USA College of Law

RICAMONTE 2-D
Case Name PHILIPPINE DUPLICATORS, INC. v. NLRC
Topic Wages
Case No. | Date G.R. No. 110068 | February 15, 1995
Ponente Feliciano, J.
Commissions are not considered as basic pay and is therefore not included in the computation
Doctrine of 13th month pay.

RELEVANT 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). 
 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.
RULING:
NO. Sales Commission js not included in the coverage of basic salary for purpose of computing the 13 th month
pay.
Based on the 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
demandable and enforceable obligation. It is so when It is made part of the wage or salary or compensation.
 USA College of Law
RICAMONTE 2-D

RULING
ND
2 MR Dismissed

SEPARATE OPINIONS
(optional)

NOTES

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.

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