JOSE SONGCO, ROMEO CIPRES, and AMANCIO MANUEL

vs
NLRC, LABOR ARBITER FLAVIO AGUAS, and
F.E. ZUELLIG (M), INC.
G.R. No. L-50999

March 23, 1990

Facts:
F. E. Zuellig (M) Inc. (Zuellig)

- engaged in the distribution of pharmaceutical products in

the Philippines.
Jose Songco, Romeo Cipres and Amancio Manuel

- worked as salesmen in Zuellig

Facts:
Zuellig filed with the DOLE an application to terminate the
petitioners on the ground of retrenchment due to financial
losses.
It was first opposed by the petitioners but at the day of the
last hearing they no longer contested their dismissal. The
parties agreed that the sole issue to be resolved is the basis
of separation pay.
The CBA entered by the two parties that an employee
entitled to separation pay shall be equivalent to one (1)
month salary per year of service.

The Labor Arbiter ruled that the petitioners should be

paid with 1 month salary for every year of service
exclusive of commissions and allowances

ISSUE:
WON earned sales commissions and allowances
should be included in the monthly salary

Ruling:
The SC ruled that the allowances are included in computing
separation pay as already settled in other jurisprudence.
The SC did not agree with the decisions of L.A and NLRC:
L.A
although commission is considered a
wage as shown by Art. 97(f) of the Labor
Code, there is no indication that it is part
of salary.
Sec. 10, Rule 1, Book 6 of implementing
rules specifically states that the basis for
termination pay s his latest salary rates

NLRC
Wage is used in its generic sense to be
ascertained on time, task, commission
basis but it does not mean that
commission allowances necessarily
forms part of salary.
This will prevent employee from insisting
ECOLA, 13th MP, Overtime pay,
premium pay and other fringe benefits to
be added to the computation of their
separation pay.

Ruling:
Salary means recompense or consideration made to a person
for his pain or industry in anothers mans business.

It can be said that wages and salary are in essence

synonymous.
Hence, it follows that in computation of separation pay the
salary base should include their earned sales commission.
Another justification raised by SC, the commissions in this case
were direct remuneration services rendered which
contributed to the increase of income of Zuellig and were
earned actual market transactions attributable to petitioners.

Ruling:
If the opposite is to be followed, since the salesmen do not
receive any basic salary it will mean that these salesmen are not
entitled to separation pay.
The Supreme Court granted the petition and ordered the
inclusion of allowances and commissions in the separation pay.