CHRISDEN VS LAZADA

GR 246892 Sept 21, 2022

PRINCIPLE:

 The nature of employment of a worker is prescribed by law, regardless of what the contract and
the parties present it to be. WHY? Tungod sa CONSTITUTION.
 How to determine necessary or desirable in the employer’s business or trade?
o It depends on the industry. There must be a reasonable connection between the work
performed by the employee and the usual trade or business of the employer.
FACTS

 The petitioners collectively named riders, were hired as riders by Lazada e-services Philippines.
o Tasked to pick up items from sellers and deliver them to Lazada’s warehouse.
o Each of them signed an Independent Contractor Agreement(contract).
 In the contract states that they are engaged for a period of 1 year.
 They use their privately-owned motorcycles in their trips.
 How did the dispute arise?
o In 2017, they were told that they have been removed from their usual routes and will no
longer be given any schedules but despite this, they still reported to work for 3 days and
waited for new assignments but to no avail.
o They learned that their routes were already given to other employees.
 Complaint filed to NLRC
o Illegal dismissal, non payment of salary, overtime pay, holiday pay, service incentive
leave pay, thirteenth month pay, separation pay, and illegal deduction, with claims for
moral and exemplary damages and attorney’s fees.
o They claim that they are regular employees because Lazada exercised the power of
control by which they carry out their work.
 Contention of Lazada
o Riders not regular but independent contractors.
o They are not a common carrier business which facilitates the sale of goods between
seller and buyers. And when a buyer purchases an item through Lazada, it merely
coordinates the delivery of the product through an independent transportation service.
Thus, delivery is merely an ancillary activity and not its main line of business.
 Labor Arbiter dismissed.
o No EE relationship
o No control exercised by Lazada.
 NLRC affirmed.
 CA dismissed.

ISSUE

WON petitioners are regular employees of Lazada

WON petitioners are independent contractors

WON satisfied the 4 fold test

WON there is economic dependence in petitioner’s employment with respondents

CONCLUSION

1. Yes.

To determine the existence of an EE relationship, the court employed a two-tiered test: th fourfold test
and the economic dependence test.

Under the 4fold test: 4 factors must be proven: employer’s selection and engagement of the employee;
payment of wages; power to dismiss; power to control the employees conduct. The power of control s
the most significant factor in the 4 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, the four factors are present. 1. Petitioners are directly employed by respondent Lazada as
evidenced by the Contracts they signed. Petitioner’s former employer RGSERVE is not a party to the
contract with Lazada. 2. As indicated in the contract, petitioners receive their salaries from respondent
Lazada. They are paid 1200 for each day of service. 3. Lazada has the power to dismiss petitioners since
in their contract Lazada can immediately terminate the agreement if there is a breach of material
provisions of the contract. 4. Lazada has control over the means and methods of the performance of
petitioner’s work as explicitly stated in their agreement. “The method by which Contractor is to perform
such services shall be as instructed by, and within the discretion and control of the company. ” Lazada
even required accomplishment of a route sheet which keeps track of the arrival, departure, and
unloading time of the items. The services performed by petitioners are integral to respondents
business. Delivery is clearly INTEGRATED in the services offered by respondents. They even have route
managers to supervise the delivery of the products from the sellers to buyers.

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. But now, petitioners were directly hired by respondents.
This demonstrates that petitioners have been economically dependent on respondents for their
livelihood.

They also cannot be considered fixed term employees because petitioners cannot bargain the terms of
their employment and it is not shown that petitioners were hired by respondents due to their special
talent or skills.

2. NO
Legitimate job contractors – Section 106 – Contractor or Subcontractor – When an employer enters
into a contract with another person for the performance of the former’s work, the employees of the
contractor and of the latter’s subcontractor, if any, shall be paid in accordance with the provisions of this
code.

In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance
with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to
such employees to the extent of the work performed under the contract, in the same manner and
extent that he is liable to employees directly employed by him.

The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the
contracting-out of labor to protect the rights of workers established under this Code. In so prohibiting or
restricting, he may make appropriate distinctions between labor-only contracting and job contracting as
well as differentiations within these types of contracting and determine who among the parties involved
shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of
any provision of this Code.

There is “Labor Only” contracting where the person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment, machineries, work premises, among
others and the workers recruited and placed by such person are performing activities which are directly
related to the principal business of such employer. In such cases, the person or intermediary shall be
considered merely as an agent of the employer who shall be responsible to the workers in the same
manner and extent as if the latter were directly employed by him.

- Must have a substantial capital or investment

- Distinct and independent business uncontrolled by the principal and compliant
with all the rights and benefits for the employees
Independent contractors - consists of individuals who possess unique skills and talents which set them
apart from ordinary employees and whose means and methods of work are free from the control of the
employer.

Example: Columnist who was hired because of her talent, skill, experience, and feminist stand point, a
basketball referee, masiador or sentenciador.

- NO TRILATERAL relationship but bilateral because they are directly engaged by the principal.
- This type of contracting, no EE relationship and contracts are governed by the CIVIL CODE.

THEY ARE NOT INDEPENDENT CONTRACTOR because

1. Petitioners are not hired by a cntractor or subcontractor. Petitioners merely refer to RGSERVE as
their former employer, but it is clear in the parties submission that petitioners were directly
hired by respondents. Each petitioner signed an individual contract withh respondent lazada
who paid them directly. Thus, there is no trilateral relationship wherein a contractor or
subcntractor is required to possess substantial capital or investment.
2. 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.
3.

NOTES: 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.

Petitioer for certiorari is only proper when

1. the NLRC gravely abused their discretion when they are “not supported by substantial evidence
or are in total disregard of evidence material to or even decisive of the controversy when it is
necessary to prevent a substantial wront or to do substantial justice”
2. when the findings of the NLRC contradict those of the Labor Arbiter
3. when necessary to arrive at a just decision of the case

FROM CA Rule 45- petition for review – questions of law lang.

When a decision of the CA under Rule 65 petition is brought to SC by petition for review under Rule 45 –
only questions of law may be raised. UNLESS the factual findings complained of are completely devoid
of support from the evidence on record or the assailed judgement is based on a gross misapprehension
of facts.

This court will not reevaluate the sufficiency of evidence before the Labor Tribunals EXCEPT:

In this case, pwede ang Rule 65 based on gross misapprehension of facts and are contradicted by
evidence on record.

In FIXED TERM employment – hired for a specific period, the work performed may also be necessary or
desirable to the usual business of the employer.

Example: Overseas employment contract, article 280, appointments to dean, assistant dean, college
secretary, principal, and other administrative offices in educational institutions, which are by practice
and tradition are rotated among faculty members.

Requisites of a fixed term employment

1. the fixed period of employment was knowingly and voluntarily agreed upon by the parties
without any force, duress, or improper pressure being brought to bear upon the employee and
absent any other circumstance vitiating his consent
2. It satisfactorily appears that employer and the employee dealt with each other on more or less
equal terms with no moral dominance exercised by the former or the latter.

These criteria presume that an employee on account of special skills or market forfes is in a
position to make demands upon the prospective employer.

WHAT IS AN INDEPENDENT CONTRACTOR?

 - One who carries on a distinct and independent business and undertakes to perform the job,
work, or servce on its own account and under one’s own responsibility according to one’s own
manner and method, free from the control and direction of the principal in all matters
connected with the performance of the work except as to the results thereof.

2 types of contractors

Legitimate job contractors – Section 106 – Contractor or Subcontractor – When an employer enters
into a contract with another person for the performance of the former’s work, the employees of the
contractor and of the latter’s subcontractor, if any, shall be paid in accordance with the provisions of this
code.

In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance
with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to
such employees to the extent of the work performed under the contract, in the same manner and
extent that he is liable to employees directly employed by him.

The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the
contracting-out of labor to protect the rights of workers established under this Code. In so prohibiting or
restricting, he may make appropriate distinctions between labor-only contracting and job contracting as
well as differentiations within these types of contracting and determine who among the parties involved
shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of
any provision of this Code.

There is “Labor Only” contracting where the person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment, machineries, work premises, among
others and the workers recruited and placed by such person are performing activities which are directly
related to the principal business of such employer. In such cases, the person or intermediary shall be
considered merely as an agent of the employer who shall be responsible to the workers in the same
manner and extent as if the latter were directly employed by him.

- Must have a substantial capital or investment

- Distinct and independent business uncontrolled by the principal and compliant
with all the rights and benefits for the employees
Independent contractors - consists of individuals who possess unique skills and talents which set them
apart from ordinary employees and whose means and methods of work are free from the control of the
employer.

Example: Columnist who was hired because of her talent, skill, experience, and feminist stand point, a
basketball referee, masiador or sentenciador.

- NO TRILATERAL relationship but bilateral because they are directly engaged by the principal.
- This type of contracting, no EE relationship and contracts are governed by the CIVIL CODE.

THEY ARE NOT INDEPENDENT CONTRACTOR because

3. Petitioners are not hired by a cntractor or subcontractor. Petitioners merely refer to RGSERVE as
their former employer, but it is clear in the parties submission that petitioners were directly
hired by respondents. Each petitioner signed an individual contract withh respondent lazada
who paid them directly. Thus, there is no trilateral relationship wherein a contractor or
subcntractor is required to possess substantial capital or investment.
4. 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.