AFP Mutual Benefit Association v. NLRC (G.R. No. 102199)


Private respondent Eutiquio Bustamante was an insurance underwriter of petitioner AFP Mutual Benefit Association until he was dismissed for misrepresentation and for simultaneously selling insurance for another life insurance company in violation of their agreement. Respondent signed a quitclaim after receiving his commissions but later on discovered that he was entitled to more than the received amount. Thus, he filed a complaint with the Office of the Insurance Commissioner but was advised to file before the Department of Labor, which then ruled in his favor citing that employer-employee relationship exists between him and petitioner. NLRC tribunal affirmed.


Whether or not employer-employee relationship existed between the parties.

Ruling: NO.

The significant factor in determining the relationship of the parties is the presence or absence of supervisory authority to control the method and the details of performance of the service being rendered, and the degree to which the principal may intervene to exercise such control. The presence of such power of control is indicative of an employment relationship, while absence thereof is indicative of independent contractorship. In other words, 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.

Private respondent was free to sell insurance at any time as he was not subject to definite hours or conditions of work and in turn was compensated according to the result of his efforts. By the nature of the business of soliciting insurance, agents are normally left free to devise ways and means of persuading people to take out insurance. There is no prohibition, as contended by petitioner, for private respondent to work for as long as he does not violate the Insurance Code. Although petitioner could have, theoretically, disapproved any of private respondent’s transactions, what could be disapproved was only the result of the work, and not the means by which it was accomplished.

The “control” which the above factors indicate did not sum up to the power to control private respondent’s conduct in and mode of soliciting insurance. On the contrary, they clearly indicate that the juridical element of control had been absent in this situation. Thus, the Court is constrained to rule that no employment relationship had ever existed between the parties.


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