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IRAN v. NLRC

FACTS:

The case involves the issue of whether commissions should be included in determining compliance with the minimum wage requirement. Antonio Iran, the petitioner, is engaged in softdrinks merchandising and distribution and hires truck drivers who also serve as salesmen, truck helpers, and non-field personnel. Private respondents were hired by the petitioner as drivers/salesmen and truck helpers. The drivers/salesmen are responsible for promoting, selling, and delivering soft drinks, while the truck helpers assist in the delivery. In addition to their regular compensation, the drivers/salesmen and truck helpers receive commissions per case of soft drinks sold.

The petitioner discovered cash shortages and irregularities allegedly committed by the private respondents and required them to report for work while an investigation was conducted. However, the private respondents did not return to work, leading the petitioner to conclude that they had abandoned their employment. Consequently, the petitioner terminated their services and filed a complaint for estafa against the private respondents. In response, the private respondents filed complaints against the petitioner for illegal dismissal, illegal deduction, underpayment of wages, and other claims.

The labor arbiter ruled that the petitioner had validly terminated the private respondents but had not complied with the minimum wage requirement and failed to pay 13th month pay. As a result, the labor arbiter ordered the petitioner to pay the necessary dues to the private respondents. Both parties appealed to the National Labor Relations Commission (NLRC), with the petitioner contesting the exclusion of commissions in determining compliance with the minimum wage requirement. The NLRC upheld the validity of the private respondents' dismissal but identified procedural lapses in the dismissal process. The petitioner's motion for reconsideration was subsequently denied, prompting the case to be elevated to the Court.

The Court ultimately held that commissions should be included in determining compliance with the minimum wage requirement. Article 97(f) of the Labor Code defines wage to encompass remuneration or earnings, regardless of whether they are fixed or based on a commission basis. The Court found the NLRC's decision unsupported by law and jurisprudence.

ISSUES:

  1. Whether or not commissions should be included in determining compliance with the minimum wage requirements.

  2. Whether or not there were procedural lapses in terminating the private respondents, warranting the award of indemnity fees.

  3. Whether or not the advance amounts received by private respondents should be considered as part of their 13th-month pay.

RULING:

  1. Commissions should be included in determining compliance with the minimum wage requirements. The Court found that commissions are part of the wages as defined under Article 97(f) of the Labor Code, thus reversing the NLRC's decision which excluded commissions from wage computation.

  2. There were procedural lapses in the termination process. The petitioner did not provide the required notices specifying the dismissal sought, hence violating procedural due process. Consequently, the nominal damages awarded to private respondents were increased from P1,000.00 to P5,000.00 each.

  3. The vouchers presented by the petitioner as proof of payment for the 13th-month pay should have been considered by the NLRC. The Court ruled that technical rules of evidence should not prevent taking such vouchers into account. Thus, the case was remanded for recomputation of the alleged deficiencies.

PRINCIPLES:

  1. Inclusion of Commissions in Wage Computation

    • Article 97(f) of the Labor Code defines "wage" to include remuneration based on commission among other methods.

    • Commissions are considered part of an employee’s salary or wage and must be included in determining compliance with minimum wage laws.

  2. Procedural Due Process in Employee Termination

    • The employer must furnish employees with two written notices for termination: (a) notice of the particular acts or omissions for which dismissal is sought, and (b) notice of the employer’s decision to dismiss.

    • Failure to observe procedural due process rules in termination warrants a sanction, typically in the form of nominal damages.

  3. 13th-Month Pay Compliance

    • Employers are only required to pay the difference when the 13th-month pay given is less than 1/12 of the employee's basic salary.

    • Evidence submitted on appeal should be considered in labor cases, even if presented late, due to the flexible application of technical rules in such cases.