Case Summary (G.R. No. L-32245)
Factual Background
The charge originated from the dismissal of Carlos N. Solano and Ricardo Tudla by Dy Keh Beng, proprietor of a basket factory engaged in the manufacture of kaing. Complainants alleged dismissals on September 28 and 29, 1960 respectively, motivated by their union activities in violation of Section 4(a), sub-paragraphs (1) and (4) of Republic Act No. 875. Preliminary investigation resulted in a formal case filed in the Court of Industrial Relations by the International Labor and Marine Union of the Philippines on behalf of the two members.
Trial Court Proceedings and Findings
A Hearing Examiner conducted the trial and prepared a report which the Court of Industrial Relations adopted in toto. The Hearing Examiner found that an employee-employer relationship existed between Dy Keh Beng and the complainants, and that the dismissals were discriminatory within the meaning of Section 4(a) of Republic Act No. 875. The Court of Industrial Relations ordered reinstatement of Solano and Tudla with backwages from their respective dates of dismissal until fully reinstated, without loss of seniority or other rights.
Issue Presented
The central issue was whether an employee-employer relationship existed between Dy Keh Beng and the complainants, given that the work for Solano was compensated on a piece basis and that both men sometimes worked intermittently. Secondary issues included whether the dismissals occurred and whether the Court of Industrial Relations properly found discriminatory conduct and imposed the remedial relief awarded.
Petitioner's Contentions
Dy Keh Beng contended that Solano and Tudla were not his employees. He asserted that Solano worked on a pakiaw or piecework basis, reported only when there were orders, and did not work continuously at the establishment. Petitioner rested his argument on the control test articulated in Madrigal Shipping Co., Inc. v. Nieves Baens del Rosario, et al., L-13130, arguing that there was no evidence that he had the right to direct the manner and method of the complainants' work. Petitioner also pleaded a special defense alleging simple extortion by the union head.
Court’s Findings of Fact
The Hearing Examiner and the Court of Industrial Relations found that Solano and Tudla had become employees of Dy Keh Beng on May 2, 1953 and July 15, 1955 respectively, and that their services were continuous except for illness. Evidence showed that the establishment at times employed eight workers and never fewer than five, that complainants ordinarily received P5.00 per day sometimes less, and that work was performed at the employer’s establishment according to the proprietor’s specifications.
Court’s Analysis on Employee-Employer Relationship
The Court upheld the applicability of the control test but emphasized that the test requires only the existence of the right to control the manner of doing the work, not the actual exercise of that right. Given the nature of basket manufacture and the proprietor’s need to specify size and quality of kaing, the Court found it natural and inferable that Dy Keh Beng retained the requisite right of control. The Court further rejected the contention that piece-rate payment compelled classification as independent contracting. It held that payment by the piece may be only a method of compensation and does not necessarily define the essence of the relation; units of work and time may serve as yardsticks for compensation without placing the worker entirely at liberty for dismissal or substitution at pleasure.
Precedents and Doctrinal Application
The Court relied on prior decisions recognizing the control test, including LVN Pictures v. Philippine Musicians Guild, et al. and Feati University v. Bautista, et al., and on doctrinal acceptance that the pakyaw or pakiaw system may constitute a labor contract rather than an independent contractor relationship, as noted in the concurrence in Sunripe Coconut Products Co. v. Court of Industrial Relations. The Court treated the Hearing Examiner’s factual findings as conclusive under Section 6 of Republic Act No. 875 where supported by substantial evidence, in line with a line of earlier decisions cited in the opinion.
Standard of Review and Deference to Findings
The Court observed that it would not reverse the factual conclusions of the Court of Industrial Relations where those findings were supported by substantial evidence. It found no abuse of discretion in the CIR’s acceptance of the Hearing Examiner’s factual determinations regarding employment status and discriminatory dismissal.
Remedy: Backwages and Modification
Although the Court affirmed the finding of unfair labor practices and the order of reinstatement, it modified the award of backwages. Noting that approximately eighteen years had elapsed since the dismissals, the Court applied the backwages
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Case Syllabus (G.R. No. L-32245)
Parties and Procedural Posture
- Dy Keh Beng was the proprietor of a basket factory and the Petitioner before the Supreme Court.
- International Labor and Marine Union of the Philippines filed the unfair labor practice charge for and on behalf of members Carlos N. Solano and Ricardo Tudla, who were the named complainants.
- The Court of Industrial Relations found petitioner guilty of unfair labor practices and ordered reinstatement with backwages, and the Court en banc affirmed that decision by resolution dated June 10, 1970.
- Petitioner sought review by certiorari in the Supreme Court from the decision of the Court of Industrial Relations dated March 23, 1970 and its en banc resolution of June 10, 1970.
- The Supreme Court modified the remedy awarded by the Court of Industrial Relations and entrusted execution to the National Labor Relations Commission.
Key Factual Allegations
- Complainants alleged that they were dismissed on September 28 and 29, 1960, respectively, because of their union activities.
- The Hearing Examiner found that Solano became an employee on May 2, 1953 and Tudla on July 15, 1955, and that their services were continuous except for illness.
- Evidence showed the establishment at times had eight workers and never fewer than five, and that complainants received P5.00 a day, sometimes less.
- Petitioner contended that Solano worked only on pakiaw or piece basis, attended the shop only when there was work, and denied knowing Tudla.
- Petitioner asserted a special defense that the union head, Bienvenido Onayan, committed simple extortion.
Issues Presented
- Whether Solano and Tudla were employees of Dy Keh Beng within the meaning of Republic Act No. 875.
- Whether complainants were dismissed by Dy Keh Beng for union activities constituting unfair labor practices under Section 4(a) of Republic Act No. 875.
- Whether the factual findings of the Court of Industrial Relations were supported by substantial evidence.
- Whether the award of backwages should be modified given the lapse of time since dismissal.
Contentions of the Parties
- Petitioner contended that no employer-employee relation existed because the control test was not met and because Solano worked on piece basis and intermittently.
- Petitioner argued that the right to control was absent because he did not direct the manner and method of complainants' work.
- The Union and complainants contended that complainants were regular employees whose work was subject to proprietor’s specifications and thus within R.A. 875 protections.
- The Court of Industrial Relations and Hearing Examiner maintained that the circumstances and continuity of service established an employment relationship despite piece-rate pay.
Statutory Framework
- Section 4(a), sub-paragraph (1) and (4), Republic Act No. 875 defines unfair labor practices by employers to include interference, restraint or coercion of employees in the exercise of rights and discrimination in regard to hire or tenure to encourage or discourage union membership.
- Section 2(d) of Republic Act No. 875 defines “employee” and Section 2(c) defines “employer” as set forth in the Industrial Peace Act.
- Section 6, Republic Act 875 provides that factual findings of the Court of Industrial Relations in unfair labor practice cases are conclusive on the Supreme Court if supported by substantial evidence.
Findings of Fact
- The Hearing Examiner found an employee-employer relationship between Dy Keh Beng and the complainants and the Court of