Case Digest: Rogelio Reyes vs. NLRC and Universal Robina

ROGELIO REYES

vs

NATIONAL LABOR RELATIONS COMMISSION and UNIVERSAL ROBINA CORPORATION GROCERY DIVISION,

G.R. No. 160233,   August 8, 2007

Justice Ynares-Santiago

Labor Law; Labor Standard; 13 month pay;

 FACTS:

Petitioner was employed as a salesman at private respondents Grocery Division in Davao City on August 12, 1977. He was eventually appointed as unit manager of Sales Department-South Mindanao District, a position he held until his retirement on November 30, 1997. Thereafter, he received a letter regarding the computation of his separation pay.

Insisting that his retirement benefits and 13^th month pay must be based on the average monthly salary of P42,766.19, which consists of P10,919.22 basic salary and P31,846.97 average monthly commission, petitioner refused to accept the check issued by private respondent in the amount of P200,322.21. Instead, he filed a complaint before the arbitration branch of the NLRC for, inter alia, 13^th month pay.

The Labor Arbiter held that the sales commission is part of the basic salary of a unit manager.

On appeal, the NLRC modified the decision of the Labor Arbiter by excluding the overriding commission in the computation of the 13^th month pay. Bothe parties MR but was denied. Only petitioner filed a petition for certiorari before the Court of Appeals but was dismissed for lack of merit. MR denied hence this petition before the SC (R45)

ISSUE:

Whether the commission is included in the computation of the 13^th month pay as it forms part of the basic salary.

HELD:

NO.

Insofar as what constitutes basic salary, the foregoing discussions equally apply to the computation of petitioners 13^th month pay. As held in San Miguel Corporation v. Inciong:

Under Presidential Decree 851 and its implementing rules, the basic salary of an employee is used as the basis in the determination of his 13th-month pay. Any compensations or remunerations which are deemed not part of the basic pay is excluded as basis in the computation of the mandatory bonus.

Under the Rules and Regulations Implementing Presidential Decree 851, the following compensations are deemed not part of the basic salary:

a)         Cost-of-living allowances granted pursuant to Presidential Decree 525 and Letter of Instruction No. 174;

b)         Profit sharing payments;

c)         All allowances and monetary benefits which are not considered or integrated as part of the regular basic salary of the employee at the time of the promulgation of the Decree on December 16, 1975. (Emphasis supplied)

            Aside from the fact that as unit manager petitioner did not enter into actual sale transactions, but merely supervised the salesmen under his control, the disputed commissions were not regularly received by him. Only when the salesmen were able to collect from the sale transactions can petitioner receive the commissions. Conversely, if no collections were made by the salesmen, then petitioner would receive no commissions at all. In fine, the commissions which petitioner received were not part of his salary structure but were profit-sharing payments and had no clear, direct or necessary relation to the amount of work he actually performed. The collection made by the salesmen from the sale transactions was the profit of private respondent from which petitioner had a share in the form of a commission.

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Case Digest: Central azucarerra vs. Central azucarerra union-nlu

CENTRAL AZUCARERA DE TARLAC, 

vs.  

CENTRAL AZUCARERA DE TARLAC LABOR UNION-NLU,

 G.R. No. 188949,  July 26, 2010

Justice Nachura

Labor Law; Labor Standard; 13 month pay;

FACTS:

The formula used by petitioner in computing the 13th-month pay was: Total Basic Annual Salary divided by twelve (12). Included in petitioner’s computation of the Total Basic Annual Salary were the following: basic monthly salary; first eight (8) hours overtime pay on Sunday and legal/special holiday; night premium pay; and vacation and sick leaves for each year. Throughout the years, petitioner used this computation until 2006 from 1975.

                After the strike and temporary cessation of operations in 2005, all the striking union was allowed to return to work. Subsequently, petitioner declared another temporary cessation of operations for the months of April and May 2006. After the suspension was lifted on June 2006, the workers were allowed to report for work on a fifteen day-per-month rotation basis until September 2005. In December 2006, petitioner gave the employees their 13th-month pay based on the employee’s total earnings during the year divided by 12. In December 2006, petitioner gave the employees their 13th-month pay based on the employee’s total earnings during the year divided by 12.

Respondent objected to this computation. It claimed that the divisor should have been eight (8) instead of 12, because the employees worked for only 8 months in 2006.

Petitioner and respondent tried to thresh out their differences in accordance with the grievance procedure as provided in their collective bargaining agreement. Despite four (4) conciliatory meetings, the parties still failed to settle the dispute, hence a complaint by for money claims based on the alleged diminution/erroneous computation of 13^th month pay   before the Labor arbiter (LA).

The LA dismissed the complaint. NLRC reversed. MR denied. Petitioner then filed a petition for certiorari under Rule 65 of the Rules of Court before the CA. CA dismissed the petition and affirm the NLRC. Hence petition before the SC (R45)

ISSUE:

Whether the computation of 13^th month pay by the petitioner is correct.

HELD:

YES. "Thirteenth-month pay" shall mean one twelfth (1/12) of the basic salary of an employee within a calendar year; the term "basic salary" of an employee for the purpose of computing the 13th-month pay was interpreted to include all remuneration or earnings paid by the employer for services rendered, but does not include allowances and monetary benefits which are not integrated as part of the regular or basic salary, such as the cash equivalent of unused vacation and sick leave credits, overtime, premium, night differential and holiday pay, and cost-of-living allowances. However, these salary-related benefits should be included as part of the basic salary in the computation of the 13th-month pay if, by individual or collective agreement, company practice or policy, the same are treated as part of the basic salary of the employees.

As correctly ruled by the CA, the practice of petitioner in giving 13th-month pay based on the employees’ gross annual earnings which included the basic monthly salary, premium pay for work on rest days and special holidays, night shift differential pay and holiday pay continued for almost thirty (30) years and has ripened into a company policy or practice which cannot be unilaterally withdrawn. Article 100 of the Labor Code, otherwise known as the Non-Diminution Rule, mandates that benefits given to employees cannot be taken back or reduced unilaterally by the employer because the benefit has become part of the employment contract, written or unwritten.