SC applied the "economic dependency test" and ruled a Lazada delivery rider as a regular employee.
ANTECEDENTS
In February 2016, Chrisden Cabrera Ditiangkin, Hendrix Masamayor Molines,5 Harvey Mosquito Juanio, Joselito Castro Verde, and Brian Anthony Cubacub Nabong (collectively, riders) were hired as riders by Lazada E-Services Philippines, Inc. (Lazada). They were primarily tasked to pick up items from sellers and deliver them to Lazada's warehouse. Each of them signed an Independent Contractor Agreement (Contract) which states that they will be paid P1,200.00 per day as service fee. Respondents maintain that the Contract they signed with petitioners explicitly states that there is no employer-employee relationship between them.
SC 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.
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Our laws strengthen this policy. In labor contracts, the nature of employment of a worker is prescribed by law, regardless of what the contract and the parties present it to be. Employment contracts are not ordinary contracts because they are imbued with public interest.
Article 1700 of the Civil Code affirms this policy:
ARTICLE 1700. The relations between capital and labor are not merely contractual. They are so impressed with public interest that labor contracts must yield to the common good. Therefore, such contracts are subject to the special laws on labor unions, collective bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of labor and similar subjects.
The applicable provisions of the law are deemed incorporated into the contract and the parties cannot exempt themselves from the coverage of labor laws simply by entering into contracts. Thus, regardless of the nomenclature and stipulations of the contract, the employment contract must be read consistent with the social policy of providing protection to labor.
"Respondents maintain that the Contract they signed with petitioners explicitly states that there is no employer-employee relationship between them. However, protection of the law afforded to labor precedes over the nomenclature and stipulations of the Contract. The Contract petitioners signed is not as ordinary as respondents purport it to be. Thus, it is patently erroneous for the labor tribunals to reject an employer-employee relationship simply because the Contract stipulates that this relationship does not exist."
ECONOMIC DEPENDENCY TEST
When the control test is insufficient, the economic realities of the employment are considered to get a comprehensive assessment of the true classification of the worker.
In Francisco v. National Labor Relations Commission,106 this Court explained the import of this test:
Thus, the determination of the relationship between employer and employee depends upon the circumstances of the whole economic activity, such as: (1) the extent to which the services performed are an integral part of the employer's business; (2) the extent of the worker's investment in equipment and facilities; (3) the nature and degree of control exercised by the employer; (4) the worker's opportunity for profit and loss; (5) the amount of initiative, skill, judgment or foresight required for the success of the claimed independent enterprise; (6) the permanency and duration of the relationship between the worker and the employer; and (7) the degree of dependency of the worker upon the employer for his continued employment in that line of business.
The proper standard of economic dependence is whether the worker is dependent on the alleged employer for his continued employment in that line of business. In the United States, the touchstone of economic reality in analyzing possible employment relationships for purposes of the Federal Labor Standards Act is dependency. By analogy, the benchmark of economic reality in analyzing possible employment relationships for purposes of the Labor Code ought to be the economic dependence of the worker on his employer.
...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.
The validity of a fixed-term employment and the level of protection accorded to labor is determined based on the "nature of the work, qualifications of the employee, and other relevant circumstances."
Here, petitioners cannot bargain the terms of their employment. To reiterate, it is not shown that petitioners were hired by respondents due to their special talent or skills. Their work as riders does not require strict and distinctive qualifications that distinguish them from other riders. More importantly, it is not shown that the fixed-term of one year in petitioners' case is an essential and natural appurtenance to their work as riders. The delivery of items is a usual and continuous activity in respondent Lazada's business.
FOOTNOTES
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