Establishing employer-employee relationship

I am an employee of Company X, a real estate corporation, working as a sales agent. I resigned because I could not achieve my sales quota due to the pandemic, and I want to just put up my own business.
Company X did not want to pay my sales commissions based on previous sales quota I achieved because, according to them, I was not the one who actively participated and closed the sales. I told Company X that I will file a case against them with National Labor Relations Commission (NLRC) for my commissions. However, the HR manager said that I am not an employee but an independent sales agent, and any labor case I file with NLRC will just be dismissed. Is the HR manager correct? If she is correct, where can I file a case to get my commissions?

Dear Theo,

As ruled in the case of Degamo vs My Citihomes, et al. (GR 249737, 15 September 2021; “Degamo Case”), before a case for money claims filed against an alleged employer can prosper, an
employer-employee relationship must first be established. To ascertain the existence of an employer-employee relationship, we apply the four-fold test, to wit: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee’s conduct or the so-called “control test.” Thus, in filing a complaint before the NLRC for Company X’s non-payment of your commissions as an employee, you should be able to show the existence of the foregoing elements of an employer-employee relationship first.

Based solely on your narration that you are entitled to commissions for your sales and that you are subject to sales quota, according to the Degamo case, sales quota does not indicate that Company X has control over the means and methods of your work as an element of an employer-employee relationship. By the nature of the business of soliciting sales on behalf of a real estate corporation such as Company X, sales agents are normally left free to devise ways and means of persuading people to buy properties.

In another case, Royale Homes Marketing Corporation vs Alcantara (GR 195190, 28 July 2014; also cited in the Degamo case), the Supreme Court specifically ruled that there is no employer-employee relationship between a real estate corporation and a sales broker when the latter: (a) is subject to rules and regulations which do not interfere with the means and methods of accomplishing the assigned tasks; (b) is not required to observe definite working hours; (c) can engage in selling other products or engage in unrelated business; (d) is paid compensation consisting of commission override, budget allocation, sales incentive and other forms of company support but not fixed monthly salary; and (e) is not entitled to statutorily mandated benefits.

Therefore, subject to proof that you are an employee of Company X, the payment of commissions based on sales quota does not mean you are an employee of Company X, and you may be an independent sales agent instead. As an independent contractor, your claim for unpaid sales commissions should be litigated in an ordinary civil action before the appropriate trial court. The jurisdiction of the NLRC pertains to cases or disputes arising out of or in connection with an employer-employee relationship. Without this critical element of employment relationship, the labor tribunals can never acquire jurisdiction over your complaint for non-payment of sales commission. (AFP Mutual Benefit Association Inc. vs NLRC, et al., GR 102199, 28 January 1997; cited in the Degamo case)

Atty. Kathy Larios

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