G.R. No. 160827 - Netlink Computer Inc. vs. Delmo

Netlink Computer Incorporated hired Eric S. Delmo on November 3, 1991, as an account manager responsible for canvassing and sourcing clients for Netlink’s products and services.
Delmo and his fellow account managers worked primarily in the field and were not required to record their presence in the office via time cards.
The payment of sales commissions became an issue when, despite generating sales amounting to roughly P35,000,000.00, Delmo’s earnings included commissions in both Philippine pesos and US dollars (P993,558.89 and US$7,588.30, respectively).

Delmo regularly earned commissions based on his sales performance, although there was no written agreement explicitly providing for payment in a foreign currency.
Netlink had previously paid commissions in US dollars and had established a consistent practice of doing so.
A dispute arose when Delmo requested full payment of his earned commissions and Netlink instead provided partial cash advances charged against those commissions.

Netlink began scrutinizing Delmo’s attendance and punctuality, issuing memoranda to admonish him for alleged infractions and attempting to force his resignation.
On November 28, 1996, Delmo was denied entry into the company premises by a security guard acting on a departmental memorandum, which led to the removal of his personal belongings from the premises.
Feeling wronged by these actions, Delmo filed a complaint for illegal dismissal, contesting the manner in which his employment had been terminated.

The Labor Arbiter ruled in favor of Delmo, declaring him illegally and unjustly dismissed.
The ruling ordered Netlink to reinstate Delmo with restoration of seniority rights and full backwages, which included:

Backwages, basic pay, and allowances from November 1996 to September 1998 amounting to P161,000.00;
13th-month pay for 1996 to 1998 totaling P15,000.00;
Unpaid commissions of P993,558.89 and US$7,588.30;
An additional 10% attorney’s fees.

Reinstatement was made immediately executory pending appeal, with an alternative separation pay provision if reinstatement became unfeasible.

The National Labor Relations Commission set aside the backwages and reinstatement aspect due to the existence of just causes for Delmo’s termination.
The NLRC’s modified award included:

A P2,000 indemnity for failure to observe procedural due process;
The unpaid commissions (P993,558.89 plus US$7,588.30), adjusted for an advance payment of P216,799.45;
A recalculated 13th-month pay limited to the applicable period (P15,000.00 for 1996 only, later modified by the CA);
10% attorney’s fees on the total amount awarded.

The CA upheld the NLRC’s ruling with modifications on several points, particularly regarding the computation of commissions and 13th-month pay.
It determined that commission liability accrues only when the sales accounts are fully or partially paid by customers, not at the time of sale.
The CA stressed that Netlink’s practice of paying commissions in US dollars, despite a lack of explicit contractual stipulation, was an established company practice that could not be unilaterally altered.
The ruling also affirmed the award of attorney’s fees, referencing prior Supreme Court decisions on similar matters.

Whether the commissions earned by Delmo, though paid previously in US dollars, should continue to be paid in that currency or be converted based on the exchange rate at the time of sale.
Whether the established practice of paying US dollar commissions – despite the absence of a written contract specifying such – imposes an implied contractual obligation on Netlink.

When does the obligation to pay commissions arise, particularly given that the commissions depend on the payment of accounts by customers?
Whether the exchange rate applicable for conversion should be the one prevailing at the time of payment or that at the time of sale.

Whether the award of 10% attorney’s fees is warranted given the circumstances of Delmo’s forced litigation in enforcing his rights.
Whether procedural due process violations by the employer justify such an award, notwithstanding the just cause for termination.