104. Lopez v Mwss

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EN BANC

[G.R. No. 154472. June 30, 2005]

ALEXANDER R. LOPEZ, HERMINIO D. PEA, !AL"ADOR #. A$%EL,GEORGE &. 'A$RERA, JOEL M. 'ARREON, DAMA!O M.'ER"AN#EX, JR., RI'ARDO ". '%E"A!, RO$ER#O !. DAGDAG,IRENEO ". D%RA(, OMER!. E!PIRIDION, MANOLO ".&ORONDA, RONI#O R. &RIA!, ANGEL '. GAR'IA, "I'#ORINOA. ILAGAN, DENNI! !. LEGADO!, MIG%EL J. LOPEZ,EMMAN%EL R. MERILLO, EDGAR E. NA#AR#E, MAMER#O !.

NEPOM%'ENO, MAR"IN R. PAD%RA, ROMEO '. RAMILO,AL$ER#O R. RAMO!, JR., RONALDO A. !ARMIEN#O,ARMANDO !. !IONG'O, JO!E #EOD( P. "ELA!'O, RI'O P."ILLAN%E"A, !AM%EL L. ZAPA#ERO, EDGARDO D. AG%DO,RO$ER#O A. ARAA, $ENJAMIN A!%N'ION, J%LIAN '.$A'OD, ED)IN N. $ORROMEO, AL$ER#O #. $%LAONG,DANIEL 'ADAOM, RO$ER#O !. 'A(E#ANO, AL&REDO '.'LA"IO, EDGARDO A. DA$%E#, NEIL DA"ID, ALEXANDER $.E!#ORE!, NOEL G%ILLEN, RODOL&O MAGNO, RE(MANLEGRO, ROMEO ". MORALE!, RO!A%RO NADORA,E%GENIO M. ORI#O, RONILO P. PAREDE!, ADGARDO R.PINEDA, 'ARLI#O !AMAR#INO, AR#%RO '. !ARAO!, JR.,JOHNEL L. #ORRI$IO, AN#ONIO A. "ERGARA, JIMM( '.%NG!ON, NOEL D. AMO(O, "IRGILIO L. AZAR'ON, RI'ARDOM. $RO#ONEL, EMERALDO '. 'A$A(A, J%LIE G. 'HAN, L%I!'. 'LA"IO, L%I! #. 'ANIZO, ERNE!#O &. DA"ID, EDGAR $. DE"ERA, RE(NALDO A. D%MLAO, AR#%RO R. D('HI#AN, ROMAN!. &AJARDO, $ERNARDINO $. MA'ALDO, ROMEO D. MANA!I!,JR., MARIO R. MANGALINDAN, "I'#ORIANO '. MAR#INEZ,

LEONARDO D. MIRALLE!, ROGELIO E. PA'ER, RO!ENDO L.PANGILINAN, NOLI H. POLINAG, DIO!DADO M. P%NZALAN,RE(NALDO '. GA#PO, 'IRILO M. !AN#O!, RAMON A.ZAM$RANA, PIO L. A!#ORGA, ROLANDO G. 'AGALINGAN,ANGELI#O A. 'A%DAL, &RAN'I!'O !. DELO! !AN#O!,'ARLO! E. LOMI$AO, ROMEO !. MALA$ANAN, LI$ERA#O $.MANGEN#E, J%LIAN M. MAR#INEZ, $ERNARDO !. MEDINA,

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MEL"IN R. MENDEZ, AL$ER# '. MIRADOR, RENEE !. O'AMPO,DA"ID J. PA!'%A, AMOR!OLO M. PILAR#A, ROLANDO '.RE(E!, GA"INO !AN GA$RIEL, JR., PER'ON &. !I!ON,PLARIDEL L. #ANGLAO, R%$EN R. #AEDO, JR., RENA#O G.#AR%', RONALDO D.'. "EN#%RA, ANGEL L. "ER#%'IO,ER)IN #. "IDAD, )ILLIAM M. AGANAON, ALEX P. MANA$A#,&RAN'I!'O ALMON#E, RODRIGO '. AN#ONIO, DO%GLA! R.A*%INO, REMEGIO R. A#IENZA, A$RAHAM '. $ALI'AN#E,MELEN'IO M. $AGNG%I!, JR., GERARDO #. $%LAONG,MELI#AN#E I. 'A!#RO, MEDARDO !. 'A#A'%#AN, "IRGILIO #.'A#%$IG, JO!E !. 'HIONG, NEL #. 'OLO$ONG, &ELIPE '.'OLLADO, RAND( #. 'OR#IG%ERRA, AN#ONIO D. DELA 'R%Z,JE!%! '. DINGLE, EDGARDO N. GAR'IA, 'EL!O Z. GOL&O,NONI#O ". &ERNANDEZ, LARR( HIDALGO, &RAN'I!'O $. JAO,

JR., 'ARLO! P. LAGLI"A, RI'O L. LARRA'A!, PEDRO ".A$ARIDE!, R%D( !. AG%INALDO, REGINALD &. AL'AN#ARA,!ERA&IN AL'AN#AR, JR., &ELIX H. ALEJANDRO, MIG%ELAL#ONAGA, JO!E #. AG%ILAR, PEDRO AG%ILAR, JR., NOEL A.ALIPIO, )ILLIAM A. ALMAZAR, RE(NALDO !.D. AL"AREZ,&LORIZEL M. AM$RO'IO, JO!E A. A!PE, RO$ER#O J. AR'EO,ERNE!#O ". AR%#A, MILLARDO DL. A#EN'IO, ERNE!#O G.A"ELINO, )EN'E!LAO '. $A$EJA!, ARNOLD &. $ALINGI#,HE$ER# &. $AR'ELON, MARLON D. $ORROZO, &LOREN#INO$A!, JR., LEARNED A. $A%#I!#A, ARMAN N. $ORROMEO,'ARLI#O &. $AR#OLO, 'ARLO! M. 'A$ER#O, AR#%RO !.'AJ%'OM, DIEGO 'ALDERON, JR., )ILLIAM A. 'AMPO!,JORGE 'ANONIGO, JR., ANGELI#O M. 'APARA', EMMAN%ELL. 'API#, LA%RO !. 'A!#RO, #OMEO $. 'A!#ALONE,"ERZNE" !. 'A#%$IG, ARMANDO 'ER"AN#E!, 'ALIX#O P.'OLADA, JR., JONA#HAN P. 'ORONEL, JOE NOEL P. 'R%Z,&RAN'I!'O 'R%Z, JR., MARIANO $. 'R%Z, JR., JO!E J.DAL%MPINE!, !ANI#O !. DE JE!%!, JO!E G. DE LEON,'RI!AN#O DE LO! RE(E!, EMMAN%EL '. DE "ERA, RODOL&O

DE "ERA, JR., HERMAN '. DE "ILLAR, I+E !. DEL&IN, PEDROE. DE!IPEDA, ERAO A. DIONI!IO, AL&REDO L. D%GA(O,RE(NALDO ". D%RA(, E%GENIO '. ELEAZAR, RA&AEL %.EN'INA, ORLANDO '. E!'OLAR, ALLAN P. E!PINA, LA%RO !.E!PINA, I!RAEL &. &ALL%RIN, ORIEL A. &E!#EJO, EDGARDO ".&IG%EROA, RALPH &LORE!, &ERDINAND $. &%GGAN, NOEL Z.GA$O#, ED%ARDO M. GALANG, "I'EN#E D. GALLARDO,

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&RE!'O $. GALO, RO!A%RO G. GAM$OA, MARIO !. GA$RIEL,RO$ER#O '. GAPA!IN III, ROM%ALDO GAPA!IN, JR., DANILO'. GAR'IA, RE!#I#%#O !. GAR'IA, NOEL $. GA#D%LA, $ENJIE!. GERONIMO, AR#%RO R. GLORIO!O, I!IDRO !. GOMED, JR.,MEDEL P. GREGORIO, RE( #. HE'HANO"A, "ONRE*%I#OHER$%ELA, 'EL!O &. IGNA'IO, JR., 'HARLIE !. IGNA'IO,ILDE&ON!O &. ILDE&ON!O, GA%DENI'O M. IN#AL, RIZALI#O M.IN#AL, RENA#O HERRERO, $IEN"ENIDO L. JAO, JR.,&ERDINAND P. LAGMAN, RENEIL M. LAREZA, ALMARIO M.LAXA, AR#H%R G. LE"I!#E, E!#E$AN #. LEGAR#O, RAMON G.LI)ANAG, ELI!EO A. L%, RA(M%NDO L%!#I'A, JR.,&ERNANDO D. MA$AN#A, NE!#OR &. MAGALLANE!, ED)IN A.MAGPA(O, MI'HAEL I. MAGRIA, ARIEL M. MALAPAD, RAMONO. MAM%'OD, &ERDINAND P. MANINGA!, RONALD D.R.

MAN%EL, ROLANDO &. MAP%E, 'HI#O '. MAR'O, ERNE!#O !.MAR'HAN, JO!EPH $. MARIANO, &RAN'I! J. MARIMON, JOHNL. MAR#EJA, JO!E E. MA!E, JR., $ERNARDO !. MEDINA,JOERE( $. MERIDOR, !%!ANO !. MIRANDA, EDGARDO '.MON#O(A, MARLON $. MORADA, ROMEO R. DEL M%NDO,RE(NALDO '. NAREDO, EDGARDO R. NEPOM%'ENO, RODEL!. NEPOM%'ENO, ROMMEL NI(O, ROM%LO P. OLAR#E,GEORGE N. OLA"ERE, ED%ARDO ONG, MARIO !. PAG!ANJAN,RENALD '. PALAD, GA%DEN'IO G. PEDRO'HE, RONALDODELA 'R%Z PEREA, EDIL$ER#O '. PIG%L, ERNE!#OPING%L, AGNE!IO D. *%E$RAL, JAME! M. *%IN#O, RI'ARDOR. RAMO!, GENERO!O REGALADO, JR., ED%ARDO L. RE(E!,RAMON '. RE(E!, LARR( !. RE'AMADA!, AN#ONIO $.REDONDO, &EDERI'O M. RI"ERA, RO$ER#O I. RO'OMORA,&ERNANDO P. RODRIG%EZ, HERNANDO !. RODRIG%EZ,ROMMEL D. ROXA!, 'HRI!#OPHER R. R%!#IA, ARN%L&O #.JAMI!ON, MARIO G. !AN PEDRO, ELMER $. !AN#O!,LEONARDO !E$A!#IAN, JR., 'ARMEN'I#O M. !EXON, JO!E!#A. ANA !IERRA, LLO(D Z. !INADJAN, RAMON !. !I!IO,

RAMIRO M. !OLI!, MAN%EL '. !%AREZ, $ENJAMIN#ALA"ERA, JR., O!'AR %. #AN, RI'ARDO !. #AN, A%G%!#%!". #ANDO', RO$ER#O L. #AEDO, ERNE!#O R. #I$A(,'HARLIE P. #I'!A(, RE( DE "ERE #IONG'O, "I"EN'IO $.#OLEN#INO, O!M%NDO !. #ORRE!, HILARIO L. "ALDEZ,LEONARDO '. "ALDEZ, PA!#OR M. "ALEN'IA, E&REN"ELA!'O, EDM%NDO D. "I'#A, &ERDINAND "ILLAN%E"A,

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JO!E '. "ILLAN%E"A, JO!E ROMMEL "ILLAMOR, OLI"ER P."ILLAN%E"A, "I'#OR P. ZA&ARALLA, HORA'IO L. ZAPA#ERO,'OENE '. ZAPI#ER, #HE HEIR! O& E!#E$AN $ALDOZA,R%$EN GALANG, &A%!#O !. 'R%Z, RE(NALDO $ORJA,'RI!AN#O 'AGALINGAN n- ADRIANO "I'#ORIA,petitioners,vs. ME#ROPOLI#AN )A#ER)OR+! AND !E)ERAGE!(!#EM, respondents.

D E ' I ! I O N

#INGA, J.

Take not from the mouth of labor the bread it has earned.

Thomas Jefferson

The constitutional protection to labor, a uniform feature of the last threeConstitutions including the present one, is outstanding in its uniqueness and as amandate for judicial activism.

This petition asks for the revie of the Court of Appeals! Decision"#$in C.A.%&.'. ()N*. ++- entitledAlexander R. Lopez, et al. v. Metropolitan Waterworks andSewerage System,hich affirmed in totothe Civil (ervice Commission!s'esolutions"$den/ing petitioners! claim for severance, retirement and terminal leavepa/.

B/ virtue of anAgreement,"$petitioners ere engaged b/ the 0etropolitan

1aterorks and (eerage (/stem 201((3 as collectors%contractors, herein theformer agreed to collect from the concessionaires of 01((, charges, fees,assessments of rents for ater, seer and4or plumbing services hich the 01(( billsfrom time to time."5$

6n #778, 01(( entered into a Concession Agreement ith 0anila 1ater (ervice,6nc. and Benpress%9/onnaise, herein the collection of bills as transferred to saidprivate concessionaires, effectivel/ terminating the contracts of service beteenpetitioners and 01((. 'egular emplo/ees of the 01((, e:cept those ho had retiredor opted to remain ith the latter, ere absorbed b/ the concessionaires. 'egularemplo/ees of the 01(( ere paid their retirement benefits, but not petitioners.6nstead, the/ ere refused said benefits, 01(( rel/ing on a resolution "+$of the Civil

(ervice Commission 2C(C3 that contract%collectors of the 01(( are not its emplo/eesand therefore not entitled to the benefits due regular government emplo/ees.

)etitioners filed a complaint ith the C(C. 6n its Resolutiondated # ;ul/ #777, "-$theC(C denied their claims, stating that petitioners ere engaged b/ 01(( through acontract of service, hich e:plicitl/ provides that a bill collector%contractor is not an01(( emplo/ee."8$'el/ing on )art < of C(C 0emorandum Circular No. =, (eries of#77, the C(C stated that contract services4job orders are not considered government
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services, hich do not have to be submitted to the C(C for approval, unlike contractualandplantillaappointments."=$0oreover, it found that petitioners ere unable to shothat the/ have contractual appointments dul/ attested b/ the C(C."7$6n addition, theC(C stated that petitioners, not being permanent emplo/ees of 01(( and not includedin the list .submitted to the concessionaire, are not entitled to severance pa/."#>$

)etitioners! claims for retirement benefits and terminal leave pa/ ere likeisedenied.

)etitioners sought reconsideration of the C(C Resolution, hich as hoeverdenied b/ the C(C on #8 (eptember #777. "##$According to the C(C, petitioners failed topresent an/ proof that their appointments ere contractual appointments submitted tothe C(C for its approval."#$The C(C held, thus?

WHEREFORE, the motion for Reconsideration of Alexander Lope, et al. is hereb!

denied. Accordin"l!, #$# Resolution %o. &&'()*+ dated ul! (, (&&& stands.

Ho-eer, this is not -ithout pre/udice to -hateer ri"hts and benefits the! ma! hae

under the %e- Labor #ode and other la-s, if an!."#$

Aggrieved, petitioners filed a petition for revie under 'ule 5 of the 'ules of Courtith the Court of Appeals. "#5$6n its Decision, the Court of Appeals narroed don theissues presented b/ petitioners as follos? 1hether or not the C(C erred in finding thatpetitioners are not contractual emplo/ees of the government and, hence, are notentitled to retirement and separation benefits. "#+$

Affirming and generall/ reiterating the ruling of the C(C, the Court of Appeals heldthat theAgreemententered into b/ petitioners and 01(( as clear and unambiguous,and should be read and interpreted according to its literal sense. "#-$@ence, as per theterms of the agreement, petitioners ere not 01(( emplo/ees. The Court of Appeals

held that no other evidence as adduced b/ petitioners to substantiate their claim thattheir papers ere forarded to the C(C for attestation and approval. "#8$6t added that inan/ event, as earl/ as - ;une #77-, the C(C specificall/ stated that contractcollectors are not 01(( emplo/ees and therefore not entitled to severance pa/. "#=$

The Court of Appeals held that petitioners are not similarl/ situated as the petitionerin the case of Chuav. ivil Service ommission"#7$since the contractual appointmentas submitted to and approved b/ the C(C, hile the former ere not. ">$urther,petitioners do not have creditable service for purposes of retirement, since their servicesere not supported b/ dul/ approved appointments."#$9astl/, the Court of Appeals heldthat petitioners ere e:empt from compulsor/ membership in the &(6(. @aving made

no monthl/ contributions remitted to the said office, petitioners are not entitled to theseparation and4or retirement benefits that the/ are claiming. "$

)etitioners no assert that the Court of Appeals rendered a decision not in accordith la and applicable jurisprudence, based on misapprehension of facts, and4orcontrar/ to the evidence on record. "$

)etitioners allege that hile their hiring as made to appear to be on contractualbasis, the contracts evidencing such hiring ere submitted to and approved b/ the
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C(C. 9ater contracts, hoever, do not appear to have been submitted to the C(C forapproval. To support its claim, petitioners presented to 23 sample agreements, "5$bothstamped approved and signed b/ C(C 'egional Directors. 1hile st/led as individualcontracts4agreements, petitioners insist that the same ere actuall/ treated b/ the01(( as appointment papers."+$

)etitioners claim that the/ ere emplo/ees of the 01((, and that the lattere:ercised control over them. The/ cite as manifestations of control the trainingrequirements, the mandated procedures to be folloed in making collections, 01((!close monitoring of their performance, as ell as the latter!s poer to transfer collectorsfrom one branch to another."-$

0oreover, the/ add that ith the nature and e:tent of their ork at the 01((, the/served as collectors of 01(( onl/."8$The/ stress that the/ have never providedcollection services to customers as an independent business. 6n fact, the/ appliedindividuall/ and ere hired b/ 01(( one b/ one. "=$The/ ere provided ith uniformsand identification cards, and received basic pa/ termed as commissions from hich

01(( deducted ithholding ta:.

"7$

The commissions ere determined or computedb/ 01(( and paid to the collectors b/ pa/roll ever/ fifteenth 2#+th3 and last da/ ofever/ month. 6n addition to the commission, collectors ere given, among others,performance, mid%/ear and anniversar/ bonuses, haard pa/, thirteenth 2# th3 monthpa/, traveling alloance, cash gift, meal alloance and productivit/ pa/.">$

)etitioners claim that bill collectors ere historicall/ regarded as emplo/ees ofNational 1aterorks and (eerage Authorit/ 2NA1A(A3, the forerunner of 01((."#$The/ cite the case of!ational Waterworks and Sewerage Aut"ority v. !WSAonsolidated La#or $nions, et al., "$herein this Court supposedl/ declared the billcollectors of NA1A(A as its emplo/ees and the commissions received b/ saidcollectors as salar/."$9ikeise, the/ claim that b/ 01((! on acts, petitioners ere its

emplo/ees. To support this contention, the/ point to the identification cards 26.D.s3 andcertifications of emplo/ment issued b/ 01(( in their favor."5$There ere also'ecords of Appointment, hich referred to the contract%collectors as emplo/ees ithcorresponding service records."+$

6n vie of the cited documents, petitioners assert that 01(( is estopped fromden/ing their emplo/ment ith the agenc/. "-$(hould there be doubt as to their status asemplo/ees, petitioners invoke the rule of liberal construction in favor of labor, and theconstitutional polic/ of protection to labor."8$

To further strengthen their case, petitioners refer to C(C 'esolution 7%>>= dated= December #77, hich states in part?

. . . . The fact that the! -ere bein" hired directl! and paid on commission basis b!

0W$$ itself is indicatie that the! are "oernment emplo!ees and should be entitled

to the incentie a-ards.
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WHEREFORE, fore"oin" premises considered, the #ommission resoles to rule that

the #ontractual'#ollectors of the 0etropolitan Water-orks and $e-era"e $!stem

10W$$2 are entitled to lo!alt! a-ards. "=$

The same resolution as made the basis of the 01((! memorandum declaring

contract%collectors government emplo/ees or personnel entitled to salar/ increasespursuant to the (alar/ (tandardiation 9a 6 F 66. "7$

Thus, petitioners claim that b/ 01((! and C(C!s on acts and declarations, the/ere made to believe that the/ ere emplo/ees of 01(( and as such eregovernment emplo/ees."5>$

)etitioners invoke the case of "ua v. ivil Service ommission, et al. "5#$hereinChua, a co%terminus emplo/ee of the National 6rrigation Administration, sought torecover earl/ retirement benefits but as denied the same. This Court, havingobserved that Chua as hired and re%hired in four 253 successive projects during a spanof fifteen 2#+3 /ears, as deemed a regular emplo/ee for purposes of retirement pa/.

)etitioners argue that in the same manner, in vie of their considerable length ofservice to 01((, the/ are entitled to their claimed benefits. "5$

6n addition to the retirement4separation4terminal leave pa/ pra/ed for, petitionersclaim moral damages for the alleged serious disturbance the/ suffered as a result of thedenial of their claims. The/ also pra/ for the aard of attorne/!s fees."5$

or its part, the 01(( avers that the Court of Appeals did not err in sustaining theresolutions of the C(C den/ing petitioners! claim for entitlement to severance,retirement and terminal leave pa/.

01(( denies the e:istence of emplo/er%emplo/ee relationship beteen itself andpetitioners. Citing C(C 0emorandum Circular No. = (eries of #77, 01(( avers thatit has the authorit/ to contract the services of another ho is considered not itsemplo/ee."55$1ith respect to the matter of pa/ment of ages, 01(( states that thecommission given to petitioners does not fall ithin the definition of compensation asprovided in )residential Degree No. ##5- 2).D. ##5-3, "5+$or in the definition of the termunder the 'evised Administrative Code either."5-$

6t adds that the issuance of 6.D.s., certificates of recognition and lo/alt/ aards asell as the grounds for termination of theAgreementcould hardl/ be considered ascontrol as the same had no relation to the means and methods to be emplo/ed b/petitioners in collecting pa/ments for 01((."58$As for the training and orientationundergone b/ petitioners, 01(( claims that it is but logical for an/ entit/ hich has

contracted the services of another to orient the latter before actual performance of theservice, more so if the entit/!s function is impressed ith public service. The fact thatcollectors ere given a regular time for remittance should likeise not be considered asa form of control. 01(( states that none of these requirements invades the collector!sprerogative to adopt their on method4strateg/ in the matter of collection. "5=$

*n the grant of thirteenth 2#th3 month pa/ and other benefits to petitioners, 01((claims that these ere mere acts of benevolence and generosit/. "57$
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)ertinentl/, therefore, the issue to be resolved is hether or not petitioners ereemplo/ees of the 01(( and, consequentl/, entitled to the benefits the/ claim.

1e find for the petitioners.

The Court has invariabl/ affirmed that it ill not hesitate to tilt the scales of justice to

the labor class for no less than the Constitution dictates that the (tate . . . shall protectthe rights of orkers and promote their elfare. "+>$6t is committed to this polic/ and hasala/s been quick to rise to defense in the rights of labor, as in this case. "+#$

)rotection to labor, it has been said, e:tends to all of laborlocal and overseas,

organied and unorganied, in the public and private sectors. "+$Besides, there is noreason not to appl/ this principle in favor of orkers in the government. Thegovernment, including government%oned and controlled corporations, as emplo/ers,should set the e:ample in upholding the rights and interests of the orking class.

The 01(( is a government oned and controlled corporation ith its on charter,'epublic Act No. -5."+$As such, it is covered b/ the civil service "+5$and falls under the

jurisdiction of the Civil (ervice Commission."++$

C(C 0emorandum Circular No. =, (eries of #77, categoricall/ made thedistinction beteen contract of services4job orders and contractualandplantillaappointment, declaring that services rendered under contracts of servicesand job orders are non%government services hich do not have to be submitted to theC(C for approval. This as folloed b/ C(C 0emorandum Circular No. 5, (eries of#775, hich alloed the crediting of services for purposes of retirement onl/ for suchservices supported b/ dul/ approved appointments. (ubsequentl/, the C(C issuedother resolutions appl/ing the above%mentioned circulars, stating that hile somefunctions ma/ have been contracted out b/ a government agenc/, the personscontracted are not entitled to the benefits due to regular government emplo/ees. "+-$

or purposes of determining the e:istence of emplo/er%emplo/ee relationship, theCourt has consistentl/ adhered to the four%fold test, namel/? 2#3 hether the allegedemplo/er has the poer of selection and engagement of an emplo/eeG 23 hether hehas control of the emplo/ee ith respect to the means and methods b/ hich ork is tobe accomplishedG 23 hether he has the poer to dismissG and 253 hether theemplo/ee as paid ages."+8$*f the four, the control test is the most important element.

A revie of the circumstances surrounding the case reveals that petitioners areemplo/ees of 01((. Despite the obvious attempt of 01(( to categorie petitionersas mere service providers, not emplo/ees, b/ entering into contracts for services, itsactuations sho that the/ are its emplo/ees, pure and simple. 01(( ielded its poer

of selection hen it contracted ith the individual petitioners, undertaking separatecontracts or agreements. The same goes true for the poer to dismiss. Althoughtermed as causes for termination of theAgreement, a revie of the same shos thatthe grounds indicated therein can similarl/ be grounds for termination of emplo/ment.

Hnder theAgreement, 01(( ma/ terminate it if the Collector%Contractor does orfails to do an/ of the folloing?
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Article 344 5 6uration, Termination and 7enal #lauses.

. . . .

1a2 Fails to collect at least ei"ht! percent 1*892 of bills issued -ithin three 1)2

months from commencement of this A"reement or ninet! percent 1&892 -ithin six 1:2months after effectiit! of this A"reement;

1b2 Erases, alters, or changes an! fi"ure on the bills or remittance receipt

forpurposes of defrauding either the concessioner or the MWSS. 4n case of

termination of his serices for an! irre"ularit!, there shall be no pre/udice a"ainst an!

criminal action for -hich he ma! be liable;

1c2 4s discourteous, dishonest, arrogant or his conduct is inimial *>. Termination b! Emplo!er. 5 An emplo!er ma! terminate an emplo!ment for

an! of the follo-in" causes?

1a2 $erious misconduct or -illful disobedience b! the emplo!ee of the la-ful

orders of his emplo!er or representatie in connection -ith his -ork;

1b2 @ross and habitual ne"lect b! the emplo!ee of his duties;

1c2 Fraud or -illful breach b! the emplo!ee of the trust reposed in him b! his

emplo!er or dul! authoried representatie;

1d2 #ommission of a crime or offense b! the emplo!ee a"ainst the person of his

emplo!er or an! immediate member of his famil! or his dul! authoried

representatie; and

1e2 Other causes analo"ous to the fore"oin".

*bviousl/, failure to collect the pa/ments of customers or remit the collectionsconstitutes neglect of dut/. 0aking erasures, alterations or changing of figures in the
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fees or collection receipts amounts to fraud. 9ack of courtes/, dishonest/ and arroganceare practicall/ the same as misconduct.

*n the issue of remuneration, 01(( claims that the compensation received b/petitioners does not fall under the definition of ages as provided in (ection 2i3 of ).D.##5-,"+7$hich is the basic pa/ or salar/ received b/ an emplo/ee, pursuant to his

emplo/ment appointments, e:cluding per diems, bonuses, overtime pa/ andalloancesG thus petitioners are not its emplo/ees. This assertion, hoever, simpl/begs the question. The provision is a simple statement of meaning, operating on the a

priori premise or presumption that the recipient is alread/ classified as an emplo/ee,and does not la/ don an/ basis or standard for determining ho are emplo/ees andho are not.

*n the other hand, relevant and appropriate is the definition of ages in the 9aborCode, namel/, that it is the remuneration, hoever designated, for ork done or to bedone, or for services rendered or to be rendered. "->$The commissions due petitionersere based on the bills collected as per the schedule indicated in theAgreement."-#$

(ignificantl/,01(( granted petitioners benefits usuall/ given to emplo/ees, to it?C*9A, meal, emergenc/, and traveling alloances, haard pa/, cash gift, and otherbonuses."-$6n an unabashed bid to claim credit for itself, 01(( professes that theseadditional benefits ere its acts of benevolence and generosit/."-$1e are notimpressed.

)etitioners rendered services to 01(( for hich the/ ere paid and given similarbenefits due the other emplo/ees of 01((. 6t is hard to imagine that 01(( assimpl/ moved b/ the spirit of benevolence and generosit/ hen it granted liberalbenefits to petitioners. 0ore so since 01(( is a government oned and controlledcorporation created for the proper operation and maintenance of aterorks s/stem toinsure an uninterrupted and adequate suppl/ and distribution of potable ater for

domestic and other purposes and the proper operation and maintenance of seerages/stems."-5$6ts main function is to provide basic services to the public. The dispositionof 01((! income is limited to the pa/ment of its contractual and statutor/ obligations,e:pansion and development, and for the enhancement of its efficient operation. "-+$6t asnot in a position to distribute hard%earned income of the (tate merel/ to give e:pressionto its supposed altruistic impulse, or to disburse funds not otherise authoried b/ laor its charter. 6f 01(( as impelled b/ some force to give the benefits to petitioners, itmust have been the force of good business sense. *bviousl/, the additional benefitsere granted ith the same motivation as good managers an/here else haveItofoster a good orking relationship ith the bill%collectors and incentivie them to raisethe high level of their performance even higher.

No the aspect of control. 01(( makes an issue out of the proviso intheAgreementthat specificall/ denies the e:istence of emplo/er%emplo/ee relationshipbeteen it and petitioners. 6t is a:iomatic that the e:istence of an emplo/er%emplo/eerelationship cannot be negated b/ e:pressl/ repudiating it in an agreement andproviding therein that the emplo/ee is not an 01(( emplo/ee"--$hen the terms ofthe agreement and the surrounding circumstances sho otherise. The emplo/ment
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status of a person is defined and prescribed b/ la and not b/ hat the parties sa/ itshould be."-8$

6n addition, the control test merel/ calls for the e:istence of the right to control, andnot the e:ercise thereof. 6t is not essential for the emplo/er to actuall/ supervise theperformance of duties of the emplo/ee, it is enough that the former has a right to ield

the poer."-=$1hile petitioners ere contract%collectors of 01((, the/ ere under thelatter!s direction as to here and ho to perform their collection and ere even subjectto disciplinar/ measures. Trainings ere in fact conducted to ensure that petitioners areconversant of the procedures of the 01((.

Contrar/ to 01((! assertion that petitioners ere free to adopt 2their3 onmethod4strateg/ in the matter of collection,"-7$theAgreementclearl/ provided that theprocedure and4or manner of the collection of bills to be folloed shall be in accordanceith the provisions of the Manual o% &rocedures. Art.

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1ater3, a concessionaire of 01((, individuall/ hired some of the former 01(( billcollectors to perform collection services for three 23 months. (ubsequentl/, the billcollectors formed a corporation, Association Collectors &roup, 6nc. 2AC&63 hich ascontracted b/ 0anila 1ater to collect charges. 9ater, 0anila 1ater asked the collectorsto transfer to a nel/ formed corporation, irst Classic Courier (ervices. 0anila 1ater

later terminated its contract ith AC&6, as a result of hich collectors ho opted toremain ith AC&6 became unemplo/ed. These bill collectors filed a complaint for illegaldismissal and mone/ claims against 0anila 1ater, claiming that the/ ere itsemplo/ees since all the methods and procedures of their collection ere controlled b/the latter. *n the other hand, 0anila 1ater contended that the bill collectors ereemplo/ees of A&C6, an independent contractor."8=$

The Court ruled that the bill collectors ere regular emplo/ees of 0anila 1ater,debunking the latter!s claim that the/ orked for an independent contractor corporation,thus?

First, A#@4 does not hae substantial capitaliation or inestment in the form of

tools, eDuipment, machineries, -ork premises, and other materials, to Dualif! as anindependent contractor. While it has an authoried capital stock of 7(,888,888.88,

onl! 7:>,88.88 is actuall! paid'in, -hich cannot be considered substantial

capitaliation. The (>( collectors subscribed to four shares each and paid onl! the

amount of 7:>.88 in order to compl! -ith the incorporation reDuirements. Further,

priate respondents reported dail! to the branch office of the petitioner because A#@4

has no office or -ork premises. 4n fact, the corporate address of A#@4 -as the

residence of its president, 0r. Herminio 6. 7ea. 0oreoer, in dealin" -ith the

consumers, priate respondents used the receipts and identification cards issued b!

petitioner.

Second, the -ork of the priate respondents -as directl! related to the principal

business or operation of the petitioner. Gein" in the business of proidin" -ater to the

consumers in the East one, the collection of the char"es therefor b! priate

respondents for the petitioner can onl! be cate"oried as clearl! related to, and in the

pursuit of the latterIs business.

Lastly, A#@4 did not carr! on an independent business or undertake the performance

of its serice contract accordin" to its o-n manner and method, free from the control

and superision of its principal, petitioner. 7rior to priate respondentsI alle"ed

emplo!ment -ith A#@4, the! -ere alread! -orkin" for petitioner, sub/ect to its rules

and re"ulations in re"ard to the manner and method of performin" their tasks. This

form of control and superision neer chan"ed althou"h the! -ere alread! under the

seemin" emplo! of A#@4. 7etitioner issued memoranda re"ardin" the billin"

methods and distribution of books to the collectors; it reDuired priate respondents to

report dail! and to remit their collections on the same da! to the branch office or to

deposit them -ith Gank of the 7hilippine 4slands; it monitored strictl! their attendance

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as -hen a collector cannot perform his dail! collection, he must notif! petitioner or

the branch office in the mornin" of the da! that he -ill be absent; and althou"h it -as

A#@4 -hich ultimatel! disciplined priate respondents, the penalt! to be imposed

-as dictated b! petitioner as sho-n in the letters it sent to A#@4 specif!in" the

penalties to be meted on the errin" priate respondents. These are indications that

A#@4 -as not left alone in the superision and control of its alle"ed emplo!ees.#onseDuentl!, it can be concluded that A#@4 -as not an independent contractor since

it did not carr! a distinct business free from the control and superision of petitioner."87$

Even under the four%fold test, the bill collectors proved to be emplo/ees of 0anila1ater. Thus, the Court held that?

Een the Bfour'fold testC -ill shothat petitioner is the emplo!er of priate

respondents. The elements to determine the existence of an emplo!ment relationship

are? 1a2 the selection and en"a"ement of the emplo!ee; 1b2 the pa!ment of -a"es; 1c2the po-er of dismissal; and 1d2 the emplo!erIs po-er to control the emplo!eeIs

conduct. The most important element is the emplo!erIs control of the emplo!eeIs

conduct, not onl! as to the result of the -ork to be done, but also as to the means and

methods to accomplish it.

We a"ree -ith the Labor Arbiter that in the three sta"es of priate respondentsI

serices -ith the petitioner, i.e., 1(2 from Au"ust (, (&&J to Au"ust )(, (&&J; 1>2 from

$eptember (, (&&J to %oember )8, (&&J; and 1)2 from 6ecember (, (&&J to

Februar! *, (&&&, the latter exercised control and superision oer the formersI

conduct.

7etitioner contends that the emplo!ment of priate respondents from Au"ust (, (&&J

to Au"ust )8, (&&J -as onl! temporar! and done to accommodate their reDuest to be

absorbed since petitioner -as still under"oin" a transition period. 4t -as onl! -hen its

business became settled that petitioner emplo!ed priate respondents for a fixed term

of three months.

Althou"h petitioner -as not obli"ed to absorb the priate respondents, b! en"a"in"

their serices, pa!in" their -a"es in the form of commission, sub/ectin" them to its

rules and imposin" punishment in case of breach thereof, and controllin" not onl! theend result but the manner of achiein" the same as -ell, an emplo!ment relationship

existed bet-een them.

%otabl!, priate respondents performed actiities -hich -ere necessar! or desirable

to its principal trade or business. Thus, the! -ere re"ular emplo!ees of petitioner,

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re"ardless of -hether the en"a"ement -as merel! an accommodation of their

reDuestK."=>$1Emphasis Ours2

6n fine, the Court found that the so%called independent contractor did not havesubstantial capitaliation or investment in the form of tools, equipment, machineries,

ork premises and other material to qualif/ as an independent contractor. 0oreover,respondents therein reported dail/ to the 0anila 1ater branch office and dealt ith theconsumers through receipts and 6.D.s. issued b/ the latter. 9ikeise, their ork asdirectl/ related to and in the pursuit of 0anila 1ater!s principal business. 0oreimportantl/, the Court noted that AC&6 did not carr/ a distinct business free from thecontrol and supervision of 0anila 1ater.

The similarit/ beteen this case and the instant petition cannot be denied. or one,the respondents in said case are petitioners in this case. "=#$(econd, the ork set%up asessentiall/ the same. 1hile the bill collectors ere individuall/ hired, or eventuall/engaged through AC&6, the/ ere under the direct control and supervision of theconcessionaire, much like the arrangement beteen herein petitioners and 01((.Third, the/ performed the same vital function of collection in both cases. ourth, the/orked e:clusivel/ for their emplo/ers. @ence, the bill collectors in the ManilaWatercase ere declared emplo/ees of 0anila 1ater despite the e:istence of a shamlabor contractor. 6n the present case, petitioners ere directl/ and individuall/ hired b/01((, the latter not resoting to the intermediar/ labor contractor artifice, but a mere ascrap of paper impudentl/ declaring the bill collectors to be not emplo/ees of 01((.1ith greater reason, therefore, should the actualit/ of the emplo/er%emplo/eerelationship beteen 01(( and petitioners be recognied.

The C(C, as ell as the Court of Appeals, makes much of C(C 0emorandumCircular No. =, (eries of #77, hich distinguishes beteen contract of services4job

services and contractual appointment. The Circular provides?

#ontract of $erices and ob Orders are different from #ontractual appointment and

7lantilla appointment of casual emplo!ees, respectiel!, -hich are reDuired to be

submitted to #$# for approal.

#ontracts of $erices and ob Orders refer to emplo!ment described as follo-s?

(. The contract coers lump sum -ork or serices such as /anitorial, securit! or

consultanc! serices -here no emplo!er'emplo!ee relationship exist;

>. The /ob order coers piece of -ork or intermittent /ob of short duration not

exceedin" six months on a dail! basis;

). The contract of serices and /ob orders are not coered b! #iil $erice La-,

Rules and Re"ulations;

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+. The emplo!ees inoled in the contracts or /ob orders do not en/o! the benefits

en/oined b! "oernment emplo!ees, such as 7ERA, #OLA and RATA.

. As the serices rendered under contracts of serices and /ob orders are not

considered "oernment serices, the! do not hae to be submitted to the #iil $erice

#ommission for approal."=$

Clinging to its tenuous denial of petitioners! emplo/ee status, the C(C avers thatcontractual emplo/ees are those ith contractual appointment submitted to and attestedb/ the C(C, unlike petitioners ho failed to sho that their appointments ere dul/attested b/ the C(C. The Court recognies the authorit/ of the C(C in promulgatingcirculars and memoranda concerning the civil service sector in line ith its function asthe central personnel agenc/ of the &overnment."=$Nevertheless, it cannot turn a blinde/e to a rather haphaard application and interpretation b/ the C(C of its on issuance,such as in this case.

A careful revie of the above%quoted circular shos that the relationship defined b/theAgreementcannot fall ithin the purvie of contract of services or job orders.)a/ments made b/ 01((! subscribers are the lifeblood of the compan/.

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The C(C goes further to sa/ that petitioners ere unable to present proof that theirappointments ere contractual in nature and submitted to the C(C for its approval, andthat submission to and approval of the C(C are important as these sho that theirservices had been credited as government service."=-$The point is of no moment.)etitioners ere able to attach onl/ to of suchAgreements hich bore the stamp of

approval b/ the C(C and these are simpl/ inadequate to prove that the otheragreements ere similarl/ approved. Even petitioners admit that subsequentl/suchAgreementsere no longer submitted to the C(C for its approval. (till, the failureto submit the documents for approval of the C(C cannot militate against the e:istenceof emplo/er%emplo/ee relationship beteen petitioners and 01((. 01(( cannotraise its on inaction to buttress its adverse position.

01(( committed itself to pa/ severance and terminal leave pa/ to its regularemplo/ees."=8$The guidelines"==$thereof states that regular emplo/ees ho haverendered at least a /ear of service and not eligible for retirement are entitled toseverance pa/ equivalent to one 2#3 month basic pa/ for ever/ full /ear of service. "=7$6nvie of the Court!s finding that petitioners ere emplo/ees of 01((, the corresponding

severance pa/, in accordance ith the guidelines, should be given to them. Terminalleave pa/ are likeise due petitioners, provided the/ meet the requirements therefor.

@oever, petitioners in this case cannot avail of retirement benefits from the &(6(.1hen their services ere engaged b/ 01((, the/ ere not reported as its emplo/eesand hence no deductions ere made against them for purpose of the &(6(contributions. 6t ould be unjust to grant petitioners retirement benefits hen there asno remittance of the emplo/ees! or the emplo/er!s share of contributions.

The case of "ua v. ivil Service ommission "7>$relied upon b/ petitioners is not inpoint. There as no question that Chua as an emplo/ee, specificall/ acontractual4project emplo/ee of the National 6rrigation Administration 2N6A3. The C(C!s

denial of her request for earl/ retirement benefits as based on the C(C!s conclusionthat contractual emplo/ees are not covered b/ the )arly Retirement Law."7#$This Courtheld that co%terminus emplo/ees ho have rendered /ears of continuous service such

as Chua ho as continuousl/ hired and rehired for four 253 successive times in a

span of fifteen 2#+3 /earsshould be included in the coverage of the Earl/ 'etirement

9a as long as the/ compl/ ith C(C regulations promulgated for such purpose.Hnderl/ing this grant of retirement benefits to Chua is the finding that her ork ith theN6A as recognied and accredited b/ the C(C as government service, that she paidher &(6( contributions throughout her service, and the fact that she applied for thebenefit ithin the prescribed period."7$

The differences beteen "uaand petitioners are readil/ apparent. The rulingin "ua concerns claims based on the Earl/ 'etirement 9a . *n the other hand, thiscase involves bill collectors ho ere hired b/ virtue of individual agreements, and hoare no claiming pa/ment of retirement, separation and terminal leave benefits.)etitioners! services, admittedl/, ere not credited4recognied b/ the C(C. 9ikeise,the parties still dispute the nature of their relationship hen petitioners made the claimfor the benefits, unlike in the case of "uahere there as no question as to her statusas an emplo/ee of the N6A. 0oreover, unlike "ua, petitioners in this case did not give
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an/ contribution for &(6( coverage, especiall/ since retirement benefits come from themonthl/ contributions of &(6( members.

)etitioner!s claim for damages and attorne/!s fees are similarl/ untenable. 01((cannot be made liable for moral damages for the serious moraldisturbance"7$petitioners allegedl/ suffered as a result of the denial of the requested

benefits because it as merel/ folloing the earlier resolution "75$of the C(C. 01((!adherence to the position of the C(C is but logical. 6t is after all, the central personnelagenc/ of the government, and its resolution at the time as valid and binding on01((.

)HERE&ORE, the petition is &'ANTED 6N )A'T. The Decisionof the Court ofAppeals in C.A.J&.'. () No. ++-, as ell as the Civil (erviceCommission!s ResolutionsNos. 77#=5 and 77>85, are hereb/ 'E

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"#$'d.at #5-.

"#5$'d.at 85%##5.

"#+$'d.at -+.

"#-$'d.at -8.

"#8$'d.at --%-8."#=$itingC(C 'esolution No. 7=#--=, id.at -7.

"#7$&.'. No. ==787, 8 ebruar/ #77, >- (C'A -+.

">$'d.at 8>.

"#$As per 0emorandum Circular >5, (eries of #775.

"$Rollo, p. 8#.

"$'d.at #>.

"5$Agreement dated 0a/ #7= in the name of Edgardo N. &arcia, id.at 5=%+=G Agreement dated 5August #787 in the name of Edilberto C. )ingul, id. at -5%8#.

"+$'d.at #5.

"-$'d.at #+%#-, 7.

"8$'d. at 5%A.

"=$'d.at 5.

"7$'d.at #-%#8.

">$)er certification of one branch manager dated > ;une #77-, id.at #=.

"#$'d.at #=.

"$#= )hil. + 2#7-83.

"$Rollo, p. 5>.

"5$'d.at #-%#8.

"+$'d.at ==.

"-$'d.at 5.

"8$'d.at 5.

"=$'d.at >5.

"7$'d.at .

"5>$'d. at 5-.

"5#$Supra note #7.

"5$Rollopp. +%++.

"5$'dat ++.

"55$'dat +8=.

"5+$'evised &overnment (ervice 6nsurance Act of #788. (ec. 2i3 thereof provides? Compensation% thebasic pa/ or salar/ received b/ an emplo/ee, pursuant to his emplo/ment appointmentse:cluding per diems, bonuses, overtime pa/ and alloances.
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"5-$(ec 5, Chapter # 2Title #3, Book 67##5, #5 (eptember #77,- (C'A 5#8, 5.

"+$BE'NA(, T@E #7=8 C*N(T6THT6*N * T@E 'E)HB96C * T@E )@696))6NE(, A C*00ENTA'K, 2>>3, p.##75, citing66 'EC*'D -#5, -7, 85=%857G (ec. , Article L666, #7=8 C*N(T6THT6*N.

"+$An Act Creating the 0etropolitan 1aterorks and (eerage (/stem and Dissolving the National1aterorks and (eerage Authorit/G and for *ther )urposes.

"+5$(ec. 2#3, Article 6L, #7=8 Constitution.

"++$Corsiga v. Defensor, 57 )hil. =8+, == 2>>3.

"+-$Rollo, pp. #-%#8.

"+8$Tan v. 9agrama, 5- )hil. #7#, ># 2>>3.

"+=$Rollo, pp. ++%+-.

"+7$See note 5+.

"->$Art 782f3, 9abor Code.

"-#$Rollopp. +%+.

"-$'dat -.

"-$'dat +=.

"-5$(ection #, 'epublic Act No. -5.

"-+$(ection #, id.

"--$Rollop. #5.

"-8$6nsular 9ife Assurance Co. 9td.

7/21/2019 104. Lopez v Mwss

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"88$&.'.No.#+=++, = ;ul/ >>5, 55 (C'A +.

"8=$'d.at ++%+-.

"87$'dat ->%-#.

"=>$'dat -.

"=#$)rivate respondents in the case are all petitioners in the present petition, to it? @erminio D. )ena,Esteban B. Baldoa, ;orge D. Canonigo, ;r., 6ke (. Delfin, 'ialino 0. 6ntal, 'e/ T. 0anlegro,;ohn 9. 0arteja, 0arlon B. 0orada, Allan D. Espina, Eduardo *ng, Agnesio D. Muebral,Edmundo B. .

"7>$&.'. No. ==787, 8 ebruar/ #77, >- (C'A -+.

"7#$'epublic Act No. --=.

"7$Supra note =+.

"7$Rollop. ++.

"75$

C(C 'esolution No. 7=#--=, Supranote +.
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104. Lopez v Mwss