G.R. No. 249616 . October 11, 2021.
ROBERTO M. MECAYDOR, ET AL., PETITIONERS, VS. SAE KYUNG REALTY CORPORATION/CHEOLSIK LIM, RESPONDENTS.

FACTS

Petitioners, construction workers hired through MPY Construction (MPY), filed complaints for illegal dismissal and monetary claims against Saekyung Realty Corporation (SRC) and its President, Lim Cheolsik. Petitioners alleged SRC directly supervised their work and monitored their time through its employee, Willy P. Yalung, and that they were terminated on September 28, 2013. Respondents claimed SRC was not a construction company and had engaged MPY as an independent contractor under a Contractor Agreement; thus, MPY was petitioners’ employer. The Labor Arbiter dismissed the case, finding no employer-employee relationship between petitioners and SRC. The NLRC initially reversed the LA, ruling MPY was a labor-only contractor and SRC the actual employer, but upon reconsideration, vacated its decision and affirmed the LA’s dismissal, finding MPY a legitimate contractor based on additional evidence presented by SRC (e.g., business permits, financial statements, LTO records of vehicles). The Court of Appeals affirmed the NLRC’s resolutions.

ISSUE

Whether the Court of Appeals erred in affirming the NLRC’s finding that no employer-employee relationship existed between petitioners and respondents, thereby dismissing the complaints for illegal dismissal.

RULING

The Supreme Court DENIED the petition and AFFIRMED the CA Decision. The Court held that the NLRC did not commit grave abuse of discretion in finding MPY to be a legitimate job contractor, not a labor-only contractor. The burden of proving the existence of an employer-employee relationship rests on the claimant. While the burden shifts to the principal to prove the contractor’s legitimacy in labor-only contracting claims, respondents sufficiently discharged this burden. The evidence presented (Contractor Agreement, Certificates of Business Registration, Mayor’s Permit, Audited Financial Statements, LTO letter showing MPY’s assets) substantiated MPY’s independent and substantial capital and investment. The Contractor Agreement showed MPY undertook a specific scope of work (construction) for SRC’s project. The provision that SRC would provide materials did not negate MPY’s independence, as the essence of the agreement was for MPY to provide labor and construction. Petitioners failed to prove that SRC exercised control over their means and methods of work. Consequently, no employer-employee relationship existed between petitioners and SRC. MPY, as the legitimate contractor, was petitioners’ direct employer. The dismissal of the case against SRC was without prejudice to the filing of an appropriate action against MPY.