Philippine Duplicators vs.

NLRC

GR 110068 February 15, 1995

Facts:

Private respondent union, for and on behalf of its member-salesmen, asked petitioner
corporation for payment of 13th month pay computed on the basis of the salesmen’s fixed or
guaranteed wages plus commissions.

Petitioner corporation refused the union’s request, but stated it would respect an opinion from
the MOLE. On 17 November 1987, acting upon a request for opinion submitted by respondent
union, Director Augusto G. Sanchez of the Bureau of Working Conditions, MOLE, rendered an
opinion to respondent union declaring applicable the provisions of Explanatory Bulletin No.
86-12, Item No. 5 (a):

Since the salesmen of Philippine Duplicators are receiving a fixed basic wage plus commission
on sales and not purely on commission basis, they are entitled to receive 13th month pay
provided they worked at least one (1) month during the calendar year. May we add at this point
that in computing such 13th month pay, the total commissions of said salesmen for the calendar
year shall be divided by twelve (12). (Emphasis supplied)

Notwithstanding Director Sanchez’ opinion or ruling, petitioner refused to pay the claims of its
salesmen for 13th month pay computed on the basis of both fixed wage plus sales
commissions.

Issue​: WON sales commission is included in the coverage of basic salary for purposes of
computing 13th month pay.

Held​:

Decision (1993)
In the first place, Article 97 (f) of the Labor Code defines the term “wage” (which is equivalent to
“salary,” as used in P.D. No. 851 and Memorandum Order No. 28) in the following terms:

(f) “Wage“ paid to any employee shall mean the remuneration or earnings, however designated,
capable of being expressed in terms of money, whether fixed or ascertained on a time, task,
piece, or commission basis, or other method of calculating the same, which is payable by an
employer to an employee under a written or unwritten contract of employment for work done or
to be done, or for services rendered or to be rendered, and includes the fair and reasonable
value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily
furnished by the employer to the employee. “Fair and reasonable value” shall not include any
profit to the employer or to any person affiliated with the employer. (Emphasis supplied)
In the instant case, there is no question that the sales commissions earned by salesmen who
make or close a sale of duplicating machines distributed by petitioner corporation constitute part
of the compensation or remuneration paid to salesmen for serving as salesmen, and hence as
part of the “wage” or “salary” of petitioner’s salesmen. Indeed, it appears that petitioner pays its
salesmen a small fixed or guaranteed wage; the greater part of the salesmen’s wages or
salaries being composed of the sales or incentive commissions earned on actual sales closed
by them. No doubt this particular salary structure was intended for the benefit of petitioner
corporation, 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 petitioner
corporation.

Petition and MR dismissed

Resolution (1995)
In Boie-Takeda the so-called commissions “paid to or received by medical representatives of
Boie-Takeda Chemicals or by the rank and file employees of Philippine Fuji Xerox Co.,” were
excluded from the term “basic salary” because these were paid to the medical representatives
and rank-and-file employees as “productivity bonuses.” The Second Division characterized
these payments as additional monetary benefits not properly included in the term “basic salary”
in computing their 13th month pay. As a rule a bonus is an amount granted and paid to an
employee for his industry loyalty which contributed to the success of the employer’s business
and made possible the realization of profits. It is an act of generosityof the employer for which
the employee ought to be thankful and grateful. It is also granted by an enlightened employer to
spur the employee to greater efforts for the success of the business and realization of bigger
profits. From the legal point of view a bonus is not and mandable and enforceable obligation. It
is so when It is made part of the wage or salary or compensation.

2nd MR dismissed.