Pedro and Jose worked as pick-up riders for an e-commerce platform which functions as a digital marketplace (the “platform”), initially through manpower agencies. After their agency engagements ended, they each entered into “Independent Contractor Agreements” directly with the platform, agreeing to provide delivery services using their own vehicles for a daily fee of ₱1,200. Their work involved: (1) following route sheets assigned by the platform, (2) picking up items from merchants and delivering them to platform’s warehouse, (3) reporting in real-time to supervisors and monitoring staff, and (4) performing additional tasks (e.g., handling returned items), which they felt compelled to accept.

In August 2017, the platform terminated or discontinued their engagements, citing operational changes (e.g., reduction of riders, shift in delivery system).

Pedro and Jose then filed a complaint for illegal dismissal and monetary claims, asserting that they were regular employees, not independent contractors. The platform countered that they were independent contractors, pointing to their contracts, use of their own vehicles, their individual DTI/BIR registrations, and the absence of employer-employee benefits. Was the platform correct?

No. Pedro and Jose are not independent contractors. There was no trilateral contracting arrangement, and their work did not involve distinct, independent business or specialized skills.

Moreover, under the four-fold test, the platform hired them directly, paid them a fixed daily fee, had the power to terminate, and exercised control over the means and methods of work (route sheets, real-time reporting, required scanning systems, performance monitoring).

Under the economic reality test, it is shown that delivery services were integral to the platform’s business model. Riders were economically dependent on the platform. They had limited opportunity for profit/loss and no real independent enterprise.

Contract labels are not controlling. The “Independent Contractor Agreement,” BIR/DTI registrations, and use of own tools do not override the actual nature of the relationship.

Hence, Pedro and Jose were illegally dismissed.

• Borromeo v. Lazada, G.R. No. 265610, April 03, 2024