The Supreme Court of the Philippines, through its Second Division, has partly affirmed a Court of Appeals finding that a former manager at an Uber group company was illegally dismissed, rejecting the employer's bid to override Philippine labor law protections by designating him an independent contractor.

In a 28-page decision promulgated on Aug. 18 and made public this week, the division ruled that the manager's formal designation as an independent contractor was contradicted by internal corporate directives dictating his work hours, operating methods, and availability.

The division found that Netherlands-based Uber Personnel Services B.V. exercised actual control over the former manager, Poncevic C. Ceballos, Jr., and concluded that Philippine law treats Mr. Ceballos as an employee entitled to protections against illegal dismissal.

Classification disputes of this kind — where a written contract labels a worker an independent contractor while day-to-day operations resemble employment — are a recurring issue in platform-based and cross-border work arrangements.

“Basic is the rule that the nature of employment is determined by the factors set by law, regardless of any contract expressing otherwise,” according to the ruling, which was written by Associate Justice Jhosep Y. Lopez.

With the ruling, the division rejected the petition filed by Uber Personnel Services and Executive Wenszu Lin. The decision also allows Mr. Ceballos to expand his claims against the company to include stock option benefits.

Background of the case

Mr. Ceballos was originally engaged in May 2014 by Uber Personnel Services as a Community Operations Manager with a monthly salary of P247,500, tasked with establishing global customer support operations. His contract explicitly disclaimed an employer-employee relationship and stipulated Dutch law as the governing jurisdiction.

He was verbally terminated in January 2015 by Mr. Lin, then regional director of Community Operations, without prior written notice or a formal investigation.

The Labor Arbiter and the National Labor Relations Commission initially dismissed Mr. Ceballos's complaint, citing the contract's independent contractor clause. The Court of Appeals reversed those rulings after evaluating internal communications and operational guidelines.

Foreign law presumption

The Supreme Court sustained the appellate court's application of Philippine law under the doctrine of processual presumption. The tribunal held that foreign law must be properly pleaded and authenticated under Rule 132 of the Revised Rules of Court. Because Uber Personnel Services failed to present competent proof of Dutch law, foreign law is presumed identical to domestic labor law. In practical terms, a foreign employer cannot rely on a choice-of-law clause to displace Philippine labor standards unless it proves the content of the foreign law it invokes.

Applying the four-fold test of employment, the Supreme Court ruled that Uber Personnel Services exercised potent control over the means and methods of Mr. Ceballos's work. Under long-standing Philippine jurisprudence, the test weighs the selection and engagement of the worker, the payment of wages, the power of dismissal, and the power of control, with the last element — the employer's prerogative over how work is performed — treated as the most decisive. The court noted operational directives issued by Mr. Lin requiring managers to maintain an “always on” posture even during vacations, adhere to strict daily scheduling guidelines, and undergo continuous performance tracking — conditions that effectively stripped the worker of operational independence.

Because Mr. Ceballos was deemed a regular employee protected by constitutional security of tenure, his summary dismissal without procedural or substantive due process constituted illegal termination, the court said. Philippine law conditions the termination of a regular employee on both substantive and procedural due process, generally requiring written notice of the charges and an opportunity to be heard before separation takes effect.

Monetary relief

Modifying the appellate ruling on monetary relief, the Supreme Court ordered Uber Personnel Services to grant Mr. Ceballos his full equity incentives under the corporate stock option plan, amounting to 3,000 shares of common stock. The award illustrates that relief in Philippine illegal-dismissal cases is not confined to wages and can extend to benefits tied to the employment relationship, such as equity incentives.

Reporting by Erika Mae P. Sinaking for BusinessWorld. Original article.