Dy Keh Beng v. International Labor and Marine Union of the Philippines
REITERATIONFacts
The Antecedents: A charge of unfair labor practice was filed against Dy Keh Beng, proprietor of a basket factory, for allegedly dismissing Carlos Solano and Ricardo Tudla on September 28 and 29, 1960, respectively, due to their union activities, in violation of Section 4(a), sub-paragraphs (1) and (4) of Republic Act No. 875. Procedural History: The International Labor and Marine Union of the Philippines, on behalf of Solano and Tudla, filed a case in the Court of Industrial Relations (CIR). Dy Keh Beng denied knowing Tudla and claimed Solano was not an employee but a piece-worker working under a separate contract for each piece of work. He also raised a special defense of extortion by the union head. The Hearing Examiner found an employee-employer relationship to exist, which was adopted in toto by the CIR. The CIR found Dy Keh Beng guilty of unfair labor practices and ordered the reinstatement of Solano and Tudla with backwages. The Petition: Dy Keh Beng sought a review by certiorari of the CIR's decision and resolution, assigning several errors, primarily questioning the existence of an employee-employer relationship and the finding of unfair labor practices.
Issue(s)
Whether an employer-employee relationship existed between petitioner Dy Keh Beng and respondents Solano and Tudla. Whether the findings of Unfair Labor Practice (ULP) by the Court of Industrial Relations (CIR) are supported by substantial evidence. Whether the award of backwages from the date of dismissal until reinstatement is proper given the passage of eighteen years.
Ruling
The Supreme Court modified the award of backwages to three years without qualification or deduction, but otherwise affirmed the decision of the Court of Industrial Relations. The execution of the award was entrusted to the National Labor Relations Commission.
Ratio Decidendi
On Issue 1: The Supreme Court applied the 'control test' to determine the existence of an employer-employee relationship. Under this test, established in LVN Pictures v. Philippine Musicians Guild, the relationship exists if the employer reserves the right to control not only the end to be achieved but also the means used to reach that end. The Court emphasized, citing Feati University v. Bautista, that it is the existence of the right to control, not its actual exercise, that is decisive. In this case, since Dy Keh Beng was engaged in manufacturing baskets ('kaing'), it was natural to infer that he required specific sizes and quality standards, thereby exercising control. The Court further noted that payment on a piece-rate or 'pakiaw' basis is merely a method of compensation and does not define the essence of the relationship, which Justice Perfecto previously described as a labor contract in Sunrise Coconut Products Co. v. CIR. Therefore, an employment relationship existed. On Issue 2: The Court held that under Section 6 of Republic Act No. 875 (RA 875), the factual findings of the CIR are conclusive if they are supported by substantial evidence. The Court reviewed the findings of the Hearing Examiner, which were adopted by the CIR, and found that the evidence disclosed a pattern of discrimination against the respondents for their union activities. The petitioner failed to show that the CIR abused its discretion in concluding that the dismissals constituted Unfair Labor Practice (ULP). Following a long line of decisions, including Philippine Newspapers' Guild v. Evening News, Inc., the Court declined to reverse the factual findings of the lower tribunal when supported by the record. Consequently, the finding of ULP stands. On Issue 3: Regarding the award of backwages, the Court noted that eighteen years had elapsed since the respondents were dismissed. To prevent further delay and complicated computations of earnings elsewhere during the pendency of the case, the Court applied the 'Mercury Drug Rule' established in Mercury Drug Co. v. CIR. This formula fixes the award of backwages to a period of three (3) years without qualification and deduction. Since there were no mitigating or aggravating circumstances in the case to warrant a deduction or an increase via exemplary damages, the three-year cap was deemed the most fitting and equitable solution. The execution of this modified award was entrusted to the National Labor Relations Commission (NLRC).
Main Doctrine
The control test for determining an employer-employee relationship requires the existence of the right to control the manner of doing the work, not necessarily the actual exercise of that right. Payment by the piece does not, in itself, negate an employer-employee relationship if other indicia of control are present. The factual findings of the Court of Industrial Relations, when supported by substantial evidence, are conclusive on the Supreme Court.