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What are the Requirements of an Employer-Employee Relationship?: Ditiangkin, et. al. vs. Lazada E-Services Philippines Inc.

Ditiangkin, et. al. vs Lazada E-Services Philippines Inc., G.R. No. 246892, reminds that when the status of an 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. 

In February 2016, Chrisden Cabrera Ditiangkin and several others were hired as riders by Lazada E-Services Philippines, Inc. 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 which states that they will be paid P1,200.00 per day as service fee. The contractor states that they are engaged for a period of one year and that they’ll be using their privately-owned motorcycles for their trips. 

Sometime in January 2017, the riders were told that they will no longer be given any schedules. They still reported for work for three days until they learned that their routes were given to other employees. The riders filed a complaint before the National Labor Relations Commission against Lazada for illegal dismissal.

Lazada argued that the riders were not regular employees but independent contractors. It also explained that after the surge of deliveries during the Christmas season, the demand decreased to its normal rate by January. Because of this, it had to reorganize the schedule to ensure all the riders will have a trip. It argued that the riders misunderstood the temporary team assignments as termination.

The Labor Arbiter ruled in favor of Lazada, while the NLRC affirmed the Labor Arbiter’s decision. The Court of Appeals also dismissed the complaint. Despite this, the riders filed a Petition before the Supreme Court, asserting that they are regular employees and that there is an employer-employee relationship present. This is proven through the presence of all four factors of the four-fold test, which includes the following: the employer’s selection and engagement of the employee; the payment of wages; the power to dismiss; and the power to control the employee’s conduct.

Furthermore, the riders also claimed that there is economic dependence in their employment with Lazada. Because they work twelve hours a day and six days a week, they are unable to gain other employment. This made them solely reliant on their employment with Lazada for income.

The Supreme Court ruled in favor of the riders and said Lazada failed to discharge their burden of proving that the riders were independent contractors, and that they didn’t fall under any of the categories of independent contractors. 

The Court also found that all four factors of the four-fold test were indeed present. First, petitioners were directly employed by Lazada instead of engaged by a third-party; second, they received their salaries of P1,200.00 for each day of service; third, Lazada stated in the contract that it had the power to dismiss the riders; and fourth, Lazada had control over the means and methods of the performance of the riders’ work. It required the accomplishment of a route sheet and the submission of trip tickets and incident reports. The riders all risked a penalty of P500.00 if an item was lost, on top of its actual value.

Finally, the court held that the services performed by the riders were integral to Lazada’s business, and that there is economic dependence in their employment with the company.

As a result, this Petition for Review was GRANTED. The Supreme Court ordered Lazada to reinstate Ditiangkin et al to their former positions and pay their full back wages and other benefits.

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