Manila Water v. Dalumpines (G.R. No. 175501; October 4, 2010)
CASE DIGEST: MANILA WATER COMPANY, INC., Petitioner, v. JOSE J. DALUMPINES, EMMANUEL CAPIT, ROMEO B. CASTOLONE, MELITANTE CASTRO, NONITO FERNANDEZ, ARNULFO JAMISON, ARTHUR LAVISTE, ESTEBAN LEGARTO, SUSANO MIRANDA, RAMON C. REYES, JOSE SIERRA, BENJAMIN TALAVERA, MOISES ZAPATERO, EDGAR PAMORAGA, BERNARDO S. MEDINA, MELENCIO M. BAONGUIS, JR., JOSE AGUILAR, ANGEL C. GARCIA, JOSE TEODY P. VELASCO, AUGUSTUS J. TANDOC, ROBERTO DAGDAG, MIGUEL LOPEZ, GEORGE CABRERA, ARMAN BORROMEO, RONITO R. FRIAS, ANTONIO VERGARA, RANDY CORTIGUERRA, and FIRST CLASSIC COURIER SERVICES, INC., Respondents.
FACTS: Petitioner Manila Water Company, Inc. (Manila Water) was one of two private concessionaires contracted by the MWSS to manage the water distribution system in the east zone of Metro Manila.
Under the concession agreement, Manila Water undertook to absorb the regular employees of MWSS listed by the latter effective August 1, 1997. Individual respondents, with the exception of Moises Zapatero (Zapatero) and Edgar Pamoraga (Pamoraga), were among the one hundred twenty-one (121) employees not included in the list of employees to be absorbed by Manila Water. Nevertheless, Manila Water engaged their services without written contract from August 1, 1997 to August 31, 1997. On September 1, 1997, individual respondents signed a three (3)-month contract to perform collection services on commission basis for Manila Waters branches in the east zone.
Before the expiration of the contract of services, the 121 bill collectors formed a corporation duly registered with the Securities and Exchange Commission (SEC) as the "Association Collectors Group, Inc." (ACGI). ACGI was one of the entities engaged by Manila Water for its courier service. Manila Water entered into a service agreement with respondent First Classic Courier Services, Inc. (FCCSI) also for its courier needs. The service agreements between Manila Water and FCCSI covered the periods 1997 to 1999 and 2000 to 2002. FCCSI gave a deadline for the bill collectors who were members of ACGI to submit applications and letters of intent to transfer to FCCSI. The individual respondents in this case were among the bill collectors who joined FCCSI and were hired effective December 1, 1997.
On various dates between May and October 2002, individual respondents were terminated from employment. Manila Water no longer renewed its contract with FCCSI because it decided to implement a "collectorless" scheme whereby Manila Water customers would instead remit payments through "Bayad Centers." Thus, aggrieved bill collectors individually filed complaints for illegal dismissal, unfair labor practice, damages, and attorneys fees, with prayer for reinstatement and backwages against petitioner Manila Water and respondent FCCSI.
The LA rendered a decision dismissing the complaint for lack of employer-employee relationship. Respondent bill collectors filed an appeal to the NLRC but the same was denied. Respondents filed a petition for certiorari to the CA which reversed the decision of the NLRC. Petitioners filed a motion for reconsideration but the same was denied. Hence, this petition.
ISSUE:
Is there employer-employee relationship between respondent bill collectors and petitioner Manila Water?
HELD: Job contracting is permissible only if the following conditions are met:
[1] The contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and,
[2] The contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of the business.
Article 106 of the Code provides that there is labor-only contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such person are performing activities which are directly related to the principal business of the employer. In such cases, 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 to the same extent as if the latter were directly employed by him.
In the instant case, the CA found that FCCSI is a labor-only contractor. Based on the factual findings of the CA, FCCSI does not have substantial capital or investment to qualify as an independent contractor. FCCSI was incorporated on November 14, 1995, with an authorized capital stock ofP400,000.00, of which onlyP100,000.00 is actually paid-in. Going by the pronouncement in Pe, such capitalization can hardly be considered substantial.
As correctly ruled by the CA, FCCSIs capitalization may not be considered substantial considering that it had close to a hundred collectors covering the east zone service area of Manila Water customers. The allegation in the position paper of FCCSI that it serves other companies courier needs does not "cure" the fact that it has insufficient capitalization to qualify as independent contractor. Neither did FCCSI prove its allegation by substantial evidence other than by their self-serving declarations. What is evident is that it was Manila Water that provided the equipment and service vehicles needed in the performance of the contracted service, even if the contract between FCCSI and Manila Water stated that it was the Contractor which shall furnish at its own expense all materials, tools, and equipment needed to perform the tasks of collectors.
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In the instant case, the CA found that FCCSI is a labor-only contractor. Based on the factual findings of the CA, FCCSI does not have substantial capital or investment to qualify as an independent contractor. FCCSI was incorporated on November 14, 1995, with an authorized capital stock ofP400,000.00, of which onlyP100,000.00 is actually paid-in. Going by the pronouncement in Pe, such capitalization can hardly be considered substantial.
As correctly ruled by the CA, FCCSIs capitalization may not be considered substantial considering that it had close to a hundred collectors covering the east zone service area of Manila Water customers. The allegation in the position paper of FCCSI that it serves other companies courier needs does not "cure" the fact that it has insufficient capitalization to qualify as independent contractor. Neither did FCCSI prove its allegation by substantial evidence other than by their self-serving declarations. What is evident is that it was Manila Water that provided the equipment and service vehicles needed in the performance of the contracted service, even if the contract between FCCSI and Manila Water stated that it was the Contractor which shall furnish at its own expense all materials, tools, and equipment needed to perform the tasks of collectors.
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The elements to determine the existence of an employment relationship are:
(a) the selection and engagement of the employee;
(b) the payment of wages;
(c) the power of dismissal; and,
(d) the employer's power to control the employee's conduct.
(a) the selection and engagement of the employee;
(b) the payment of wages;
(c) the power of dismissal; and,
(d) the employer's power to control the employee's conduct.
The most important of these elements is the employer's control of the employee's conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish it.
First, respondent bill collectors were individually hired by the contractor, but were under the direct control and supervision of the concessionaire. Second, they performed the same function of courier and bill collection services. Third, the element of control exercised by Manila Water over respondent bill collectors is manifested in the following circumstances:
(a) respondent bill collectors reported daily to the branch offices of Manila Water to remit their collections with the specified monthly targets and comply with the collection reporting procedures prescribed by the latter;
(b) respondent bill collectors, except for Pamoraga and Zapatero, were among the 121 collectors who incorporated ACGI;
(c) Manila Water continued to pay their wages in the form of commissions even after the employees alleged transfer to FCCSI. Manila Water paid the respondent bill collectors their individual commissions, and the lump sum paid by Manila Water to FCCSI merely represented the agency fee; and
(d) the certification or individual clearances issued by Manila Water to respondent bill collectors upon the termination of the service contract with FCCSI.
First, respondent bill collectors were individually hired by the contractor, but were under the direct control and supervision of the concessionaire. Second, they performed the same function of courier and bill collection services. Third, the element of control exercised by Manila Water over respondent bill collectors is manifested in the following circumstances:
(a) respondent bill collectors reported daily to the branch offices of Manila Water to remit their collections with the specified monthly targets and comply with the collection reporting procedures prescribed by the latter;
(b) respondent bill collectors, except for Pamoraga and Zapatero, were among the 121 collectors who incorporated ACGI;
(c) Manila Water continued to pay their wages in the form of commissions even after the employees alleged transfer to FCCSI. Manila Water paid the respondent bill collectors their individual commissions, and the lump sum paid by Manila Water to FCCSI merely represented the agency fee; and
(d) the certification or individual clearances issued by Manila Water to respondent bill collectors upon the termination of the service contract with FCCSI.
The certification stated that respondents were contract collectors of Manila Water and not of FCCSI. Thus, this Court agrees with the findings of the CA that if, indeed, FCCSI was the true employer of the bill collectors, it should have been the one to issue the certification or individual clearances.
DENIED
DENIED
