Commissions as wages

Respondent Vilma S. De Peralta filed a complaint for illegal dismissal, illegal deduction, unpaid commission, annual profit sharing, damages, and attorney’s fees against petitioner Toyota Pasig, Inc.

The Labor Arbiter (LA) dismissed the complaint for lack of merit, but ordered petitioner to pay respondent the amount of P11,111.50, representing the latter’s salary for January 2012. The National Labor Relations Commission (NLRC) affirmed the LA ruling with modification finding petitioner liable to respondent in the amount of P617,248.08, representing the latter’s unpaid commissions, tax rebate for achieved monthly targets, salary deductions, salary for the month of January 2012, and success share/profit sharing. The Court of Appeals (CA) affirmed the NLRC ruling in toto.

The petitioner argues that the CA erred in awarding respondent her monetary claims as they do not partake of unpaid wages/salaries, as well as the labor standard benefits of employees provided by law. Does this argument find merit?

Ruling: No.

The petition is without merit. xxx In Iran v. NLRC, 352 Phil. 261 (1998). the Court thoroughly explained:

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. xxxx The NLRC asserts that the inclusion of commissions in the computation of wages would negate the practice of granting commissions only after an employee has earned the minimum wage or over. While such a practice does exist, the universality and prevalence of such a practice is questionable at best. In truth, this Court has taken judicial notice of the fact that some salesmen do not receive any basic salary but depend entirely on commissions and allowances or commissions alone, although an employer-employee relationship exists.

Undoubtedly, this salary structure is intended for the benefit of the corporation establishing such, on the apparent assumption that thereby 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 to the corporation. (Emphases and underscoring supplied)

In this case, respondent’s monetary claims, such as commissions, tax rebates for achieved monthly targets, and success share/profit sharing, are given to her as incentives or forms of encouragement in order for her to put extra effort in performing her duties as an ISE. Clearly, such claims fall within the ambit of the general term “commissions” which in turn, fall within the definition of wages pursuant to prevailing law and jurisprudence. Thus, respondent’s allegation of nonpayment of such monetary benefits places the burden on the employer, i.e., petitioner, to prove with a reasonable degree of certainty that it paid said benefits and that the employee, i.e., respondent, actually received such payment or that the employee was not entitled thereto. (Perlas-Bernabe, J., SC 1st Division, Toyota Pasig, Inc. vs. Vilma S. De Peralta, G.R. No. 213488, November 07, 2016).

While such a practice does exist, the universality and prevalence of such a practice is questionable at best.