AFP-MBAI

vs.
NLRC and BUSTAMANTE
By Richard Troy A. Colmenares
USA College of Law
6/15/14 2:44:05 PM
Nature of the Case
A petition for certiorari seeking to annul NLRC Resolution and affirming decision of labor arbiter ordering payment of insurance commissions
to private respondent.

Facts
Private respondent Bustamante is an agent of petitioner AFP-MBAI under a Sales Agent Agreement (SAA). His compensation is
commission-based. Petitioner dismissed private respondent in violation of the SAA. At the time, private respondent had a receivable, a
portion of which (~18%) was paid to him. Private respondent demanded for the release of the remainder receivables, and the same was not
granted by petitioner. He signed a quit-claim agreeing to the re-computation made by the petitioner in re his demand. When private
respondent was to get his cheque, he found out from the Account Summary (AS) that the value he was getting was incompatible with the
AS. He sought from the Insurance Commission (IC) what was correctly due him, but he was advised that it was DOLE that had jurisdiction
over his contention. Later he filed with DOLE his complaint, seeking for (1) separation pay and (2) other money claims due to private
respondents (2.a) commission from the renewal of and the old businesses generated, (2.b)moral damages and (2.c) exemplary damages.
The Labor Arbiter denied his separation pay, but granted a lesser amount to his money claim including attorneys fees. The same ruling was
upheld by NLRC, denying private respondents appeal.

Issue(s)
(1). Is the private-respondent an employee of the petitioner? Stated otherwise, is an insurance agent an employee?
(2). Does the Labor Arbiter have jurisdiction over money claims not arising from employer-employee relationship?

Held
(1). No.

Employer to employee (E2e) relationship is a question of fact lodged to the labor arbiter and NLRC. Any finding is to be accorded
with due respect and finality, when supported by substantial evidence.

At the heart of determing E2e relationship is the four-fold test, the last being the most important: (1) the power to hire; (2) the
payment of wage; (3) the power to dismiss; and (4) the power to control.

However, NLRC was incorrect in ruling that the SAA provides there is control exercised by the petitioner over the private
respondent by virtue of procuring exclusive business for the former. It is the Insurance Commissions memo circulars (2-81 and 2-
85) that enables insurance companies, such as the petitioner, to exercise exclusive jurisdiction over its agents. The basis therefore
is the law and not the intention of the petitioner. In effect, this does not change the relationship between the parties to that of E2e.

Furthermore, private-respondent:
a. did not rebut that being bound by company rules is not indicative of the power of control,
b. did not rebut petitioners position that territorial assignments are not indicative of the power of control envisaged in an E2e
relationship.

thereby allowing admission of said allegations and leaving no room to appreciate NLRCs ruling that there exists E2e relationship
based on the power of control.

On top of that, not every control reserved by a party to himself is indicative of E2e relationship. A distinction must be made between
mere guidelines of a mutually desirable result and those that control or fix the methodology that bind or restrict the party hired to
use such means. The former is result-oriented whereas the latter addresses both the result and the means used to achieve the
same. The governance of the insurance sector is provided for in the Insurance Code, and it is expected that an insurance company
may come up with its own guidelines and rules to uphold the same. These guidelines do not restrict the agents contractual
prerogative to adopt his own means to achieve the expected results of the insurance company, and hence cannot justify an E2e
relationship. The fact that the private respondent was also free to sell insurance at any time means that he is not time-constrained
as typical employees would be, thereby negating his claim as an employee bound by an E2e relationship.

Henceforth, there is no room to rule there exists an E2e relationship between petitioner and private-respondent. (Private-
respondent was not an employee of petitioner).

(2). No.

Since there never was an E2e relationship, the money claims of private respondent is wanting jurisdiction of the proper civil courts.
A void judgment for want of jurisdiction is no judgment at all.

Henceforth, petition is granted without prejudice to private-respondents right to file a suit for collection of unpaid commissions
against the petitioner at the right venue and at the right period.