Case Summary (G.R. No. 257821)
Antecedents
In April 2016, Lazada engaged the petitioners as motorcycle riders through Independent Contractor Agreements. These agreements explicitly stated that no employer-employee relationship existed, and they had a one-year term. Petitioners’ contracts expired at various times in 2017, while one was terminated early due to misconduct. The petitioners alleged illegal dismissal and filed a complaint seeking reinstatement and backwages.
Ruling of the Labor Arbiter
On April 10, 2018, the Labor Arbiter ruled in favor of Lazada, stating that there was no employer-employee relationship due to the nature of the Independent Contractor Agreements. Consequently, the complaint was dismissed for lack of jurisdiction.
Ruling of the NLRC
The NLRC, in its decision on November 21, 2018, upheld the Labor Arbiter’s ruling, emphasizing the absence of an employer-employee relationship. The Commission noted it did not have jurisdiction to determine the legality of the petitioners' contract termination.
Ruling of the Court of Appeals
The CA, in its decision on March 25, 2021, also affirmed the decisions of the lower courts, finding no employer-employee relationship and rejecting the evidence presented by the petitioners to establish control by Lazada over their work.
Issues for Resolution
The central issue was whether the CA erred in concluding that the petitioners were independent contractors. Subordinate issues included whether their job functions were necessary in Lazada's business and whether they met the four-fold test for employment.
Arguments of Petitioners
The petitioners argued that they were regular employees engaged in tasks essential to Lazada’s operations and did not possess unique skills that would classify them as independent contractors. They cited instances outlining Lazada’s control over their work processes, including disciplinary actions and issuance of identification and employment documentation.
Arguments of Respondents
Lazada maintained that the petitioners were independent contractors and that the tasks they performed as riders were not essential to its business operations. Lazada asserted that it did not exercise control over the petitioners' methods of work since they had discretion regarding their transportation and work hours.
Ruling of the Court
The Court clarified that in evaluating labor cases, it follows a two-tier test—applying both the four-fold test and the economic dependence test to ascertain the existence of an employer-employee relationship. The Court highlighted that employment agreements are imbued with public interest. Consequently, any effort to categorize such contracts strictly as independent contractor agreements does not exempt parties from labor protections.
Findings on Employment Status
The Court found that the petitioners satisfied both the four-fold and economic dependence tests as they were hired by Lazada, received wages, were subject to dismissal, and Lazada controlled the means and methods of their
...continue readingCase Syllabus (G.R. No. 257821)
Background and Procedural History
- Petitioners Rogelio Garalde Mendaros and others were hired in April 2016 by Lazada E-Services Philippines, Inc. as motorcycle riders through Independent Contractor Agreements (ICAs) stating no employer-employee relationship existed.
- The ICAs had a one-year term; contracts of several petitioners expired in early April 2017, some ended prematurely due to alleged violations.
- Petitioners filed a complaint for illegal dismissal, money claims, damages, and attorney’s fees, asserting they were regular employees unlawfully dismissed.
- Lazada contended the ICAs negated employer-employee relationship, classified as contracts for services which fall under civil law, hence labor tribunals lack jurisdiction.
- Labor Arbiter (LA) dismissed petitioners’ complaint for lack of jurisdiction, a ruling affirmed by the National Labor Relations Commission (NLRC) and subsequently by the Court of Appeals (CA).
- Petitioners elevated the case to the Supreme Court via a Petition for Review on Certiorari under Rule 45 of the Rules of Court.
Legal Issue
- Whether the CA erred in affirming the labor tribunals’ finding that petitioners were independent contractors, denying the existence of an employer-employee relationship with Lazada.
- Subsidiary issues include:
- If petitioners’ tasks were necessary or desirable to Lazada’s usual trade or business.
- If petitioners satisfied the four-fold test of employment.
- If petitioners were economically dependent on Lazada for their livelihood.
Arguments of the Parties
Petitioners’ Arguments
- Despite the ICA terms, petitioners are regular employees performing duties integral to Lazada's business.
- They did not possess unique skills distinguishing them from ordinary employees.
- The four-fold test was met:
- Lazada selected and engaged them.
- Wage payment evidenced by PHP 1,200 daily rate.
- Lazada had power to dismiss, as shown by dismissal for alleged violations.
- Lazada controlled means and methods of work, as shown by letters, certificates, run sheets, time logs, and identification cards.
- Provisions in ICAs showed Lazada had discretion and control over performance schedules and methods.
Respondents’ Arguments
- Petitioners were independent contractors, their work as riders not necessary to Lazada’s usual business.
- Petitioners failed to meet the four-fold and economic dependence tests.
- Lazada did not control means or methods; petitioners chose transportation routes, breaks, and delivery timing.
- Petitioners were free to work for others, negating control a