUMERATION
(fixed salary herein is relatively small and greater part of renumeration is paid by
commission)
Under the Revised Guidelines of PD 851, “Employees who are paid a fixed or guaranteed wage plus
commission are also entitled to the mandated 13th month pay, based on their total earnings during the
11
calendar year, i.e., on both their fixed or guaranteed wage and commission ”.
These types of workers such as sales agents who are paid for their services rendered with a small fixed
th
wage and mostly by commission basis is entitled for 13 month pay. The “basic salary” includes the
small-fixed wage and the commission.
12
In Philippine Duplicators, Inc vs. NLRC et al , the Court reiterated the ruling which found “Sales
commissions” earned by sales agent constitute part of the compensation or remuneration paid to
salesmen for serving as salesmen, and hence as part of the "wage" or salary of petitioner's
salesmen.
Here, the salesmen a small fixed or guaranteed wage, the greater part of the salesmen‟s wages or
salaries being composed of the sales or incentive commissions earned on actual sales they were able to
close. This particular salary structure was intended for the benefit of the employer, based on the apparent
assumption that its salesmen would be moved to greater enterprise and diligence and closes 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
IV. NIGHT DIFFERENTIAL, SERVICE INCENTIVE LEAVE, AND HOLIDAY PAY
 PURELY COMMISSION BASED WORKERS (only to Field Personnel and whose time and
performance is unsupervised)
13
The Omnibus Implementing Rules and Regulations of Labor Code excluded field personnel paid in
purely commissioned basis for entitlement of Night Differential, Service Incentive Leave, and Holiday Pay.
Rule II, Section 1(e) states that the following are not entitled to Night Differential:
(e) Field personnel and other employees whose time and performance is unsupervised by
the employer including those who are engaged on task or contract basis, purely
commission basis, or those who are paid a fixed amount for performing work irrespective of
the time consumed in the performance thereof
Rule IV, Holiday Pay, Section 1(e) and Rule V, Service Incentive Leave, Section 1(d) also provides the
same exemption.
 OTHER COMMISSIONED BASED WORKERS where performance of work and time is

supervised and/or not field personnel
These types of workers are said to be entitled to night-differential, service incentive leave and holiday
pay.
10
Boie-Takeda Chemicals, Inc., Hon. Dionisio De La Serna, G.R. No. 92174 December 10, 1993
11
Revised Guidelines of PD851
12
PHILIPPINE DUPLICATORS, INC vs. NLRC, G.R. No. 110068 February 1995
13
Omnibus Rules to Implement the Labor Code
4
14
Auto Bus Transport Systems, Inc., v. Bautista clarifies that an employee who is paid on purely
commission basis is entitled to SIL:
A careful perusal of said provisions of law will result in the conclusion that the grant
of service incentive leave has been delimited by the Implementing Rules and
Regulations of the Labor Code to apply only to those employees not explicitly excluded
by Section 1 of Rule V. According to the Implementing Rules, Service Incentive
Leave shall not apply to employees classified as field personnel. The phrase other
employees whose performance is unsupervised by the employer must not be
understood as a separate classification of employees to which service incentive leave
shall not be granted. Rather, it serves as an amplification of the interpretation of the
definition of field personnel under the Labor Code as those whose actual hours of work
in the field cannot be determined with reasonable certainty.
The same is true with respect to the phrase those who are engaged on task
or contract basis, purely commission basis. Said phrase should be related with
field personnel, applying the rule on ejusdem generis that general and unlimited terms
are restrained and limited by the particular terms that they follow. Hence, employees
engaged on task or contract basis or paid on purely commission basis are not
automatically exempted from the grant of service incentive leave, unless, they fall
under the classification of field personnel.
xxxx
According to Article 82 of the Labor Code, field personnel shall refer to non-
agricultural employees who regularly perform their duties away from the principal
place of business or branch office of the employer and whose actual hours of
work in the field cannot be determined with reasonable certainty. This definition is
further elaborated in the Bureau of Working Conditions (BWC), Advisory Opinion to
Philippine Technical-Clerical Commercial Employees Association which states that:
As a general rule, [field personnel] are those whose performance of
their job/service is not supervised by the employer or his representative, the
workplace being away from the principal office and whose hours and days
of work cannot be determined with reasonable certainty; hence, they are
paid specific amount for rendering specific service or performing specific
work. If required to be at specific places at specific times, employees
including drivers cannot be said to be field personnel despite the fact
that they are performing work away from the principal office of the
employee.
V. SERVICE CHARGES
 PURELY COMMISSION BASED WORKERS, WORKERS PAID WITH FIXED SALARY WITH
COMMISSION AS INCENTIVE and WORKERS PAID WITH FIXED SALARY AND
COMMISSION AS PART OF RENUMERATION (fixed salary herein is relatively small and
greater part of renumeration is paid by commission)
The Omnibus Implementing Rules and Regulations of Labor Code under Rule VI, Services Charges, in
Section 2 provides the employees covered to be entitled for service charges.
SECTION 2. Employees covered. —

This rule shall apply to all employees of covered employers, regardless of their positions,
designations or employment status, and irrespective of the method by which their wages are paid
15
except to managerial employees .
14
Auto Bus Transport Systems, Inc., v. Bautista , G.R. No. 156367. May 16, 2005
5
Herein, only managerial employees are exempt from entitlement thereof. It was mandated that all
employees of the covered employers in Section 1 regardless of the method by which their wages are paid
are entitled to service charges.
VI. RETIREMENT PAY
 ALL WORKERS PAID BY COMMISSION BASIS WHETHER PURELY OR WHOLE IS

ENTITLED
16
In the case of Rodolfo J. Serrano, vs. Severino Santos Transit And/Or Severino Santos , bus conductor
paid on purely commissioned basis of a bus company wherein no retirement scheme was included
provides that:
Republic Act No. 7641 which was enacted on December 9, 1992 amended Article 287 of the Labor Code
provides for retirement pay to qualified private sector employees in the absence of any retirement plan.
Moreover, the Implementing Rules of said law provide under RULE II, Retirement Benefits, SECTION 1,
provides that the rule on retirement benefit shall apply to all employees in the private sector,
regardless of their position, designation or status and irrespective of the method by which their
wages are paid, except to those specifically exempted under Section 2.
Section 2 of the same IRR, however did not include those based on workers paid on commission basis.
VII. SEPARATION PAY
 WORKERS PAID BY COMMISSION BASIS whether purely or partly paid may or may not be
entitled to separation pay depending on their status as a regular employee or the existence of
employee-employer relationships.
 Entitlement to Separation pay depends on the existence of the employee-employer relationship
17
In the case of San Miguel Jeepney Service et al Vs. NLRC et al , court held that drivers, dispatchers
and mechanic -- to be regular employees as they were unarguably performing work necessary and
desirable in the business of SMJS. Without the services rendered by private respondents, petitioners
could not have conducted their business of providing transportation services within the naval base.
The mere fact that they were paid on commission basis does not affect or change their status as
regular employees. The test for determining whether an employee is regular or casual has nothing to do
with the manner of computing or paying employees wages or compensation.
However, in the same ruling, the Court states that these commission-basis employees involved were
regular employees (by operation of law, plus of course, the fact that their status as employees had never
been challenged at any stage of the present case), it does not follow that every employee paid
(whether wholly or partly) on commission basis can be considered a regular employee, or an
employee at all, for that matter. While this caveat may seem rather elementary, it is still needful to
stress that there are many lines of business legally and legitimately engaging the services of workers,
15
Omnibus Rules to Implement the Labor Code
16
Rodolfo J. Serrano, vs. Severino Santos Transit And/Or Severino Santos, G.R. No. 187698, August 9, 2010
17
SAN MIGUEL JEEPNEY SERVICE and MAMERTO GALACE, petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION, EDELBERTO PADUA and 23 OTHERS, G.R. No. 92772. November 28, 1996
6
who are paid on commission basis to perform activities desirable and necessary for such businesses,
without creating any kind of employer-employee relationship at any time.
 WITHOUT EMPLOYEE-EMPLOYER RELATIONSHIP
Purely commissioned based workers are not entitled thereto.
VIII. SOLO PARENT LEAVE
 ALL EMPLOYEES REGARDLESS OF STATUS (may be purely commissioned based or

partially paid)
All employees are entitled regardless of employment status as long as they fall within the definition of
“solo-parent” under Republic Act No. 8972 and there is the existence of employee-employer
18
relationship .
XI. WA
Purely Half-Salary or Salary Based Boundary

commissioned Percentage (no basis
based (Full based commission
Commission) Commission or
(unsupervised) commission
is as
incentive)
Wage/Salary NO. YES YES NO
Hours of Work NO. If a field YES (if not YES (if not YES (if not
personnel considered as considered as considered as
employee such field- field- field-
as sales agent personnel) personnel) personnel)
YES. If not a
considered as
filed personnel
and time and
performance of
work is
supervised
such as drivers,
conductors etc
Meal Periods NO. If a field YES (if not YES (if not YES (if not
YES. If not a
considered as
filed personnel
and time and
performance of
work is
18
REPUBLIC ACT NO. 8972
7
supervised
such as drivers,
conductors etc.
Night NO as to FIELD YES (if not YES (if not YES (if not
Differential PERSONNEL considered as considered as considered as
field- field- field-
(see IRR Rule personnel) personnel) personnel)
II, Nighshift
Differential)
YES, if time and

performance is
supervised
Holiday Pay NO as to FIELD YES (if not YES (if not YES (if not
PERSONNEL considered as considered as considered as
field- field- field-
(see IRR Rule personnel) personnel) personnel)
IV, Nighshift
Differential
YES, if time and

performance is
supervised
Service NO as to FIELD YES (if not YES (if not YES (if not
Incentive PERSONNEL considered as considered as considered as
Leave (see IRR field- field- field-
RULE V personnel) personnel) personnel)
Service
Incentive Leave
YES, if time and

performance is
supervised
Overtime Pay NO. If a field YES (if not YES (if not YES (if not
YES. If not a
considered as
filed personnel
and time and
performance of
work is
supervised
such as drivers,
conductors etc
Service YES YES YES YES
Charge
13-month pay NO (revised Yes Yes NO (revised
th th
guidelines 13 (Employees Employees guidelines 13
month pay law who are paid a who are paid a month pay law
PD 851) fixed or fixed or PD 851)
guaranteed guaranteed
wage plus wage plus
commission commission
8
are also are also
entitled to the entitled to the
mandated 13th mandated 13th
month pay, month pay,
based on their based on their
total earnings total earnings
during the during the
calendar year, calendar year,
i.e., on both i.e., on both
their fixed or their fixed or
guaranteed guaranteed
wage and wage and
commission. commission.
(revised (revised
th th
guidelines 13 guidelines 13
month pay law month pay law
PD 851) PD 851)
Separation QUALIFIED QUALIFIED QUALIFIED QUALIFIED
Depends on the Depends on Depends on Depends on

existence of the existence the existence the existence
Employee- of Employee- of Employee- of Employee-
Employer Employer Employer Employer
Relationship Relationship Relationship Relationship
Retirement YES (Republic YES (Republic YES (Republic YES (Republic
Pay Act No. 7641 Act No. 7641 Act No. 7641 Act No. 7641
which was which was which was which was
enacted on enacted on enacted on enacted on
December 9, December 9, December 9, December 9,
1992 amended 1992 amended 1992 amended 1992
Article 287 of Article 287 of Article 287 of amended
the Labor the Labor the Labor Article 287 of
Code) Code) Code) the Labor
Code)
Solo Parent YES (but must YES (but must YES (but must YES (but must
Leave have existence have existence have existence have
of employee of employee of employee existence of
employer employer employer employee
relationship relationship relationship employer
regardless of regardless of regardless of relationship
employment employment employment regardless of
status) status) status) employment
status)
VAWC (Leave) YES (but must YES (but must YES (but must YES (but must
have existence have existence have existence have
of employee of employee of employee existence of
employer employer employer employee
relationship relationship relationship employer
relationship
9
Name : MAYORALGO, Maria Remedios C.
Student No. : 2013-0065
Professor : Atty. Porfirio DG Panganiban, Jr.
Subject : Labor Law Review
APPLICATION OF LABOR STANDARDS TO COMMISSION-BASED EMPLOYEES
Whether or not the commission-based employees are entitled to Wage/Salary, Service Incentive Leave,
Overtime, Separation/Retirement Pay, etc. as provided in the Labor Standards.
KINDS OF COMMISSION-BASED EMPLOYEES
a. Purely commission-based employees

b. Part-fixed and part-performance-based employees
STATUS OF EMPLOYMENT
A commission-based employee can either be a regular employee or an independent contractor

depending on the circumstances.
In Singer Sewing Machine Company vs Drilon1, wherein the collectors claim their right to form
union as employees of the petitioner, the Court stated that [t]he nature of the relationship between a
company and its collecting agents depends on the circumstances of each particular relationship. Not all
collecting agents are employees and neither are all collecting agents independent contractors. The
collectors could fall under either category depending on the facts of each case.
In the case of Chaves vs NLRC2, petitioner Chaves, being paid on the basis of per trip by the
respondent corporation, wanted to avail himself of the benefits that the regular employees were
receiving such as overtime pay, nightshift differential pay, 13th month pay, among others. The Court, in
resolving the issue of whether an employer-employee relationship existed, stated that –
The elements to determine the existence of an employment relationship are: (1)

the selection and engagement of the employee; (2) the payment of wages; (3) the power
of dismissal; and (4) the employers power to control the employees conduct. The most
important element is the employers control of the employees conduct, not only as to the
result of the work to be done, but also as to the means and methods to accomplish it. All
the four elements are present in this case.
Xxxx.
1
GR No.91307, SINGER SEWING MACHINE COMPANY, petitioner vs. HON. FRANKLIN M. DRILON, MED-ARBITER FELIX B.
CHAGUILE, JR., and SINGER MACHINE COLLECTORS UNION-BAGUIO (SIMACUB), respondents.
2
GR No.146530, PEDRO CHAVEZ, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, SUPREME PACKAGING, INC. and
ALVIN LEE, Plant Manager, respondents.
Fourth. As earlier opined, of the four elements of the employer-employee
relationship, the control test is the most important. Compared to an employee, an
independent contractor is one who carries on a distinct and independent business and
undertakes to perform the job, work, or service on its own account and under its own
responsibility according to its own manner and method, free from the control and
direction of the principal in all matters connected with the performance of the work
except as to the results thereof. Hence, while an independent contractor enjoys
independence and freedom from the control and supervision of his principal, an
employee is subject to the employers power to control the means and methods by which
the employees work is to be performed and accomplished.
Further, in San Miguel Jeepney Service vs NLRC3, it was held that the drivers, dispatchers and
mechanics who were paid on commission basis were regular employees and entitled to separation pay
because they were unarguably performing work necessary and desirable in the business of SMJS.
Without the services rendered by private respondents, petitioners could not have conducted their
business of providing transportation services within the naval base. This plus the fact that private
respondents had each rendered from two to eight years of service cause them to come squarely within
the ambit of Art. 280 of the Labor Code; beyond dispute, they were not only employees, but regular
employees, as correctly held by public respondent.
The mere fact that they were paid on commission basis does not affect or change their status as
regular employees. The test for determining whether an employee is regular or casual has nothing to do
with the manner of computing or paying a employee's wages or compensation. Rather,
The primary standard, . . ., of determining a regular (as against casual)

employment is the reasonable connection between the particular activity performed by
the employee in relation to the usual business or trade of the employer. The test is
whether the former is usually necessary or desirable in the usual business or trade of the
employer. The connection can be determined by considering the nature of the work
performed and its relation to the scheme of the particular business or trade in its
entirety. Also, if the employee has been performing the job for at least one year, even if
the performance is not continuous or merely intermittent, the law deems the repeated
and continuing need for its performance as sufficient evidence of the necessity if not
indispensability of that activity to the business. Hence, the employment is also
considered regular, but only with respect to such activity and while such activity exists."
(emphasis supplied)
On the other hand, we should hasten to add that while in this particular case, these
"commission-basis" employees involved were regular employees (by operation of law, plus of
course, the fact that their status as employees had never been challenged at any stage of the
present case), it does not follow that every employee paid (whether wholly or partly) on
commission basis can be considered a regular employee, or an employee at all, for that matter.
While this caveat may seem rather elementary, it is still needful to stress that there are many
3
G.R. No. 92772 November 28, 1996, SAN MIGUEL JEEPNEY SERVICE and MAMERTO GALACE, petitioners, vs.
NATIONAL LABOR RELATIONS COMMISSION, EDELBERTO PADUA and 23 OTHERS, respondents.
lines of business legally and legitimately engaging the services of workers, who are paid on
commission basis to perform activities desirable and necessary for such businesses, without
creating any kind of employer-employee relationship at any time. Xxxx.
ENTITLEMENT TO LABOR STANDARDS BENEFITS
I. Bus Drivers & Conductors
In the case of bus drivers, Department of Labor and Employment (DOLE) issued Department
Order (DO) No. 118-12 s. 2012, re: RULES AND REGULATIONS GOVERNING THE EMPLOYMENT AND
WORKING CONDITIONS OF DRIVERS AND CONDUCTORS IN THE PUBLIC UTILITY BUS TRANSPORT
INDUSTRY.
The Public Utility Bus Operator are mandated to adopt a mutually agreed upon “part-fixed, part-
performance” based compensation scheme for their bus drivers and conductors pursuant to Section 1.
Fixed and Performance-Based Compensation Scheme, Rule III of the DO No. 118-12.
The bus drivers and conductors are likewise entitled to the following minimum benefits4:
a. Wages for all actual work during the normal work hours and days shall not be lower than the
applicable minimum wage rates.
b. 12 days Regular holidays
c. Rest day 24 consecutive hours for every 6 consecutive working days
d. Overtime Pay
e. Night-shift differential pay
f. Service incentive leave
g. 13th month pay
h. Maternity Leave
i. Paternity Leave
j. Solo Parent’s Leave
k. Leave for victims of VAWC
l. Special leave for women under RA No. 9710, otherwise known as Magna Carta for Women
m. Retirement Pay
Drivers and conductors are likewise entitled to Right to Security of Tenure, Right to Self-
Organization and Collective Bargaining and Right to Social Welfare Benefits, such as Pag-IBIG, PhilHealth,
Employees’ Compensation Law, Social Security Law and other applicable laws.
II. Collectors in Debt Collection Industry
The Department of Labor and Employment (DOLE) issued Department Order (DO) No. 155-16 s.
2016 re: RULES AND REGULATIONS GOVERNING THE EMPLOYMENT AND WORKING CONDITIONS OF
COLLECTORS IN THE DEBT COLLECTION INDUSTRY, to ensure the protection and welfare of collectors
4
Section 2.Minimum Benefits, Rule II, DOLE Department Order No. 118-12 s. 2012
and similar personnel engaged in purely collection services on delinquent and/or past due accounts of
clients through negotiations by telephone and/or personal field visits.
It classified the employees as: a) regular employees, b) commission-based collectors.
Regular employees are those appointed to fill up regular positions or whose employment is not
dependent on the performance or completion of a specific job, work or service, or on the term or
duration of a collection service agreement, including (a) office-base employees; (b) regular collectors;
and (c) collectors paid with wage and commission.5
On the other hand, Commission-based collectors are purely commission-based agents who are
engaged by the collection agent/service provider to recover, collect or cure accounts of a particular
principal/client and whose employment is6:
a) Dependent on the availability of endorsements and/or co-terminus with the term of the
collection service agreement between the principal/client and the collection agency or
service provider (i.e. tele-collectors and field collectors); and
b) Whose manner of compensation is purely on commission basis; and
c) Not required to report for work on a regular basis and he/she is free from control and
supervision of the collection agency/service provider in matters connected with the
collection, recovery and curing of accounts except as to results thereof and subject to
prohibitions and limitations mandated by law and government regulatory agencies.
The minimum benefits of regular collectors and collectors with wage and commission are as
7
follows:
a. Wages for all actual work during the normal work hours and days shall not be lower than the
applicable minimum wage rates.
b. 12 days Regular holidays
c. Rest day 24 consecutive hours for every 6 consecutive working days
d. Overtime Pay
e. Night-shift differential pay
f. Service incentive leave
g. 13th month pay
h. Maternity Leave
i. Paternity Leave
j. Solo Parent’s Leave
k. Leave for victims of VAWC
l. Special leave for women under RA No. 9710, otherwise known as Magna Carta for Women
m. Retirement Pay
n. Safe and healthful working condition as provided under the Occupational Safety and Health
Standards
5
Section 2, Rule II, Department Order No. 155-16 s. 2016
6
7
The collection agencies are not precluded from providing the commission-based collectors with the
same benefits.
The employees are also entitled to Right to Security of Tenure, Right to Self-Organization and
Collective Bargaining and Social Welfare Benefits, such as Pag-IBIG, PhilHealth, Employees’
Compensation Law, Social Security Law and other applicable laws.
RIGHT TO 13TH MONTH PAY
A. PURELY COMMISSION-BASED EMPLOYEES

- Not entitled because they are expressly excluded as provided in Section 3(e) of Rules and
Regulation Implementing Presidential Decree No. 851.
B. PART-FIXED, PART-COMMISSION
- It depends whether commission is paid; a) as an incentive, or b) as direct remuneration for
service rendered. If it forms part as an incentive, the commission is not included in the total
basic salary for the year as basis of the computation of the 13th month pay. On the other hand, if
it is a direct remuneration for services rendered, it should be included in the computation of the
total basic salary.
In the case of Philippine Duplicators vs. NLRC8, the Court ruled as follows –
Considering the above circumstances, the Third Division held, correctly, that the
sales commissions were an integral part of the basic salary structure of Philippine
Duplicators' employees salesmen. These commissions are not overtime payments, nor
profit-sharing payments nor any other fringe benefit. Thus, the salesmen's commissions,
comprising a pre-determined percent of the selling price of the goods sold by each
salesman, were properly included in the term "basic salary" for purposes of computing
their 13th month pay.
In Boie-Takeda the so-called commissions "paid to or received by medical

representatives of Boie-Takeda Chemicals or by the rank and file employees of Philippine
Fuji Xerox Co.," were excluded from the term "basic salary" because these were paid to
the medical representatives and rank-and-file employees as "productivity bonuses."4 The
Second Division characterized these payments as additional monetary benefits not
properly included in the term "basic salary" in computing their 13th month pay. We note
that productivity bonuses are generally tied to the productivity, or capacity for revenue
production, of a corporation; such bonuses closely resemble profit-sharing payments and
have no clear director necessary relation to the amount of work actually done by each
individual employee. More generally, a bonus is an amount granted and paid ex gratia to
the employee; its payment constitutes an act of enlightened generosity and self-interest
on the part of the employer, rather than as a demandable or enforceable obligation.
Xxxx.
8
G.R. No. 110068 February 15, 1995, PHILIPPINE DUPLICATORS, INC., petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION and PHILIPPINE DUPLICATORS EMPLOYEES UNION-TUPAS, respondents.
Nica Jenine O. Nacilla
2017-0451 September 13, 2018
Commission-based and Boundary-based Employees
It is of no doubt that labor and employment are looked upon and treated with high respect
and value. Similar to every other right, they are also protected by the 1987 Philippine
Constitution. As a matter of fact, various provisions in the Constitution pertain to labor and
employment per se as well as on the rights and welfare of the workers.
Apart from the 1987 Philippine Constitution, other laws also govern labor and
employment. One of which and the most known is the Labor Code of the Philippines. The Labor
Code of the Philippines stands as the law governing employment practices and labor relations in
the Philippines. Among others, it prescribes the rules for hiring and termination of private
employees; the conditions of work including maximum work hours and overtime; employee
benefits such as holiday pay, thirteenth month pay and retirement pay; and the guidelines in the
organization and membership in labor unions as well as in collective bargaining1.
Although it appears that the application of the provisions of the Code is simple, it is not.
Certain provisions of the Code apply only to certain kinds of employees.
This paper endeavors to answer one of the questions in Labor Law that is, whether or not
the boundary-based employees and commission-based employees, primarily the public utility
drivers and conductors entitled to receive benefits under the Code.
Kinds of Employment
In essence, there are five general classifications of employment under the Labor Code.
These are: 1) Regular Employees; 2) Project Employees; 3) Seasonal Employees; 4) Casual
Employees and 5) Fixed-term Employees.
Regular Employees refer to those who have been „engaged to perform activities which
are usually necessary or desirable in the usual business or trade of employer. Project Employees,
on the other hand, refer to those “whose employment has been fixed for a specific project or
undertaking, the completion or termination of which has been determined at the time of the
engagement of the employee. Further, Seasonal employees refer to those who work or perform
1
Bureau of Labor Relations. https://blr.dole.gov.ph/2014/12/11/labor-code-of-the-philippines/ accessed on 13 Sep
2018
services which are seasonal in nature and the employment is for the duration of the season.
Casual employees refer to those who are not regular, project or seasonal employees. Lastly,
Fixed-term employees are those whose term is freely and voluntarily determined by the
employer and the employees.2
Commission-based and Boundary-based Employees
Given the five general classifications of employment, the question now is, “to which
classification does commission-based employees and boundary-based employees such as the
public utility vehicle drivers and conductors fall?”
The difference between the two kinds of employees was mentioned in the case of Serrano
v Severino Santos Transit, G.R. No. 187698, August 9, 2010. In this case, it was held that, “in
practice, taxi drivers do not receive fixed wages. They retain only those sums in excess of the
boundary or fee they pay to the owners or operators of the vehicles. Conductors, on the other
hand, are paid a certain percentage of the bus earnings for the day”3.
In essence, this means that boundary-based do not have guaranteed earnings as compared
to commission-based employees. The boundary-based employees, should they not meet the
boundary, would not receive any compensation and would even incur debts to the employer
whereas, the commission-based employees would always have compensation regardless of the
amount of his total earnings for the day for as long as there was earnings. Both kinds of
employees, however, would have their compensation dependent upon their total earnings for the
day.
Commission-based and Boundary-based Employees as Regular Employees
In the case of Caong et al v Regualos, G.R. No. 179428 January 26, 2011, the court
reiterated the ruling in Martinez v. NLRC, 339 Phil. 176, 182 (1997), citing National Labor
Union v. Dinglasan, 98 Phil. 649, 652-653 (1956) stating that,
The relationship between jeepney owners/operators and jeepney drivers

under the boundary system is that of employer-employee and not of lessor-lessee
because in the lease of chattels the lessor loses complete control over the chattel
leased although the lessee cannot be reckless in the use thereof, otherwise he
would be responsible for the damages to the lessor. In the case
of jeepney owners/operators and jeepney drivers, the former exercises supervision
and control over the latter. The fact that the drivers do not receive fixed wages but
2
3
Serrano v Severino Santos Transit, G.R. No. 187698, August 9, 2010
get only that in excess of the so-called boundary [that] they pay to the
owner/operator is not sufficient to withdraw the relationship between them from
that of employer and employee. Thus, private respondents were employees
because they had been engaged to perform activities which were usually
necessary or desirable in the usual business or trade of the employer.4
Further, it has already been established under Philippine Jurisprudence that both
boundary-based and commission-based employees specifically the public utility vehicle drivers
and conductors are considered regular employees.
This finds importance in determining whether both kinds of employees are entitled to
benefits under the Code or not.
Entitlement to Benefits under the Code
The benefits mentioned in the Code are holiday pay, thirteenth month pay and retirement
pay, among others.
Under the Code, the persons not entitled to the employment benefits under Title 1
covering Arts 82 to 96 are the government employees, managerial employees, field personnel,
members of the family of the employer who are dependent on him for support, domestic helpers,
persons in the personal service of another and workers who are paid by results. Clearly, the
commission-based and boundary-based employees are not among those who are excluded to
receive benefits under Title 1 of the Code. Hence, they too are entitled.
On the claim that they are considered field personnel and hence should be excluded, the
court explained in the case of Serrano v Severino Santos Transit, G.R. No. 187698 August 9,
2010 that:
“Republic Act No. 7641 which was enacted on December 9,

1992 amended Article 287 of the Labor Code by providing for retirement pay to
qualified private sector employees in the absence of any retirement plan in the
establishment. The pertinent provision of said law reads:
Section 1. Article 287 of Presidential Decree No. 442, as amended,

otherwise known as the Labor Code of the Philippines, is hereby amended to read
as follows:
x xx x
4
National Labor Union v. Dinglasan, 98 Phil. 649, 652-653 (1956)
In the absence of a retirement plan or agreement providing for retirement
benefits of employees in the establishment, an employee upon reaching the age of
sixty (60) years or more, but not beyond sixty-five (65) years which is hereby
declared the compulsory retirement age, who has served at least five (5) years in
the said establishment, may retire and shall be entitled to retirement pay
equivalent to at least one-half (1/2) month salary for every year of service, a
fraction of at least six (6) months being considered as one whole year.
Unless the parties provide for broader inclusions, the term one-half (1/2)
month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month
pay and the cash equivalent of not more than five (5) days of service incentive
leaves.
Retail, service and agricultural establishments or operations employing not more

than (10) employees or workers are exempted from the coverage of this provision.
RULE II
Retirement Benefits
SECTION 1.
General Statement on Coverage. This Rule shall apply to all employees in

the private sector, regardless of their position, designation or status and
irrespective of the method by which their wages are paid, except to those
specifically exempted under Section 2hereof. As used herein, the term Act shall
refer to Republic Act No. 7641 which took effect on January 7, 1993.
SECTION 2
Exemptions. This Rule shall not apply to the following employees:

2.1 Employees of the National Government and its political subdivisions,
including Government-owned and/or controlled corporations, if they are covered
by the Civil Service Law and its regulations.
2.2 Domestic helpers and persons in the personal service of another.
2.3 Employees of retail, service and agricultural establishment or
operations regularly employing not more than ten (10) employees. As used in this
sub-section;
x xxx
SECTION 5
Retirement Benefits.
5.1 In the absence of an applicable agreement or retirement plan, an

employee who retires pursuant to the Act shall be entitled to retirement pay
equivalent to at least one-half (―) month salary for every year of service, a
fraction of at least six (6) months being considered as one whole year.
5.2 Components of One-half (―) Month Salary. For the purpose of

determining the minimum retirement pay due an employee under this Rule, the
term one-half month salary shall include all of the following:
(a) Fifteen (15) days salary of the employee based on his latest salary rate.
As used herein, the term salary includes all remunerations paid by an employer to
his employees for services rendered during normal working days and hours,
whether such payments are fixed or ascertained on a time, task, piece of
commission basis, or other method of calculating the same, and includes the fair
and reasonable value, as determined by the Secretary of Labor and Employment,
of food, lodging or other facilities customarily furnished by the employer to his
employees. The term does not include cost of living allowances, profit-sharing
payments and other monetary benefits which are not considered as part of or
integrated into the regular salary of the employees.
(b) The cash equivalent of not more than five (5) days of service incentive
leave;
(c) One-twelfth of the 13th month pay due the employee.
(d) All other benefits that the employer and employee may agree upon that
should be included in the computation of the employees retirement pay.
For purposes, however, of applying the law on SIL, as well as on retirement, the Court
noted that there is a difference between drivers paid under the boundary system and conductors
who are paid on commission basis. It was discussed that “under P.D. 851 or the SIL Law, the
exclusion from its coverage of workers who are paid on a purely commission basis is only with
respect to field personnel. Hence, employees who purely commission-based are not
automatically exempted from the grant of service incentive leave, unless, they fall under the
classification of field personnel.5
The case of Gabriel v Gutierrez, G.R. No. 146989, February 7, 2007, is also one of
instances where the court said that “boundary drivers of passenger jeepneys are considered
regular employees of the jeepney operators. Being such, they are entitled to security of tenure”.6
5
Serrano v Severino Santos Transit, G.R. No. 187698 August 9, 2010
6
Gabriel v Gutierrez, G.R. No. 146989, February 7, 2007
Paeste, Lybenson B. 2014-0479
Labor Law Review
Commission
Commission is the recompense, compensation, reward of an employee, 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 of the principal. ((PACIWU)-TUCP
vs. NLRC GR. 107994 Aug. 15, 1995)
Commission-Only Employees
Those who are paid by commission as salary or as an add on as benefits to their salary.
Types of Commission
1. Commission as a direct remuneration – Payment which is considered as a wage for

services rendered.
2. Commission as an incentive – Payment made to encourage and ensure productivity and
does not form part of the basic salary.
Benefits
1. Overtime pay - Victory Liner v Arce G.R. No. 164820
2. Night shift Differential – Victory Liner v Arce G.R. No. 164820
3. Service Incentive Leaves - Auto Bus Transport Systems, Inc., v. Bautista G.R. No. 156367,
May 16, 2005
4. Maternity Leaves
5. Paternity Leaves
6. Parental Leave for Solo Parents
7. Parental Leave for Solo Parents.
8. Retirement Pay. - Republic Act No. 7641 (Serrano v Severino Transit G.R. No. 187698)
9. Separation Pay - Victory Liner v Arce G.R. No. 164820
10. 13th month Pay - Employees who are paid a fixed or guaranteed wage plus commission
are also entitled to the mandated 13th month pay, based on their total earning(s) during
the calendar year, i.e., on both their fixed and guaranteed wage and commission.
((PACIWU)-TUCP vs. NLRC GR. 107994 Aug. 15, 1995)
QUEVEDO, Arrah Svetlana T. LABOR REVIEW
2015-0229 TH 6-9PM
Assignment:
Compensation of Drivers
The value of workers is also recognized through entitlements and benefits which
Philippine labor laws grant to employees. The Labor Code is abundant with provisions
to cater to the different designations of workers who may be identified as drivers.
As to a driver who is a regular employee
The law provides that a driver who is a regular employee is entitled to benefits
including that of overtime pay. Article 82 of the Labor Code limits coverage as to who
may be entitled thereto.
ART. 82. Coverage. – The provisions of this title [Working Conditions and Rest
Periods] shall apply to employees in all establishments and undertakings whether for
profit or not, but not to government employees, managerial employees, field personnel,
members of the family of the employer who are dependent on him for support, domestic
helpers, persons in the personal service of another, and workers who are paid by
results as determined by the Secretary of Labor in appropriate regulations.
In Far East Agricultural Supply v. Lebatique (G.R. No. 162813, 12 February

2007), the employee-driver filed a complaint seeking to paid overtime pay. As the
complainant was not considered a field personnel, the employer was made liable to pay
for the overtime pay. Thus:
As correctly found by the Court of Appeals, Lebatique is not a field personnel as

defined above for the following reasons: (1) company drivers, including Lebatique, are
directed to deliver the goods at a specified time and place; (2) they are not given the
discretion to solicit, select and contact prospective clients; and (3) Far East issued a
directive that company drivers should stay at the client’s premises during truck-ban
hours which is from 5:00 to 9:00 a.m. and 5:00 to 9:00 p.m.14 Even petitioners admit
that the drivers can report early in the morning, to make their deliveries, or in the
afternoon, depending on the production of animal feeds.15 Drivers, like Lebatique, are
under the control and supervision of management officers. Lebatique, therefore, is a
regular employee whose tasks are usually necessary and desirable to the usual trade
and business of the company. Thus, he is entitled to the benefits accorded to regular
employees of Far East, including overtime pay and service incentive leave pay.
As to a driver who is a field personnel
In Article 82 of the Labor Code, a field personnel is defined as follows:

“Field personnel” shall refer to non-agricultural employees who regularly perform
their duties away from the principal place of business or branch office of the employer
and whose actual hours of work in the field cannot be determined with reasonable
certainty.
In Auto Bus Transport Systems, Inc. v. Bautista, it was held that the definition of
a “field personnel” is not merely concerned with the location where the employee
regularly performs his duties but also with the fact that the employee’s performance is
unsupervised by the employer. Field personnel are those who regularly perform their
duties away from the principal place of business of the employer and whose actual
hours of work in the field cannot be determined with reasonable certainty. Thus, in order
to determine whether an employee is a field employee, it is also necessary to ascertain
if actual hours of work in the field can be determined with reasonable certainty by the
employer. In so doing, an inquiry must be made as to whether or not the employee’s
time and performance are constantly supervised by the employer.
If a driver is categorized as a field personnel who is not supervised by the

employer and whose actual hours in the field cannot be determined with reasonable
certainty by the employer, then such driver may be considered a field personnel. In that
case, such driver is not entitled to overtime pay. These may apply to truck drivers or bus
drivers provided those conditions are met.
As to a driver as a househelper
The Labor Code likewise provides for the definition of domestic or household
service: under Art. 141, “Domestic or household service” shall mean service in the
employer’s home which is usually necessary or desirable for the maintenance and
enjoyment thereof and includes ministering to the personal comfort and convenience of
the members of the employer’s household, including services of family drivers.
Under the law, family drivers when considered as domestic househelpers, are
not entitled to overtime pay since they are covered by contract of domestic service.
They are also not covered by the provisions in the Kasambahay Law.
As to drivers employed in the Public Utility Bus Transport Industry
In January 2012, the Department of Labor and Employment issued Department

Order No. 118-12 series of 2012. It provides for the rules and regulations governing the
employment and working conditions of the bus drivers and conductors. With the
implementation of the DO 118-12 s.2012, bus drivers will be under a fixed and
performance-based compensation scheme. The fixed component shall be based on a
mutually agreed upon amount by the owner/operator and the driver/conductor which
shall not be lower than the minimum wage. The performance based component shall be
based on safety performance, business performance and other related parameters.
However, when DO No. 118-12 s. 2012 was implemented in July 2012, the
Supreme Court declared it unconstitutional, null and void, and should be recalled. The
operators said the new scheme will "force [them] to abandon their existing employment
arrangements with their respective drivers and conductors... or such other time-honored
arrangements that had long existed since time in memoriam." As such, bus drivers got
paid depending on the number of passengers that ride their vehicles, or the number of
trips they manage to complete on their routes. Under current collective bargaining
agreements, drivers and conductors receive salary on a "payment by results" or
"commission basis."
But if the bus drivers are considered as regular employees and not as field
personnel as in the case of Dasco et al. vs. Philtranco (G. R. No. 211141, June 29,
2016), they should be entitled to payment of overtime pay, holiday pay, service
incentive leave, rest days.
REGALADO, DUSTIN G.
2015-0454
Labor Law Review
Commission Based Workers
Basis:
Article 101. PAYMENT BY RESULTS
The Secretary of Labor shall regulate the payment of wages by results, including pakyao,
piecework and other nontime work, in order to ensure the payment of fair and reasonable wage
rates, preferably through time and motion studies or in consultation with representatives of
workers and employer’s organizations.
Who are Commission Based Workers or Workers paid by results?
These are workers whose pay is calculated not on the basis of time spent on the job but of the
quantity and quality or the kind of work they turn out. They do nontime work and are paid by their
results. These workers may be categorized into two: those whose time and performance is supervised
by the employer and those whose time and performance is unsupervised by the employer. The first
category has element of control and supervision over the manner as to how the work is to be performed
while in the second category there is no such element because the control, if any, is merely over the
result of the work itself. An example of the first category is a piece-rate worker whose work is usually
performed within the premises of the company. On the other hand, workers on pakiaw and takay basis
are usually unsupervised by the employer and therefore fall under the second group. Nevertheless,
these workers are similar in nature, in that the stress is placed on the unit of work produced or the
quantity thereof; a uniform amount is paid per unit accomplished. Moreover, payment by result is not
determinative of employer-employee relationship.
Entitlement to night differential and service incentive leave
The rules implementing the Labor Code on night differential and service incentive leave do not
apply to employees whose time and performance is unsupervised by the employers, including those
who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed
amount for performing work irrespective of the time consumed in the performance thereof. Conversely,
workers paid by results whose time and performance are supervised by the employer are covered by
said rules, i.e., entitled to the benefits.
Illustration: if the work is given to a homeworker on piece-rate wherein there is no supervision
since they perform their work in their homes, they are not covered by said rules. On the other hand, if
the same work is given to workers who perform their work in the company premises, they are covered
by the rules and therefore entitled to night differential and service incentive leave.
Entitlement to Holiday pay
Section 8, Rule IV. – Holiday Pay of Certain Employees. – x x x (b) Where a

covered employee is paid by results or output, such as payment on piece work, his
holiday pay shall not be less than his average daily earnings for the last seven (7) actual
working days immediately preceding the regular holiday; Provided, however, That in no
case shall the holiday pay be less than the applicable statutory minimimum wage rate.
Entitlement to 13th month pay
P.D. No. 851 exempts from the payment of 13th month pay employers of those who are paid a
fixed amount for performing specific work, irrespective of the time consumed in the performance
thereof, except where the workers are paid on piece rate basis in which case the employer shall grant
the 13th month pay to such workers. As used in the said law, workers paid on piece rate basis shall refer
to those who are paid a standard amount for every piece or unit of work produced that is more or less
regularly replicated, without regard to the time spent in producing the same. In order to be entitled to
the 13th month pay, the piece rate worker should have rendered at least one month work or service
during the calendar year.
Benefits payable to piece rate workers
1. The applicable statutory minimum daily rate

2. Yearly service incentive leave of five days with pay
3. Night shift differential pay
4. Holiday pay
5. Meal and rest periods
6. Overtime pay (conditional)
7. Premium pay (conditional)
8. 13th month pay
9. Other benefits granted by law, by individual or collective agreement or company policy or
practice
Source: The Labor Code with Comments and Cases, C.A. Azucena, Volume 1, 7th edition 2010
SARMIENTO, MAJESCA M
THURSDAY 6:00-9:00 HH 205
Commission based employees are employees who earned their wages based on the
percentage of the total sales that they make and such depends on what both the employers and
the employees upon in the employment contract. .They may also be considered as regular
employees. However, commission based employees’ rights may differ compared to employees
who have fixed income.
Wages
Article 97(f) of the Labor Code of the Philippines states that wages as 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 and Employment, of board, lodging, or other facilities customarily furnished
by the employer to the employee. "Fair and reasonable value" shall not include any profit to the
employer, or to any person affiliated with the employer.1 It is clear therefore, that a commission
based employees are entitled to their wages as specifically mentioned in Labor Code. Also as
stated in Article 98 of the same law, persons excluded from the application of minimum wage
statutes are those in "farm tenancy or leasehold, domestic service and persons working in their
respective homes in needle work or in any cottage industry duly registered in accordance with
law.2 Commission based employees such as bus drivers and truck drivers are non-agricultural
employees, therefore they are entitled to their minimum wage.
1 Article 97, Labor Code.

Service Incentive Leave
Article 95 of the Labor Code states that (a) Every employee who has rendered at least
one year of service shall be entitled to a yearly service incentive leave of five days with
pay.3 While all employees are covered under the rule on service incentive leave, one of the
exceptions is those who are engaged on task or contract basis, purely commission basis, or
those who are paid in a fixed amount performing work irrespective of the time consumed in
the performance.4 Commission based employees are generally not entitled to service leave
incentives. But the same should be classified as the law says employees in purely
commission basis, thus if employees are partly paid in commission basis then they are
entitled to service incentive leave.
13th Month Pay
Section 1 of PD851 states that “all employers are hereby required to pay all their
employees receiving a basic salary of not more than P1,000 a month, regardless of the nature
of their employment, a 13th-month pay not later than December 24 of every year.” 5
However, Section 3(e) of the same law provides for an exception wherein “employers of
those who are paid on purely commission, boundary, or task basis, and those who are paid a

4 Rule V, Sec. 1 (d), Implementing Rules and Regulations of the Labor Code.
5 Section 1, PD 851
fixed amount for performing a specific work, irrespective of the time consumed in the
performance thereof, except where the workers are paid on piece-rate basis in which case the
employer shall be covered by this issuance insofar as such workers are concerned.” Clearly,
commission based employees are generally not entitled to 13th month pay just like what was
stated in Implementing Rules and Regulation of Labor Code with respect to Service
Incentive Leave. But then, the law does not specifically prohibits an employee to be entitled
to 13th month pay. Purely commission basis is different from partly paid commission
employees as when employees also earned fixed income aside from the commissions that
they received. A good example would be bus drivers or truck drivers which have a fixed
income as stated in the employment contract and have an additional commission. In the case
of Boie- Takeda Chemicals Inc, Inc vs. Hon Dela Serna, the Supreme Court has held that In
remunerative schemes consisting of a fixed or guaranteed wage plus commission, the fixed
or guaranteed wage is patently the "basic salary" for this is what the employee receives for a
standard work period. Commissions are given for extra efforts exerted in consummating
sales or other related transactions. They are, as such, additional pay, which this Court has
made clear do not form part of the "basic salary."6 However, int he case of Philippine
Duplicators Inc vs NLRC, Court has held that “We observe that the third item excluded from
the term "basic salary" is cast in open ended and apparently circular terms: "other
remunerations which are not part of the basic salary." However, what particular types of
earnings and remuneration are or are not properly included or integrated in the basic salary
are questions to be resolved on a case to case basis, in the light of the specific and detailed
facts of each case. In principle, where these earnings and remuneration are closely akin to
fringe benefits, overtime pay or profit-sharing payments, they are properly excluded in
computing the 13th month pay. However, sales commissions which are effectively an
integral portion of the basic salary structure of an employee, shall be included in
determining his 13th month pay.”7 Thu, if it forms part of the basic salary of a commission
based employee, then the same shall be entitled to a 13th month pay.
6 Boie- Takeda Chemicals Inc, Inc vs. Hon Dela Serna, G.R. No. 92174, December 10, 1993
7 Philippine Duplicators Inc vs NLRC, G.R. No. G.R. No. 110068, February 15, 1995
Overtime Pay
Under Artcle 87 of the Labor Code, Overtime pay refers to the additional compensation
for work performed beyond eight (8) hours a day.8 While Commission based employees are
entitled to SIL and 13th month pay provided that they are partly paid commission employees,
they are not entitled to overtime pay because as commission based employees, they may
somehow be under the control and supervision of the employees but since their time is not
limited to 8 hours a day, it would be difficult to compute for the hours rendered as overtime.
Holiday Pay and Premium Pay
Article 84 of the Labor Code states that “Holiday pay refers to the payment of the
regular daily wage for any unworked regular holiday.”9 Articles 91-93 of the same law
focuses on premium pay where in Premium pay refers to the additional compensation for
work performed within eight (8) hours on non-work days, such as rest days and special
days.10 However, just like the 13th month pay and SIL, PD 851 provided for an exception
wherein, “Field personnel and other employees whose time and performance is unsupervised
by the employer, including those who are engaged on task or contract basis, purely
commission basis or those who are paid a fixed amount for performing work irrespective of
the time consumed in the performance thereof.”11

10 Articles 91, Labor Code
11 DOLE Handbook on Workers Statutory Monetary Benefits
Separation Pay
Separation pay is given to employees in instances covered by Articles 298 and 299
(formerly Articles 283 and 284) of the Labor Code of the Philippines. An employee’s
entitlement to separation pay depends on the reason or ground for the termination of his or
her services. An employee may be terminated for just cause (i.e., gross and habitual neglect
of duty, fraud, or commission of a crime), and other similar causes as enumerated under
Article 297 (formerly Article 282) of the Labor Code and, generally, may not be entitled to
separation pay. On the other hand, where the termination is for authorized causes, separation
pay is due.12 In the case of San Miguel Jeepney Service vs. NLRC, Court has held that,
“The mere fact that they were paid on commission basis does not affect or change their
status as regular employees. The test for determining whether an employee is regular or
casual has nothing to do with the manner of computing or paying a employee's wages or
compensation. Rather,
The primary standard, . . ., of determining a regular (as against casual) employment is

the reasonable connection between the particular activity performed by the employee in
relation to the usual business or trade of the employer. The test is whether the former is
usually necessary or desirable in the usual business or trade of the employer. The connection
can be determined by considering the nature of the work performed and its relation to the
scheme of the particular business or trade in its entirety. Also, if the employee has been
performing the job for at least one year, even if the performance is not continuous or merely
intermittent, the law deems the repeated and continuing need for its performance as
sufficient evidence of the necessity if not indispensability of that activity to the business.
Hence, the employment is also considered regular, but only with respect to such activity and
while such activity exists."(emphasis supplied)
private respondents are entitled to security of tenure and their services may be terminated
only for causes provided by law. Likewise, they are also to be accorded the benefits provided
under the Labor Code, including inter alia separation pay for loss of employment resulting from
retrenchment to prevent losses or closure/cessation of operation not due to serious business
12 Ibid.
losses. The Solicitor General in his Comment suggested that, being regular employees, they are
likewise entitled to the protection of minimum wage statutes. 13
Therefore, if commission based employees are considered as regular employees, they are
entitled to their separation pay.
Retirement Pay
Article 302 of the Labor Code states that Employees shall be retired upon reaching the
age of sixty (60) years or more but not beyond sixty-five (65) years old [and have served the
establishment for at least five (5) years]. This benefit applies to all employees except:
1) government employees;
2) employees of retail, service and agricultural establishments/operations
regularly employing not more than ten (10) employees .14
Commission based employees are then entitled also to their retirement pay as long as they
qualified under Article 301 of the Labor code for the law did not qualify whether the same shall
be a purely commission based employees of partly commission based employees. Thus if
commission based employees rendered as least 5 years of service in the said establishment then
he shall be entitled to such right which is that the minimum retirement pay shall be equivalent to
one-half (1/2) month salary for every year of service, a fraction of at least six (6) months
being considered as one (1) whole year.15
13 San Miguel Jeepney Service vs. NLRC, G.R. No 92772, November 28, 1996.
15 Ibid.
SIQUIAN, CELINE JEANNE A.
2014- 0340 / Sept. 13, 2018
LABOR LAW REVIEW ASSIGNMENT
ATTY. PORFIRIO PANGANIBAN
Legal basis/insights on Commission-Based Employees and their entitlements
Commission is defined as a recompense, compensation or reward of an employee, 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 of the principal.
Commission-Based Employees may either be those who in addition to a guaranteed fixed wage
earn commission as a direct remuneration for service rendered or those who earn it in the form of
an incentive or encouragement to ensure productivity.
 Employees paid on a purely commission basis are not entitled to 13th month pay. They
are expressly excluded from the coverage of PD 851 except those employees paid on
partly commission basis, i.e., those guaranteed with a fixed wage aside from the
commission.
Commission that take the form of an incentives or encouragement to ensure

productivity, e.g., productivity bonus, does not form part of the basic salary. As such, it
may be excluded from the computation of 13th month pay. Only the fixed or guaranteed
wage is required to be included in the computation (Boie-Takeda Chenicals, Inc. vs. Dela
Serna, G.R. No. 92174, Dec.10, 1993).
While commission that takes the form of a direct remuneration for services
rendered should be included in the computation of the basic salary. That is, it should be
added to the guaranteed wage of the employee in computing his “basic salary” (Phil.
Duplicators, Inc. vs NLRC, G.R. No. 110068, February 15, 1995).
 Employees paid according to “boundary” system are not entitled to 13th mo pay.
Boundary system is where the employees do not receive fixed wages, but retain only
those sums in excess of the “boundary” or fee they pay to the owners or operators of their
vehicles. They are akin to employees paid on purely commission basis
 Drivers who are paid on commission basis, but with guaranteed minimum wage in case
their commission be less than their basic minimum, are entitled to 13th month pay
 Workers can be considered regular employees, and therefore entitled to separation pay.
In SAN MIGUEL JEEPNEY SERVICE and MAMERTO GALACE, petitioners,

vs. NATIONAL LABOR RELATIONS COMMISSION, EDELBERTO PADUA and 23
OTHERS
The mere fact that they were paid on commission basis does not affect or change
their status as regular employees. The test for determining whether an employee is
regular or casual has nothing to do with the manner of computing or paying a employees
wages or compensation. Private respondents are entitled to security of tenure and their
services may be terminated only for causes provided by law.
They are also to be accorded the benefits provided under the Labor Code, including inter
alia separation pay for loss of employment resulting from retrenchment to prevent losses or
closure/cessation of operation not due to serious business losses.
The Solicitor General in his Comment suggested that, being regular employees, they are
likewise entitled to the protection of minimum wage status. Hence, they are entitled to separation
pay computed based on their minimum wage.
COMPREHENSIVE RESEARCH
Re: Commission-Based Employees
SISON, ALDOUS FRANCIS P. | 2017-0706

Labor Review | Thursday 6:00-9:00pm
ATTY. PORFIRIO PANGANIBAN JR.
Commissions
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.1
Employees paid by commission
Art. 97(f) of the Labor Code defined wages as “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…2” In Iran v. NLRC3 the
Supreme Court emphasized that the definition above explicitly includes commissions as
part of wages.
The Supreme Court in Boie-Takeda Chemicals, Inc v. De la Serna4 stressed that “in
remunerative schemes consisting of a fixed or guaranteed wage plus commission, the
fixed or guaranteed wage is patently the „basic salary‟ for this is what the employee
receives for a standard work period. Commissions are given for extra efforts exerted in
consummating sales or other related transactions. They are, as such, additional pay,
which this Court has made clear do not form part of the „basic salary.‟"
In Atok-Big Wedge Mining Co., Inc. v. Atok-Big Wedge Mutual Benefit Association,5 the
Supreme Court explained that if bonus or commission forms part of wages depends
upon the circumstances or condition for its payment. If it is an additional compensation
which the employer promised and agreed to give without any conditions imposed for its
payment, such as success of business or greater production or output, then it is part of
the wage. But if it is paid only if profits are realized or a certain amount of productivity
achieved, it cannot be considered part of the wages. In the case at bar, it is not payable
to all but to laborers only. It is also paid on the basis of actual production or actual work
accomplished. If the desired goal of production is not obtained or the amount of actual
work accomplished, the bonus does not accrue. It is evidence that under the
1
Iran v. NLRC, G.R. No. 121927, April 22, 1998
2
Art. 97(f), Labor Code
3
G.R. No. 121927. April 22, 1998
4
G.R. No. 92174, December 10, 1993
5
G.R. No. L-5276, March 3, 1953
circumstances it is paid only when the labor becomes more efficient or more productive.
It is only an inducement for efficiency, a prize therefor, not a part of the wage.
Compensation of Commission-based employees
Thus, when the regular wage includes the commissions, the employee is entitled to
overtime, holiday, night-shift differential, 13th month, and other additional pay. This is
because under the Labor Code, the multiplicand of the additional compensable rate is
the regular wage.
Overtime pay is equivalent to an employee‟s regular wage plus at least 25% thereof.6
Holiday pay is equivalent to twice or 30%, as the case may be, of the daily regular
wage.7 Employees or workers who are paid on purely commission basis are not entitled
to holiday pay.8
Night-shift differential is equivalent to an employee‟s regular wage plus not less than
10% of his regular wage for each hour of work performed. Employees or workers who
are paid on purely commission basis are not entitled to night-shift differential9
With 13th month pay, the law specifically provides that workers who are paid on purely
commission, boundary, or task basis, and those who are paid a fixed amount for
performing a specific work, irrespective of the time consumed in the performance
thereof are not entitled to 13th month pay.10
When a worker is paid guaranteed wage plus commission, the fixed or guaranteed
wage is patently the „basic salary‟,11 thus, forms part of the computation of 13th month
pay.
Employees or workers who are paid on purely commission basis are not also entitled to
paid service incentive leave.12
Public utility bus drivers and conductors
PUB bus drivers and conductors are entitled to compensation of not lower than the
applicable minimum-wage for work during normal hours or days. They are also entitled
to overtime pay, premium pay, 13th month pay, and holiday pay. Paid leaves such as
SIL, Maternity, Paternity, Parental, VAWC, Magna Carta of Women, etc. are given to
6
Art. 87, Labor Code
7
Art. 93 and 94, Labor Code
8
Par. (e), Sec. 1, Rule IV, Omnibus Rules Implementing the Labor Code
9
Par. (e), Sec. 1, Rule II, Omnibus Rules Implementing the Labor Code
10
IRR of PD 851
11
Boie-Takeda Chemicals, Inc v. De la Serna, G.R. No. 92174, December 10, 1993
12
Par. (d), Sec. 1, Rule V, Omnibus Rules Implementing the Labor Code
PUB drivers and conductors. They are entitled to retirement pay upon reaching the age
of 60 years old.13
Aside from the fixed compensation provided above, they are also entitled to a
performance-based component based on safety performance and business
performance such as ridership, revenues, and other related parameters.14
Salesmen
In Iran v. NLRC,15 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. Thus forms part of the computation of additional pay such as overtime, holiday
pay, etc.
These employees (sales personnel) are evaluated by the result of their work and not by
the actual hours of field work which are hardly susceptible to determination. 16 The
Supreme Court in UFE v. Vivar17citing San Miguel Brewery, Inc. v. Democratic Labor
Organization18 stated that the reasons for excluding an outside salesman are fairly
apparent. Such a salesman, to a greater extent, works individually. There are no
restrictions respecting the time he shall work and he can earn as much or as little, within
the range of his ability, as his ambition dictates. In lieu of overtime he ordinarily receives
commissions as extra compensation. He works away from his employer's place of
business, is not subject to the personal supervision of his employer, and his employer
has no way of knowing the number of hours he works per day. In this case, the Court
applied the rule on exempting these workers from payment of overtime pay to the
exclusion from holiday pay. It must be noted that the Court considered the employees in
this case as field personnel.
13
Sec. 2., Rule II, Department Order 118-12, Series of 2012, Department of Labor and Employment
14
Par. b., Sec. 2., Rule III, Department Order 118-12, Series of 2012, Department of Labor and Employment
15
G.R. No. 121927. April 22, 1998
16
UFE v. Vivar, GR no. 79255, January 20, 1992
17
GR no. 79255, January 20, 1992
18
8 SCRA 613 [1963]
ARELLANO UNIVESITY SCHOOL OF LAW
LABOR LAW REVIEW
RESEARCH ON COMMISSION-BASED EMPLOYEES
SUBMITTED BY:
JUMEN G. TAMAYO
SUBMITTED TO:
DEAN PORFIRIO DG. PANGANIBAN, JR
1
Commission-Based Employee
“The law regards him with tenderness and even favor and always with faith and
hope in his capacity to help in shaping the nation‟s future. He must not be taken
for granted. He deserves abiding respect. How society treats him determines
whether the knife in his hands shall be a caring too for beauty and progress or
an angry weapon of defiance and revenge. If we cherished him as we should,
we must resolve to lighten “the weight of centuries of exploitation and disdain
that bends his back but does not bow his head.”
- Cebu Royal Plant vs. Minister of Labor

G. R. No. 58639, August 12, 1987
There is no doubt that the Philippines‟ work force is one of its greatest and most
valuable asset. According to recent data, the labor force participation rate of
the country is 60.1% as of July 2018 (https://psa.gov.ph/statistics/survey/labor-
and-employment/labor-force-survey/table). Here we can glean that the
richness of our labor force is a real asset once it is used to propel our economy
moving forward.
No doubt that business opportunities is still on the rise in our country. Evidence to
this are the rising business establishments, right and left opening of business
ventures and opportunities. But how these trends can be translated to benefit
our labor force? What can these opportunities can extend to our workers?
Particularly, how is our government posturing itself to let these business
opportunities be also felt by the labor force? How is the current condition of
workforce given the current situation of our economy?
2
These questions have lead the research and study for the condition of one kind
of workforce in the country, the commissioned-based employees. This work will
focus on the concept, kinds, examples and entitlements of the commissioned
base employees as provided by our laws and common practices.
Jurisprudence and actual situations provide for the concept commissioned-

based employees. Broadly, commission-based employees can be classified as
commissioned salesman, an employee receiving purely commission and
employee receiving commission. According to actual practice, commissioned
salesman only receive commissions based on sales made (output-based). No
mandatory benefits and regular salary is given. On the other hand, employee
receiving commission is regarded as a regular employee, thus, all mandated
benefits and salary is given. The commission is merely a part of the wage being
paid to the said employee.
Commission-based employee enjoys the freedom he can get because he is

not required to report to office or attend random meetings. It saves them
time, money and effort, which use can use for acquiring sales or outputs. This
is because no employee-employer relationship exists. The worker has the
latitude and freedom to do in order to achieve the agreed deliverables
without being supervised by the principal. Thus, when an employee is purely
receiving commissions based on the output or sales, no other benefits can be
given.
For salaried employee receiving commission, the law provides that all
mandated benefits should also be given being an employee of the company.
This is so because, on top of the salary, Commission in the the form of an
3
incentive or encouragement to ensure productivity does not form part of the
basic salary is being given.
However, caution must be taken for an employee who is salaried and

commission based. The treatment on the commission should be taken into
account whether the commission is in the form of an incentive or it is being paid
as direct remuneration. When it is considered as an incentive, the court in BOIE-
TAKEDA CHEMICALS, INC., petitioner, vs. HON. DIONISIO DE LA SERNA, G.R. No.
92174 December 10, 1993,
“In compensation schemes consisting of a fixed or guaranteed wage plus

commission, the fixed or guaranteed wage is clearly the “basic salary” for this is
what the employee receives for a standard work period. Commissions are given
for extra efforts exerted in consummating sales or other related transactions.
They are, as such, additional pay, which this Court has made clear do not form
part of the „basic salary‟.”
Thus, commission is excluded in the computation of the 13th month pay.
In Iran vs. NLRC, (G.R. No. 121927. April 22, 1998), the case is different. The issue
raised was whether or not commissions are included in determining compliance
with the minimum wage requirement. Here, “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 petitioners delivery trucks and promoted, sold and delivered softdrinks to
4
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.”
Petitioner is of the position that commissions should be excluded in the

computation of 13th month pay.
In deciding in favor of the respondents, the court said that
“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.
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
5
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 salesmans 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 table below shows the summary of benefits that can be given to each kind
of employee:
Purely Salaried with

Benefits
Commission Commission
13th month pay No Yes
Performance Bonus Yes Yes
Leaves (VL, SL, SIL) No Yes
Mandatory Contributions (SSS, HDMF, No Ye
PhilHealth)
Retirement benefits No Yes
Overtime Pay No Yes
Night Differential No Yes
Holiday Premium Pay No Yes
Source: Labor Code; Actual Interview with HR Director/Practitioner
To sum it up, a commission-based employee can either be treated as a regular

employee where supervision and control can be exercised by the employer.
Corollary to this, the employee receives all the mandated and management
prerogative-based benefits. On the other hand, a worker receiving purely
commission is free from control and supervision of the employer. The mode and
manner of performing or accomplishing the required job or deliverables solely
depends on him as long as he can deliver. The delivered output shall then be
6
the basis of his earnings in the form of commissions. He, however, cannot claim
other benefits being given to ordinary employees.
7
TANGHAL, Noelle Christine P. Labor Law Review
2016-0861 September 13, 2018
A Comprehensive Research Paper on the Employment Status and Conditions of

Commission-Based Bus Drivers, Truck Drivers and Other Employees of Similar Nature
The non-applicability of the provisions of the Labor Code of the Philippines applies to
those who are considered to be “field personnel”. “Field personnel” are those whose performance
of their job or service is not supervised by the employer or his representative, the workplace
being away from the principal office and those whose days of work cannot be determined with
reasonable certainty1; hence, they are paid for rendering specific service or performing specific
work. If required to be at a specific place at specific times, employees including drivers cannot
be said to be field personnel despite the fact that they are performing work away from the
principal office of the employer.2
In a 2005 case decided by the Supreme Court, it ruled that bus drivers and conductors are
supervised; their actual work of hours is monitored. They cannot be considered as field
personnel, hence, employees engaged on task or contract basis or paid on purely commission
basis are not automatically exempted from the grant of service incentive leave, unless, of course
they fall under the classification of field personnel. Petitioner’s contention that respondent is not
entitled to the grant of service incentive leave just because he was paid on purely commission
basis is misplaced. What must be ascertained in order to resolve the issue of propriety of the
grant of service incentive leave to respondent is whether or not he is field personnel.3
The employment relationship is essential to be established so as to entitle the workmen

for the benefits laid down by law. It is important to note that such employment relationship is a
characterized not by whatever the parties call it in their contract but what the law calls it after the
examination of the facts surrounding the case. 4. In a 1958 case, the Court ruled that the
relationship of employer and employee exists between the owner of a bus and its conductor
operating under the boundary system within the meaning of the law.5
1
Labor Code with Comments and Cases Edition 8, Azucena, p. 182.
2
BWC advisory opinion to Philippine Technical-Clerical Commercial Employees Association, April 6, 1989.
3
4
Labor Code with Comments and Cases Edition 8, Azucena, p. 154.
5
Doce v. Workmen's Compensation Commission, G.R. No. L-9417, December 22, 1958, 104 PHIL 946-949
The Court reiterated that the only features that would make the relationship of lessor and
lessee between the respondent, owner of the jeeps, and the drivers, members of the petitioner
union, are the fact that he does not pay them any fixed wage but their compensation is the excess
of the total amount of fares earned or collected by them over and above the amount of P7.50
which they agreed to pay to the respondent, and the fact that the gasoline burned by the jeeps is
for the account of the drivers. These two features are not, however, sufficient to withdraw the
relationship between them from that of employer-employee, because the estimated earnings for
fares must be over and above the amount they agreed to pay to the respondent for a ten-hour shift
or ten-hour a day operation of the jeeps. Not having any interest in the business because they did
not invest anything in the acquisition of the jeeps and did not participate in the management
thereof, their service as drivers of the jeeps being their only contribution to the business, the
relationship of lessor and lessee cannot be sustained.6.
Considering that these workmen are regular employees protected by the Labor Code, they
should thus be accorded of all the benefits provided by the law. In one case, the Supreme Court
held that regular employees “regular employees are entitled to security of tenure and their
services may be terminated only for causes provided by law. Likewise, they are also to be
accorded the benefits provided under the Labor Code, including inter alia separation pay for loss
of employment resulting from retrenchment to prevent losses or closure/cessation of operation
not due to serious business losses. The Solicitor General in his Comment suggested that, being
regular employees, they are likewise entitled to the protection of minimum wage statutes. Hence,
the separation pay due them may be computed on the basis of the minimum wage prevailing at
the time their services were terminated by petitioners.” 7
In cases of nonpayment of allowances and other monetary benefits, if it is established that

the benefits being claimed have been withheld from the employee for a period longer than three
(3) years, the amount pertaining to the period beyond the three-year prescriptive period is
therefore barred by prescription. The amount that can only be demanded by the aggrieved
employee shall be limited to the amount of the benefits withheld within three (3) years before the
filing of the complaint.
6
National Labor Union vs. Benedicto Dinglasan, G.R. No. L-7945. March 23, 1956.
7
San Miguel Jeepney Service and Mamerto Galace vs. National Labor Relations Commission , Edelberto Padua and
23 Others, G.R. No. 92772. November 28, 1996.
In the case of service incentive leave, the employee may choose to either use his leave
credits or commute it to its monetary equivalent if not exhausted at the end of the
year. Furthermore, if the employee entitled to service incentive leave does not use or commute
the same, he is entitled upon his resignation or separation from work to the commutation of his
accrued service incentive leave.8
In the1998 case of Fernandez vs. NLRC, the Court held that the clear policy of the Labor
Code is to grant service incentive leave pay to workers in all establishments, subject to a few
exceptions. Section 2, Rule V, Book III of the Implementing Rules and Regulations provides that
"[e]very employee who has rendered at least one year of service shall be entitled to a yearly
service incentive leave of five days with pay." Service incentive leave is a right which accrues to
every employee who has served "within 12 months, whether continuous or broken reckoned
from the date the employee started working, including authorized absences and paid regular
holidays unless the working days in the establishment as a matter of practice or policy, or that
provided in the employment contracts, is less than 12 months, in which case said period shall be
considered as one year." It is also "commutable to its money equivalent if not used or exhausted
at the end of the year." In other words, an employee who has served for one year is entitled to it.
He may use it as leave days or he may collect its monetary value. To limit the award to three
years, as the solicitor general recommends, is to unduly restrict such right. 9|10
8
9
Fernandez v. NLRC, G.R. No. 105892, 28 January 1998, 349 Phil 65
LABOR LAW REVIEW | Suzette P. Valdez/2014-0365
COMPREHENSIVE RESEARCH ON COMMISSION-BASED EMPLOYEES
I. Who are commission-based employees?
A. Iran v. NLRC (G.R. No. 121927)
Article 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.
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.
II. What are the commission-based employees entitled to?
A. Chavez v. NLRC (448 SCRA 478)
Wages are defined as 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 service rendered or to be rendered.
That the petitioner was paid on a per trip basis is not significant. This is merely a
method of computing compensation and not a basis for determining the existence
or absence of employer-employee relationship. One may be paid on the basis of
results or time expended on the work, and may or may not acquire an employment
status, depending on whether the elements of an employer-employee relationship
are present or not. In this case, it cannot be gainsaid that the petitioner received
P a g e 1|8
compensation from the respondent company for the services that he rendered to
the latter.
B. Makati Haberdashery, Inc., v. NLRC (179 SCRA 449)
As a consequence of their status as regular employees of the petitioners, they can

claim cost of living allowance. This is apparent from the provision defining the
employees entitled to said allowance, thus: All workers in the private sector,
regardless of their position, designation or status, and irrespective of the method by
which their wages are paid.
Private respondents are also entitled to claim their 13th Month Pay under Section
3(e) of the Rules and Regulations Implementing P.D. No. 851 which provides:
Section 3. Employers covered. — The Decree shall apply to all employers except
to:
xxx
(e) Employers of those who are paid on purely commission, boundary, or task basis,
and those who are paid a fixed amount for performing a specific work, irrespective
of the time consumed in the performance thereof, except where the workers are paid
on piece-rate basis in which case the employer shall be covered by this issuance insofar
as such workers are concerned.
On the other hand, while private respondents are entitled to Minimum Wage, COLA
and 13th Month Pay, they are not entitled to service incentive leave pay because as
piece-rate workers being paid at a fixed amount for performing work irrespective
of time consumed in the performance thereof, they fall under one of the exceptions
stated in Section 1(d), Rule V, Implementing Regulations, Book III, Labor Code. For
the same reason private respondents cannot also claim holiday pay (Section 1(e),
Rule IV, Implementing Regulations, Book III, Labor Code).
C. Labor Congress v. NLRC (290 SCRA 509)
Exempted Employers
The following employers are still not covered by P.D. No. 851:
xxx
d. Employers of those who are paid on purely commission, boundary or task basis,
and those who are paid a fixed amount for performing specific work, irrespective of
the time consumed in the performance thereof, except where the workers are paid
on piece-rate basis in which case the employer shall grant the required 13th month
pay to such workers.
P a g e 2|8
The Revised Guidelines as well as the Rules and Regulations identify those workers
who fall under the piece-rate category as those who are paid a standard amount for
every piece or unit of work produced that is more or less regularly replicated,
without regard to the time spent in producing the same.
As to overtime pay, the rules, however, are different. According to Section 2 (e), Rule
I, Book III of the Implementing Rules, workers who are paid by results including
those who are paid on piece-work, takay, pakiao, or task basis, if their output rates
are in accordance with the standards prescribed under Section8, Rule VII, Book III,
of these regulations, or where such rates have been fixed by the Secretary of Labor
in accordance with the aforesaid section, are not entitled to receive overtime pay.
Here, private respondents did not allege adherence to the standards set forth in
Section 8 nor with the rates prescribed by the Secretary of Labor. As such,
petitioners are beyond the ambit of exempted persons and are therefore entitled to
overtime pay. Once more, the National Labor Relations Commission would be in a
better position to determine the exact amounts owed petitioners, if any.
III. What are bus drivers and conductors, as commission-based employees, entitled
to?
A. By virtue of Department of Labor and Employment (DOLE) Department Order

No. 118-12, Series of 2012, “Rules and Regulations Governing the Employment
and Working Conditions of Drivers and Conductors in the Public Utility Bus
Transport Industry,” the following were defined and determined accordingly:
RULE I: COVERAGE AND DEFINITION OF TERMS
xxx
Section 2. Definition of Terms. As used herein, the following terms shall mean:
xxx
b) “Fixed and Performance-based Compensation Scheme” refers compensation

scheme for bus drivers and conductors wherein the fixed component shall be based
on an amount mutually agreed upon by the owner/operator and the
driver/conductor, which shall be lower than the applicable minimum wage. The
performance based component shall be based on safety performance, business
performance and other related parameters.
xxx
Rule II: Terms and Conditions of Employment
P a g e 3|8
Section 2. Minimum Benefits. – The public utility bus drivers and conductors are
entitled to the following benefits:
a) Wages for all actual work during the normal work hours and days shall not be
lower than the applicable minimum wage rates. Wages shall be paid at least
once every two weeks or twice a month at intervals not exceeding 16 days;
b) Twelve (12) Regular Holidays with pay pursuant to Republic Act No. 9849 (An
Act Declaring the Tenth Day of Zhul Hijja, the Twelfth Month of the Islamic
Calendar, A National Holiday for the Observance of Eidul Adha, Further
Amending for the Purpose of Section 26, Chapter 7, Book 1 of Executive Order
No. 292, Otherwise known as the Administrative Code of 1987, As Amended).
The driver/conductor shall be paid holiday pay of 100% of the minimum wage
even if he/she does not report for work, provided he/she is present or is on
leave of absence with pay on the workday immediately preceding the holiday. If
the driver/conductor is required to work on said holiday, he/she shall be paid
200% of the minimum wage.
c) Rest day of twenty-four (24) consecutive hourse for every six (6) consecutive
working days. If the driver/conductor is required to work on a rest day, he/she
shall be paid an additional premium pay of 30% of the basic wage. If the
driver/conductor is required to work on special days under Republic Act No.
9848, he/she shall also be paid an additional premium pay of 30% of the basic
wage. Whenever work is performed on a rest day, which happens to be also a
special day, he/she is entitled to an additional 50% of the basic wage;
d) Overtime pay equivalent to at least 25% of the basic wage on ordinary days and
30% on regular holidays, spcial days and rest days for work beyond eight (8)
hours per day;
e) Night shift pay of an additional 10% of the basic wage for work between 10:00
pm and 6:00 am of the following day;
f) Paid service incentive leave of five (5) days for every year of service;
g) 13th month pay pursuant to Presidential Decree No. 851, as amended, which
entitled the employee to receive an amount equivalent to 1/12 of the total basic
salary earned within the calendar year, not later than 24 December of each year;
h) Paid maternity leave of sixty (60) days for normal delivery or seventy eight (78)
days for caesarean section delivery, pursuant to Republic Act No 8282,
otherwise known as the Social Security Act of 1997;
i) Paid paternity leave of seven (7) days, pursuant to Republic Act No. 8187,
otherwise known as the Paternity Leave Act of 1996;
P a g e 4|8
j) Paid leave of ten (10) days for victims of violence against women and their
children, pursuant to Republic Act No. 9262, otherwise known as the Anti-
Violence Against Women and Their Children Act of 2004;
k) Paid special leave for women who underwent surgery caused by gynaecological
disorders, pursuant to Republic Act No. 9710, otherwise known as the Magna
Carta of Women; and,
l) Retirement pay upon reaching the age of sixty (60) or more, pursuant to
Republic Act No. 7641.
Section 3. Hours of work and Hours of Rest. – The normal hours of work of a
driver and conductor shall not exceed eight (8) hours per day.
If the driver/conductor is required to work overtime, the maximum hours of work

shall not exceed twelve (12) hours in any 24-hour period, subject to the overriding
safety and operational conditions of the public utility bus.
Drivers and conductors shall be entitled to rest periods of at least one (1) hours,
exclusive of meal breaks, within a 12-hour shift.
Section 4. Right to Security of Tenure. – Drivers and conductors shall enjoy

security of tenure in their employment as provide by law. Their employment can
only be terminated for just or authorized causes pursuant to the provisions of the
Labor Code, as amended.
Section 5. Observance of Required Standards of Due Process; Requirements of

Notice. – In all cases of termination of employment, the standards of due process
laid down in the Labor Code, as amended, and settled jurisprudence on the matter,
must be observed. Thus, the following is hereby set out to clarify the standards of
due process that must be observed:
a) For termination of employment based on just causes as defined in the code, the
requirement of two written notices served on the employee shall observe the
following:
1. The first written notice should contain:
1.1. The specific causes or grounds for termination;

1.2. Detailed narration of the facts and circumstances that will serve as
based for the charge against the employee. A general description of the
charge will not suffice;
1.3. The company rule, if any, that is violated and/or the ground that is
being charged against the employee; and,
1.4. A directive that the employee is given opportunity to submit a written
explanation within a reasonable period.
P a g e 5|8
“Reasonable period” should be construed as a period of at least five (5)

calendar days from receipt of the notice to give the employee an
opportunity to study the accusation, consult a union official or lawyer,
gather data and evidence, and decided on the defences against the
complaint.
2. After serving the first notice, the employer should afford the employee ample
opportunity to be hear and to defend himself/herself with the assistance of
his/her representative if he/she so desires, as provided in Article 277 (b) of
the Labor Code, as amended.
“Ample opportunity to be hear” mean any meaningful opportunity (verbal or

written) given to the employee to answer the charges against him/her and
submit evidence in support of his/her defense, whether in a hearing,
conference or some other fair, just and reasonable way. A formal hearing or
conference becomes mandatory only when requested by the employee in
writing or substantial evidentiary disputes exist or a company rules or
practice requires it, or when similar circumstances justify it.
3. After determining that termination of employment is justified, the employer

contractor shall serve the employee a written notice of termination
indicating that: (1) all circumstances involving the charge against the
employees have been considered; and, (2) the grounds have been
established to justice the severance of their employment.
The foregoing notices shall be served on the employee’s last known address.
b) For termination of employment based on authorized causes defined in Article

283 of the Labor Code, the requirement of due process shall be deemed
complied with upon service of a written notice to the employee and the
appropriate regional office of the Department of Labor and Employment at least
thirty days before the effectivity of the termination, specifying the ground or
grounds for termination.
c) If the termination is brought about by the completion of the contract or phrase

thereof, no prior notice is required. If the termination is brought about by the
failure of a probationary employee to meet the reasonable standards of the
employer, which was made known to the employee at the time of his/her
employment , it shall be sufficient that a written notice is served upon the
employee within a reasonable time prior to the expiration of the probationary
period.
Section 6. Right to Self-Organization and Collective Bargaining. – Drivers and

conductors shall have the right to form, join or assist in the formation of a labor
P a g e 6|8
organization, association, or cooperative of their own choice for purposed of

colletive bargaining or for mutual aid or protection.
RULE III: COMPENSATION
Section 1. Fixed and Performance Based Compensation Scheme. – Bus owners

and/or operators shall adopt a mutually-agreed upon “part-fixed, part-
performance” based compensation scheme for their bus drivers and conductors.
Section 2. Method of Determining Compensation. – Bus owners and/or

conductors, in consultation with their drives and conductors shall determine the
following:
a) The fixed component shall be based on an amount mutually agreed upon by the
owner/operator and the driver/conductor, which shall take into account
minimum ridership requirement and in no case be lower than the applicable
minimum wage for work during normal hours/days. They shall also be entitled
to wage related benefits such as overtime pay, premium pay and holiday pay,
among others.
b) The performance-based component shall be based on safety performance and

business performance such as ridership, revenues/profitability, and other
reaalted parameters.
xxx
RULE IV: OCCUPATIONAL SAFETY AND HEALTH
Section 1. Occupational Safety and Health Policy and Program. – The bus owners
and/or operators shall adopt, implement and promote occupational safety and
health programs consistent with the provisions of the Occupational Safety and
Health Standards (OSHS) and other related DOLE issuances to include the
prevention and control of tuberculosis, HIV and AIDS, hepatitis B and drugs in the
workplace.
The bus owners and/or operators shall also implement and promote workplace
policies and programs on Anti-Smoking, Anti-Sexual Harassment and Disaster and
Climate Risk Reduction.
xxx
RULE V: SOCIAL PROTECTION
Section 1. Social Welfare Benefits. – Without prejudice to established company

policy, collective bargaining agreement or other applicable employment agreement,
P a g e 7|8
all bus drivers and conductors shall be entitled to coverage for social welfare
benefits such as Pag-ibig Fund (Republic Act No. 7742_, PHILHEALTH (Republic Act
no. 7875, as amended by Republic Act No. 9241), Employees’ Compensation Law
(Presidential Decree No. 626), Social Security Law (Republic Act No. 1161, as
amended by Republic Act No. 8282) and other applicable laws.
The cost of health services for the illnesses and injuries suffered by the driver and
conductor shall be covered by mandatory social welfare programs under existing
laws.
xxx
RULE VII: LABOR MANAGEMENT SCHEMES
Section 1. Labor-Management Scheme. – The National Conciliation and Mediaton

Board (NCMB) shall encourage and assist public utility bus companies in creating a
labor management committee or nay labor management mechanism that shall be
composed of representatives from management and drivers/conductors. The
committee is tasked to develop and implement labor-management schemes and
welfare programs for the workers.
Respectfully submitted.
September 13, 2018, City of Pasay.
P a g e 8|8
Vardeleon, Crizedhen N.
Labor Review- Thursday 6:00-9:00PM
Three Kinds of Employees (Article 295 of the Labor Code)
1. Regular Employees- the employee has been engaged to perform activities

which are usually necessary or desirable in the usual business or trade of the
employer.
2. Project Employees - the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the
time of the engagement of the employee or where the work or service to be
performed is seasonal in nature and the employment is for the duration of the
season.
3. Casual Employees - those who are neither regular nor project employees.
Jeepney Drivers - the mere fact that they were paid on commission basis does not
affect or change their status as regular employees. The test for determining whether
an employee is regular or casual has nothing to do with the manner of computing or
paying an employees wages or compensation. Rather,
The primary standard, x x x, of determining a regular (as against casual) employment is the reasonable
connection between the particular activity performed by the employee in relation to the usual business or trade of the
employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer.
The connection can be determined by considering the nature of the work performed and its relation to the scheme of the
particular business or trade in its entirety. Also, if the employee has been performing the job for at least one year, even if
the performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its
performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the
employment is also considered regular, but only with respect to such activity and while such activity exists.[16]
(underscoring supplied)
Commission-basis Employees- it does not follow that every employee paid

(whether wholly or partly) on commission basis can be considered a regular
employee, or an employee at all, for that matter. While this caveat may seem
rather elementary, it is still needful to stress that there are many lines of business
legally and legitimately engaging the services of workers, who are paid on
commission basis to perform activities desirable and necessary for such
businesses, without creating any kind of employer-employee relationship at any
time. (San Miguel Jeepney Service v NLRC, GR No 92772, November 28, 1996)
Taxi Drivers – the fact that the drivers do not receive fixed wages but get only that in
excess of the so called “boundary”, they pay to the owner/operator is not sufficient to
withdraw the relationship between them from that of employer and employee (Angel
Jardin v NLRC and Goodtaxi, GR. No. 119268, February 23, 2000)
Bus Drivers - the petitioners are not field personnel as defined above and the NLRC’s
finding in this regard is supported by the established facts of this case: (1) the
petitioners, as bus drivers and/or conductors, are directed to transport their passengers
at a specified time and place; (2) they are not given the discretion to select and contract
with prospective passengers; (3) their actual work hours could be determined with
reasonable certainty, as well as their average trips per month; and ( 4) the respondents
supervised their time and performance of duties.
In order to monitor their drivers and/or conductors, as well as the passengers and the
bus itself, the bus companies put checkers, who are assigned at tactical places along
the travel routes that are plied by their buses. The drivers and/or conductors are
required to be at the specific bus terminals at a specified time. In addition, there are
always dispatchers in each and every bus terminal, who supervise and ensure prompt
departure at specified times and arrival at the estimated proper time. Obviously, these
drivers and/or conductors cannot be considered as field personnel because they are
under the control and constant supervision of the bus companies while in the
performance of their work.(Dasco, et. al. vs. Philtranco Service Enterprises
Inc./Centurion Solano, G.R. No. 211141, June 29, 2016)
Truck Drivers– First. Undeniably, it was the respondents who engaged the services of
the petitioner without the intervention of a third party. Second. Wages are defined as
“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
service rendered or to be rendered. The petitioner is paid on a per trip basis is not
significant. This is merely a method of computing compensation. Third. The
respondent’s power to dismiss the petitioner was inherent in the fact that they engaged
the services of the petitioner as truck driver. They exercised this power by terminating
the petitioner’s services albeit in the guise of severance of contractual relation due
allegedly to the latter’s breach of his contractual obligation. Fourth. Compared to an
employee, an independent contractor is one who carries on a distinct and independent
business and undertakes to perform the job, work or service on its own account and
under its own responsibility according to its own manner and method, free from the
control and direction of the principal in all matters connected with the performance of
the work except as to the results thereof. Hence while an independent contractor enjoys
independence and freedom from the control and supervision of his principal. An
employee is subject to the employer’s power to control the means and methods by
which the employee’s work is to be performed and accomplished. A careful review of
the records shows that the latter performed his work under the respondents’ supervision
and control. The existence of an employer-employee relationship cannot be negated by
expressly repudiating it in a contract and providing therein that the employee is an
independent contractor when the facts clearly show otherwise. Employment status is
defined by law and not by what the parties say it should be. ( Chavez vs NLRC et al, GR
No. 146520, January 17, 2005)
Therefore, taxi drivers, truck drivers, bus drivers and jeepney drivers are considered as
regular employees and they are all entitled to all the rights of a regular employees. It is
regardless on a method of computing their compensation on whether they are paid on
full commission based, half-salary/half-commission/salary-based and etc.
The elements to determine the existence of an employment relationship are: (1) the
selection and engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the employer’s power to control the employee’s conduct. The most
important element is the employer’s control of the employee’s conduct, not only as to
the result of the work to be done, but also as to the means and methods to accomplish
it.
The rights of regular employees are:
1. Security of Tenure/ Separation Pay/Retirement Pay
2. Work Day and Work Hours/ Night Shift Pay/ Overtime Pay
3. Weekly Rest Day
4. Wage and Wage- Related Benefits/Minimum Wage/ 13th Month Pay/ Service
Incentive Leave
5. Right to Self- Organization and Collective Bargaining
6. EC Benefits and Work Related Contingencies
Veloso, Jocelyn M.
2017-0074
Labor Review
Atty. Panganiban
Who are Commission-Based Employees?

They are employees being by hired by employers who are either being paid by Commission as salary or
as an add on benefits to their salary.
Is commission treated as part of basic salary?
What if an employee is paid on purely commission basis, will he be entitled to 13th month pay? Despite
the mandatory nature of 13th month pay, the law provides that employees paid on a purely commission basis are
not entitled to 13thmonth pay, because they are expressly excluded from the law‟s coverage. However, those
employees who are only partly paid on commission basis, i.e., those guaranteed with a fixed wage aside from
the commission, are entitled to 13th month pay, but only insofar as their basic salary is concerned.
The computation of what constitutes basic salary varies depending on whether:
1. Commission is paid as an incentive or encouragement to ensure productivity, i.e., productivity bonus; or
2. Commission is paid as a direct remuneration for service rendered.
Commission paid as incentive

Commission that takes the form of an incentive or encouragement to ensure productivity does not form part of
the basic salary. As such, it may be excluded from the computation of 13th month pay. Only the fixed or
guaranteed wage is required to be included in the computation.
In compensation schemes consisting of a fixed or guaranteed wage plus commission, the fixed or guaranteed
wage is clearly the “basic salary” for this is what the employee receives for a standard work period.
Commissions are given for extra efforts exerted in consummating sales or other related transactions. They are,
as such, additional pay, which this Court has made clear do not form part of the „basic salary‟ [See: G.R. No. L-
92174].
Thus, computation of 13th month pay shall be: Basic salary = Fixed wage (commission is excluded).
Commission paid as direct remuneration

On the other hand, commission that takes the form of a direct remuneration for services rendered should be
included in the computation of the basic salary. That is, it should be added to the guaranteed wage of the
employee in computing his “basic salary.”
In the first place, Article 97(f) of the Labor Code defines the term “wage” as 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 it, 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.
In some companies, the sales commissions earned by salesmen who make or close a sale constitute part of the
compensation or remuneration paid to them for serving as salesmen, and hence part of their “wage” or “salary”.
This is especially true if it appears that an employer pays its salesmen a small fixed or guaranteed wage, the
greater part of the salesmen‟s wages or salaries being composed of the sales or incentive commissions earned
on actual sales they were able to close. This particular salary structure was intended for the benefit of the
employer, based on the apparent assumption that 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 [See: G.R. No. 110068].
Thus, computation of 13th month pay shall be: Basic salary = Fixed wage + Commission.
That being said, it is clear that commissions are generally not subject to the computation of 13 th month pay,
though in certain instances, may be treated as part of basic salary when it is paid as a direct remuneration for
services the employee rendered. This is something payroll managers ought to know, in order to ensure that the
company will continue having a peaceful conduct of personnel affairs, and its employees a bonus.
Thirteenth-Month Pay for Certain Types of Employees.

1. Employees who are paid on piecework basis are entitled to the thirteenth-month pay.
2. Employees who are paid a fixed or guaranteed wage plus commission are also entitled to the thirteenth-
month pay, based on their earnings during the calendar year (i.e., on both their fixed or guaranteed wage
and commission).
In the consolidated cases of Boie Takeda Chemicals, Inc. vs. Dionisio de la Serna, G.R. No. 92174
December 10, 1993, and Philippine Fuji Xerox Corporation vs. Cresenciano B. Trajano and Philippine
Fuji Xerox Employees Union, G.R. No. 102552 December 10, 1993, the Supreme Court ruled that
commissions, while included in the generic term wage, are not part of "basic salary/wage" and therefore
should not be included in computing the thirteenth-month pay. Thus:
In remunerative schemes consisting of a fixed or guaranteed wage plus commission, the fixed or
guaranteed wage is patently the "basic salary" for this is what the employee receives for a standard work
period. Commissions are given for extra efforts exerted in consummating sales or other related
transactions. They are, as such, additional pay, which this Court has made clear do not form part of the
"basic salary" (228 SCRA 329 [1993]).
3. Employees with multiple employers Government employees working part-time in a private enterprise,
including private educational institutions, as well as employees working in two or more private firms,
whether on full-time or part-time basis, are entitled to the thirteenth- month pay from all their private
employers, regardless of their total earnings from each of their employers.
4. They are entile to:

1. Overtime pay
2. Night shift Differential
3. Service Incentive Leaves
4. Maternity Leaves
5. Paternity Leaves
6. Parental Leave for Solo Parents
7. Parental Leave for Solo Parents.
8. Retirement Pay.
9. Employees who are paid a fixed or guaranteed wage plus commission
are also entitled to the thirteenth-month pay, based on their earnings
during the calendar year (i.e., on both their fixed or guaranteed wage
and commission).
10. Separation Pay
Villanueva, Emilio Jan D.
2016-0304
Labor Review Thursday 6:00-9:00 p.m.
Commission based employees
Truck drivers, bus drivers, or drivers in general are not field personnel as provided by Bureau of Working
Conditions (BWC), Advisory Opinion to Philippine Technical-Clerical Commercial Employees Association:
As a general rule, field personnel are those whose performance of their job/service is not supervised by
the employer or his representative, the workplace being away from the principal office and whose hours
and days of work cannot be determined with reasonable certainty; hence, they are paid specific amount
for rendering specific service or performing specific work. If required to be at specific places at specific
times, employees including drivers cannot be said to be field personnel despite the fact that they are
performing work away from the principal office of the employee.
Hence, in the case of Auto Bus Transport Systems, Inc., v. bautista, an employee who is paid on a purely
commission basis is entitled to Service Incentive Leave.
The discussion of their labor standards benefits will focus mainly on Full Commission employees:
Basic Wage
The term “basic wage” means all the remuneration or earnings paid by an employer to a worker for
services rendered on normal working days and hours and hours but does not include cost-of-living
allowances, profit-sharing payments, premium payments, 13th month pay or other monetary benefits
which are not considered as part of or integrated into the regular salary of the workers.
It is the remuneration or earnings, however designated, for work done or to be done or for services
rendered or to be rendered;
It is 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.
From the foregoing definition, commission-based employees such as bus drivers and truck drivers are
given wages because their earnings come from a percentage from the total receipts of the earnings of
the services rendered by them. They are certain types of commission-based employees:
1. Employees who are paid on full commission

These are employees who are paid only a percentage or portion of the profits that they have
earned for the employer.
2. Employees who are paid Half salary/half commission
These are employees who are paid an hourly wage with an additional percentage of the profits
that they have earned for the employer on top of their hourly salary wage.
3. Salary based
These employees are given a basic hourly/daily salary without any commission.
Separation Pay
Commission based employees are entitled to separation pay if they are deemed under the law as
regular employees as provided by the case of San Miguel Jeepney services vs. NLRC stating that:
2016-0304
The rationale for this ruling is simply that the complainants/private respondents were unarguably
performing work necessary and desirable in the business of SMJS. Without the services rendered by
private respondents, petitioners could not have conducted their business of providing transportation
services within the naval base. This plus the fact that private respondents had each rendered from two
to eight years of service cause them to come squarely within the ambit of Art. 280 of the Labor Code;
beyond dispute, they were not only employees, but regular employees, as correctly held by public
respondent.
The mere fact that they were paid on commission basis does not affect or change their status as regular
employees. The test for determining whether an employee is regular or casual has nothing to do with
the manner of computing or paying an employee's wages or compensation.
13th Month Pay
Commission based employees are not entitled to 13th month pay as provided under P.D. 851, section 3
(e) its implementing rules and regulations:
Section 3. Employers covered The Decree shall apply to all employers except to:
XXX
(e) Employers of those who are paid on purely commission, boundary, or task basis, and those who are
paid a fixed amount for performing a specific work, irrespective of the time consumed in the
performance thereof, except where the workers are paid on piece-rate basis in which case the employer
shall be covered by this issuance insofar as such workers are concerned.
Overtime pay
Generally, employees who are paid on commission basis only are not entitled to overtime pay because
the payment of their wage is not based on an hourly rate. Article 87 of the Labor Code provides that:
“Work may be performed beyond eight (8) hours a day provided that the employee is paid for the
overtime work, an additional compensation equivalent to his regular wage plus at least twenty-five
(25%) thereof. Work performed beyond eight hours on a holiday or rest day shall be paid an additional
compensation equivalent to the rate of the first eight hours on a holiday or rest day plus at least thirty
percent (30%) thereof.”
From the foregoing, an employee paid on commission basis only cannot be given overtime pay unless
the commission is only given as a bonus on top of his regular hourly wage.
 The General hours of work applies to commission-based employees.
General hours of work may apply to commission-based employees because of the control which the
employers have over them and the use of their equipment, i.e., Bus, Trucks. An employee may be
required to return said equipment to the Garage of the employee at a certain time from when they have
started their route up to the time that they may be called or as they may be instructed to return.
2016-0304
Article 84 of the Labor Code does not provide any exception of non-application of said provision on
commission-based employees:
“Hours worked shall include (a) all time during which an employee is required to be on duty or
to be at a prescribed workplace; and (b) all time during which an employee is suffered or permitted to
work.”
The Commission based employee may be applied to “all time during which an employee is required to
be on duty or to be at a prescribed workplace,” considering that they are required to be on duty to
render their services to customers or to their employer, i.e., Bus drivers, Truck drivers respectively.
 Night shift differential does not apply to commission-based employees:
Field personnel and other employees whose time and performance are unsupervised by the employer
including those who are engaged on task or contract basis, purely commission basis, or those who are
paid a fixed amount for performing work irrespective of the time consumed in the performance thereof.
San Miguel Brewery Inc vs Democratic Labor Organization (1963) – San Miguel’s sales personnel
followed a planned route in such a way that their work may be completed in less than 8 hours, but
they’re free to exceed 8 hours. They were paid monthly wages plus sales commission. The Court said:
The benefits could not be given to the employee if he is paid on a piece-work or commission basis,
regardless of the time employed. The reason for this is that his earnings in the form of commission basis
would allow him to earn more if he worked harder. In other words, in lieu of overtime pay, he ordinarily
receives commissions as extra compensation. It should also be considered that the subject employees
also receive monthly compensation.
Union of Filipro Employees vs Vivar (1992) – The dispute hinged on the interpretation of the phrase,
“whose actual hours of work in the field cannot be determined with reasonable certainty.” The subject
employees usually report to the office and start their field work at 8:00 am and return at 4 or 4:40 pm.
Thus, they argued that their working hours can be determined with reasonable certainty. Issue:
Whether or not Nestle’s field personnel were entitled to holiday pay. Held: NO. The Labor Code’s IRR
says: “Field personnel and other employees whose time and performance is unsupervised by the
employer.” The phrase “whose time and performance is unsupervised” merely interpreted the phrase
“whose actual hours of work in the field cannot be determined with reasonable certainty.” Such did not
add another element, contrary to the petitioner’s argument. In this case, the company had no way of
determining whether or not these sales personnel, even if they reported to the office before 8 am and
come back at 4:40 pm really spent the hours in between in actual field work.

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LABOR LAW REVIEW

Aguilar, Cherry Kerr P.

Atty. Porfirio DG. Panganiban, Jr.

Commission is a form of compensation based on a percentage of or some

Commission based workers may or may not be regular employees of a

The presence or absence of employer-employee relationship is not

It is therefore clear that to determine whether or not commission based

B. Classification and Examples

Commission based employees may also receive fixed salary or compensation

i. Those receiving purely commission based compensation; and

ii. Those receiving both fixed salary and commission, or partially-

In the Philippines, there are various examples of jobs involving commission

2. Debt collector agents

5. Real estate broker/agents

6. Hair Salon/Spa personnel (e.g. Manicurists, Hair stylists)

9. Physical therapists in Rehabilitation Centers

10. Product distributors

ii. Holiday Pay

iii. Premium Pay and Overtime Pay

o Workers who are paid by results, including those who are

o Field personnel, if they regularly perform their duties away

iv. Night Shift Differential

v. Service Incentive Leave

vi. 13th month pay

viii. Retirement Pay

The Labor Code of the Philippines

Bureau of Working Conditions. (2018). Handbook on Worker’s Statutory Monetary Benefits.

Wages is defined as:

"Wage" paid to any employee shall mean the remuneration or

The Supreme Court in discussed that in remunerative schemes consisting of a fixed or

1 Art. 97(f), Labor Code

In Iran v. NLRC,13 commissions earned by private respondents in selling softdrinks

ENTITLEMENT: WAGE or SALARY/BENEFITS

The law is silent on whether or not a purely commission based employees is

13th Month Pay

Field Personnel or employees whose performance is unsupervised by the

Commission based employees whose performance is supervised by the

EXAMPLES OF EMPLOYEES BASED ON THEIR CLASSIFICATION

Commission is the recompense, compensation, reward of an employee, agent, salesman, executor,

An employer-employee relationship exists between a jeepney-owner and a driver under a

As to Entitlement to Cost of Living Allowance (COLA):

As to Entitlement to Retirement Benefits:

The Implementing Rules of Republic Act No. 7641 provides:

SECTION 5: Retirement Benefits.

As to Entitlement to Service Incentive Leave:

Art. 95. RIGHT TO SERVICE INCENTIVE LEAVE –

Book III, Rule V: SERVICE INCENTIVE LEAVE

“COMPREHENSIVE RESEARCH on Commission-Based Employees”

Question: Whether they are entitled to Wage/Salary, Sick Incentive Leave,

At this point, it is necessary to stress that the definition of a “field personnel” is

Thus, A bus driver-conductor, not being a field personnel but a regular

Therefore, as correctly concluded by the appellate court, respondent is not a field

Guided by the foregoing norms, petitioner Roque S. Duterte hired as truck/trailer

For purposes of entitling rank and file employees a 13thmonth pay, it is

Besides, respondent admitted that he was paid on commission only. Moreover,

Petitioner Antonio Iran is engaged in softdrinks merchandising and

As part of their compensation, the drivers/salesmen and truck

The Supreme Court ruled that the commissions earned by private

Likewise, there is no law mandating that commissions be paid only

Bus companies are also encouraged to create a labor-management committee and

The Technical Education and Skills Development Authority (TESDA), in

The certificate from TESDA is one of the requirements in getting Certificates of

Source link: https://www.dole.gov.ph/news/view/1632