Manila Water Company, Inc. vs. Pena

A contractor that lacks substantial capital or investment, whose workers perform activities directly related to the principal's main business, and which does not carry on an independent business free from the principal's control and supervision, is a labor-only contractor; the principal is deemed the employer of the workers and cannot defeat their security of tenure through fixed-term contracts imposed to preclude the acquisition of tenurial security.

Manila Water Company, Inc. is one of two private concessionaires contracted by the Metropolitan Waterworks and Sewerage System (MWSS) to manage the water distribution system in the East Zone of Metro Manila, pursuant to Republic Act No. 8041, otherwise known as the National Water Crisis Act of 1995. Under the Concession Agreement, Manila Water undertook to absorb former MWSS employees whose names and positions appeared in a list furnished by MWSS, while the employment of those not in the list was terminated on the day Manila Water took over the operation of the East Zone on August 1, 1997. Private respondents were contractual collectors of the MWSS and were among the 121 employees not included in that list, a circumstance that placed their continued engagement with the new concessionaire at the center of the dispute.

Private respondents Herminio D. Peña, Esteban B. Baldoza, Jorge D. Canonigo, Jr., Ike S. Delfin, Rizalino M. Intal, Rey T. Manlegro, John L. Marteja, Marlon B. Morada, Allan D. Espina, Eduardo Ong, Agnesio D. Quebral, Edmundo B. Victa, Victor C. Zafaralla, Edilberto C. Pingul and Federico M. Rivera were contractual collectors of the Metropolitan Waterworks and Sewerage System. When Manila Water Company, Inc. took over the operation of the East Zone of Metro Manila on August 1, 1997 as one of two private concessionaires under the Concession Agreement with the MWSS, it absorbed only those former MWSS employees whose names and positions appeared in the list furnished by the latter; the employment of those not in the list was terminated on that same day. Private respondents were among the 121 collectors excluded from the list.

Notwithstanding their exclusion, Manila Water engaged their services without a written contract from August 1, 1997 to August 31, 1997. On September 1, 1997, they signed a three-month contract to perform collection services for eight branches of Manila Water in the East Zone. Before that three-month contract expired, the 121 collectors incorporated the Association Collectors Group, Inc. (ACGI) on November 21, 1997, and Manila Water contracted ACGI to collect charges for the Balara Branch. Subsequently, most of the 121 collectors were asked by Manila Water to transfer to the First Classic Courier Services, a newly registered corporation; only private respondents remained with ACGI. Manila Water continued to transact with ACGI for its collection needs until February 8, 1999, when it terminated its contract with ACGI.

Throughout these arrangements, the collectors reported daily to the branch office of Manila Water because ACGI had no office or work premises, its corporate address being the residence of its president, Herminio D. Peña. In dealing with consumers, private respondents used receipts and identification cards issued by Manila Water. Manila Water issued memoranda regarding billing methods and the distribution of books to the collectors; required them to report daily and to remit their collections on the same day to the branch office or to deposit them with the Bank of the Philippine Islands; strictly monitored their attendance, such that a collector unable to perform his daily collection had to notify Manila Water or the branch office on the morning of the day of his absence; and, although it was ACGI that ultimately disciplined the collectors, the penalty to be imposed was dictated by Manila Water through letters it sent to ACGI specifying the penalties to be meted on erring private respondents. ACGI, for its part, had an authorized capital stock of P1,000,000.00 but only P62,500.00 paid-in, the 121 collectors having subscribed to four shares each and paid only P625.00 in order to comply with the incorporation requirements.

Private respondents filed a complaint for illegal dismissal and money claims against Manila Water, contending that they were its employees because all the methods and procedures of their collections were controlled by it. Manila Water asserted that private respondents were employees of ACGI, an independent contractor, and that it had no control or supervision over the manner in which they performed their work except as to the results, so that no employer-employee relationship existed between them and only a service contractor-client relationship existed with ACGI.

The Labor Arbiter found that private respondents were regular employees of Manila Water, not only because the tasks they performed were controlled by it but also because those tasks were obviously necessary and desirable to its principal business. The NLRC, on the other hand, found that the documentary evidence consisting of letters and memoranda regarding the collectors' poor performance did not constitute proof of control, since the documents merely identified the erring collectors and left the appropriate disciplinary actions to the corporation to impose, and that there was no evidence showing that ACGI's incorporation was irregular. The Court of Appeals found that Manila Water deliberately prevented the creation of an employment relationship with private respondents and that ACGI was not an independent contractor.

• Independent Contracting: Petitioner asserted that ACGI, a duly organized corporation primarily engaged in collection services, was an independent contractor which entered into a service contract for the collection of petitioner's accounts starting November 30, 1997 until the early part of February 1999, and that it therefore had no employment relationship with private respondents, who were employees of ACGI.
• Absence of Control: Petitioner maintained that it had no control and supervision over private respondents' manner of performing their work except as to the results thereof, so that it had only a service contractor-client relationship with ACGI.
• Temporary and Fixed-Term Engagement: Petitioner contended that the employment of private respondents from August 1, 1997 to August 30, 1997 was only temporary and done to accommodate their request to be absorbed, since petitioner was still undergoing a transition period, and that it was only when its business became settled that it employed private respondents for a fixed term of three months.
• Grave Abuse of Discretion: Petitioner argued that the Court of Appeals went beyond its jurisdiction in giving due course to respondents' petition for certiorari under Rule 65 of the Rules of Court notwithstanding the absence of any proof of grave abuse of discretion on the part of the NLRC.
• Bad Faith and Damages: Petitioner argued that the Court of Appeals found it guilty of bad faith and awarded moral and exemplary damages notwithstanding the absence of any specific evidence in support thereof.

• Control over Collection Methods: Private respondents contended that they were petitioner's employees, as all the methods and procedures of their collections were controlled by the latter.
• Grave Abuse of Discretion by the NLRC: Private respondents contended, in their petition for certiorari before the Court of Appeals, that the NLRC acted with grave abuse of discretion amounting to lack or excess of jurisdiction when it reversed the decision of the Labor Arbiter.

• Employer-Employee Relationship: Whether an employer-employee relationship existed between petitioner Manila Water and private respondents.
• Status of ACGI: Whether ACGI was an independent contractor or a labor-only contractor.
• Illegal Dismissal: Whether private respondents were illegally dismissed by petitioner.
• Moral and Exemplary Damages: Whether the awards of moral and exemplary damages in favor of private respondents were warranted.
• Grave Abuse of Discretion: Whether the Court of Appeals erred in giving due course to respondents' petition for certiorari under Rule 65 notwithstanding the absence of proof of grave abuse of discretion on the part of the NLRC.

• Employer-Employee Relationship: Yes. An employment relationship existed between petitioner and private respondents, the four-fold test being satisfied, with petitioner exercising control over the collectors' conduct in all three stages of their engagement.
• Status of ACGI: ACGI was not an independent contractor but a labor-only contractor, being merely an agent of petitioner under Section 5, Department Order No. 18-02, Rules Implementing Articles 106-109 of the Labor Code.
• Illegal Dismissal: Yes. As employer, petitioner bore the burden of proving that the dismissal was for a cause allowed by law and that procedural due process was observed; it failed to discharge that burden, having relied solely on the defense that it was not the employer.
• Moral and Exemplary Damages: No. Such awards cannot be justified solely on the premise that the employer dismissed the employee without just cause or due process; additional facts must be pleaded and proved.
• Grave Abuse of Discretion: No. The disharmony between the factual findings of the Labor Arbiter and the NLRC opened the door to review, the factual findings of administrative agencies not being infallible and being set aside when they fail the test of arbitrariness.

• Employer-Employee Relationship: The existence of an employment relationship is essentially a question of fact, and factual findings of quasi-judicial bodies like the NLRC, particularly when they coincide with those of the Labor Arbiter and are supported by substantial evidence, are accorded respect and even finality. A disharmony between the factual findings of the Labor Arbiter and the NLRC, however, opens the door to review, since factual findings of administrative agencies are not infallible and will be set aside when they fail the test of arbitrariness; when the findings of the NLRC contradict those of the Labor Arbiter, the Court, in the exercise of its equity jurisdiction, may look into the records and reexamine the questioned findings. Applying the four-fold test — (a) selection and engagement of the employee; (b) payment of wages; (c) power of dismissal; and (d) the employer's power to control the employee's conduct — the Court found that in all three stages of private respondents' services with petitioner, namely (1) from August 1, 1997 to August 31, 1997; (2) from September 1, 1997 to November 30, 1997; and (3) from December 1, 1997 to February 8, 1999, petitioner exercised control and supervision over their conduct. Although petitioner was not obliged to absorb private respondents, by engaging their services, paying their wages in the form of commission, subjecting them to its rules and imposing punishment in case of breach thereof, and controlling not only the end result but the manner of achieving the same, an employment relationship existed between them. The most important element 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.

• Status of ACGI: The resolution of the case initially boiled down to a determination of the true status of ACGI, whether it was an independent contractor or a labor-only contractor, since the existence of an employment relationship between petitioner and private respondents cannot be negated by simply alleging that the latter are employees of ACGI as an independent contractor; ACGI's status had to be measured in terms of and determined by the criteria set by statute. Job contracting is permissible only if (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. Labor-only contracting, as defined in Section 5, Department Order No. 18-02, refers to an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform job, work or service for a principal, and any of the following elements is present: (i) the contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal; or (ii) the contractor does not exercise the right to control over the performance of the work of the contractual employee. ACGI failed the statutory criteria. First, it did not have substantial capitalization or investment: while it had an authorized capital stock of P1,000,000.00, only P62,500.00 was actually paid-in, which cannot be considered substantial capitalization, the 121 collectors having subscribed to four shares each and paid only P625.00 to comply with incorporation requirements; further, private respondents reported daily to petitioner's branch office because ACGI had no office or work premises, its corporate address being the residence of its president, and in dealing with consumers they used receipts and identification cards issued by petitioner. Second, the work of private respondents was directly related to the principal business or operation of petitioner, since the collection of charges from consumers in the East Zone was clearly related to and in pursuit of petitioner's business of providing water. Lastly, 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 petitioner: prior to private respondents' alleged employment with ACGI, they were already working for petitioner subject to its rules and regulations regarding the manner and method of performing their tasks, and this form of control and supervision never changed although they were already under the seeming employ of ACGI, as shown by petitioner's memoranda on billing methods and distribution of books, its requirement of daily reporting and same-day remittance or deposit with the Bank of the Philippine Islands, its strict monitoring of attendance, and its dictation of the penalties to be meted on erring collectors through letters to ACGI. ACGI was therefore engaged in labor-only contracting and, as such, was considered merely an agent of petitioner. In labor-only contracting, the statute creates an employer-employee relationship for a comprehensive purpose: to prevent a circumvention of labor laws; the contractor is considered merely an agent of the principal employer, and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer. Since ACGI was only a labor-only contractor, the workers it supplied should be considered employees of petitioner.

• Illegal Dismissal: Private respondents performed activities which were necessary or desirable to petitioner's principal trade or business, and thus were regular employees of petitioner regardless of whether the engagement was merely an accommodation of their request, pursuant to Article 280 of the Labor Code, which provides that an employment shall be deemed regular where the employee has been engaged to perform activities usually necessary or desirable in the usual business or trade of the employer, notwithstanding any written agreement to the contrary and regardless of the oral agreement of the parties. As regular employees, private respondents were entitled to security of tenure which may not be circumvented by mere stipulation in a subsequent contract that their employment is one with a fixed period. While the Court has upheld the legality of fixed-term employment, where from the circumstances it is apparent that the periods have been imposed to preclude acquisition of tenurial security by the employee, they should be struck down or disregarded as contrary to public policy and morals. The term fixed in the subsequent contract was used to defeat the tenurial security which private respondents already enjoyed: the individual contracts were prepared by petitioner in the form of a letter addressed to the complainants, dated September 1, 1997, when complainants were already working for petitioner as collectors, and with their employment as their means of survival there was no room for them to disagree with the presented letter-contracts, their only choice being to negotiate the terms or to lose the employment they already had. As private respondents' employer, petitioner had the burden of proving that the dismissal was for a cause allowed under the law and that they were afforded procedural due process. Petitioner failed to discharge this burden by substantial evidence, as it maintained the defense that it was not the employer of private respondents. Having established that the schemes employed by petitioner were devious attempts to defeat the tenurial rights of private respondents and that it failed to comply with the requirements of termination under the Labor Code, the dismissal of private respondents was tainted with illegality. Under Article 279 of the Labor Code, an employee unjustly dismissed from work is entitled to reinstatement without loss of seniority rights and other privileges, and to full backwages, inclusive of allowances, and to other benefits or their monetary equivalent computed from the time compensation was withheld up to the time of actual reinstatement; however, if reinstatement is no longer possible, the employer has the alternative of paying separation pay in lieu of reinstatement.

• Moral and Exemplary Damages: The award of moral and exemplary damages in favor of private respondents cannot be sustained. Such an award cannot be justified solely upon the premise that the employer dismissed his employee without just cause or due process; additional facts must be pleaded and proved to warrant the grant of moral damages under the Civil Code. The act of dismissal must be attended with bad faith, or fraud, or must be oppressive to labor or done in a manner contrary to morals, good customs or public policy, and it must further be shown that social humiliation, wounded feelings, or grave anxiety resulted therefrom. Similarly, exemplary damages are recoverable only when the dismissal was effected in a wanton, oppressive or malevolent manner. Those circumstances were not adequately established. Private respondents are, however, entitled to attorney's fees as they were compelled to litigate with petitioner and incur expenses to enforce and protect their interests; the award by the Labor Arbiter of P22,250.00 as attorney's fees, being reasonable, was sustained.

• Grave Abuse of Discretion: The factual findings of the Labor Arbiter and the NLRC being in disharmony, the Court was warranted in looking into the records of the case and reexamining the questioned findings in the exercise of its equity jurisdiction. Factual findings of administrative agencies are not infallible and will be set aside when they fail the test of arbitrariness, so that the Court of Appeals did not err in reviewing the NLRC's reversal of the Labor Arbiter's findings.

• Labor-Only Contracting — An arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform job, work or service for a principal, and any of the following elements is present: (i) the contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal; or (ii) the contractor does not exercise the right to control over the performance of the work of the contractual employee. In such a case, the statute creates an employer-employee relationship for the comprehensive purpose of preventing a circumvention of labor laws; the contractor is considered merely an agent of the principal employer, and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer. The Court applied this doctrine to hold that ACGI, having only P62,500.00 in paid-in capital, no office or work premises, and no independent control over the collectors, was a labor-only contractor whose supplied workers were petitioner's employees.

• Statutory Criteria for Permissible Job Contracting — Job contracting is permissible only if (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. ACGI satisfied neither condition, so its contract with petitioner could not shield the latter from the employment relationship.

• Four-Fold Test of Employment — 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. The most important element 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. Petitioner's memoranda on billing and book distribution, its daily reporting and same-day remittance requirements, its attendance monitoring, and its dictation of penalties all established this control.

• Regular Employment under Article 280 — An employment shall be deemed regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, notwithstanding any written agreement to the contrary and regardless of the oral agreement of the parties, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement, or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. Because the collectors' work was necessary and desirable to petitioner's water distribution business, they became regular employees regardless of the accommodation or fixed-term character of their engagement.

• Fixed-Term Employment and Security of Tenure — While the Court has upheld the legality of fixed-term employment, where from the circumstances it is apparent that the periods have been imposed to preclude acquisition of tenurial security by the employee, they should be struck down or disregarded as contrary to public policy and morals. The Court found that the three-month letter-contracts prepared by petitioner and signed by collectors who were already working for it were used to defeat the tenurial security they already enjoyed, and were therefore null and void.

• Burden of Proof in Illegal Dismissal — As employer, the petitioner bears the burden of proving that the dismissal was for a cause allowed under the law and that the employee was afforded procedural due process. Petitioner failed to discharge this burden by substantial evidence because it maintained the defense that it was not the employer of private respondents.

• Moral and Exemplary Damages in Illegal Dismissal — An award of moral damages cannot be justified solely upon the premise that the employer dismissed his employee without just cause or due process; additional facts must be pleaded and proved, and the act of dismissal must be attended with bad faith, fraud, or must be oppressive to labor or done in a manner contrary to morals, good customs or public policy, with social humiliation, wounded feelings, or grave anxiety resulting therefrom. Exemplary damages are recoverable only when the dismissal was effected in a wanton, oppressive or malevolent manner. These circumstances were not adequately established, so the awards were deleted.

• Attorney's Fees — Attorney's fees are recoverable where the party was compelled to litigate with the adverse party and incur expenses to enforce and protect its interests. The award of P22,250.00, being reasonable, was sustained.

• "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." — This passage, drawn from De los Santos vs. NLRC, states the statutory criteria against which ACGI's status was measured; it is the canonical formulation of permissible job contracting applied in the case.

• "In labor-only contracting, the statute creates an employer-employee relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer." — This is the ratio decidendi on the consequence of labor-only contracting, grounding the finding that private respondents were petitioner's own employees.

• "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. The most important element 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." — This passage states the four-fold test and identifies control as its decisive element, the standard the Court applied to petitioner's memoranda, reporting requirements, attendance monitoring, and dictation of penalties.

• "While this Court has upheld the legality of fixed-term employment, where from the circumstances it is apparent that the periods have been imposed to preclude acquisition of tenurial security by the employee, they should be struck down or disregarded as contrary to public policy and morals." — This passage supplies the rule invalidating the three-month letter-contracts, and is the frequently cited formulation on fixed-term employment as a means of circumventing security of tenure.

• "Such an award cannot be justified solely upon the premise that the employer dismissed his employee without just cause or due process. Additional facts must be pleaded and proved to warrant the grant of moral damages under the Civil Code." — This passage states the evidentiary standard for moral damages in illegal dismissal cases, the basis for deleting the awards of moral and exemplary damages.

• De los Santos vs. NLRC, 423 Phil. 1020, 1032 [2001], citing Tiu vs. NLRC, 324 Phil. 202 [1996] — Controlling precedent enunciating the statutory criteria for permissible job contracting, quoted at length and applied to ACGI's failure to satisfy either condition.
• San Miguel Corporation vs. MAERC Integrated Services, Inc., G.R. No. 144672, 10 July 2003 — Cited for the rule that a labor-only contractor is considered merely an agent of the principal employer, who is responsible to the contractor's employees as if they had been directly employed.
• Sy vs. Court of Appeals, G.R. No. 142293, 27 February 2003 — Cited as authority for the four-fold test of employment and for the primacy of the employer's power of control over the means and methods of the work.
• Magsalin vs. National Organization of Working Men, G.R. No. 148492, 9 May 2003 — Cited for the rule that fixed-term employment imposed to preclude the acquisition of tenurial security is struck down as contrary to public policy and morals.
• Brent School, Inc. vs. Zamora, 181 SCRA 702 — Cited in the Labor Arbiter's disquisition, quoted with approval, for the doctrine that not all contracts of employment fixing a period are invalid, the evil sought to be prevented being agreements entered into precisely to circumvent security of tenure; the individual letter-contracts in this case were held to fall within the prohibited class.
• Solidbank Corporation (now Metrobank) vs. Court of Appeals, G.R. No. 151026, 25 August 2003 — Cited for the rule that the employer bears the burden of proving that the dismissal was for a cause allowed under the law and that procedural due process was observed.
• De Leon vs. NLRC, G.R. No. 112661, 30 May 2001, 358 SCRA 274, 283 — Cited for the rule that where reinstatement is no longer possible, the employer may instead pay separation pay in lieu of reinstatement.
• PSBA-Manila vs. NLRC, 329 Phil. 932, 940 [1996] — Cited for the rule that exemplary damages are recoverable only when the dismissal was effected in a wanton, oppressive or malevolent manner.
• National Bookstore, Inc. vs. Court of Appeals, G.R. No. 146741, 27 February 2002, 378 SCRA 194, 204 — Cited as the basis for sustaining the award of attorney's fees to private respondents who were compelled to litigate to protect their interests.
• Fleischer Company, Inc. vs. NLRC, G.R. No. 121608, 26 March 2001, 355 SCRA 105, 111 — Cited for the rule that the existence of an employer-employee relationship is a question of fact and that factual findings of quasi-judicial bodies supported by substantial evidence are accorded respect and even finality.
• Tres Reyes vs. Maxim's Tea House, G.R. No. 140853, 27 February 2003 — Cited in support of the respect accorded to factual findings of quasi-judicial bodies.
• Diamond Motors Corporation vs. Court of Appeals, G.R. No. 151981, 1 December 2003 — Cited for the rule that a disharmony between the factual findings of the Labor Arbiter and the NLRC opens the door to review by the Court, which may look into the records and reexamine the findings.

• Article 280, Labor Code — Provides that an employment shall be deemed regular where the employee has been engaged to perform activities usually necessary or desirable in the usual business or trade of the employer, notwithstanding any written agreement to the contrary and regardless of the oral agreement of the parties, except in cases of specific project or seasonal employment. Applied to hold that private respondents, whose collection work was necessary and desirable to petitioner's water distribution business, became regular employees entitled to security of tenure.
• Article 279, Labor Code — Provides that an employee unjustly dismissed from work is entitled to reinstatement without loss of seniority rights and other privileges, and to full backwages, inclusive of allowances, and to other benefits or their monetary equivalent computed from the time compensation was withheld up to actual reinstatement. Cited in support of the relief granted, with separation pay in lieu of reinstatement where reinstatement is no longer possible.
• Section 5, Department Order No. 18-02, Rules Implementing Articles 106-109 of the Labor Code — Defines labor-only contracting as an arrangement where the contractor merely recruits, supplies or places workers to perform job, work or service for a principal, and either the contractor lacks substantial capital or investment relating to the job while the workers perform activities directly related to the principal's main business, or the contractor does not exercise the right to control the performance of the work of the contractual employee. This provision supplied the test under which ACGI was declared a labor-only contractor. The Department Order superseded Rule VIII-A, Book III of the Rules Implementing the Labor Code.
• Rule 65, Rules of Court — The procedural vehicle invoked by private respondents before the Court of Appeals and challenged by petitioner as having been improperly given due course; the Court upheld the review in light of the disharmony between the factual findings of the Labor Arbiter and the NLRC.
• Republic Act No. 8041 (National Water Crisis Act of 1995) — The statutory basis for the Concession Agreement under which petitioner, as one of two private concessionaires, took over the operation of the East Zone of Metro Manila and assumed the obligation to absorb former MWSS employees appearing in the list furnished by MWSS.
• Civil Code provisions on moral and exemplary damages — Invoked to require that additional facts beyond a dismissal without just cause or due process be pleaded and proved, and that the dismissal be attended with bad faith, fraud, oppression, or wanton or malevolent conduct, before moral and exemplary damages may be awarded.

Davide, Jr., C.J. (Chairman), Panganiban, Carpio, and Azcuna, JJ., concur.