RAQUEL P. CONSULTA, Petitioner, vs.

COURT OF APPEALS, PAMANA

PHILIPPINES, INC., RAZUL Z. REQUESTO, and ALETA TOLENTINO,
Respondents.
G.R. No. 145443 March 18, 2005
CARPIO, J.:

TOPIC: Employer-Employee Relationship; Labor Arbiter’s jurisdiction over

claims for unpaid commission.

FACTS:
This is a petition for review assailing the Decision and Resolution of the
Court of Appeals reversing the Resolution of the NLRC which in turn affirmed
the Labor Arbiter’s Decision.
Respondent Pamana Philippines, Inc. is engaged in health care
business. While petitioner Raquel Consulta was a Managing Associate of
Pamana with an area of operation within Metro Manila. Consulta was duly
authorized by Pamana to negotiate with the Federation of Filipino Civilian
Employees Association working at the United States Subic Naval Base for a
Health Care Plan for the FFCEA members. Pamana and the U.S. Naval Supply
Depot signed the FFCEA account. Consulta, claiming that Pamana did not pay
her commission for the FFCEA account, filed a complaint for unpaid wages or
commission against Pamana, its President Razul Requesto and its Executive Vic
The Labor Arbiter Alex Arcadio Lopez ordered the respondents to pay
petitioner her unpaid commission to be computed as against actual transactions
between respondent Pamana and the contracting Department of U.S. Naval
Supply Depot upon presentation of pertinent document. Respondents appealed
the Decision of the Labor Arbiter to the NLRC. The NLRC dismissed the appeal
and affirmed the Decision of the Labor Arbiter. It also denied the motion for
reconsideration of the respondents. On appeal, the appellate court reversed the
NLRC Decision and ruled that Consulta was a commission agent, not an
employee of Pamana. The appellate court also ruled that Consulta should have
litigated her claim for unpaid commission in an ordinary civil action. Hence,
Consulta’s recourse to the Supreme Court.

ISSUES:
1. Whether or not Consulta was an employee of Pamana.
2. Whether or not the Labor Arbiter had jurisdiction over Consulta’s claim
for unpaid commission.
HELD:

1. No. Consulta was an independent agent and not an employee of Pamana.

In Viaña v. Al-Lagadan, the Court first laid down the four-fold test to
determine the existence of an employer-employee relationship. The four
elements of an employer-employee relationship are: (1) the power to hire; (2) the
payment of wages; (3) the power to dismiss; and (4) the power to control. The
power to control is the most important of the four elements.
In the present case, the power to control is missing. Pamana tasked
Consulta to organize, develop, manage, and maintain a sales division, submit a
number of enrollments and revenue attainments in accordance with company
policies and guidelines, and to recruit, train and direct her Supervising
Associates and Health Consultants. However, the manner in which Consulta
was to pursue these activities was not subject to the control of
Pamana. Consulta failed to show that she had to report for work at definite
hours. The amount of time she devoted to soliciting clients was left entirely to
her discretion. The means and methods of recruiting and training her sales
associates, as well as the development, management and maintenance of her
sales division, were left to her sound judgment.
Pamana paid Consulta not for labor she performed but only for the results
of her labor. Without results, Consulta’s labor was her own burden and
loss. Her right to compensation, or to commission, depended on the tangible
results of her work. Also, the fact that the appointment required Consulta to
solicit business exclusively for Pamana did not mean that Pamana exercised
control over the means and methods of Consulta’s work as the term control is
understood in labor jurisprudence. Neither did it make Consulta an employee of
Pamana. Pamana did not prohibit Consulta from engaging in any other
business, or from being connected with any other company, for as long as the
business or company did not compete with Pamana’s business. The exclusivity
provision was a reasonable restriction designed to prevent similar acts
prejudicial to Pamana’s business interest. Article 1306 of the Civil Code provides
that “the contracting parties may establish such stipulations, clauses, terms and
conditions as they may deem convenient, provided they are not contrary to law,
morals, good customs, public order, or public policy.”

2. No. There being no employer-employee relationship between Pamana and

Consulta, the Labor Arbiter and the NLRC had no jurisdiction to entertain and
rule on Consulta’s money claim.
Article 217 of the Labor Code provides: (a) Except as otherwise provided
under this Code the Labor Arbiters shall have original and exclusive jurisdiction
to hear and decide, within thirty (30) calendar days after the submission of the
case by the parties for decision without extension, even in the absence of
stenographic notes, the following cases involving all workers, whether
agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers
may file involving wages, rates of pay, hours of work and other terms and
conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising
from the employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including
questions involving the legality of strikes and lockouts; and
6. Except claims for Employees Compensation, Social Security, Medicare and
maternity benefits, all other claims, arising from employer-employee
relations, including those of persons in domestic or household service,
involving an amount exceeding five thousand pesos (P5,000.00) regardless
of whether accompanied with a claim for reinstatement.

(b) The Commission shall have exclusive appellate jurisdiction over all
cases decided by Labor Arbiters.

(c) Cases arising from the interpretation or implementation of collective

bargaining agreements and those arising from the interpretation or
enforcement of company personnel policies shall be disposed of by
the Labor Arbiter by referring the same to the grievance machinery
and voluntary arbitration as may be provided in said agreements.

Consulta filed her action under Article 217(a) (6) of the Labor
Code. However, since there was no employer-employee relationship between
Pamana and Consulta, the Labor Arbiter should have dismissed Consulta’s claim
for unpaid commission. Consulta’s remedy is to file an ordinary civil action to
litigate her claim.

ADJUDICATION:
Petition was dismissed. The Decision of the Court of Appeals was affirmed in
toto.