Primary Holding

Parers and shellers under the "pakiao" system are considered employees or laborers entitled to statutory benefits despite being paid on a piecework basis.

Background

The case arose when the Sunshine Coconut Workers' Union filed a claim on behalf of parers and shellers seeking sick leave benefits. Sunripe Coconut Products Co., Inc. contested the claim, arguing these workers were independent contractors. The dispute reached the Court of Industrial Relations, which ruled in favor of the workers. Sunripe appealed to the Supreme Court.

Facts

• 1. Parers and shellers worked for Sunripe Coconut Products Co., Inc. under the "pakiao" (piece-rate) system.
• 2. They performed regular tasks within the company's premises under supervision.
• 3. They relied primarily on this work for their livelihood.
• 4. Sunripe claimed they were independent contractors.

Arguments of the Petitioners

• 1. Workers were independent contractors, not employees.
• 2. They were paid based on output, not time, under the "pakiao" system.
• 3. The company only controlled the final product quality, not the work process.

Arguments of the Respondents

• 1. The degree of control and supervision indicated an employer-employee relationship.
• 2. Workers were integrated into the company’s operations and depended on it for their livelihood.
• 3. Being paid per output does not negate employee status under Commonwealth Act No. 103.

Issues

• 1. Whether parers and shellers are independent contractors or employees.
• 2. Whether they are entitled to labor benefits like sick leave.

Ruling

• 1. The Supreme Court affirmed the Court of Industrial Relations' decision.
• 2. It held that the degree of control and the economic dependence of the workers indicated an employer-employee relationship.
• 3. The "pakiao" payment system does not exclude them from being considered employees.
• 4. The Court emphasized the need to prevent employers from structuring contracts to evade labor laws.

Doctrines

• 1. Control Test: Determines employment status based on the employer’s control over work methods.
• 2. Economic Dependence Test: Evaluates if workers rely primarily on the employer for livelihood.

Precedents Cited

• 1. Philadelphia Record Company, 69 N.L.R.B. 1232 (1946) – Applied to support classification based on economic realities.
• 2. McDermott's Case, 283 Mass. 74; Werner v. Industrial Comm., 212 Wis. 76 – Definitions of employee referenced.

Statutory and Constitutional Provisions

• 1. Commonwealth Act No. 103 (Court of Industrial Relations Act)
• 2. Section 39(b), Workmen's Compensation Law (definition of employee)