San Miguel v. Democratic Labor

6. SAN MIGUEL v. DEMOCRATIC LABOR (Maye) b.
For employees who work at night, he held that they should be

July 31, 1963 | Bautista Angelo, J.| Eight-Hour Labor Law application paid their corresponding salary differentials for work done at night
w/ the present qualification: 25% of their salary for those who
PETITIONER: San Miguel Brewery Inc work at 6pm-12am and 75% for those who work from 12:01-6am.
RESPONDENT: Democratic Labor Organization c. For work done during Sundays and holidays, employees must be
paid an additional compensation of 25% even if they had been paid
SUMMARY: Respondent Democratic Labor Assoc. filed a manifestation a compensation on monthly salary basis.
claiming for the following against petitioner SMB: overtime pay, night-shift d. The demands for the application of the Minimum Wage Law to
differential pay, attorney’s fees, separation pay, and sick and vacation leave workers paid on “pakiao” basis, payment of accumulated vacation
compensation. Judge Bautista ruled that those working outside the company’s and sick leave and other claims were dismissed or set aside.
premises are entitled to overtime compensation, hence, the Eight-Hour Labor 5. SMC filed this petition for review questioning the ruling that outside or
Law applies to them. SMB filed this petition questioning Bautista’s ruling that field sales personnel are entitled to the benefits of the Eight-Hour Labor
outside or field sales personnel are entitled to the benefits of the Eight-Hour Law.
Labor law. 6. SMC alleged the following facts:
The issue is whether the Eight-Hour Labor Law applies to respondent workers. a. After the morning roll call, employees leave the plant to go on
SC held no. The Eight-Hour Labor Law only applies to an employee who is their respective sales route (7 am or 8 am). They do not have a
paid on a monthly or daily basis. This law has no application to employees paid daily time record as they were never required to start earlier.
on a piece-work basis. CIR is wrong to apply the law to the piece-work b. The sales routes were planned in a way that they can be completed
employees. According to a 1957 ruling by DOLE field sales personnel receiving within 8 hrs at most or within such number of hours.
regular monthly salaries, plus commission, are NOT subject to the Eight-Hour c. The moment these outside or field employees leave the plant and
Labor Law. while in their sales routes, they are on their own.
d. They receive monthly salaries and sales commissions, depending
DOCTRINE: upon their individual efforts or industry. Besides the monthly
The Eight-Hour Labor Law only applies to employees who are paid on a salary, they are paid sales commission ranging from P30-109 a
monthly or daily basis. Employees who are paid on a piece-work or commission month.
basis are EXCLUDED. 7. SMB contends that since employees concerned are paid a commission on
the sales they make outside of the required 8 hrs beside the fixed salary, the
FACTS: Court of Industrial Relations erred in ordering that they be paid an overtime
1. January 1955, Democratic Labor Association (“union”) filed a complaint compensation as required by the Eight-Hour Labor Law. The commission
against the San Miguel Brewery (SMB) embodying 12 demands for the they are paid already takes the place of such overtime compensation.
betterment of the conditions of employment of its members.
2. SMB filed its answer specifically denying its material averments. Asked for ISSUE: WoN the Eight Hour Labor Law is applicable to an employee or
the dismissal of the complaint. laborer who is paid on piece-work, “pakiao”, or commission basis? NO.
3. September 1955 – The union manifested its desire to confine its claim to its
demand for (1) overtime, (2) night-shift differential pay, (3) atty’s fees. RATIO:
a. It was also allowed to present evidence on service rendered during 1. Overtime compensation is an additional pay for work or services rendered
Sundays and holidays or its claim for additional separation pay and in excess of 8 hrs a day by an employee, and if the employee is already
sick and vacation leave. given extra compensation for excess labor, he is not covered by the law.
4. Judge Bautista, who received the evidence, rendered decision: 2. The Eight-Hour Labor Law only has application where an employee or
a. For overtime compensation, he held that the provisions of the laborer is paid on a monthly or daily basis, or is paid a monthly or
Eight-Hour Labor Law apply to the employees concerned for daily compensation. In such case, if he is made to work beyond the
those working in the field or engaged in the sale of the requisite period of 8 hours, he should be paid the additional compensation
company’s products outside its premises and consequently prescribed by law.
should be paid extra compensation in addition to the monthly 3. The law has no application when the employee or laborer is paid on a
salary and commission earned, regardless of meal allowance given. piece-work, “pakiao”, or commission basis, regardless of the time
employed.
a. Reason: His earnings in the form of commission is based on his public service.
gross receipts of the day. His participation depends upon his
industry so that more hours 🡪 higher commission. In addition, he is WHEREFORE, the decision of the industrial court is MODIFIED:
not subject to his employer’s personal supervision. ● The award with regard to extra work performed by those employed in the
4. In this case, the employees concerned are paid a fixed salary for their month outside or field sales force is set aside.
of service, and sometimes they work in excess of the 8-hour period. For ● The rest of decision (pay for Sundays and holidays and the award for night
their extra work, they are paid a COMMISSION, in lieu of the extra salary differentials) is AFFIRMED.
compensation to which they are entitled (See Fact 6d)
5. Insofar as the extra work they perform, the union can be considered as
employees paid on piece work, “pakiao” or commission basis. This is in
accord with the DOLE Opinion, when it made a ruling to the effect that
field sales personnel receiving regular monthly salaries, plus
commission, are NOT subject to the Eight-Hour Labor Law.
6. Therefore, the industrial court erred in holding that the Eight-Hour Labor
Law applies to the employees composing the outside service force.
Re: Claim for night salary differentials: See fact 4b for ruling.
a. Industrial court found that claimants worked with SMB and
rendered night duties once every 3 weeks during the period of
employment and they were never given any additional
compensation aside from their monthly salaries. Company started
paying night differentials only in 1949. As such, it ordered the
payment of night differentials retroactively (Fact 4b)
7. SMB argument: an award for night shift differentials cannot be given
retroactive effect, but can only be entertained from demand, which was
1953.
8. SC: It appears that before the filing of the petition concerning the claim for
night salary differentials, a similar one had already been filed long ago,
which had been the subject of negotiations between the union and the
company which culminated in a strike in 1952.
Re: Claim for pay for Sundays and holidays for service performed by some
who were watchmen and/or security guards.
a. SMB contends that these employees are not entitled to extra pay
for work done during these days because they are paid on a
monthly basis and are given one day off, which may take the place
of the work they may perform either on Sunday or any holiday.
9. SC: Disagree with this claim as it runs counter to law.
10. Commonwealth Act No. 444 expressly provides that no person, firm, or
corporation may compel an employee or laborer to work during Sundays
and legal holidays unless he is paid an additional sum of 25% of his regular
compensation.
a. General rule: This is MANDATORY, regardless of the nature of
compensation.
b. Exception: Not mandatory on public utilities who perform some

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6. SAN MIGUEL v. DEMOCRATIC LABOR (Maye) b.

For employees who work at night, he held that they should be

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