In February 2016, Chrisden Ditiangkin and several others each executed an Independent Contractor Agreement with Lazada E-Services Philippines, Inc. whereby they agreed to be riders for Lazada. Lazada is an online selling site which allows sellers to sell their products online via their website or mobile application. The primary task of the riders is to pick up items for sale from sellers an then bring those items to Lazada’s warehouse. The contract specified that the duration of their agreement will be for one year or until February 2017; that the riders shall be paid Php1,200.00 a day, and that the riders shall use their own motorcycles, among others.
In January 2017, the riders were told that they were no longer given any schedules. They still reported for work for three days until they learned that their routes were given to other riders. Ditiangkin et al then filed a labor case against Lazada for illegal dismissal.
In its defense, Lazada averred that the riders are independent contractors as proven by their contract; that after the December 2016 holidays, the demand for riders went down hence they had to reorganize their riders’ schedules; that the contracts of the riders were not terminated.
The Labor Arbiter ruled in favor of Lazada. The NLRC affirmed the decision of the labor arbiter. The Court of Appeals dismissed the appeal filed by Ditiangkin et al on the ground that the remedy used was improper.
ISSUE: Whether or not the riders are regular employees of Lazada.
HELD: Yes. Under the four-fold test, to establish an employer-employee relationship, four factors must be proven: (a) the employer’s selection and engagement of the employee; (b) the payment of wages; ( c) the power to dismiss; and (d) the power to control the employee’s conduct. All these are present in this case:
(a) Despite how the contract was named, it was clear that Ditiangkin et al were directly hired by Lazada;
(b) Ditiangkin et al were paid Php1,200.00 a day;
(c) The contract stated that Lazada may immediately terminate the contract for any breach; and
(d) Lazada imposed strict rules on how the riders’ work is carried out. Lazada requires the accomplishment of a route sheet which keeps track of the arrival, departure, and unloading time of the items. Ditiangkin et al shoulder a penalty of P500.00 if an item is lost on top of its actual value. Ditiangkin et al were also required to submit trip tickets and incident reports to Lazada.
Even if we consider these instructions as mere guidelines, the circumstances of the whole economic activity between petitioners and respondents confirm the existence of an employer-employee relationship.
The services performed by Ditiangkin et al are integral to Lazada’s business. Lazada 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 Lazada. Lazada 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.