GR 110068; (November, 1993) (Digest)
G.R. No. 110068 November 11, 1993
PHILIPPINE DUPLICATORS, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and PHILIPPINE DUPLICATORS EMPLOYEES UNION – TUPAS, respondents.
FACTS
Petitioner Philippine Duplicators, Inc. employs salesmen who are paid a fixed or guaranteed salary plus sales commissions computed on the selling price of the duplicating machines they sell. Private respondent union, on behalf of its member-salesmen, demanded payment of 13th month pay computed on the basis of both the fixed salary and sales commissions, citing MOLE Explanatory Bulletin No. 86-12 issued by Secretary Augusto S. Sanchez, which stated that employees paid a fixed or guaranteed wage plus commission are entitled to 13th month pay based on their total earnings (fixed wage and commission). Petitioner refused, arguing that sales commissions are not part of “basic salary” for 13th month pay computation under P.D. No. 851 and its implementing rules. The Labor Arbiter and the National Labor Relations Commission (NLRC) ruled in favor of the union, directing petitioner to compute 13th month pay inclusive of commissions. Petitioner appealed to the Supreme Court, contending that the administrative issuances expanding “basic salary” to include commissions were void.
ISSUE
What is the appropriate mode of computation of the 13th month pay for employees who receive a fixed or guaranteed salary plus sales commissions?
RULING
The Supreme Court ruled that the 13th month pay of employees paid a fixed or guaranteed wage plus sales commissions must be computed based on their total earnings, including both the fixed wage and sales commissions. The Court held that sales commissions constitute part of the “wage” or “salary” as defined in Article 97(f) of the Labor Code, being remuneration for services rendered. They are not excluded as “allowances” or “fringe benefits” under the implementing rules of P.D. No. 851. The administrative constructions by the DOLE (Explanatory Bulletin No. 86-12 and the Revised Guidelines of Secretary Franklin Drilon) interpreting “basic salary” to include commissions are valid and entitled to respect. Thus, petitioner is liable to pay the 13th month pay deficiency. The petition was dismissed for lack of merit.