G.R. No. 168537, December 11, 2008
DAMIAN AKLAN, ET AL., petitioners, vs. SAN MIGUEL CORPORATION, BMA PHILASIA, INC., and ARLENE EUSEBIO, respondents.

FACTS

Petitioners, forty-seven (47) former employees of respondent BMA Philasia, Inc. (BMA) at San Miguel Corporation’s (SMC) Pasig City warehouse, were hired under fixed-term contracts starting October 1999. On July 31, 2001, some petitioners filed a complaint with the DOLE against BMA and its president, Arlene Eusebio, for underpayment of wages and non-payment of benefits. Subsequently, petitioners Elmer Caboteja, Joan Erico Dumalagan, and Ronaldo Salvador were terminated by BMA for various infractions (insubordination, failure to perform duties) and filed illegal dismissal complaints. During conciliation, eleven petitioners executed quitclaims in favor of BMA. On October 18, 2001, the remaining petitioners held a picket at the warehouse protesting BMA’s refusal to pay their wage claims, which disrupted operations. BMA terminated their services, prompting them to file consolidated complaints for illegal dismissal against BMA, Eusebio, and SMC. Petitioners alleged BMA was a labor-only contractor and that SMC, which owned the warehouse and equipment and whose Sales Logistic Coordinator oversaw their daily performance, was their true employer. Respondents countered that the three petitioners were dismissed for cause, the others abandoned their jobs by not returning to work after the picket, and that BMA was a legitimate independent contractor with a warehousing agreement with SMC, possessing substantial capitalization and exercising exclusive control over petitioners.

ISSUE

Whether the Court of Appeals erred in upholding the NLRC’s finding that petitioners were not illegally dismissed and that BMA was a legitimate independent contractor, not a labor-only contractor for SMC.

RULING

The Supreme Court DENIED the petition and AFFIRMED the Court of Appeals’ decision. The Court held:
1. On the Existence of an Employer-Employee Relationship with SMC: BMA was a legitimate job contractor, not a labor-only contractor. The evidence showed BMA was a duly registered corporation with substantial capitalization and investment in tools, equipment, and machinery. It employed petitioners, paid their wages, and exercised control over their work through its own supervisors. The control exercised by SMC’s Sales Logistic Coordinator was merely limited to ensuring the contracted services (warehousing and delivery) met its standards, which is permissible under a job contracting arrangement. SMC was therefore not the direct employer.
2. On the Legality of Dismissal:
* For petitioners Caboteja, Dumalagan, and Salvador, their dismissals were for just causes (insubordination, neglect of duty) and with due process (they were given notices and opportunities to explain). Their dismissals were valid.
* For the other petitioners who participated in the October 18, 2001 picket, the NLRC and CA correctly found they were not illegally dismissed but had abandoned their work. Their simultaneous failure to return to work after the picket, despite BMA’s urging during conciliation, constituted abandonment—a voluntary severance of the employment relationship. Their intent to abandon was evident from their deliberate act to paralyze operations to force BMA to meet their demands.
3. On the Quitclaims: The quitclaims executed by eleven petitioners before DOLE officials were valid, having been voluntarily entered into for valuable consideration and constituting a valid compromise agreement that barred them from pursuing further claims.
4. On Monetary Awards: While the dismissals were upheld, the NLRC’s award of salary differentials, service incentive leave pay, and 13th month pay (except for the year 2000) in the aggregate amount of P1,256,366.80, plus 10% attorney’s fees, was affirmed. The Court modified this by deleting the attorney’s fees, as petitioners’ claims were pursued through a free legal clinic and no evidence of an attorney’s fees agreement was presented.