G.R. No. 265610 - Borromeo vs. Lazada E-Services Philippines, Inc.

Case Summary (G.R. No. 265610)

Employment Background and Agreements

Borromeo and Parcia initially rendered services to Lazada through manpower agencies RGServe Manpower Services and Dynamic Personnel Assistance Manpower respectively. Subsequently, both entered into Independent Contractor Agreements with Lazada, beginning in April 2016 and July 2017, agreeing to provide logistics and delivery services using their own motor vehicles, compensated with a daily service fee.

Nature of the Working Relationship

Borromeo and Parcia were assigned routes and tasked to pick up and deliver products from Lazada merchants to its warehouse, reporting their activities to Lazada supervisors. They were also required to perform additional duties such as retrieving defective items, which they could not refuse for fear of losing assignments.

Grounds for Complaint and Lazada’s Defense

After being informed of termination due to personnel reduction, Borromeo and Parcia filed a complaint for illegal dismissal and unpaid benefits, asserting they were regular employees and that manpower agencies were labor-only contractors. Lazada argued they were independent contractors based on contractual terms, use of personal vehicles, business registrations, and absence of employer-employee relationship provisions.

Labor Arbiter's Findings

The Labor Arbiter dismissed the complaint for lack of jurisdiction, ruling no employer-employee relationship existed. Evidence such as signed independent contractor agreements, BIR and DTI registrations, issuance of official receipts, and lack of statutory deductions supported this finding. The Labor Arbiter applied the control test and found that Lazada's oversight of routes did not translate to control over how the work was performed, thus confirming the independent contractor status. The complaint’s allegations against manpower agencies as labor-only contractors were unsubstantiated due to their non-impleading.

NLRC and Court of Appeals Decisions

The NLRC affirmed the Labor Arbiter’s findings, holding that the parties’ agreements governed the relationship. It emphasized the freedom of contract and the lack of evidence to override the agreements. The CA found no grave abuse of discretion by the NLRC, highlighting factors such as DTI and BIR registrations, contract terms rejecting employer-employee relationship, use of personal vehicles, agreed payment terms, and lack of substantial control by Lazada. Both bodies concluded there was no illegal dismissal as no employment relation existed.

Petitioners' Arguments on Appeal

Borromeo and Parcia acknowledged the late filing of the petition but attributed this to their former counsel’s misrepresentation and urged consideration on merits. They cited the Supreme Court’s ruling in Ditiangkin v. Lazada, which invalidated similar independent contractor agreements and recognized riders as employees. They invoked the four-fold employer-employee test—selection and hiring, payment of wages, employer’s power of dismissal, and control over methods of work—arguing all factors were present. They stressed economic dependence, control over work means, issuance of company IDs, and performance of services integral to Lazada’s business as indicia of employment. They further claimed their engagement lasted over a year, granting regular employee status entitling them to reinstatement and benefits. They sought moral and exemplary damages and personal liability of individual respondents due to involvement in their dismissal.

Lazada’s Counterarguments

Lazada moved for outright dismissal due to the petition’s late filing without substantiated excuse and maintained that petitioners were independent contractors. Distinguishing this case from Ditiangkin, Lazada highlighted differences, such as contract expirations and distinct factual circumstances, and provided proof of business registrations, agreement terms, and lack of employer control. The company negated claims arising from ID cards and economic dependence, denying oppressive conduct to justify moral damages or personal liability of corporate officers.

Issues for Resolution

The Court identified two issues: (a) whether the petition should be dismissed for late filing; and (b) whether the Court of Appeals erred in affirming the NLRC’s ruling that Borromeo and Parcia were independent contractors.

Procedural Requirements and Late Filing

The Court reiterated strict compliance with Rule 45 requirements, including the 15-day period for filing petitions for review. While dismissal on procedural grounds is proper, judicial discretion allows relaxation of such rules in the interest of substantial justice, especially when procedural lapses result from counsel’s gross negligence and there are meritorious grounds.

Definition and Legal Framework on Independent Contractors

An independent contractor is defined as one who conducts an independent business and performs work using their own methods, subject only to control over results. Article 106 of the Labor Code distinguishes labor-only contracting from legitimate job contracting, requiring substantial capital, independent business, freedom from principal’s control over methods, and compliance with labor laws.

Applicability of Independent Contractor Classification

The Court found petitioners did not fit either recognized category of independent contractors: there was no third-party contractor involved (trilateral relationship), and petitioners lacked unique skills or talents characterizing bilateral independent contractors. They directly contracted with Lazada and were paid by it, negating independent contractor status.

Employer-Employee Relationship and Tests Applied

Applying the four-fold test, the Court found:

Selection and engagement were directly by Lazada.
Petitioners received compensation from Lazada, constituting wages.
Lazada had the power to terminate their services.
Lazada exercised control over the means and methods of work, including route monitoring, reporting procedures, and provision of equipment for scanning.

The Court also applied the economic reality test, considering facto

Case Syllabus (G.R. No. 265610)

Background and Factual Context

Petitioners Walter L. Borromeo and Jimmy N. Parcia worked as pick-up riders servicing Lazada E-Services Philippines, Inc. ("Lazada").
Borromeo initially worked from February 5, 2015, to March 31, 2016, under RGServe Manpower Services; Parcia from March 31, 2012, to March 31, 2016, under Dynamic Personnel Assistance Manpower.
Both subsequently entered into Independent Contractor Agreements with Lazada on April 1, 2016 (Borromeo) and July 16, 2017 (Parcia), respectively.
Under these contracts, they agreed to provide logistics and delivery services using their own motorcycles in exchange for a service fee of PHP 1,200 per full day.
The contracts stipulated no employer-employee relationship and included terms on duration and grounds for termination or renewal at Lazada's discretion.
Their duties included picking up products from Lazada merchants and delivering to Lazada warehouses; also retrieving defective items for return despite it not formally being rider duties.
Borromeo and Parcia were required to report arrivals and provide real-time communication with Lazada supervisors, including scanning products using Lazada-issued equipment.
On August 18-19, 2017, Lazada informed them of termination effective August 23, 2017, citing personnel reduction.

Petitioners’ Claims and Arguments

Borromeo and Parcia filed complaints for illegal dismissal and unpaid benefits (overtime, holiday pay, 13th month, etc.) before the NLRC.
They asserted they were regular employees due to:
- Their work being directly related and desirable to Lazada's core business.
- The claim that RGServe and Dynamic were labor-only contractors, implying Lazada as the true employer.
They contended:
- Their dismissal was without just cause and violated procedural due process.
- Economic dependence on Lazada as employees despite the Independent Contractor Agreement.
- Issuance of Lazada IDs and constant control evidenced employer-employee relationship.
They sought reinstatement, back wages, damages, and attorney’s fees.
They admitted delay in filing the final petition, blaming former counsel's misrepresentations regarding filing deadlines and consequences.

Respondents’ Position and Defense

Lazada argued Borromeo and Parcia were independent contractors, supported by:
- Their use of personal vehicles.
- Registration and licensing as independent businesses with BIR and DTI.
- Explicit contractual provisions negating employer-employee relationship.
Claimed Borromeo’s contract expired on March 30, 2017, without renewal due to refusal to deliver last mile services.
Parcia's contract was terminated after he did not return to work upon proposed route changes.
Argued absent employer-employee relationship, claims for labor benefits and illegal dismissal lacked jurisdiction and merit.
Contended other individuals named (Doronollo, Ancheta, Delantar, Reyes) had no personal liability as mere employees of Lazada without malice or bad faith.

Labor Arbiter's Findings and Ruling

Dismissed complaint for lack of jurisdiction due to absence of employer-employee relationship.
Relied on:
- Independent Contractor Agreements.
- Petitioners’ registration with BIR and DTI and issuance of official receipts.
- Lack of deductions for SSS, PhilHealth, and Pag-IBIG contributions.
- Lazada’s control limited to results (deliveries), not means or methods.
- The route sheet requirement was informational, not dictatorial of work methods.
Found contract terms governed by the Civil Code, not the Labor Code.
Noted failure to implead RGServe and Dynamic, so could not address labor-only contracting claim.
Ordered case dismissed.

National Labor Relations Commission (NLRC) Decision

Affirmed Labor Arbiter’s dismissal of the complaint for lack of employer-employee relationship.
Reiterated that the contractual relationship was bilateral and governed by the Civil Code.
Emphasized parties’ freedom to contract so long as terms do not violate law or public policy.
Denied reconsideration motion for lack of merit.

Court of Appeals (CA) Decision and Resolution

Denied the petition for certiorari filed by Borromeo and Parcia.
Agreed with NLRC findings:
- Petitioners were independent contractors based on DTI/BIR registration, contract terms, use of own vehicles, and absence of labor benefits.
- No employer control over means and methods; control related only to results.
- Agreements explicitly negated employer-employee relationship.
Held termination or non-renewal of contracts did not equate to illegal dismissal.
Denied reliefs prayed for by petitioners.
Denied motion for reconsideration.

Petitioners’ Arguments in the Supreme Court

Admitted late filing but invoked counsel’s gross negligence and misrepresentations to excuse delay, urging Court to consider merits.
Asserted CA erred relying on Ditiangkin v. Lazada, as that case was controlling and pet