Philippine Duplicators, Inc. vs.

NLRC and Philippine Duplicators Employees Union-Tupas

November 11, 1993
G.R. No. 110068

Facts:

Herein petitioner (Philippine Duplicators, Inc.) is a domestic corporation that is engaged in the
distribution of imported duplicating machines and other related products, while herein
respondent Philippine Duplicators Employees Union (PDEU for brevity) are comprised of
salesmen who are paid a fixed or guaranteed salary plus commissions, which are computed on
the selling price of the duplicating machines sold by the respective salesmen. On December 16,
1975, P.D. 851 was promulgated. It prescribed the payment of 13th month pay to employees with
a basic salary of Php 1,000.00. On 1986, then-President Cory Aquino issued M.O. No. 28, which
modified the previous law to include all the owners for entitlement to 13th month pay. In
response to M.O. 28, the Minister Of Labor and Employment (MOLE) issued MOLE
Explanatory Bulletin No. 86-12. Item 5(a) of said issuance provides for the inclusion of those
employees who are paid a fixed and guaranteed wage plus commission to be entitled to 13th
month pay, based on their total earnings during the calendar year.

Private respondent union asked from the petitioner for the payment of 13th month pay to be
computed pursuant to Item 5(a) of the MOLE E.B. No. 86-12. However, the petitioner refused to
grant respondent union’s request. Instead, herein petitioner asked for the opinion of the MOLE
regarding the matter at hand. After knowing this, the MOLE rendered an opinion, reiterating
Item 5(a) of its recent issuance. Despite the rendered opinion of the MOLE, the petitioner had
once again refused to pay the members of the respondent union with their 13th month pay which
is to be computed pursuant to E.B. No. 86-12, Item 5(a).

Respondent union instituted a complaint before the Labor Arbiter, which rendered a decision in
their favor. Herein petitioner appealed to the NLRC, which affirmed the award of the LA.

Hence, this petition.

Issue:

What is the appropriate mode of computation of the 13th month pay of employees who receive a
fixed or guaranteed salary plus sales commissions?

Ruling:

The standard set by Item 5(a) of MOLE E.B. No. 86-12 must be followed. To recapitulate, the
13th month pay of employees paid a fixed or guaranteed wage plus sales commissions must be
equivalent to one-twelfth (1/12) of the total earnings (fixed or guaranteed wage-cum-sales
commissions) during the calendar year. Considering that petitioner has excluded from the
computation of the 13th month pay the sales commissions earned by its individual salesmen, we
believe and so hold that petitioner must be held liable to pay for the deficiency.