The Supreme Court (SC) has ordered Lazada E-Services Philippines, Inc. (Lazada) to pay the full backwages and other benefits of its five rider-employees who were hired in 2016 and dismissed in 2017.
The ruling granted the petition filed by Chrisden Cabrera Ditiangkin, Hendrix Masamayor Molines, Harvey Mosquito Juanio, Joselito Castro Verde, and Brian Anthony Cubacub Nabong, who – aside from the payment of their benefits – were ordered reinstated to their former posts as riders of Lazada.
It remanded the case to the arbiter of the National Labor Relations Commission (NLRC) for the computation of the actual monetary benefits of the reinstated riders. The monetary benefits should earn an interest of six per cent annually from the finality of the SC decision until fully paid.
Senior Associate Justice Marvic M.V.F. Leonen wrote the decision that was made public last Jan. 19.
The SC’s decision reiterated its 2014 ruling: “When the status of the employment is in dispute, the employer bears the burden to prove that the person whose service it pays for is an independent contractor rather than a regular employee with or without fixed terms.”
In February 2016, the five riders were hired by Lazada to pick up items from sellers and deliver them to the firm’s warehouse with P1,200 each per day as service fee, for one year. They signed a contract called “Independent Contractor Agreement.”
In January 2017, the five riders were told by a Lazada dispatcher that they have been removed from their usual routes and will no longer be given any schedules. Later, they learned that their routes had been given to other riders.
They filed a complaint before the NLRC for illegal dismissal. They told the labor arbiter that they are regular employees of Lazada because the means and methods by which they carry out their work are subject to the discretion and control of Lazada.
Lazada, on the other hand, countered that the five riders are not regular employees but independent contractors. It pointed out that it is not a common carrier but a business which facilitates the sale of goods between its sellers and buyers.
It said that when a buyer purchases an item through Lazada, it merely coordinates the delivery of the product through an independent transportation service, and, thus, delivery is merely an ancillary activity and not its main line of business.
On Nov. 3, 2017, the labor arbiter dismissed the complaint. The NLRC affirmed the dismissal on April 30, 2018. The Court of Appeals (CA) denied on March 15, 2019 the riders’ petition challenging the NLRC’s ruling. The riders elevated the case to the SC.
In resolving the petition to determine the existence of an employer-employee relationship, the SC employed a two-tiered test -- the four-fold test and the economic dependence test.
Under the four-fold test, the factors must be proven: “the employer's selection and engagement of the employee; the payment of wages; the power to dismiss; and the power to control the employee's conduct.”
The SC said:
“The power of control is the most significant factor in the four-fold test. The right to control extends not only over the work done but over the means and methods by which the employee must accomplish the work. The power of control does not have to be actually exercised by the employer. It is sufficient that the employer ‘has a right to wield the power.’
“In this case, respondents (Lazada) contend that petitioners (riders) are independent contractors and that there is no employer-employee relationship between them. They submit that petitioners represented having substantial capital when they signed the Contract and should be bound by its stipulations.
“However, respondents failed to discharge their burden of proving that petitioners are independent contractors. Petitioners do not fall under any of the categories of independent contractors.
“First, petitioners are not hired by a contractor or subcontractor. Petitioners merely refer to RGSERVE, Inc. as their former employer, but it is clear in the parties' submissions that petitioners were directly hired by respondents. Each petitioner signed an individual Contract with respondent Lazada who paid them directly. Thus, there is no trilateral relationship wherein a contractor or subcontractor is required to possess substantial capital or investment.
“Second, petitioners cannot be considered independent contractors in a bilateral relationship. The work performed by petitioners do not require a special skill or talent. Picking up and delivering goods from warehouse to buyers do not call for a specific expertise. It is also not shown that petitioners were hired due to their unique ability or competency.
“Contrary to respondents' assertions, petitioners satisfy both the four-fold and economic dependence tests. Here, the four factors are present.
“First, petitioners are directly employed by respondent Lazada as evidenced by the Contracts they signed. Petitioner's former employer, RGSERVE, Inc., is not a party to the Contract with respondent Lazada.
“Second, as indicated in the Contract, petitioners receive their salaries from respondent Lazada. Petitioners are paid by respondent Lazada the amount of Pl ,200 for each day of service.
“Third, respondent Lazada has the power to dismiss petitioners. In their contract, respondents can immediately terminate the agreement if there is a breach of material provisions of the Contract.
“Lastly, respondent Lazada has control over the means and methods of the performance of petitioners' work.
“The services performed by petitioners are integral to respondents' business. Respondents insist that the delivery of items is only incidental to their business as they are mainly an online platform where sellers and buyers transact.
“However, the delivery of items is clearly integrated in the services offered by respondents. That respondents could have left the delivery of the goods to the sellers and buyers is of no moment because this is evidently not the business model they are implementing.
“In carrying out their business, they are not merely a platform where parties can transact; they also offer the delivery of the items from the sellers to the buyers. The delivery eases the transaction between the sellers and buyers and is an integral part of respondent Lazada's business.
Further, petitioners have invested in equipment to be engaged by respondents. Particularly, petitioners are required by respondents to use their own motor vehicles and other equipment and supplies in the delivery of the items.
“Moreover, petitioners had no control over their own profit or loss because they were paid a set daily wage. Petitioners also had no control over their own time and they cannot offer their service to other companies as respondents can demand their presence from time to time.
“More importantly, petitioners are dependent on respondents for their continued employment in this line of business. As the facts reveal, petitioners have been previously engaged by a third-party contractor to provide services for respondents. This time, petitioners were directly hired by respondents. This demonstrates that petitioners have been economically dependent on respondents for their livelihood.
“WHEREFORE, the Petition for Review is GRANTED. The Jan. 14, 2019 and March 15, 2019 Resolutions of the Court of Appeals in CA-G.R. SP No. 158529 are REVERSED.
“Respondents Lazada E-Services Philippines, Inc., Allan Ancheta, Richard Delantar, and Jade Andrade are ORDERED to reinstate Chrisden Cabrera Ditiangkin, Hendrix Masamayor Molines, Harvey Mosquito Juanio, Joselito Castro Verde, and Brian Anthony Cubacub Nabong to their former positions, and to pay their full backwages, overtime pay, thirteenth month pay, cash bond deposit, and other benefits and privileges from the time they were dismissed on Jan. 16, 2017, up to their actual reinstatement.
“This case is REMANDED to the Labor Arbiter for the computation of the total monetary benefits awarded and due to Chrisden Cabrera Ditiangkin, Hendrix Masamayor Molines, Harvey Mosquito Juanio, Joselito Castro Verde, and Brian Anthony Cubacub Nabong. All monetary awards shall be subject to the interest rate of 6 percent per annum from the date of finality of this Decision until full payment.132 SO ORDERED.”
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