G.R. No. 124643 July 30, 1998
NAZARIO M. PONCE, FERMIN ZACATE, JESUS B. RICO, ANICETO B. ESTO and JOHN GERMAN B. LIMBAGO, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, P & R PARTS MACHINERIES CORPORATION, FERNANDO RAMILLANO AND/OR BRGT AGENCY, ALSO KNOWN AS RIZ-MAN COMPANY, INC., respondents.

FACTS

Petitioners Nazario Ponce, Fermin Zacate, Jesus Rico, Aniceto Esto, and John Limbago were daily wage earners hired by BRGT Agency (also known as Riz-Man Co., Inc.) and assigned to work at P & R Parts and Machineries Corporation (“P & R”) under a “Job Contract” between BRGT and P & R. Their work involved quality control, buffing, assembling, and lathe machine operation. In November 1993, a strike was declared by the P & R Parts Employees’ Union. P & R, through its Personnel Manager, required petitioners to shed light on the incident, but petitioners allegedly joined the strikers in sympathy. Petitioners were dismissed from employment in December 1993 (except Nazario Ponce, terminated in November 1993 for allegedly sleeping on duty). They filed complaints for illegal dismissal, underpayment of wages, damages, and attorney’s fees against P & R. P & R argued petitioners were employees of BRGT Agency, an independent contractor, pursuant to their Job Contract. The Labor Arbiter ruled in favor of petitioners, declaring an employer-employee relationship between petitioners and P & R, finding the termination illegal, and ordering reinstatement with backwages and wage differentials, holding P & R and BRGT jointly and severally liable. The NLRC reversed the Labor Arbiter’s decision, holding that no employer-employee relationship existed between petitioners and P & R, citing the Job Contract and characterizing petitioners as under an independent contractor, and dismissed the complaint. Petitioners filed this certiorari petition seeking reversal of the NLRC decision and reinstatement of the Labor Arbiter’s decision.

ISSUE

Whether the National Labor Relations Commission committed grave abuse of discretion in reversing the Labor Arbiter’s finding that an employer-employee relationship existed between petitioners and P & R Parts and Machineries Corporation, and that petitioners were illegally dismissed.

RULING

Yes. The Supreme Court GRANTED the petition, ANNULLED and SET ASIDE the NLRC decision and resolution, and REINSTATED and AFFIRMED the Labor Arbiter’s decision. The Court held that the NLRC committed grave abuse of discretion in completely discarding the Labor Arbiter’s findings. The Job Contract between P & R and BRGT Agency did not negate the existence of an employer-employee relationship between petitioners and P & R, especially given that BRGT Agency had disclaimed any contractual relationship with P & R and supervision over petitioners. P & R failed to prove valid grounds for dismissal. The claim that petitioners joined the strikers was not adequately shown, and mere sympathy or sharing merienda with strikers is not legal cause for dismissal. For Nazario Ponce, allegedly caught sleeping, no proper investigation was conducted. The burden of proving just cause and observing due process rests on the employer, which P & R failed to discharge.