Reyes v. National Labor Relations Commission
REITERATIONFacts
The Antecedents: Petitioner Rogelio Reyes was employed by Universal Robina Corporation (URC) as a salesman in 1977 and later became a unit manager. Upon his retirement on November 30, 1997, URC offered him separation pay amounting to P200,322.21. Reyes disputed this computation, particularly the exclusion of his average monthly sales commission of P31,846.97 from his basic salary, which he insisted should be included in the calculation of his retirement benefits and 13th month pay. He refused the offered amount and instead filed a complaint for various monetary claims. Procedural History: The Labor Arbiter ruled in favor of Reyes, holding that sales commissions constitute part of a unit manager's basic salary and ordering URC to pay Reyes P911,699.92, plus attorney's fees. The National Labor Relations Commission (NLRC) modified this decision, affirming the award of other claims but excluding overriding commissions from the computation of retirement pay and 13th month pay, and deleting attorney's fees. Both parties sought reconsideration, which the NLRC denied. Reyes then filed a petition for certiorari with the Court of Appeals, which also dismissed his petition. His subsequent motion for reconsideration was denied, leading to the present petition. The Petition: This case is before the Supreme Court via a petition for review on certiorari under Rule 45 of the Rules of Court. The sole issue presented is whether the average monthly sales commission of P31,846.97 should be included in the computation of Reyes' retirement benefits and 13th month pay. Reyes argues that commissions earned by salesmen are part of their basic salary. URC counters that Reyes' commissions were not sales commissions but rather profit-sharing payments, not includible in basic salary, and that Reyes is estopped from claiming otherwise. The Court of Appeals, in affirming the NLRC, found that Reyes' overriding commissions were not sales commissions in the same sense as those earned by salesmen, but rather akin to profit-sharing payments, and thus correctly excluded from the computation of retirement benefits and 13th month pay.
Issue(s)
Whether the average monthly sales commission should be included in the computation of retirement benefits and 13th month pay. Whether overriding commissions paid to a unit manager constitute part of the basic salary.
Ruling
The petition is denied. The Court affirmed the decision of the Court of Appeals, which upheld the National Labor Relations Commission's ruling that overriding commissions should be excluded in the computation of retirement pay and 13th month pay.
Ratio Decidendi
On whether the average monthly sales commission should be included in the computation of retirement benefits and 13th month pay: The Court ruled in the negative. Article 287 of the Labor Code, as amended by R.A. 7641, and its implementing rules define "one-half month salary" for retirement pay computation. This definition includes basic salary, 13th month pay, and service incentive leave cash conversion, but explicitly excludes profit-sharing payments and other monetary benefits not integrated into the regular salary. The Court found that the petitioner's overriding commissions were not part of his basic salary structure but rather partook of the nature of profit-sharing payments. On whether overriding commissions paid to a unit manager constitute part of the basic salary: The Court clarified that the inclusion of commissions in the basic salary depends on the specific circumstances. Citing Boie-Takeda Chemicals, Inc. v. De la Serna and Soriano v. National Labor Relations Commission, the Court distinguished between sales commissions earned by salesmen based on their direct sales efforts and overriding commissions received by a unit manager. The latter, as in this case, are not earned from direct sales transactions but from supervising salesmen. Therefore, these overriding commissions are not considered part of the basic salary for purposes of retirement pay and 13th month pay. The Court emphasized that the nature of these commissions as profit-sharing payments, dependent on the collections made by the salesmen, further supports their exclusion from the basic salary. The Court also noted that findings of fact by the NLRC and the Court of Appeals, when affirmed by the Supreme Court, are conclusive and not subject to re-examination.
Main Doctrine
Overriding commissions received by a unit manager who supervises salesmen and does not effect sales transactions are considered profit-sharing payments and are not part of the basic salary for the computation of retirement pay and 13th month pay.