Benigno M. Vigilla v. Philippine College of Criminology

Summary

This case involved 17 employees of Philippine College of Criminology who were dismissed when the school terminated its relationship with Metropolitan Building Services Inc. (MBMSI), their alleged contractor, upon discovering MBMSI's corporate registration was revoked in 2003. The employees filed complaints for illegal dismissal and other labor benefits. The Labor Arbiter found MBMSI was a labor-only contractor and PCCr was the real employer, ordering reinstatement and payment of benefits. However, the NLRC and higher courts ruled that the employees' claims were settled by releases, waivers and quitclaims they executed in favor of MBMSI. The Supreme Court affirmed, holding that despite MBMSI's dissolved status, the settlement documents remained valid under Corporation Code provisions. The Court established that labor-only contractors are solidarily liable with principal employers under the Labor Code, and pursuant to Civil Code Article 1217, settlement with one solidary debtor extinguishes the entire obligation. The decision clarified the legal effects of labor-only contracting and the validity of settlements even involving dissolved corporations.