SAN MIGUEL BREWERY, INC., ETC., PETITIONER, VS. DEMOCRATIC LABOR ORGANIZATION, ET AL., RESPONDENTS.

On January 27, 1953, the Democratic Labor
Association filed a complaint against the San Miguel Brewery, Inc.,
embodying 12 demands for the betterment of the conditions of employment
of its members. The company filed its answer to the complaint
specifically denying its material averments and answering the demands
point by point. The company asked for the dismissal of the complaint.

At the hearing held sometime in September, 1955, the union manifested
its desire to confine its claim to its demands for overtime,
night-shift differential pay, and attorney’s fees, although it was
allowed to present evidence on service rendered during Sundays and
holidays, or on its claim for additional separation pay and sick and
vacation leave compensation.

After the case had been submitted for
decision, Presiding Judge Jose S. Bautista, who was commissioned to
receive the evidence, rendered decision expressing his disposition with
regard to the points embodied in the complaint on which evidence was
presented. Specifically, the disposition insofar as those points
covered by this petition for review are concerned, is as follows:

1. With regard to overtime
   compensation, Judge Bautista held that the provisions of the Eight-Hour
   Labor Law apply to the employees concerned for those working in the
   field or engaged in the sale of the company’s products outside its
   premises and consequently they should be paid the extra compensation
   accorded them by said law in addition to the monthly salary and
   commission earned by them, regardless of the meal allowance given to
   employees who work up to late at night.
2. As to employees who work at night, Judge Bautista decreed
   that they be paid their corresponding salary differentials for work
   done at night prior to January 1, 1949 with the present qualification:
   25% on the basis of their salary to those who work from 6:00

   to 12:00 p.m., and 75% to those who work from 12:01 to 6:00
   in the morning.

3. With regard to work done during Sundays and holidays, Judge Bautista
   also decreed that the employees concerned be paid an additional
   compensation of 25% as provided for in Commonwealth Act No. 444 even if
   they had been paid a compensation on monthly salary basis.

The demands for the application of the Minimum Wage I
Law to workers paid on “pakiao” basis payment of accumulated vacation and sick leave and attorney’s fees, as
well as the award of additional separation pay, were
either dismissed, denied, or set aside.

Its motion for reconsideration having been denied by
the industrial court en banc, which affirmed the decision
of the court a quo with few exceptions, the San Miguel
Brewery, Inc. interposed the present petition for review.

Anent the finding of the court a quo, as affirmed by
the Court of Industrial Relations, to the effect that outside or field sales personnel are entitled to the benefits
of the Eight-Hour Labor Law, the pertinent facts are
as follows:

After the morning roll call, the employees leave the
plant of the company to go on their respective sales
routes either at 7:00 a.m. for soft drinks trucks, or 8:00
a.m. for beer trucks. They do not have a daily time
record. The company never require them to start their
work as outside sales personnel earlier than the above
schedule.

The
sales routes are so planned that they can be completed within 8 hours
at most, or that the employees could make their sales on their routes
within such number of hours variable in the sense that sometimes they
can be completed in less than 8 hours, sometimes 6 or 7 hours, or more.
The moment these outside or field employees leave the plant and while
in their sales routes they are on their own; and often times when the
sales are completed, or when making short trip deliveries only, they go
back to the plant, load again, and make another round of sales. These
employees receive monthly salaries and sales commission in variable
amounts. The amount of compensation they receive is uncertain depending
upon their individual efforts or industry. Besides the monthly salary,
they are paid sales commission that range from P30, P40, sometimes P60,
P70, to sometimes P90, P100, and P109 a month, at the rate of P.01 to
P0.01-1/2 per case.

It is contended that since the employees concerned are
paid a commission on the sales they make outside of the required 8
hours besides the fixed salary that is paid to them, the Court of
Industrial Relations erred in ordering that they be paid an overtime
compensation as required by the Eight-Hour Labor Law for the reason
that the commission they are paid already takes the place of such
overtime compensation. Indeed, it is claimed, overtime compensation is
an additional pay for work or service rendered in excess if 8 hours a
day by an employee, and if the employee is already given extra
compensation for labor performed in excess of 8 hours a day, he is not
covered by the law. His situation, the company contends, can be likened
to an employee who is paid on piece of work, “pakiao”, or commission
basis, which is expressly excluded from the operation of the Eight-Hour
Labor Law.^[1]

We are in accord with this view, for in our opinion
the Eight-Hour Labor Law only has application where an
employee or laborer is paid in a monthly or daily basis,
or is paid a monthly or daily compensation, in which case,
if he is made to work beyond the requisite period of 8
hours, he should be paid the additional compensation
prescribed by law. This law has no application when the
employee or laborer is paid on a piece-work, “pakiao”, or
commission basis, regardless of the time employed. The
philosophy behind this exemption is that his earnings are

in the form of commission based on the gross receipts of
the day. His participation depends upon his industry so
that the more hours he employs in the work the greater
are his gross returns and the higher his commission. This
philosophy is better explained in Jewel Tea Co. vs. Willams,
CCA. Okl., 118 F. 2d 202, as follows:

“The
reasons for excluding an outside salesman are fairly apparent. Such
salesman, to a great extent, works individually. There are no
restrictions respecting the time he shall work and he can earn as much
or as little, within the range of his ability, as his ambition
dictates. In lieu of overtime he ordinarily receives commissions as
extra compensation. He works away from his employer’s place of
business, is not subject to the personal supervision of his employer,
and his employer has no way of knowing the number of hours he works per
day.”

True it is that the employees concerned are paid a ;
fixed salary for their month of service, such as Benjamin
Sevilla, a salesman, P215; Mariano Ruedas, a truck driver,
P155; Alberto Alpaza and Alejandro Empleo, truck helpers,
P125 each, and sometimes they work in excess of the required 8-hour period of work, but for their extra work
they are paid a commission which is in lieu of the extra
compensation to which they are entitled. The record shows
that these employees during the period of their employment were paid sales commission ranging from P30, P40,
sometimes P60, P70, to sometimes P90, P100 and P109
a month depending on the volume of their sales and their
rate of commission per case. And so, insofar as the
extra work they perform, they can be considered as
employees paid on piecework, “pakiao” or commission
basis. The Department of Labor, called upon to implement the Eight-Hour Labor Law, is of this opinion
when on December 9, 1957 it made the ruling on a query
submitted to it, thru the Director of the Bureau of
Labor Standards, to the effect that field sales personnel
receiving regular monthly salaries, plus commission, are
not subject to the Eight-Hour Labor Law. Thus, on this
point, said official stated:

“Moreover,
when a fieldman receives a regular monthly salary plus commission on
percentage basis of his sales, it is also the established policy of the
Office to consider his commission as payment for the extra time he
renders in excess of eight hours, thereby classifying him as if he were
on piecework basis, and therefore, technically speaking, he is not
subject to the Eight Hours Labor Law.

We are, therefore, of the opinion that the industrial
court erred in holding that the Eight-Hour Labor Law
applies to the employees composing the outside service
force and ordering that they be paid the corresponding
additional compensation.

With regard to the claim for night salary differentials,
the industrial court found that claimants Magno Johnson
and Jose Sanchez worked with the respondent company
during the periods specified by them in their testimony
and that watchmen Zoilo Lliga, Inocentes Prescillas and
Daniel Cauyca rendered night duties once every three
weeks continuously during the period of their employment
and that they were never given any additional compensation aside from their monthly regular salaries. The court
found that the company started paying night differentials
only in January, 1949 but never before that time. And so
it ordered that the employees concerned be paid 25% additional compensation for those who worked from 6:00 to
12:00 p.m. and 75% additional compensation for those who
worked from 12:01 to 6:00 in the morning. It is now
contended that this ruling is erroneous because an award
for night shift differentials cannot be given retroactive
effect but can only be entertained from the date of demand
which was on January 27, 1953, citing in support thereof
our ruling in Earnshaws Docks & Honolulu Iron Work vs.
The Court of Industrial Relations, et al., 100 Phil., 742.

This ruling, however, has no application here for it appears that before the filing of the petition concerning this
claim 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
Unfortunately, however, the strike fizzled out and the
strikers were ordered to return to work with the understanding that the claim for night salary differentials
should be settled in court. It is perhaps for this reason
that the court a quo granted this claim in spite of the
objection of the company to the contrary

The remaining point to be determined refers to the
claim for pay for Sundays and holidays for service performed by some claimants who were watchmen or security
guards. It is contended that these employees are not
entitled to extra pay for work done during these days
because they are paid oh 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.

We disagree with this claim because it runs counter
to law. Section 4 of 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. This proviso is mandatory,
regardless of the nature of compensation. The only exception is with regard to public utilities who perform
some public service.

Wherefore, the decision of the industrial court is hereby
modified as follows; the award with regard to extra work
performed by those employed in the outside or field sales
force is set aside. The rest of the decision insofar as
work performed on Sundays and holidays covering watchmen and security guards, as well as the award for night
salary differentials is affirmed. No costs.

Bengzon, C. J. Labrador, Concepcion, Reyes, J. B, L.,
Barrera, Paredes, Dizon, Regala, and Makalintal, J.J.,
concur.

 

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^[1] Section 21 Commonwealth Act. No. 444; Lara vs. del Rosario L-6339. April 20, 1954.