VIGILLA VS PCCR, GR NO 200094, JUNE 10, 2013 (TOO LONG) : Facts

36.
VIGILLA VS PCCR, GR NO 200094, JUNE 10, 2013 (TOO LONG)
FACTS:
Respondent PCCR is a non-stock educational institution. Petitioners Vigilla et al. were janitors,
janitresses and supervisor in the Maintenance Department of PCCR under the supervision and
control of Atty. Seril, PCCR’s Senior Vice President for Administration. Vigilla et al however,
were made to understand, upon application with PCCR, that they were under MBMSI, a
corporation engaged in providing janitorial services to clients. Atty. Seril is also the President
and General Manager of MBMSI.
In 2008, PCCR discovered that the Certificate of Incorporation of MBMSI had been revoked as
of July 2003. Thus on March 2009, PCCR (through its president, Bautista) terminated the
school’s relationship with MBMSI, resulting in the dismissal of the employees or maintenance
personnel under MBMSI.
In September, 2009, the dismissed employees, led by their supervisor, Vigilla, filed complaints
for illegal dismissal, reinstatement, back wages, separation pay (for the lone retired EE),
underpayment of salaries, overtime pay, holiday pay, service incentive leave, and 13th month
pay against MBMSI, Atty. Seril and PCCR.
In their complaints, Vigilla et al alleged that PCCR and not MBMSI was their real employer
because (a) MBMSI’s certification had been revoked; (b) PCCR had direct control over MBMSI’s
operations; (c) there was no contract between MBMSI and PCCR; and (d) the selection and
hiring of employees were undertaken by PCCR.
On the other hand, PCCR and Bautista contended that (a) PCCR could not have illegally
dismissed the complainants because it was not their direct employer; (b) MBMSI was the one
who had complete and direct control over the complainants; and (c) PCCR had a contractual
agreement with MBMSI, thus, making the latter their direct employer.
PCCR submitted several documents to the Labor Arbiter including releases, waivers and
quitclaims in favor of MBMSI executed by the petitioners to prove that they were employees of
MBMSI and not PCCR. These notarized documents (waivers/quitclaims) stated that petitioners
release and discharge MBMS of any and all claims, demands, causes of action, damages,
obligations of any nature whatsoever (known or unknown), whether or not arising or in relation
to their employment with the company or third persons.
The Labor Arbiter ruled in a decision that (a) PCCR was the real principal employer of the
complainants; (b) MBMSI was a mere labor-only contractor; (c) the complainants were regular
employees of PCCR; and (d) PCCR/Bautista were in bad faith in dismissing the complainants.
The LA found that PCCR is the one which actually exercised control over the means and
methods of the work of the petitioners, thru Atty. Seril. So LA ordered for reinstatement with
backwages and other benefits.
In a motion, the NLRC affirmed LA’s ruling but respondents were excused from their liability by
virtue of the valid releases, waivers and quitclaims executed by the petitioners.
Upon appeal, the CA pointed out that based on the principle of solidary liability and Article
1217 of the New Civil Code, petitioners’ respective releases, waivers and quitclaims in favor of
MBMSI and Atty. Seril redounded to the benefit of PCCR. CA also upheld the factual findings of
the NLRC as to the authenticity and due execution of the individual releases, waivers and
quitclaims because of the failure of petitioners to substantiate their claim of forgery and to
overcome the presumption of regularity of a notarized document.
ISSUE:
Whether or not MBMSI, as Labor Only Contractor, is solidarily liable to PCCR.

RULING:
Yes. A Labor-only Contractor, the MBMSI, is Solidarily Liable with the employer, the PCCR.
Article 106 of the Labor Code provides: “In such cases [labor-only contracting], the person or
intermediary shall be considered merely as an agent of the employer who shall be responsible
to the workers in the same manner and extent as if the latter were directly employed by him.”
Section 19 of DO 18-02 (which was in effect at that time) in explaining Art. 106 provides that:
“The principal shall be deemed as the direct employer of the contractual employees and
therefore, solidarily liable with the contractor or subcontractor for whatever monetary claims
the contractual employees may have against the former in the case of violations as provided for
in Sections 5 (Labor-Only contracting) xxx In addition, the principal shall also be solidarily liable
in case the contract between the principal and contractor or subcontractor is preterminated for
reasons not attributable to the fault of the contractor or subcontractor.”
The latest IRR of the Labor Code (DO 18-A of 2011) reiterates this: “A finding by competent
authority of labor-only contracting shall render the principal jointly and severally liable with the
contractor to the latter’s employees, in the same manner and extent that the principal is liable
to employees directly hired by him/her, as provided in Article 106 of the Labor Code, as
amended.”
The NLRC and the CA correctly ruled that the releases, waivers and quitclaims executed by
petitioners in favor of MBMSI redounded to the benefit of PCCR pursuant to Article 1217
(extinguishment of solidary obligation) of the New Civil Code. The reason is that MBMSI is
solidarily liable with the respondents for the valid claims of petitioners pursuant to Article 109 of
the Labor Code.

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36.

VIGILLA VS PCCR, GR NO 200094, JUNE 10, 2013 (TOO LONG)

Whether or not MBMSI, as Labor Only Contractor, is solidarily liable to PCCR.

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