AFP Mutual Benefits Association v.

NLRC
Facts:

In 1975, Private respondent was hired by the herein petitioner as Sales Agent,
and was bound by the below listed agreement:
- Sales Agent shall solicit exclusively for the petitioner, and shall be bound
by the latters IRRs.
- The SALES AGENT shall confine his business activities for AFPMBAI while
inside any military camp, installation or residence of military personnel.
He is free to solicit in the area for which he/she is licensed and as
authorized.
- Sales Agent shall be entitled to commission out of the insurance policies
solicited by the said agent.
- There shall be no employer-employee relationship between the parties.
In 1989, petitioner dismissed private respondent for simultaneously selling
insurance for another company.
During his dismissal, private respondent was entitled for commission
equivalent to 24 months as per the agreement and the account summary
(P354,796.09)
However, private respondent was only paid the amount of Php 35,000
Thus, private respondent filed a complaint with DOLE for his money claims.
The labor arbiter rendered a decision affirming the dismissal of the private
respondent, however the separation pay was denied. Petitioner was ordered
to pay private respondent separation pay amounting to Php 31, 976 and
attorneys fees.
On appeal, the Commission affirmed the decision of the Labor Arbiter.
In the ruling of the labor arbiter, it contended that the private respondent is
an employee of the petitioner on the ground that the former is bound by the
companys IRRS. On the appeal, the commission affirmed and added that the
petitioner had been exercising control over the private respondent, in
connection with proviso of the contract stating that petitioner may assign
private respondent a specific area of responsibility and a production quota.
Exercise of control by the employer over the employee is an essential
element of the existence of such employment relationship among the parties.
Hence, this petition.

Issue:

Whether or not there existed an employer-employee relationship between the

petitioner and the private respondent.
Whether or not the Commission and the Labor Arbiter have the jurisdiction
over the case.

Ruling:

Petition granted.
The existence of employer-employee relationship is ultimately a question of
fact.
The labor arbiter and the Commission both ruled that the petitioner is
exercising control over the private respondent, by the fact that the latter was
required to solicit business exclusively for the petitioner. However, this
restriction originated from the regulation issued by the Insurance Commission
for the protection of the public and for the insurance companies to exercise
exclusive supervision over the agent, and not to establish control over the
means and methods of accomplishment of task of the sales agent.
Neither did the private respondent is bound by the petitioners IRRs. The
former is bound by the regulations pertaining to the matter of selling the
insurance, and not covered by the rules and regulations covering the
employees conduct / violation, work standards or benefits.
As for the territorial assignments of the sales agent, private respondent failed
to rebut petitioner's allegation that it had never issued him any territorial
assignment at all.
The test to determine the existence of independent contractorship is whether
one claiming to be an independent contractor has contracted to do the work
according to his own methods and without being subject to the control of the
employer except only as to the result of the work. Such is exactly the nature
of the relationship between petitioner and private respondent.
No. Where there is no Employer-Employee Relationship, the Commission has
no jurisdiction to entertain and rule on money claims. Hence, any decision
rendered shall be null and void.