DY KEH BENG vs.

INTERNATIONAL LABOR and MARINE UNION OF THE PHILIPPINES

G.R. No. L-32245 May 25, 1979

DE CASTRO, J.:

Petitioner Dy Keh Beng seeks a review by certiorari of the decision of the Court of Industrial Relations dated March 23, 1970 in Case
No. 3019-ULP and the Court's Resolution en banc of June 10, 1970 affirming said decision. The Court of Industrial Relations in that
case found Dy Keh Beng guilty of the unfair labor practice acts alleged and order him to

reinstate Carlos Solano and Ricardo Tudla to their former jobs with backwages from their respective dates of dismissal
until fully reinstated without loss to their right of seniority and of such other rights already acquired by them and/or allowed
by law. 1

Now, Dy Keh Beng assigns the following errors 2 as having been committed by the Court of Industrial Relations:

RESPONDENT COURT ERRED IN FINDING THAT RESPONDENTS SOLANO AND TUDLA WERE EMPLOYEES OF
PETITIONERS.

II

RESPONDENT COURT ERRED IN FINDING THAT RESPONDENTS SOLANO AND TUDLA WERE DISMISSED FROM THEIR
EMPLOYMENT BY PETITIONER.

III

RESPONDENT COURT ERRED IN FINDING THAT THE TESTIMONIES ADDUCED BY COMPLAINANT ARE CONVINCING AND
DISCLOSES (SIC) A PATTERN OF DISCRIMINATION BY THE PETITIONER HEREIN.

IV

RESPONDENT COURT ERRED IN DECLARING PETITIONER GUILTY OF UNFAIR LABOR PRACTICE ACTS AS ALLEGED
AND DESCRIBED IN THE COMPLAINT.

RESPONDENT COURT ERRED IN PETITIONER TO REINSTATE RESPONDENTS TO THEIR FORMER JOBS WITH
BACKWAGES FROM THEIR RESPECTIVE DATES OF DISMISSALS UNTIL FINALLY REINSTATED WITHOUT LOSS TO THEIR
RIGHT OF SENIORITY AND OF SUCH OTHER RIGHTS ALREADY ACQUIRED BY THEM AND/OR ALLOWED BY LAW.

The facts as found by the Hearing Examiner are as follows:

A charge of unfair labor practice was filed against Dy Keh Beng, proprietor of a basket factory, for discriminatory acts within the
meaning of Section 4(a), sub-paragraph (1) and (4). Republic Act No. 875, 3 by dismissing on September 28 and 29, 1960,
respectively, Carlos N. Solano and Ricardo Tudla for their union activities. After preliminary investigation was conducted, a case was
filed in the Court of Industrial Relations for in behalf of the International Labor and Marine Union of the Philippines and two of its
members, Solano and Tudla In his answer, Dy Keh Beng contended that he did not know Tudla and that Solano was not his employee
because the latter came to the establishment only when there was work which he did on pakiaw basis, each piece of work being done
under a separate contract. Moreover, Dy Keh Beng countered with a special defense of simple extortion committed by the head of the
labor union, Bienvenido Onayan.

After trial, the Hearing Examiner prepared a report which was subsequently adopted in toto by the Court of Industrial Relations. An
employee-employer relationship was found to have existed between Dy Keh Beng and complainants Tudla and Solano, although
Solano was admitted to have worked on piece basis.4 The issue therefore centered on whether there existed an employee employer
relation between petitioner Dy Keh Beng and the respondents Solano and Tudla .

According to the Hearing Examiner, the evidence for the complainant Union tended to show that Solano and Tudla became employees
of Dy Keh Beng from May 2, 1953 and July 15, 1955, 5 respectively, and that except in the event of illness, their work with the
establishment was continuous although their services were compensated on piece basis. Evidence likewise showed that at times the
establishment had eight (8) workers and never less than five (5); including the complainants, and that complainants used to receive
?5.00 a day. sometimes less. 6

According to Dy Keh Beng, however, Solano was not his employee for the following reasons:

(1) Solano never stayed long enought at Dy's establishment;

(2) Solano had to leave as soon as he was through with the

(3) order given him by Dy;

(4) When there were no orders needing his services there was nothing for him to do;

(5) When orders came to the shop that his regular workers could not fill it was then that Dy went to his address in Caloocan
and fetched him for these orders; and

(6) Solano's work with Dy's establishment was not continuous. , 7

According to petitioner, these facts show that respondents Solano and Tudla are only piece workers, not employees under Republic
Act 875, where an employee 8 is referred to as

shall include any employee and shag not be limited to the employee of a particular employer unless the Act explicitly states
otherwise and shall include any individual whose work has ceased as a consequence of, or in connection with any current
labor dispute or because of any unfair labor practice and who has not obtained any other substantially equivalent and
regular employment.

while an employer 9

includes any person acting in the interest of an employer, directly or indirectly but shall not include any labor organization
(otherwise than when acting as an employer) or anyone acting in the capacity of officer or agent of such labor organization.

Petitioner really anchors his contention of the non-existence of employee-employer relationship on the control test. He points to the
case of Madrigal Shipping Co., Inc. v. Nieves Baens del Rosario, et al., L-13130, October 31, 1959, where the Court ruled that:

The test ... of the existence of employee and employer relationship is whether there is an understanding between the
parties that one is to render personal services to or for the benefit of the other and recognition by them of the right of one
to order and control the other in the performance of the work and to direct the manner and method of its performance.

Petitioner contends that the private respondents "did not meet the control test in the fight of the ... definition of the terms employer and
employee, because there was no evidence to show that petitioner had the right to direct the manner and method of respondent's
work. 10 Moreover, it is argued that petitioner's evidence showed that "Solano worked on a pakiaw basis" and that he stayed in the
establishment only when there was work.

While this Court upholds the control test 11 under which an employer-employee relationship exists "where the person for whom the
services are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching such
end, " it finds no merit with petitioner's arguments as stated above. It should be borne in mind that the control test calls merely for the
existence of the right to control the manner of doing the work, not the actual exercise of the right. 12 Considering the finding by the
Hearing Examiner that the establishment of Dy Keh Beng is "engaged in the manufacture of baskets known as kaing, 13 it is natural
to expect that those working under Dy would have to observe, among others, Dy's requirements of size and quality of the kaing. Some
control would necessarily be exercised by Dy as the making of the kaing would be subject to Dy's specifications. Parenthetically, since
the work on the baskets is done at Dy's establishments, it can be inferred that the proprietor Dy could easily exercise control on the
men he employed.

As to the contention that Solano was not an employee because he worked on piece basis, this Court agrees with the Hearing Examiner
that

circumstances must be construed to determine indeed if payment by the piece is just a method of compensation and
does not define the essence of the relation. Units of time ... and units of work are in establishments like respondent (sic)
just yardsticks whereby to determine rate of compensation, to be applied whenever agreed upon. We cannot construe
payment by the piece where work is done in such an establishment so as to put the worker completely at liberty to turn
him out and take in another at pleasure.

At this juncture, it is worthy to note that Justice Perfecto, concurring with Chief Justice Ricardo Paras who penned the decision in
"Sunrise Coconut Products Co. v. Court of Industrial Relations" (83 Phil..518, 523), opined that

judicial notice of the fact that the so-called "pakyaw" system mentioned in this case as generally practiced in our country,
is, in fact, a labor contract -between employers and employees, between capitalists and laborers.

Insofar as the other assignments of errors are concerned, there is no showing that the Court of Industrial Relations abused its
discretion when it concluded that the findings of fact made by the Hearing Examiner were supported by evidence on the record.
Section 6, Republic Act 875 provides that in unfair labor practice cases, the factual findings of the Court of Industrial Relations are
conclusive on the Supreme Court, if supported by substantial evidence. This provision has been put into effect in a long line of
decisions where the Supreme Court did not reverse the findings of fact of the Court of Industrial Relations when they were supported
by substantial evidence. 14

Nevertheless, considering that about eighteen (18) years have already elapsed from the time the complainants were dismissed, 15 and
that the decision being appealed ordered the payment of backwages to the employees from their respective dates of dismissal until
finally reinstated, it is fitting to apply in this connection the formula for backwages worked out by Justice Claudio Teehankee in "cases
not terminated sooner." 16 The formula cans for fixing the award of backwages without qualification and deduction to three years,
"subject to deduction where there are mitigating circumstances in favor of the employer but subject to increase by way of exemplary
damages where there are aggravating circumstances. 17 Considering there are no such circumstances in this case, there is no reason
why the Court should not apply the abovementioned formula in this instance.

WHEREFORE; the award of backwages granted by the Court of Industrial Relations is herein modified to an award of backwages for
three years without qualification and deduction at the respective rates of compensation the employees concerned were receiving at
the time of dismissal. The execution of this award is entrusted to the National Labor Relations Commission. Costs against petitioner.

SO ORDERED.