Philippine Duplicators, Inc. v. National Labor Relations Commission
REITERATIONFacts
The Antecedents: Petitioner Philippine Duplicators, Inc. (PD) employed salesmen who received a fixed salary plus commissions based on their sales. The private respondent union, Philippine Duplicators Employees Union - TUPAS, demanded that the 13th month pay for its member-salesmen be computed based on their total earnings, including both their fixed salary and sales commissions. Procedural History: The union filed a complaint with the Labor Arbiter, who ruled in favor of the union, ordering PD to pay 13th month pay computed according to MOLE Explanatory Bulletin No. 86-12. PD appealed to the National Labor Relations Commission (NLRC), which affirmed the Labor Arbiter's decision. PD's motion for reconsideration was denied, leading to the present petition for certiorari. The Petition: Petitioner argues that sales commissions are not part of the "basic salary" for 13th month pay computation and that MOLE Explanatory Bulletin No. 86-12 and Director Sanchez's opinion were void as they expanded the scope of P.D. No. 851 and Memorandum Order No. 28 without legislative authority. Petitioner also cited Item No. 4(a) of the Revised Guidelines on the Implementation of the 13th Month Pay, arguing it excluded commissions.
Issue(s)
Whether sales commissions are included in the computation of "basic salary" for the purpose of determining the 13th month pay. Whether MOLE Explanatory Bulletin No. 86-12 and Director Sanchez's opinion are valid and binding. Whether the NLRC committed grave abuse of discretion in affirming the Labor Arbiter's decision.
Ruling
The petition is dismissed for lack of merit. The National Labor Relations Commission did not commit grave abuse of discretion. Petitioner is liable to pay the deficiency in the 13th month pay for its salesmen.
Ratio Decidendi
On the inclusion of sales commissions in the computation of "basic salary" for 13th month pay: Article 97(f) of the Labor Code defines "wage" as "remuneration or earnings, however designated," payable for work done or services rendered, and includes those calculated on a commission basis. Sales commissions earned by salesmen constitute part of their compensation for services rendered to the employer and are therefore part of their "wage" or "salary." The term "basic salary" in P.D. No. 851 and Memorandum Order No. 28 is not limited to fixed or guaranteed wages but encompasses all remunerations for services rendered, excluding only fringe benefits like profit-sharing payments and certain allowances not integrated into the regular salary. Sales commissions are not fringe benefits but are direct remunerations for services that contribute to the employer's income. The Court has previously held in Songco v. National Labor Relations Commission that sales commissions are part of a salesman's salary base for computing separation pay, emphasizing that "salary" and "wage" are often used interchangeably and both refer to recompense for services performed. Therefore, sales commissions should be included in the computation of the 13th month pay. On the validity of MOLE Explanatory Bulletin No. 86-12 and Director Sanchez's opinion: These issuances represent contemporaneous administrative construction of the term "basic salary" as used in P.D. No. 851 and Memorandum Order No. 28. Such administrative constructions are entitled to great respect and ordinarily control the interpretation of statutes by the courts. The MOLE Explanatory Bulletin No. 86-12, specifically Item No. 5(a), explicitly states that employees paid a fixed or guaranteed wage plus commission are entitled to 13th month pay based on their total earnings, including both wage and commission. This interpretation aligns with the definition of "wage" under the Labor Code and the principle that commissions are part of remuneration for services rendered. Furthermore, the Revised Guidelines on the Implementation of the 13th Month Pay, issued by Secretary Franklin M. Drilon, also reiterated this interpretation in Item No. 5(a), further solidifying the administrative construction that commissions should be included. On whether the NLRC committed grave abuse of discretion: The NLRC affirmed the Labor Arbiter's decision, correctly applying the prevailing administrative issuances and jurisprudence regarding the computation of 13th month pay for employees receiving fixed wages plus commissions. The NLRC correctly noted that it was not vested with the authority to pass upon the validity of the Explanatory Bulletin, which remained operative until declared invalid by the Supreme Court. Since the NLRC's decision was based on a correct interpretation of the law and administrative issuances, and there was no showing of capriciousness or arbitrariness, it did not commit grave abuse of discretion. The petition, therefore, lacks merit.
Main Doctrine
The 13th month pay of employees who receive a fixed or guaranteed salary plus sales commissions must be computed based on their total earnings for the calendar year, which includes both their fixed or guaranteed wage and their sales commissions.