DY KEH BENG, PETITIONER, VS. INTERNATIONAL LABOR AND MARINE UNION OF THE PHILIPPINES, ET. AL., RESPONDENTS.

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 ordered 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:

I

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

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.

V

RESPONDENT COURT ERRED IN ORDERING 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 and 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 P5.00 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 enough at Dy’s
establishment;

(2)  
Solano had to leave as soon as he was through
with the order given him by Dy;

(3)  
When there were no orders needing his services
there was nothing for him to do;

(4)   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

(5)   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 shall 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 nonexistence 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 light 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 “Sunripe 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 calls 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
above-mentioned 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.

Teehankee, (Chairman), Makasiar, Guerrero, and
Melencio-Herrera, JJ., concur.

Fernandez, J., took no part.

^[1]
Rollo, p. 48.

^[2]
Petitioner’s Brief, pp. 1-2.

^[3]
Republic Act 875, as amended, Section 4. 
Unfair Labor Practices. ?

a) It shall be unfair labor practice
for an employer:

(1) To
interfere with, restrain or coerce employees in the exercise of their rights
guaranteed in section three;

x x
x

(4) To
discriminate in regard to hire or tenure of employment or any term or condition
of employment to encourage or discourage membership in any labor
organization:  x x
x

^[4]
Rollo, p. 32.

^[5]
Id., p. 23.

^[6]
Id.

^[7]
Rollo, Annex A, p. 22.

^[8]
Section 2(d), Republic Act 875, As Amended, otherwise known as the Industrial
Peace Act.

^[9]
Id., Section 2(c).

^[10]
Petitioner’s Brief, pp. 5-7.

^[11]
LVN Pictures v. Philippine Musicians Guild, et
al., 110 Phil. 725.

^[12]
Feati University
v. Bautista, et al., L-21500, December
27, 1966, 18 SCRA 1191.

^[13]
Rollo, p. 46.

^[14]
Among them are:  Philippine Newspapers’
Guild v. Evening News, Inc., 86 Phil. 303; G.P.T.C.
Employees Union v. Court of Industrial Relations, et. al., 102 Phil.
538; Community Sawmill Company v. Court of Industrial Relations and
Community Effort Labor Union, L-24347, March 27, 1979; Gonzalo, Puyat & Sons, Inc. v. Labayo,
62 SCRA 488; De Leon, et al. v. Pampanga Development Co., Inc., L-26844, September 30,
1969, 29 SCRA 628; Castillo, et al. v. Court
of Industrial Relations, L-26124, May 29, 1971, 39 SCRA
75.

^[15]
Rollo, p. 36.

^[16]
Mercury Drug Co., Inc., et al. v. Court of Industrial Relations,
L-23357, April 30, 1974, 56
SCRA 694, 712.

^[17]
Id.