GR 92174; (December, 1993) (Digest)
G.R. No. L-92174 and G.R. No. L-102552, December 10, 1993.
BOIE-TAKEDA CHEMICALS, INC., petitioner, vs. HON. DIONISIO DE LA SERNA, Acting Secretary of the Department of Labor and Employment, respondent.
PHILIPPINE FUJI XEROX CORP., petitioner, vs. CRESENCIANO B. TRAJANO, Undersecretary of the Department of Labor and Employment, and PHILIPPINE FUJI XEROX EMPLOYEES UNION, respondents.
FACTS
These are consolidated petitions involving the computation of the 13th month pay. In G.R. No. 92174 , a routine inspection of Boie-Takeda Chemicals, Inc. revealed it had not included the commissions earned by its medical representatives in computing their 13th month pay for 1986-1988. The Regional Director ordered Boie-Takeda to pay the deficiency. The Acting Secretary of Labor affirmed the order but modified it to exclude commissions earned before August 13, 1986. In G.R. No. 102552, a similar inspection of Philippine Fuji Xerox Corp. found underpayment of 13th month pay for 1986-1988 for not including sales commissions. The Regional Director ordered restitution, and the Undersecretary of Labor denied the company’s appeal. Both companies contested the labor officials’ orders, which were based on Section 5(a) of the Revised Guidelines on the Implementation of the 13th Month Pay Law issued by then Secretary Franklin Drilon on November 16, 1987. This provision stated that employees paid a fixed or guaranteed wage plus commission are entitled to 13th month pay based on total earnings, including both the fixed wage and commission. The petitioners argued this provision unlawfully expanded the statutory definition of “basic salary.”
ISSUE
Whether the second paragraph of Section 5(a) of the Revised Guidelines on the Implementation of the 13th Month Pay Law, which includes commissions in the computation of the 13th month pay for employees paid a fixed wage plus commission, is valid.
RULING
No. The Supreme Court GRANTED the consolidated petitions. It declared the second paragraph of Section 5(a) of the Revised Guidelines null and void for being violative of Presidential Decree No. 851, the law it sought to implement. The Court ruled that the provision constituted a grave abuse of discretion. The law and its original implementing rules defined “basic salary” for 13th month pay computation as excluding allowances and monetary benefits not integrated into the regular salary. The Court held that commissions are not part of the “basic salary” but are additional pay, akin to overtime pay or bonuses, given for extra efforts or transactions. By including commissions in the computation, the Revised Guidelines unduly expanded the statutory concept of “basic salary.” An administrative rule cannot amend or widen the scope of the law. Consequently, the assailed Orders based on this invalid guideline were set aside.