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LOPEZ v MWSS GR 12600 October 7, 1988 CONTROL TEST

A lot of petitioners (half a page). Contractor-collectors asserting that they are employees because MWSS exercises control. SC
rules in favor of petitioner.
Facts:
- Lopez et al (many, many petitioners) were contracted by the MWSS as collector-contractors in different years
- 1997: The collections department of MWSS was transferred to a private concessionaire. MWSS then terminated the
services of the collector-contractors as well as their own employees in the said department. They gave separation pay
to the latter but did not give any to the collector-contractors.
- Lopez et al, the group of collector contractors, now sue MWSS on the grounds that they are employees of MWSS via
the control test which means they should receive corresponding separation pays according to their service (citing Chua
case)
- MWSS states that they are not employees but mere contractors as can be clearly discerned from the contract.
- MWSS also states that the petitioners are employees of the independent contractor ACGI.
ISSUE:
WoN the petitioners are actually employees of MWSS despite the clear pronouncement on the contract that they are
simply contractors and denies the existence of an employee-employer relationship
RULING:
CA denies petition stating that the contract was clear in saying that the contractors are merely contractors. SC grants
the petition.
HELD:
- YES, the petitioners are employees of MWSS because MWSS exercises control over them which creates an employee-
employer relationship. This control is not present in a contractor:
o On the contract stipulation:
It is axiomatic that the existence of an employer-employee relationship cannot be negated by
expressly repudiating it in an agreement and providing therein that the employee is "not an MWSS
employee" when the terms of the agreement and the surrounding circumstances show otherwise. The
employment status of a person is defined and prescribed by law and not by what the parties say it
should be.
o Control can be simply in existence and not practiced:
In addition, the control test merely calls for the existence of the right to control, and not the exercise
thereof. It is not essential for the employer to actually supervise the performance of duties of the
employee, it is enough that the former has a right to wield the power.
o Evidence of control are clearly shown in the records:
Contrary to MWSS assertion that petitioners were "free to adopt (their) own method/strategy in the
matter of collection", the Agreement clearly provided that the procedure and/or manner of the
collection of bills to be followed shall be in accordance with the provisions of the Manual of
Procedures. Art. VI of the Agreement
Furthermore, petitioners did not have their own offices nor their own supplies and equipment. MWSS
provides them with company stationeries, office space and equipment.74 Likewise, MWSS comported
itself as the employer of petitioners, providing them with I.D.s. and certifications which declared them
as employees of MWSS It also deducted and remitted petitioners withholding taxes and Medicare
contributions
- ON ACGI not being the employer:
o ACGI does not have substantial capitalization or investment in the form of tools, equipment, machineries, work
premises, and other materials, to qualify as an independent contractor.
o the work of the private respondents was directly related to the principal business or operation of MWSS
o ACGI did not carry on an independent business or undertake the performance of its service contract according
to its own manner and method, free from the control and supervision of its principal, petitioner.