LABOR CASE DIGEST. Account execs are independent contractors

Petitioners Antonio Valeroso and Allan Legatona alleged that they started working on Nov. 1, 1998 and July 13, 1998, respectively, as account executives tasked to solicit cable subscriptions for respondent Skycable Corp.

They received commissions ranging from P15,000 to P530,000 each upon reaching a specific quota every month and an allowance of P6,500 to P7,000 per month. From being direct hires of respondent, they were transferred on Jan. 1, 2007 to Skill Plus Manpower Services. In February 2009, they were informed that their commissions would be reduced due to the introduction of prepaid cards sold to cable subscribers resulting in lower monthly cable subscriptions.

On the other hand, respondent claimed that it did not terminate the services of petitioners for there was never an employer-employee relationship between them. It averred that in 1998, respondent engaged petitioners as independent contractors under a sales agency agreement. In 2007, it decided to streamline its operations and instead of contracting with numerous independent account executives such as petitioners, respondent engaged the services of an independent contractor, Armada Resources & Marketing Solutions, Inc., formerly Skill Plus Manpower Services.

As a result, petitioners’ contracts were terminated but they, together with other sales executives, were transferred to Armada, which became their employer. In 2009, respondent and Armada again entered into a sales agency agreement wherein petitioners were again tasked to solicit accounts/generate sales for respondent. Which argument finds merit?

Ruling: That of SkyCable Corp.

Indeed, “the presence of the power of control is indicative of an employment relationship while the absence thereof is indicative of independent contractorship.”

Moreover, evidence on record reveal the existence of independent contractorship between the parties. As mentioned, the sales agency agreement provided the primary evidence of such relationship. “While the existence of employer-employee relation- ship is a matter of law, the characterization made by the parties in their contract as to the nature of their juridical relationship cannot be simply ignored, particularly in this case where the parties’ written contract unequivocally states their intention” to be strictly bound by independent contractorship. Petitioner Legatona, in fact, in his release and quitclaim, acknowledged that he was performing sales activities as sales agent/independent contractor and not an employee of respondent. In the same token, De la Cuesta and Navasa, made sworn testimonies that petitioners are employees of Armada, which is an independent contractor engaged to provide marketing services for respondent.

Neither can we subscribe to petitioners’ contention that they are considered regular employees of respondent for they perform functions necessary and desirable to the business operation of respondent in consonance with Article 280 of the Labor Code. We have held that “Article 280 is not the yardstick for determining the existence of an employment relationship because it merely distinguishes between two kinds of employees, i.e., regular employees and casual employees, for purposes of determining their rights to certain benefits, such as to join or form a union, or to security of tenure. Article 280 does not apply where the existence of an employment relationship is in dispute,” as in this case.

Evidently, the legal relation of petitioners as sales account executives to respondent can be that of an independent contractor. There was no showing that respondent had control with respect to the details of how petitioners must conduct their sales a ctivity of soliciting cable subscriptions from the public.

In the case of Abante, Jr. v. Lamadrid Bearing & Parts Corporation, 474 Phil. 414, 426 (2004), Empermaco Abante, Jr., a commission salesman who pursued his selling activities without interference or supervision from respondent company and relied on his own resources to perform his functions, was held to be an independent contractor. (Del Castillo, J.; SC 2nd Division, Antonio Valeroso, et. al. vs. Skycable Corporation, G.R. No. 202015, July 13, 2016). (Almirante is a former labor arbiter)

Evidence on record reveal the existence of independent contractorship between the parties. As mentioned, the sales agency agreement provided the primary evidence of such relationship.