G.R. No. 163126. January 22, 2014


In this appeal by petition for review on certiorari, the petitioners seek to reverse the decision promulgated on December 17, 2003,[1] whereby the Court of Appeals (CA) annulled and set aside the decision rendered in their favor on September 19, 2000 by the National Labor Relations Commission (NLRC) of Cebu City,[2] and instead dismissed their complaint for illegal dismissal and monetary benefits for its lack of merit.

The petitioners were employees of respondent Iloilo Buantong Enterprises Corporation (IBEC), a family-owned and -controlled corporation engaged in the retail of motorcyles, bicycles and spare parts. IBEC had seven employees, including the petitioners and respondent Wilson Lim, its general manager. Petitioner Agustin Canlas worked as Credit and Collection Manager for Panay Island from September 1992 with a daily salary of P150.00, and petitioner Ariel Dagang served as Collection/Credit Investigator starting in March 1994 with a daily salary of P125.00.

In a letter dated October 6, 1998,[3] Lim directed the petitioners to explain their long absence and to report to work on October 12, 1998, or face termination. In a letter dated October 7, 1998, Canlas and Dagang demanded the payment of their commissions of one percent of their over-all monthly collections beginning in the year 1995 with the threat of legal action should the same be unheeded within ten (10) days.[4] The petitioners did not return to work or tender an explanation of their extended absence from work, but, instead, brought a complaint in the NLRC charging IBEC and Lim with illegal dismissal, and seeking the payment of their underpaid salaries and wages, and unpaid commissions, overtime pay, premium pay for holiday and rest day, holiday pay, service incentive leave pay, allowances, separation pay, damages and attorney's fees (NLRC Sub-RAB VI CASE NO. 06-10-50588-98).[5]

According to their position paper,[6] Canlas rendered service until January 1998, and remitted a total monthly collection of P700,000.00 but was not paid his commissions of one percent beginning January 1994 onwards; Dagang worked until September 17, 1998, and remitted a monthly collection of P170,000.00 but was not paid his commission of one percent beginning March 1998 up to September 1998. In support of their claims, they submitted their respective affidavits[7] attesting to their entitlement to commissions, and a copy of their demand letter dated October 6, 1998.[8]In their answer, the respondents denied having illegally dismissed the petitioners. They insisted that Canlas did not report to work in the whole month of February 1998 allegedly due to family matters; that in March 1998 he requested an extended leave until June 1998 because of an accident; that Dagang did not report to work beginning April 1998 and sought leave from work until June 1998; that because they did not report to work, Lim, IBAC's general manager, issued the letter dated October 6, 1998 for them to report to work that they refused to heed; that under the circumstances, they were not entitled to separation pay, and to their other money claims because field employees were not legally entitled to overtime pay, service incentive leave, premium pay for holiday and rest day, and holiday pay by the nature of their work; and that their claims for damages and attorney's fees were without factual and legal bases.[9]

Ruling of the Labor Arbiter In her decision of October 7, 1999,[10] Labor Arbiter Ma. Sol Monteclaro Manalo declared that there was no substantial evidence to support the complaint for illegal dismissal; granted the claim for unpaid commissions and service incentive leave pay for not being disputed by the respondents; and denied the other money claims for lack of factual and legal bases. She disposed thusly:

A. Commission P252,000.00
B. Service Incentive Pay P 2,250.00
A. Commission P 60,000.00
B. Service Incentive Pay P 2,250.00
All other claims are hereby ORDERED DISMISSED for lack of merit.

Decision of the NLRC Aggrieved, the respondents appealed to the NLRC, contending that the petitioners, as field employees, were not entitled to service incentive leave pay; that they did not specifically rebut the petitioners' claim for commissions because they had not been furnished a copy of the petitioners' position paper; that, however, the petitioners had not substantiated their entitlement to such claim; and that IBEC's income tax returns for the years from 1992 to 1998 disproved that Canlas and Dagang had remitted collections totaling of P700,000.00 and P170,000.00, respectively.[11]

On September 19, 2000,[12] the NLRC modified the Labor Arbiter's decision by setting aside the award of service incentive leave pay and attorney's fees on the ground that the petitioners were not legally entitled thereto, but sustaining the award of commissions. It held that even if IBEC had not been furnished a copy of the petitioners' position paper, the claim for payment of commissions had been specified in the complaint and had also been brought to their attention during the mandatory conference; and that the commission of one percent of the total monthly collection was reasonable and constituted an efficient substitute for daily or monthly allowances, explaining that no field worker would allow himself to work with a compensation equivalent to the minimum basic pay alone because of the expenses for travel necessarily associated with the task of collecting. However, it limited the recovery of commissions to three years reckoned from the filing of the complaint on October 19, 1998. It decreed as follows:
WHEREFORE, the Decision of the Labor Arbiter is hereby modified awarding Agustin O. Canlas, Sr. ONE HUNDRED NINETY SIX THOUSAND PESOS (P196,000.00) commission and Ariel Dagang FIFTY ONE THOUSAND PESOS (P51,000.00) commission; and setting aside all the rest.

The respondent moved for reconsideration, but the NLRC denied their motion on August 15, 2002.[13]

Judgment of the CA The respondents elevated the NLRC's rulings to CA on certiorari.

In the assailed judgment promulgated on December 17, 2003,[14] the CA nullified the decision of the NLRC for having been rendered with grave abuse of discretion upon its finding that the petitioners' affidavits were self-serving and unsubstantiated, and did not constitute substantial evidence showing their right to the commissions. The fallo of the assailed judgment of the CA reads:
WHEREFORE, foregoing premises considered, the Petition having merit in fact and in law, is hereby GIVEN DUE COURSE. Resultantly, the assailed decision of public respondent National Labor Relations Commission, 4th division is hereby ANNULLED and SET ASIDE for having been issued with grave abuse of discretion and private respondents' complaint ordered DISMISSED. NO COSTS.

The CA denied the petitioners' motion for reconsideration on March 23, 2004.[15]

Hence, this appeal by petition for review on certiorari, with the petitioners arguing that the CA gravely erred in finding that they were not entitled to the commissions.

Ruling The appeal lacks merit.

Both the Labor Arbiter and the NLRC found and held that the petitioners were entitled to the commission of one percent on their monthly collections only because IBEC did not controvert the claim thereon. Thereby, the labor tribunals accorded credence to their affidavits as well as to their demand letter dated October 7, 1998. But the Court concurs with the CA, and accordingly considers their finding erroneous, because even if IBEC had not disputed the claim, the evidence thereon was still insufficient basis for granting it.

For one, considering that no law required an employer to pay commissions to its employees, the petitioners were burdened to prove that there was an agreement between them and IBEC for the payment of the commissions.[16] Indeed, every party who alleges a fact must establish it with competent evidence, for allegation is not proof. But the petitioners did not discharge their burden because their affidavits were self-serving. To rely on the affidavits alone would be to open the door to perjured declarations. Such reliance would then be offensive to the fundamental right of the employer to due process.[17] Likewise, the petitioners did not present any single record, like a memorandum on the commissions or their payroll, to establish that IBEC followed a company policy or practice of extending or paying allowances to its field personnel like them. It would have been quite easy for them to present due to their having been in the employ of IBEC for a good number of years.

Under the circumstances, the NLRC acted whimsically and arbitrarily in giving credence to the petitioners' unsubstantiated assertion of a substantial monetary liability on the part of the employer. Credence should not be accorded to a bare allegation of their self-serving affidavits. The CA correctly granted the petition for certiorari in order to annul the NLRC's ruling rendered with grave abuse of discretion amounting to lack or excess of jurisdiction. Grave abuse of discretion, according to De los Santos v. Metropolitan Bank and Trust Company,[18] means either that the judicial or quasi-judicial power was exercised in an arbitrary or despotic manner by reason of passion or personal hostility, or that the respondent judge, tribunal or board evaded a positive duty, or virtually refused to perform the duty enjoined or to act in contemplation of law, such as when such judge, tribunal or board exercising judicial or quasi-judicial powers acted in a capricious or whimsical manner as to be equivalent to lack of jurisdiction.

WHEREFORE, the Court DENIES the petition for review on certiorari; AFFIRMS the decision promulgated on December 17, 2003 by the Court of Appeals; and ORDERS the petitioners to pay the costs of suit.


[1] Rollo, pp. 85-90; penned by Associate Justice Jose L. Sabio, Jr. (retired/deceased), with Associate Justice Delilah Vidallon-Magtolis (retired) and Associate Justice Hakim S. Abdulwahid concurring.[2] Id. at 73-79; penned by Commissioner Irenea E. Ceniza, with Commissioner Bernabe S. Batuhan and Commissioner Edgardo M. Enerlan concurring;

[3] Id. at 62-63.

[4] Id. at 49.

[5] Id. at 125.

[6] Id. at 40-44.

[7] Id. at 45-46.

[8] Supra note 3.

[9] Id. at 50-56.

[10] Id. at 68-71.

[11] Id. at 146-159.

[12] Supra note 2.

[13] Id. at 81-83.

[14] Supra note 1.

[15] Rollo, p. 91.

[16] Solas v. Power & Telephone Supply Philippines, Inc., G.R. No. 162332, August 28, 2008, 563 SCRA 522, 531.

[17] Great Southern Maritime Services Corporation v. Acuña, G.R. No. 140189, February 28, 2005, 452 SCRA 422.

[18] G.R. No. 153852, October 24, 2012, 684 SCRA 410, 422.