Republic of the Philippines Republic of the Philippines
SUPREME COURT SUPREME COURT Manila Manila SECOND DIVISION SECOND DIVISION G.R.
G.R. No. No. 156367 156367 May May 16, 16, 20052005
AUTO BUS TRANSPORT SYSTEMS, INC.,
AUTO BUS TRANSPORT SYSTEMS, INC., petitioner, petitioner, vs.
vs.
ANTONIO BAUTISTA,
ANTONIO BAUTISTA, respondent. respondent. D E C I S I O N
D E C I S I O N CHICO-NAZARIO, CHICO-NAZARIO, J J ..::
Before Us is a Petition for Review on
Before Us is a Petition for Review on CertiorariCertiorari assailing the Decision assailing the Decision11 and Resolutioand Resolutionn22 of theof the Court of Appeals affirming the Decision
Court of Appeals affirming the Decision33 of the National Labor Relations Commission (NLRC).of the National Labor Relations Commission (NLRC). The NLRC ruling modified the Decision of the Labor Arbiter (finding respondent entitled to the The NLRC ruling modified the Decision of the Labor Arbiter (finding respondent entitled to the award of 13
award of 13thth month pay and service incentive leave pay) by deleting the award of 13 month pay and service incentive leave pay) by deleting the award of 13thth month month pay to respondent.
pay to respondent. THE FACTS THE FACTS
Since 24 May 1995, respondent Antonio Bautista has been employed by petitioner Auto Bus Since 24 May 1995, respondent Antonio Bautista has been employed by petitioner Auto Bus Transport Systems, Inc. (Autobus), as driver-conductor with travel routes Manila-Tuguegarao Transport Systems, Inc. (Autobus), as driver-conductor with travel routes Manila-Tuguegarao via Baguio, Baguio- Tuguegarao via Manila and Manila-Tabuk via Baguio. Respondent was paid via Baguio, Baguio- Tuguegarao via Manila and Manila-Tabuk via Baguio. Respondent was paid on commission basis, seven percent (7%) of the total gross income per travel, on a twice a month on commission basis, seven percent (7%) of the total gross income per travel, on a twice a month basis.
basis.
On 03 January 2000, while respondent was driving Autobus No. 114 along Sta. Fe, Nueva On 03 January 2000, while respondent was driving Autobus No. 114 along Sta. Fe, Nueva Vizcaya, the bus he was driving accidentally bumped the rear portion of Autobus No. 124, as the Vizcaya, the bus he was driving accidentally bumped the rear portion of Autobus No. 124, as the latter vehicle suddenly stopped at a sharp curve without giving any warning.
latter vehicle suddenly stopped at a sharp curve without giving any warning.
Respondent averred that the accident happened because he was compelled by the management to Respondent averred that the accident happened because he was compelled by the management to go back to Roxas, Isabela, although he had not slept for almost twenty-four (24) hours, as he had go back to Roxas, Isabela, although he had not slept for almost twenty-four (24) hours, as he had just arrived in Manila from Roxas, Isabela. Respondent further alleged that he was not allowed to just arrived in Manila from Roxas, Isabela. Respondent further alleged that he was not allowed to work until he fully paid the amount of P75,551.50, representing thirty percent (30%) of the cost work until he fully paid the amount of P75,551.50, representing thirty percent (30%) of the cost of repair of the damaged buses and that despite respondent’s pleas for reconsideration, the
of repair of the damaged buses and that despite respondent’s pleas for reconsideration, the samesame was ignored by management. After a month, management sent him a letter of termination.
was ignored by management. After a month, management sent him a letter of termination.
Thus, on 02 February 2000, respondent instituted a Complaint for Illegal Dismissal with Money Thus, on 02 February 2000, respondent instituted a Complaint for Illegal Dismissal with Money Claims for nonpayment of 13
Claims for nonpayment of 13thth month pay and service incentive leave pay against Autobus. month pay and service incentive leave pay against Autobus.
Petitioner, on the other hand, maintained that respondent’s employment was replete with Petitioner, on the other hand, maintained that respondent’s employment was replete with offenses involving reckless imprudence, gross negligence, and dishonesty. To support its claim, offenses involving reckless imprudence, gross negligence, and dishonesty. To support its claim, petitioner
petitioner presented presented copies copies of of letters, letters, memos, memos, irregularity irregularity reports, reports, and and warrants warrants of of arrestarrest pertaining to several incidents wherein respondent was involved.
pertaining to several incidents wherein respondent was involved.
Furthermore, petitioner avers that in the exercise of its management prerogative, respondent’s Furthermore, petitioner avers that in the exercise of its management prerogative, respondent’s employment was terminated only after the latter was provided with an opportunity to explain his employment was terminated only after the latter was provided with an opportunity to explain his side regarding the accident on 03 January 2000.
side regarding the accident on 03 January 2000.
On 29 September 2000, based on the pleadings and supporting evidence presented by the parties, On 29 September 2000, based on the pleadings and supporting evidence presented by the parties, Labor Arbiter Monroe C. Tabingan promulgated a Decision
Labor Arbiter Monroe C. Tabingan promulgated a Decision,,44 the dispositive portion of whichthe dispositive portion of which reads:
reads:
WHEREFORE, all premises considered, it is hereby found that the complaint for Illegal WHEREFORE, all premises considered, it is hereby found that the complaint for Illegal Dismissal has no leg to stand on. It is hereby ordered DISMISSED, as it is hereby Dismissal has no leg to stand on. It is hereby ordered DISMISSED, as it is hereby DISMISSED.
However, still based on the above-discussed premises, the respondent must pay to the However, still based on the above-discussed premises, the respondent must pay to the complainant the following:
complainant the following: a. his 13
a. his 13thth month pay from the date of his hiring to the date of his dismissal, month pay from the date of his hiring to the date of his dismissal, presently computed at P78,117.87;
presently computed at P78,117.87; b. his
b. his service incentive service incentive leave paleave pay for all y for all the years the years he had he had been in been in service with service with thethe respondent, presently computed at P13,788.05.
respondent, presently computed at P13,788.05.
All other claims of both complainant and respondent are hereby dismissed for lack of All other claims of both complainant and respondent are hereby dismissed for lack of merit
merit..55 Not
Not satisfied satisfied with with the the decision decision of of the the Labor Labor Arbiter, Arbiter, petitioner petitioner appealed appealed the the decision decision to to thethe NLRC which rendered its decision on 28 September 2001, the decretal portion of which reads: NLRC which rendered its decision on 28 September 2001, the decretal portion of which reads:
[T]he Rules and Regulations Implementing Presidential Decree No. 851, particularly Sec. [T]he Rules and Regulations Implementing Presidential Decree No. 851, particularly Sec. 3 provides:
3 provides:
"Section 3. Employers covered.
"Section 3. Employers covered. – – The Decree shall apply to all employers except The Decree shall apply to all employers except to:
to:
xxx xxx xxx xxx xxx xxx
e) employers of those who are paid on purely commission, boundary, or task e) employers of those who are paid on purely commission, boundary, or task basis,
basis, performing performing a a specific specific work, work, irrespective irrespective of of the the time time consumed consumed in in thethe performance thereof. xxx."
performance thereof. xxx."
Records show that complainant, in his position paper, admitted that he was paid on a Records show that complainant, in his position paper, admitted that he was paid on a commission basis.
commission basis.
In view of the foregoing, we deem it just and equitable to modify the assailed Decision In view of the foregoing, we deem it just and equitable to modify the assailed Decision by deleting the award of 13
by deleting the award of 13thth month pay to the complainant. month pay to the complainant. …
…
WHEREFORE, the Decision dated 29 September 2000 is MODIFIED by deleting the WHEREFORE, the Decision dated 29 September 2000 is MODIFIED by deleting the award of 13
award of 13thth month pay. The other findings are AFFIRMED month pay. The other findings are AFFIRMED..66
In other words, the award of service incentive leave pay was maintained. Petitioner thus sought a In other words, the award of service incentive leave pay was maintained. Petitioner thus sought a reconsideration of this aspect, which was subsequently denied in a Resolution by the NLRC reconsideration of this aspect, which was subsequently denied in a Resolution by the NLRC dated 31 October 2001.
dated 31 October 2001.
Displeased with only the partial grant of its appeal to the NLRC, petitioner sought the review of Displeased with only the partial grant of its appeal to the NLRC, petitioner sought the review of said decision with the Court of Appeals which was subsequently denied by the appellate court in said decision with the Court of Appeals which was subsequently denied by the appellate court in a Decision dated 06 May 2002, the dispositive portion of which reads:
a Decision dated 06 May 2002, the dispositive portion of which reads: WHEREFORE, premises considered, the
WHEREFORE, premises considered, the Petition Petition is DISMISSED for lack of merit; and is DISMISSED for lack of merit; and the assailed
the assailed Decision Decision of respondent Commission in NLRC NCR CA No. 026584-2000 isof respondent Commission in NLRC NCR CA No. 026584-2000 is hereby AFFIRMED
hereby AFFIRMED in totoin toto. No costs. No costs..77 Hence, the instant petition.
Hence, the instant petition. ISSUES
ISSUES
1. Whether or not respondent is entitled to
1. Whether or not respondent is entitled to service incentive leave;service incentive leave;
2. Whether or not the three (3)-year prescriptive period provided under Article 291 of the Labor 2. Whether or not the three (3)-year prescriptive period provided under Article 291 of the Labor Code, as amended, is applicable to respondent’s claim of service incentive leave pay.
Code, as amended, is applicable to respondent’s claim of service incentive leave pay. RULING OF THE COURT
However, still based on the above-discussed premises, the respondent must pay to the However, still based on the above-discussed premises, the respondent must pay to the complainant the following:
complainant the following: a. his 13
a. his 13thth month pay from the date of his hiring to the date of his dismissal, month pay from the date of his hiring to the date of his dismissal, presently computed at P78,117.87;
presently computed at P78,117.87; b. his
b. his service incentive service incentive leave paleave pay for all y for all the years the years he had he had been in been in service with service with thethe respondent, presently computed at P13,788.05.
respondent, presently computed at P13,788.05.
All other claims of both complainant and respondent are hereby dismissed for lack of All other claims of both complainant and respondent are hereby dismissed for lack of merit
merit..55 Not
Not satisfied satisfied with with the the decision decision of of the the Labor Labor Arbiter, Arbiter, petitioner petitioner appealed appealed the the decision decision to to thethe NLRC which rendered its decision on 28 September 2001, the decretal portion of which reads: NLRC which rendered its decision on 28 September 2001, the decretal portion of which reads:
[T]he Rules and Regulations Implementing Presidential Decree No. 851, particularly Sec. [T]he Rules and Regulations Implementing Presidential Decree No. 851, particularly Sec. 3 provides:
3 provides:
"Section 3. Employers covered.
"Section 3. Employers covered. – – The Decree shall apply to all employers except The Decree shall apply to all employers except to:
to:
xxx xxx xxx xxx xxx xxx
e) employers of those who are paid on purely commission, boundary, or task e) employers of those who are paid on purely commission, boundary, or task basis,
basis, performing performing a a specific specific work, work, irrespective irrespective of of the the time time consumed consumed in in thethe performance thereof. xxx."
performance thereof. xxx."
Records show that complainant, in his position paper, admitted that he was paid on a Records show that complainant, in his position paper, admitted that he was paid on a commission basis.
commission basis.
In view of the foregoing, we deem it just and equitable to modify the assailed Decision In view of the foregoing, we deem it just and equitable to modify the assailed Decision by deleting the award of 13
by deleting the award of 13thth month pay to the complainant. month pay to the complainant. …
…
WHEREFORE, the Decision dated 29 September 2000 is MODIFIED by deleting the WHEREFORE, the Decision dated 29 September 2000 is MODIFIED by deleting the award of 13
award of 13thth month pay. The other findings are AFFIRMED month pay. The other findings are AFFIRMED..66
In other words, the award of service incentive leave pay was maintained. Petitioner thus sought a In other words, the award of service incentive leave pay was maintained. Petitioner thus sought a reconsideration of this aspect, which was subsequently denied in a Resolution by the NLRC reconsideration of this aspect, which was subsequently denied in a Resolution by the NLRC dated 31 October 2001.
dated 31 October 2001.
Displeased with only the partial grant of its appeal to the NLRC, petitioner sought the review of Displeased with only the partial grant of its appeal to the NLRC, petitioner sought the review of said decision with the Court of Appeals which was subsequently denied by the appellate court in said decision with the Court of Appeals which was subsequently denied by the appellate court in a Decision dated 06 May 2002, the dispositive portion of which reads:
a Decision dated 06 May 2002, the dispositive portion of which reads: WHEREFORE, premises considered, the
WHEREFORE, premises considered, the Petition Petition is DISMISSED for lack of merit; and is DISMISSED for lack of merit; and the assailed
the assailed Decision Decision of respondent Commission in NLRC NCR CA No. 026584-2000 isof respondent Commission in NLRC NCR CA No. 026584-2000 is hereby AFFIRMED
hereby AFFIRMED in totoin toto. No costs. No costs..77 Hence, the instant petition.
Hence, the instant petition. ISSUES
ISSUES
1. Whether or not respondent is entitled to
1. Whether or not respondent is entitled to service incentive leave;service incentive leave;
2. Whether or not the three (3)-year prescriptive period provided under Article 291 of the Labor 2. Whether or not the three (3)-year prescriptive period provided under Article 291 of the Labor Code, as amended, is applicable to respondent’s claim of service incentive leave pay.
Code, as amended, is applicable to respondent’s claim of service incentive leave pay. RULING OF THE COURT
The disposition of the first issue revolves around the proper interpretation of Article 95 of the The disposition of the first issue revolves around the proper interpretation of Article 95 of the Labor Code
Labor Code vis-à-visvis-à-visSection 1(D), Rule V, Book III of the Implementing Rules and RegulationsSection 1(D), Rule V, Book III of the Implementing Rules and Regulations of the Labor Code which provides:
of the Labor Code which provides: A
Art. rt. 9595.. RIGHT TO SERVICE INCENTIVE LEAVE RIGHT TO SERVICE INCENTIVE LEAVE
(a) Every employee who has rendered at least one year of service shall be entitled (a) Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay.
to a yearly service incentive leave of five days with pay. Bo
Boook IIk II II , , RuRulle e V: SERVIV: SERVI CE ICE I NCENTINCENTI VE LVE L EE AVE AVE SE
SE CTCTII ON 1ON 1.. Coverage. Coverage. – – This rule shall apply to all emplo This rule shall apply to all employees except:yees except: …
…
(d) Field personnel and other employees whose performance is unsupervised by (d) Field personnel and other employees whose performance is unsupervised by the employer including those who are engaged on task or contract basis, purely the employer including those who are engaged on task or contract basis, purely commission basis, or those who are paid in a fixed amount for performing work commission basis, or those who are paid in a fixed amount for performing work irrespective of the time consumed in the performance thereof; .
irrespective of the time consumed in the performance thereof; . . .. .
A careful perusal of said provisions of law will result in the conclusion that the grant of service A careful perusal of said provisions of law will result in the conclusion that the grant of service incentive leave has been delimited by the Implementing Rules and Regulations of the Labor incentive leave has been delimited by the Implementing Rules and Regulations of the Labor Code to apply only to those employees not explicitly excluded by Section 1 of Rule V. Code to apply only to those employees not explicitly excluded by Section 1 of Rule V. According to the Implementing Rules, Service Incentive Leave shall not apply to employees According to the Implementing Rules, Service Incentive Leave shall not apply to employees classified as "field personnel." The phrase "other employees whose performance is unsupervised classified as "field personnel." The phrase "other employees whose performance is unsupervised by
by the the employer" employer" must must not not be be understood understood as as a a separate separate classification classification of of employees employees to to whichwhich service incentive leave shall not be granted. Rather, it serves as an amplification of the service incentive leave shall not be granted. Rather, it serves as an amplification of the interpretation of the definition of field personnel under the Labor Code as those "whose actual interpretation of the definition of field personnel under the Labor Code as those "whose actual hours of work in the field cannot b
hours of work in the field cannot be determined with reasonable certainty.e determined with reasonable certainty.""88 The same is true with respect to the phrase "
The same is true with respect to the phrase "those who are engaged on task or contract basis,those who are engaged on task or contract basis, purely commission basis
purely commission basis.."" Said phrase should be related with "field personnel," applying the ruleSaid phrase should be related with "field personnel," applying the rule on
on ejusdem generisejusdem generis that general and unlimited terms are restrained and limited by the particularthat general and unlimited terms are restrained and limited by the particular terms that they follow
terms that they follow..99 Hence, employees engaged on task or contract basis or paid on purelyHence, employees engaged on task or contract basis or paid on purely commission basis are not automatically exempted from the grant of service incentive leave, commission basis are not automatically exempted from the grant of service incentive leave, unless, they fall under the classification of field personnel.
unless, they fall under the classification of field personnel. Therefor
Therefor e, petitioner’s contention that respondent is not entitled to the grant of service incentivee, petitioner’s contention that respondent is not entitled to the grant of service incentive leave just because he was paid on purely commission basis is misplaced. What must be leave just because he was paid on purely commission basis is misplaced. What must be ascertained in order to resolve the issue of propriety of the grant of service incentive leave to ascertained in order to resolve the issue of propriety of the grant of service incentive leave to respondent is whether or not he
respondent is whether or not he is a field personnel.is a field personnel.
According to Article 82 of the Labor Code, "field personnel" shall refer to non-agricultural According to Article 82 of the Labor Code, "field personnel" shall refer to non-agricultural employees who regularly perform their duties away from the principal place of business or employees who regularly perform their duties away from the principal place of business or branch office
branch office of the of the employer and employer and whose actual whose actual hours of hours of work in work in the field the field cannot be cannot be determineddetermined with reasonable certainty. This definition is further elaborated in the
with reasonable certainty. This definition is further elaborated in the Bureau Bureau of of WorkingWorking Conditions (BWC), Advisory Opinion to Philippine Technical-Clerical Commercial Employees Conditions (BWC), Advisory Opinion to Philippine Technical-Clerical Commercial Employees Associatio
Associationn1010which states that:which states that:
As a general rule, [field personnel] are those whose performance of their job/service is As a general rule, [field personnel] are those whose performance of their job/service is not supervised by the employer or his representative, the workplace being away from the not supervised by the employer or his representative, the workplace being away from the principal office and who
principal office and whose hours and dse hours and days of work cannoays of work cannot be determined t be determined with reasonablewith reasonable certainty; hence, they are paid specific amount for rendering specific service or certainty; hence, they are paid specific amount for rendering specific service or performing specific work.
performing specific work. If required to If required to be at specific be at specific places at specific places at specific times, employeestimes, employees including drivers cannot be said to be field personnel despite the fact that they are including drivers cannot be said to be field personnel despite the fact that they are performing work away from the principal office of the employee.
performing work away from the principal office of the employee. [Emphasis ours] [Emphasis ours]
To this discussion by the BWC, the petitioner differs and postulates that under said advisory To this discussion by the BWC, the petitioner differs and postulates that under said advisory opinion, no employee would ever be considered a field personnel because every employer, in one opinion, no employee would ever be considered a field personnel because every employer, in one way or another, exercises control over his employees. Petitioner further argues that the only way or another, exercises control over his employees. Petitioner further argues that the only criterion that should be considered is the nature of work of the employee in that, if the criterion that should be considered is the nature of work of the employee in that, if the
employee’s job requires that he works away from the principal office like that of a messenger or a bus driver, then he is inevitably a field personnel.
We are not persuaded. At this point, it is necessary to stress that the definition of a "field personnel" is not merely concerned with the location where the employee regularly performs his
duties but also with the fact that the employee’s performance is unsu pervised by the employer. As discussed above, field personnel are those who regularly perform their duties away from the principal place of business of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. Thus, in order to conclude whether an employee is a field employee, it is also necessary to ascertain if actual hours of work in the field can be determined with reasonable certainty by the employer. In so doing, an inquiry must be made as to whether or not the employee’s time and performance are constantly supervised by the employer.
As observed by the Labor Arbiter and concurred in by the Court of Appeals:
It is of judicial notice that along the routes that are plied by these bus companies, there are its inspectors assigned at strategic places who board the bus and inspect the passengers, the punched tickets, and the conductor’s reports. There is also the mandatory
once-a-week car barn or shop day, where the bus is regularly checked as to its mechanical, electrical, and hydraulic aspects, whether or not there are problems thereon as reported by the driver and/or conductor. They too, must be at specific place as [sic] specified time, as they generally observe prompt departure and arrival from their point of origin to their point of destination. In each and every depot, there is always the Dispatcher whose function is precisely to see to it that the bus and its crew leave the premises at specific times and arrive at the estimated proper time. These, are present in
the case at bar. The driver, the complainant herein, was therefore under constant supervision while in the performance of this work. He cannot be considered a field personnel.11
We agree in the above disquisition. Therefore, as correctly concluded by the appellate court, respondent is not a field personnel but a regular employee who performs tasks usually necessary and desirable to the usual trade of petitioner’s business. Accordingly, respondent is entitled to the grant of service incentive leave.
The question now that must be addressed is up to what amount of service incentive leave pay respondent is entitled to.
The response to this query inevitably leads us to the correlative issue of whether or not the three (3)-year prescriptive period under Article 291 of the Labor Code is applicable to respondent’s claim of service incentive leave pay.
Article 291 of the Labor Code states that all money claims arising from employer-employee relationship shall be filed within three (3) years from the time the cause of action accrued; otherwise, they shall be forever barred.
In the application of this section of the Labor Code, the pivotal question to be answered is when does the cause of action for money claims accrue in order to determine the reckoning date of the three-year prescriptive period.
It is settled jurisprudence that a cause of action has three elements, to wit, (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and (3) an act or omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff .12
To properly construe Article 291 of the Labor Code, it is essential to ascertain the time when the third element of a cause of action transpired. Stated differently, in the computation of the three-year prescriptive period, a determination must be made as to the period when the act constituting a violation of the workers’ right to the benefits being claimed was committed. For if the cause of action accrued more than three (3) years before the filing of the money claim, said cause of action has already prescribed in accordance with Article 291.13
Consequently, in cases of nonpayment of allowances and other monetary benefits, if it is established that the benefits being claimed have been withheld from the employee for a period longer than three (3) years, the amount pertaining to the period beyond the three-year prescriptive period is therefore barred by prescription. The amount that can only be demand ed by
the aggrieved employee shall be limited to the amount of the benefits withheld within three (3) years before the filing of the complaint.14
It is essential at this point, however, to recognize that the service incentive leave is a curious animal in relation to other benefits granted by the law to every employee. In the case of service incentive leave, the employee may choose to either use his leave credits or commute it to its monetary equivalent if not exhausted at the end of the year .15 Furthermore, if the employee entitled to service incentive leave does not use or commute the same, he is entitled upon his resignation or separation from work to the commutation of his accrued service incentive leave. As enunciated by the Court in Fernandez v. NLRC :16
The clear policy of the Labor Code is to grant service incentive leave pay to workers in all establishments, subject to a few exceptions. Section 2, Rule V, Book III of the Implementing Rules and Regulations provides that "[e]very employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay." Service incentive leave is a right which accrues to every employee who has served "within 12 months, whether continuous or broken reckoned from the date the employee started working, including authorized absences and paid regular holidays unless the working days in the establishment as a matter of practice or policy, or that provided in the employment contracts, is less than 12 months, in which case said period shall be considered as one year." It is also "commutable to its money equivalent if not used or exhausted at the end of the year." In other words, an employee who has served for one year is entitled to it. He may use it as leave days or he may collect its monetary value. To limit the award to three years, as the solicitor general recommends, is to unduly restrict such right.17 [Italics supplied]
Correspondingly, it can be conscientiously deduced that the cause of action of an entitled employee to claim his service incentive leave pay accrues from the moment the employer refuses to remunerate its monetary equivalent if the employee did not make use of said leave credits but instead chose to avail of its commutation. Accordingly, if the employee wishes to accumulate his leave credits and opts for its commutation upon his resignation or separation from employment, his cause of action to claim the whole amount of his accumulated service incentive leave shall arise when the employer fails to pay such amount at the time of his resignation or separation from employment.
Applying Article 291 of the Labor Code in light of this peculiarity of the service incentive leave, we can conclude that the three (3)-year prescriptive period commences, not at the end of the year when the employee becomes entitled to the commutation of his service incentive leave, but from the time when the employer refuses to pay its monetary equivalent after demand of commutation or upon termination of the employee’s services, as the case may be.
The above construal of Art. 291, vis-à-vis the rules on service incentive leave, is in keeping with the rudimentary principle that in the implementation and interpretation of the provisions of the Labor Code and its implementing regulations, the workingman’s welfare should be the primordial and paramount consideration.18 The policy is to extend the applicability of the decree to a greater number of employees who can avail of the benefits under the law, which is in consonance with the avowed policy of the State to give maximum aid and protection to labor .19 In the case at bar, respondent had not made use of his service incentive leave nor demanded for its commutation until his employment was terminated by petitioner. Neither did petitioner compensate his accumulated service incentive leave pay at the time of his dismissal. It was only upon his filing of a complaint for illegal dismissal, one month from the time of his dismissal, that respondent demanded from his former employer commutation of his accumulated leave credits. His cause of action to claim the payment of his accumulated service incentive leave thus accrued from the time when his employer dismissed him and failed to pay his accumulated leave credits. Therefore, the prescriptive period with respect to his claim for service incentive leave pay only commenced from the time the employer failed to compensate his accumulated service incentive
leave pay at the time of his dismissal. Since respondent had filed his money claim after only one month from the time of his dismissal, necessarily, his money claim was filed within the prescriptive period provided for by Article 291 of the Labor Code.
WHEREFORE, premises considered, the instant petition is hereby DENIED. The assailed Decision of the Court of Appeals in CA-G.R. SP. No. 68395 is hereby AFFIRMED. No Costs. SO ORDERED.
Republic of the Philippines SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 111744 September 8, 1995
LOURDES G. MARCOS, ALEJANDRO T. ANDRADA, BALTAZARA J. LOPEZ AND VILMA L. CRUZ, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and INSULAR LIFE ASSURANCE CO., LTD., respondents.
REGALADO, J .:
This petition for certiorari seeks the nullification of the decision1 of the National Labor Relations Commission (NLRC) promulgated on May 31, 1992 in NLRC NCR CA No. 004120-92, and its resolution dated August 27, 1993 denying petitioner's motion for reconsideration thereof. The said decision set aside on appeal, the decision of Labor Arbiter Alex Arcadio Lopez ordering private respondent to pay petitioners their service awards, anniversary bonus and prorated performance bonus in the amount of P144,579.00 and 10% attorney's fees in the amount
of P14,457.90.2
First, the undisputed facts.
Petitioners were regular employees of private respondent Insular Life Assurance Co:, Ltd., but they were dismissed on November 1, 1990 when their positions were declared redundant. A special redundancy benefit was paid to them, which included payment of accrued vacation leave and fifty percent (50%) of unused current sick leave, special redundancy benefit, equivalent to three (3) months salary for every year of service; and additional cash benefits, in lieu of other benefits provided by the company or required by law.3
Before the termination of their services, petitioner Marcos had been in the employ of private respondent for more than twenty (20) years, from August 26, ]970; petitioner Andrada, more than twenty-five (25) years, from July 26, 1965; petitioner Lopez, exactly thirty (30) years, from October 31, 1960; and petitioner Cruz, more than twenty (20) years, from March 1, 1970.4
Petitioners, particularly Baltazara J. Lopez, sent a letter dated October 23, 1990 to respondent company questioning the redundancy package, She claimed that they should receive their respective service awards and other prorated bonuses which they had earned at the time they were dismissed. In addition, Lopez argued that "the cash service awards have already been budgeted in a fund distinct and apart from redundancy fund.5
Thereafter, private respondent required petitioners to execute a "Release and Quitclaim,"6 and petitioners complied but with a written protest reiterating their previous demand that they were
nonetheless entitled to receive their service awards.
On March 21, 1991, petitioners inquired from the Legal Service of the Department of Labor and Employment7whether respondent corporation could legally refuse the payment of their service awards as mandated in their Employee's Manual.
About three months later the labor department issued its opinion, with pertinent authorities, responding to petitioners' query as follows:
This Department believes that your query presents several issues. These shall be addressed point by point, thus:
First, the Department deems the service award to be part of the benefits of the employees of Insular Life. Company policies and practices are fertile sources of employee's rights. These must be applied uniformly as interpretation cannot vary from one employee to another. . . .
xxx xxx xxx
While it may be argued that the above-cited case applies only to retirement benefits, we find solace in the cases of Liberation Steamship Co., Inc. vs. CIR and National Development Company vs. Unlicensed Crew members of Three Dons vessels (23 SCRA 1105) where the Supreme Court held that a gratuity or bonus, by reason of its long and regular concession indicating company practice, may become regarded as part of regular compensation and thus demandable.
xxx xxx xxx
Second, the award is earned at the pertinent anniversary date. At this time, entitlement to the award becomes vested. The anniversary date is the only crucial determining factor. Since the award accrues on that date, it is of no moment that the entitled employee is separated from service (for whatever cause) before the awards are physically handed out.
xxx xxx xxx
Third, even if the award has not accrued — as when an employee is separated from service because of redundancy before the applicable 5th year anniversary, the material benefits of the award must be given, prorated, by Insular Life. This is especially true (in) redundancy, wherein he/she had no control.
xxx xxx xxx
Fourth, the fact that you were required to sign "Release and Quitclaim" does not affect your right to the material benefits of the service award. . . .8
Meanwhile, in the same year, private respondent celebrated its 80th anniversary wherein the management approved the grant of an anniversary bonus equivalent to one (1) month salary only to permanent and probationary employees as of November 15, 1990.9
On March 26, 1991, respondent company announced the grant of performance bonus to both rank and file employees and supervisory specialist grade and managerial staff equivalent to two (2) months salary and 2.75 basic salary, respectively, as of December 30, 1990. The performance bonus, however, would be given only to permanent employees as of March 30, 1991.10
Despite the aforequoted opinion of the Department of Labor and Employment, private respondent refused to pay petitioners service awards. This prompted the latter to file a consolidated complaint, which was assigned to NLRC Labor Arbiter Lopez, for payment of their service awards, including performance and anniversary bonuses.
In their complaint, petitioners contended that they are likewise entitled to the performance and anniversary bonuses because, at the time the performance bonus was announced to be given, they were only short of two (2) months service to be entitled to the full amount thereof as they had already served the company for ten (10) months prior to the declaration of the grant of said benefit. Also, they lacked only fifteen (15) days to be entitled to the full amount of the
anniversary bonus when it was announced to be given to employees as of November 15, 1990. In a decision dated October 8, 1992, the labor arbiter ordered respondent company to pay petitioners their service awards, anniversary bonuses and prorated performance bonuses,
Respondent company appealed to public respondent NLRC claiming grave abuse of discretion committed by the labor arbiter in holding it liable to pay said service award, performance and anniversary bonuses, and in not finding that petitioners were estopped from claiming the same as said benefits had already been given to them.
In setting aside the decision of the labor arbiter, respondent NLRC upheld the validity of the quitclaim document executed by petitioners. For this conclusion, it rationalized that "(c)ertainly, before complainants signed the quitclaim and release, they are aware of the nature of such
document. In fact, they never assailed the genuineness and due execution of the same. Hence, we can safely say that they were not placed under duress or were compelled by means of force to sign the document."11
Furthermore, the NLRC held that "(n)either was there any unwritten agreement between complainants and respondent upon separation, which entitled the former to other renumerations or benefits. On the contrary, they voluntarily accepted the redundancy benefit package, otherwise, they would not have been separated from employment."12
Hence, this petition wherein it is postulated that the basic issue is whether or not respondent NLRC committed reversible error or grave abuse of discretion in affirming the validity of the
"Release and Quitclaim" and, consequently, that petitioners are not entitled to payment of service awards and other bonuses.13 The Solicitor General public respondent NLRC and private respondent company duly filed their respective comments.14
In their petition, petitioners stress that they have actually devoted much, if not all, of their employable life with private respondent; that given their length of service, their loyalty to the latter is easily demonstrable; and that the same length of service had rendered slim, if not eliminated, their chances of getting employed somewhere else."15
On the other hand, respondent company reiterates its basic contention that the consideration for the settlement of petitioners' claim is credible and reasonable, more than satisfies the legal requirement therefor, and that petitioners, in executing the release and quitclaim, did so voluntarily and with full knowledge of the consequences thereof.16
The petition being meritorious, we find for petitioners.
Under prevailing jurisprudence, the fact that an employee has signed a satisfaction receipt for his claims does not necessarily result in the waiver thereof. The law does not consider as valid any agreement whereby a worker agrees to receive less compensation than what he is entitled to recover. A deed of release or quitclaim cannot bar an employee from demanding benefits to which he is legally entitled. 17
We have heretofore explained that the reason why quitclaims commonly frowned upon as contrary to public policy, and why they are held to be ineffective to bar claims for the full measure of the workers' legal rights, is the fact that the employer and the employee obviously do not stand on the same footing. The employer drove the employee to the wall. The latter must have harsh necessities of life. He thus found himself in no position to resist money proffered. His, then, is a case of adherence, not of choice. One thing sure, however, is that petitioners did not relent on their claim. They pressed it. They are deemed not have waived any of their rights. Renuntiatio non praesumitur .18
Along this line, we have more trenchantly declared that quitclaims and/or complete releases executed by the employees do not estop them from pursuing their claims arising from unfair labor practices of the employer. The basic reason for this is that such quitclaims and/or complete releases are against public policy and, therefore, null and void. The acceptance of termination does not divest a laborer of the right to prosecute his employer for unfair labor practice acts. 19While there maybe possible exceptions to this holding, we do not perceive any in the case at bar.
Furthermore, in the instant case, it is an undisputed fact that when petitioners signed the instrument of release and quitclaim, they made a written manifestation reserving their right to demand the payment of their service awards. 20The element of total voluntariness in executing
that instrument is negated by the fact that they expressly stated therein their claim for the service awards, a manifestation equivalent to a protest and a disavowal of any waiver thereof.
As earlier stated, petitioners even sought the opinion of the Department of Labor and Employment to determine where and how they stood in the controversy. This act only shows their adamant desire to obtain their service awards and to underscore their disagreement with the "Release and Quitclaim" they were virtually forced to sign in order to receive their separation pay.
We have pointed out in Veloso, et al . , vs. Department of Labor and Employment, et al . ,21that: While rights may be waived, the same must not be contrary to law, public order, public policy, morals or good customs or prejudicial to a third person with a right
recognized by law.
Article 6 of the Civil Code renders a quitclaim agreement void ab initio where the quitclaim obligates the workers concerned to forego their benefits while at the same time exempting the employer from any liability that it may choose to reject. This runs counter to Art. 22 of the Civil Code which provides that no one shall be unjustly enriched at the expense of another.
We agree with the further observations of the Solicitor General who, in recommending the setting aside of the decision of respondent NLRC, called attention to the fact that "contrary to private respondent's contention, the "additional" redundancy package does not and could not have covered the payment of the service awards, performance and anniversary bonuses since the private respondent company has initially maintained the position that petitioners are not legally entitled to the same. . . . Surprisingly, in a sudden turnabout, private respondent now claims . . . that the subject awards and bonuses are integrated in the redundancy package. It is evident, therefore, that private respondent has not truly consolidated the payment of the subject awards and bonuses in the redundancy package paid to the petitioners.22
We are likewise in accord with the findings of the labor arbiter that petitioners are indeed entitled to receive service awards and other benefits, thus:
Since each of the complainants have rendered services to respondent in multiple(s) of five years prior to their separation from employment, respondent should be paid their service awards for 1990.
We are not impressed with the contention of the respondent that service award is a bonus and therefore is an act of gratuity which the complainants have no right to demand. Service awards are governed by respondent's employee's manual and (are) therefore contractual in nature.
On the matter of anniversary and performance bonuses, it is not disputed that it is respondent's practice to give an anniversary bonus every five years from its incorporation; that pursuant to this practice, respondent declared an anniversary bonus for its 80th Anniversary in 1990; that per terms of this declaration, only the employees of respondent as of 15 November 1990 will be given the bonus; and that complainants were separated from respondent only 25 days before :the respondent's anniversary. On the other hand, it is also (not) disputed that respondent regularly gives performance bonuses; that for its commendable performance in 1990, respondent declared a performance bonus; that per terms of this declaration, only permanent employees of respondent as of March 30, 1991 will be given this bonus; and that complainants were employees of respondents for the first 10 months of 1990.
We cannot see any cogent reason why an anniversary bonus which respondent gives only once in every five years were given to all employees of respondent as of 15 November 1990 (pro rata even to probationary employees; Annex 9) and not to complainants who have rendered service to respondent for most of the five
year cycle. This is also true in the case of performance bonus which were given to permanent employees of respondent as of 30 March 1991 and not to employees
who have been connected with respondent for most of 1990 but were separated prior to 30 March 1991.
We believe that the prerogative of the employer to determine who among its employee shall be entitled to receive bonuses which are, as a matter of practice, given periodically cannot be exercised arbitrarily.23 (Emphasis and corrections in parentheses supplied.)
The grant of service awards in favor of petitioners is more importantly underscored in the precedent case of Insular Life Assurance Co., Ltd ., et al . vs. NLRC, et al .,24where this Court ruled that "as to the service award differentials claimed by some respondent union members, the company policy shall likewise prevail, the same being based on the employment contracts or collective bargaining agreements between the parties. As the petitioners had explained, pursuant to their policies on the matter, the service award differential is given at the end of the year to an employee who has completed years of service divisible by 5.
A bonus is not a gift or gratuity, but is paid for some services or consideration and is in addition to what would ordinarily be given.25 The term "bonus" as used in employment contracts, also conveys an idea of something which is gratuitous, or which may be claimed to be gratuitous, over and above the prescribed wage which the employer agrees to pay.
While there is a conflict of opinion as to the validity of an agreement to pay additional sums for the performance of that which the promisee is already under obligation to perform, so as to give the latter the right to enforce such promise after performance, the authorities hold that if one enters into a contract of employment under an agreement that he shall be paid a certain salary by the week or some other stated period and, in addition, a bonus, in case he serves for a specified length of time, there is no reason for refusing to enforce the promise to pay the bonus, if the employee has served during the stipulated time, on the ground that it was a promise of a mere gratuity.
This is true if the contract contemplates a continuance of the employment for a definite term, and the promise of the bonus is made at the time the contract is entered into. If no time is fixed for the duration of the contract of employment, but the employee enters upon or continues in service under an offer of a bonus if he remains therein for a certain time, his service, in case he remains for the required time, constitutes an acceptance of the offer of the employer to pay the bonus and, after that acceptance, the offer cannot be withdrawn, but can be enforced by the employee.26 The weight of authority in American jurisprudence, with which we are persuaded to agree, is that after the acceptance of a promise by an employer to pay the bonus, the same cannot be withdrawn, but may be enforced by the employee.27 However, in the case at bar, equity demands that the performance and anniversary bonuses should be prorated to the number of months that petitioners actually served respondent company in the year 1990. This observation should be
taken into account in the computation of the amounts to be awarded to petitioners.
WHEREFORE, the assailed decision and resolution of respondent National Labor Relations Commission are hereby SET ASIDE and the decision of Labor Arbiter Alex Arcadio Lopez is REINSTATED.
SO ORDERED.
Republic of the Philippines SUPREME COURT
Manila EN BANC
G.R. No. 110068 February 15, 1995
PHILIPPINE DUPLICATORS, INC., petitioner, vs.
NATIONAL LABOR RELATIONS COMMISSION and PHILIPPINE DUPLICATORS EMPLOYEES UNION-TUPAS, respondents.
R E S O L U T I O N FELICIANO, J .:
On 11 November 1993, this Court, through its Third Division, rendered a decision dismissing the Petition for Certiorari filed by petitioner Philippine Duplicators, Inc. (Duplicators) in G.R. No. 110068. The Court upheld the decision of public respondent National Labor Relations Commission (NLRC), which affirmed the order of Labor Arbiter Felipe T. Garduque II directing petitioner to pay 13th month pay to private respondent employees computed on the basis of their
fixed wages plus sales commissions. The Third Division also denied with finality on 15 December 1993 the Motion for Reconsideration filed (on 12 December 1993) by petitioner.
On 17 January 1994, petitioner Duplicators filed (a) a Motion for Leave to Admit Second Motion for Reconsideration and (b) a Second Motion for Reconsideration. This time, petitioner invoked the decision handed down by this Court, through its Second Division, on 10 December 1993 in the two (2) consolidated cases of Boie-Takeda Chemicals, Inc. vs. Hon. Dionisio de la Serna and Philippine Fuji Xerox Corp. vs. Hon. Cresenciano B. Trajano, in G.R. Nos. 92174 and 102552, respectively. In its decision, the Second Division inter alia declared null and void the second paragraph of Section 5 (a)1 of the Revised Guidelines issued by then Secretary of Labor Drilon. Petitioner submits that the decision in the Duplicators case should now be considered as having been abandoned or reversed by the Boie-Takeda decision, considering that the latter went "directly opposite and contrary to" the conclusion reached in the former. Petitioner prays that the decision rendered in Duplicators be set aside and another be entered directing the dismissal of the money claims of private respondent Philippine Duplicators' Employees' Union.
In view of the nature of the issues raised, the Third Division of this Court referred the petitioner's Second Motion for Reconsideration, and its Motion for Leave to Admit the Second Motion for Reconsideration, to the Court en banc en consulta. The Court en banc, after preliminary deliberation, and inorder to settle the condition of the relevant case law, accepted G.R. No. 110068 as a banc case.
Deliberating upon the arguments contained in petitioner's Second Motion for Reconsideration, as well as its Motion for Leave to Admit the Second Motion for Reconsideration, and after review of the doctrines embodied, respectively, in Duplicators and Boie-Takeda, we consider that these Motions must fail.
The decision rendered in Boie-Takeda cannot serve as a precedent under the doctrine of stare decisis. The Boie-Takeda decision was promulgated a month after this Court, (through its Third Division), had rendered the decision in the instant case. Also, the petitioner's (first) Motion for Reconsideration of the decision dated 10 November 1993 had already been denied,with finality, on 15 December 1993, i.e.; before the Boie-Takeda decision became final on 5 January 1994. Preliminarily, we note that petitioner Duplicators did not put in issue the validity of the Revised Guidelines on the Implementary on of the 13th Month Pay Law, issued on November 16, 1987, by then Labor Secretary Franklin M. Drilon, either in its Petition for Certiorari or in its (First)
asserted their validity in opposing the decision rendered by public respondent NLRC. Any attempted change in petitioner's theory, at this late stage of the proceedings, cannot be allowed. More importantly, we do not agree with petitioner that the decision in Boie-Takeda is "directly opposite or contrary to" the decision in the present (Philippine Duplicators). To the contrary, the doctrines enunciated in these two (2) cases in fact co-exist one with the other. The two (2) cases present quite different factual situations (although the same word "commissions" was used or
invoked) the legal characterizations of which must accordingly differ. The Third Division in Durplicators found that:
In the instant case, there is no question that the sales commission earned by the 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 galary structure was intended for the benefit of the 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.
In other words, the sales commissions received for every duplicating machine sold constituted part of the basic compensation or remuneration of the salesmen of Philippine Duplicators for
doing their job. The portion of the salary structure representing commissions simply comprised an automatic increment to the monetary value initially assigned to each unit of work rendered by a salesman. Especially significant here also is the fact that the fixed or guaranteed portion of the wages paid to the Philippine Duplicators' salesmen represented only 15%-30% of an employee's total earnings in a year. We note the following facts on record:
Salesmen's Total Earnings and 13th Month Pay
For the Year 19862
Name of Total Amount Paid Montly Fixed
Salesman Earnings as 13th Month Pay Wages x 123
Baylon, P76,610.30 P1,350.00 P16,200.00 Benedicto Bautista 90,780.85 1,182.00 14,184.00 Salvador Brito, 64,382.75 1,238.00 14,856.00 Tomas Bunagan, 89,287.75 1,266.00 15,192.00 Jorge Canilan, 74,678.17 1,350.00 16,200.00 Rogelio Dasig, 54,625.16 1,378,00 16,536.00 Jeordan Centeno, 51,854.15 1,266.04 15,192.00 Melecio, Jr. De los Santos 73,551.39 1,322.00 15,864.00 Ricardo
del Mundo, 108,230.35 1,406.00 16,872.00 Wilfredo Garcia, 93,753.75 1,294.00 15,528.00 Delfin Navarro, 98,618.71 1,266.00 15,192.00 Ma. Teresa Ochosa, 66,275.65 1,406.00 16,872.00 Rolano Quisumbing, 101,065.75 1,406.00 16,872.00 Teofilo Rubina, 42,209.73 1,266.00 15,192.00 Emma Salazar, 64,643.65 1,238.00 14,856.00 Celso Sopelario, 52,622.27 1,350.00 16,200.00 Ludivico Tan, 30,127.50 1,238.00 14,856.00 Leynard Talampas, 146,510.25 1,434.00 17,208.00 Pedro Villarin, 41,888.10 1,434.00 17,208.00 Constancio Carrasco, 50,201.20 403.75* Cicero Punzalan, 24,351.89 1,266.00 15,192.00 Reynaldo Poblador, 25,516.75 323.00* Alberto Cruz, 32,950.45 323.00* Danilo Baltazar, 15,681.35 323.00* Carlito
Considering the above circumstances, the Third Division held, correctly, that the sales commissions were an integral part of the basic salary structure of Philippine Duplicators' employees salesmen. These commissions are not overtime payments, nor profit-sharing payments nor any other fringe benefit. Thus, the salesmen's commissions, comprising a pre-determined percent of the selling price of the goods sold by each salesman, were properly included in the term "basic salary" for purposes of computing their 13th month pay.
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."4 The Second Division characterized these payments as additional monetary benefits not properly included in the term "basic salary" in computing their 13th month pay. We note that productivity bonuses are generally tied to the productivity, or capacity for revenue production, of a corporation; such bonuses closely resemble
profit-sharing payments and have no clear director necessary relation to the amount of work actually done by each individual employee. More generally, a bonus is an amount granted and paid ex gratia to the employee; its payment constitutes an act of enlightened generosity and self-interest on the part of the employer, rather than as a demandable or enforceable obligation. In Philippine Education Co. Inc. (PECO) v. Court of Industrial Relations,5 the Court explained the nature of a bonus in the following general terms:
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 generosity of 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. In such a case the latter would be a
fixed amount and the former would be a contingent one dependent upon the realization of profits. . . .6 (Emphasis supplied)
In Atok-Big Wedge Mining Co. , Inc. v. Atok-Big Wedge Mutual Benefit Association,7 the Court amplified:
. . . . Whether or not [a] bonus forms part of waqes depends upon the circumstances or conditions for its payment . If it is an additional compensation which the employer promised and agreed to give without any conditions imposed for its payment, such as success of business or greater production or output, then it is part of the wage. But if it is paid only if profits are realized or a certain amount of productivity achieved, it cannot be considered part of wages. . . . It is also paid on the basis of actual or actual work accomplished. If the desired goal of production is not obtained, or the amount of actual work accomplished, the bonus
does not accrue. . . .8 (Emphasis supplied)
More recently, the non-demandable character of a bonus was stressed by the Court in Traders Royal Bank v. National Labor Relations Commission:9
A bonus is a " gratuity or act of liberality of the giver which the recipient has no right to demand as a matter of right ." (Aragon v. Cebu Portland Cement Co., 61 O.G. 4567). " It is something given in addition to what is ordinarily received by or strictly due the recipient ." The granting of a bonus is basically a management prerogative which cannot be forced upon the employer "who may not be obliged to assume the onerous burden of granting bonuses or other benefits aside from the employee's basic salaries or wages . . ." (Kamaya Point Hotel v. NLRC, 177 SCRA 160 [1989]).10(Emphasis supplied)
If an employer cannot be compelled to pay a productivity bonus to his employees, it should follow that such productivity bonus, when given, should not be deemed to fall within the "basic salary" of employees when the time comes to compute their 13th month pay.
It is also important to note that the purported "commissions" paid by the Boie-Takeda Company to its medical representatives could not have been "sales commissions" in the same sense that Philippine Duplicators paid its salesmen Sales commissions. Medical representatives are not salesmen; they do not effect any sale of any article at all. In common commercial practice, in the Philippines and elsewhere, of which we take judicial notice, medical
representatives are employees engaged in the promotion of pharmaceutical products or medical devices manufactured by their employer. They promote such products by visiting identified physicians and inform much physicians, orally and with the aid of printed brochures, of the existence and chemical composition and virtues of particular products of their company. They commonly leave medical samples with each physician visited; but those samples are not "sold" to the physician and the physician is, as a matter of professional ethics, prohibited from selling such samples to their patients. Thus, the additional payments made to Boie-Takeda's medical representatives were not in fact sales commissions but rather partook of the nature of profit-sharing bonuses.
The doctrine set out in the decision of the Second Division is, accordingly, that additional payments made to employees, to the extent they partake of the nature of profit-sharing payments, are properly excluded from the ambit of the term "basic salary" for purposes of computing the 13th month pay due to employees. Such additional payments are not "commissions" within the meaning of the second paragraph of Section 5 (a) of the Revised Guidelines Implementing 13th Month Pay.
The Supplementary Rules and Regulations Implementing P.D. No. 851 subsequently issued by former Labor Minister Ople sought to clarify the scope of items excluded in the computation of the 13th month pay; viz .:
Sec. 4. Overtime pay, earnings and other remunerations which are not part of the basic salary shall not be included in the computation of the 13th month pay.
We observe that the third item excluded from the term "basic salary" is cast in open ended and apparently circular terms: "other remunerations which are not part of the basic salary." However, what particular types of earnings and remuneration are or are not properly included or integrated in the basic salary are questions to be resolved on a case to case basis, in the light of the specific and detailed facts of each case. In principle, where these earnings and remuneration are closely akin to fringe benefits, overtime pay or profit-sharing payments, they are properly excluded in computing the 13th month pay. However, sales commissions which are effectively an integral portion of the basic salary structure of an employee, shall be included in determining his 13th
month pay.
We recognize that both productivity bonuses and sales commissions may have an incentive effect. But there is reason to distinguish one from the other here. Productivity bonuses are generally tied to the productivity or profit generation of the employer corporation. Productivity bonuses are not directly dependent on the extent an individual employee exerts himself. A productivity bonus is something extra for which no specific additional services are rendered by any particular employee and hence not legally demandable, absent a contractual undertaking to pay it. Sales commissions, on the other hand, such as those paid in Duplicators, are intimately related to or directly proportional to the extent or energy of an employee's endeavors. Commissions are paid upon the specific results achieved by a salesman-employee. It is a percentage of the sales closed by a salesman and operates as an integral part of such salesman's basic pay.
Finally, the statement of the Second Division in Boie-Takeda declaring null and void the second paragraph of Section 5(a) of the Revised Guidelines Implementing the 13th Month Pay issued by
former Labor Secretary Drilon, is properly understood as holding that that second paragraph provides no legal basis for including within the term "commission" there used additional payments to employees which are, as a matter of fact, in the nature of profit-sharing payments or bonuses. If and to the extent that such second paragraph is so interpreted and applied, it must be regarded as invalid as having been issued in excess of the statutory authority of the Secretary of Labor. That same second paragraph however, correctly recognizes that commissions, like those paid in Duplicators, may constitute part of the basic salary structure of salesmen and hence should be included in determining the 13th month pay; to this extent, the second paragraph is and remains valid.
ACCORDINGLY, the Motions for (a) Leave to File a Second Motion for Reconsideration and the (b) aforesaid Second Reconsideration are DENIED for lack of merit. No further pleadings will be entertained.
Narvasa, C.J., Padilla, Bidin, Regalado, Davide, Jr., Romero, Bellosillo, Melo, Quiason, Puno, Vitug, Kapunan, Mendoza and Francisco, JJ., concur.
