G.R. No. 84484 - Insular Life Assurance Co., Ltd. v. National Labor Relations Commission
G.R. No. 84484 - Insular Life Assurance Co., Ltd. v. National Labor Relations Commission
DECISION
NARVASA, J : p
Either party may terminate this contract by giving to the other notice in
writing to that effect. It shall become ipso facto cancelled if the Insurance
Commissioner should revoke a Certificate of Authority previously issued or
should the Agent fail to renew his existing Certificate of Authority upon its
expiration. The Agent shall not have any right to any commission on renewal
of premiums that may be paid after the termination of this agreement for
any cause whatsoever, except when the termination is due to disability or
death in line of service. As to commission corresponding to any balance of
the first year's premiums remaining unpaid at the termination of this
agreement, the Agent shall be entitled to it if the balance of the first year
premium is paid, less actual cost of collection, unless the termination is due
to a violation of this contract, involving criminal liability or breach of trust.
"ASSIGNMENT. No Assignment of the Agency herein created or of
commissions or other compensations shall be valid without the prior
consent in writing of the Company . . ."
Some four years later, in April 1972, the parties entered into another
contract - an Agency Manager's Contract — and to implement his end of it
Basiao organized an agency or office to which he gave the name M. Basiao
and Associates, while concurrently fulfilling his commitments under the first
contract with the Company. 2
In May, 1979, the Company terminated the Agency Manager's
Contract. After vainly seeking a reconsideration, Basiao sued the Company in
a civil action and this, he was later to claim, prompted the latter to terminate
also his engagement under the first contract and to stop payment of his
commissions starting April 1, 1980. 3
Basiao thereafter filed with the then Ministry of Labor a complaint4
against the Company and its president. Without contesting the termination
of the first contract, the complaint sought to recover commissions allegedly
unpaid thereunder, plus attorney's fees. The respondents disputed the
Ministry's jurisdiction over Basiao's claim, asserting that he was not the
Company's employee, but an independent contractor and that the Company
had no obligation to him for unpaid commissions under the terms and
conditions of his contract. 5
The Labor Arbiter to whom the case was assigned found for Basiao. He
ruled that the underwriting agreement had established an employer-
employee relationship between him and the Company, and this conferred
jurisdiction on the Ministry of Labor to adjudicate his claim. Said official's
decision directed payment of his unpaid commissions ". . . equivalent to the
balance of the first year's premium remaining unpaid, at the time of his
termination, of all the insurance policies solicited by . . . (him) in favor of the
respondent company . . ." plus 10% attorney's fees. 6
This decision was, on appeal by the Company, affirmed by the National
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Labor Relations Commission. 7 Hence, the present petition for certiorari and
prohibition.
The chief issue here is one of jurisdiction: whether, as Basiao asserts,
he had become the Company's employee by virtue of the contract invoked
by him, thereby placing his claim for unpaid commissions within the original
and exclusive jurisdiction of the Labor Arbiter under the provisions of Section
217 of the Labor Code, 8 or, contrarily, as the Company would have it, that
under said contract Basiao's status was that of an independent contractor
whose claim was thus cognizable, not by the Labor Arbiter in a labor case,
but by the regular courts in an ordinary civil action. cdrep
has been followed and applied in later cases, some fairly recent.11 Indeed, it
is without question a valid test of the character of a contract or agreement
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to render service. It should, however, be obvious that not every form of
control that the hiring party reserves to himself over the conduct of the party
hired in relation to the services rendered may be accorded the effect of
establishing an employer-employee relationship between them in the legal
or technical sense of the term. A line must be drawn somewhere, if the
recognized distinction between an employee and an individual contractor is
not to vanish altogether. Realistically, it would be a rare contract of service
that gives untrammelled freedom to the party hired and eschews any
intervention whatsoever in his performance of the engagement.
Logically, the line should be drawn between rules that merely serve as
guidelines towards the achievement of the mutually desired result without
dictating the means or methods to be employed in attaining it, and those
that control or fix the methodology and bind or restrict the party hired to the
use of such means. The first, which aim only to promote the result, create no
employer-employee relationship unlike the second, which address both the
result and the means used to achieve it. The distinction acquires particular
relevance in the case of an enterprise affected with public interest, as is the
business of insurance, and is on that account subject to regulation by the
State with respect, not only to the relations between insurer and insured but
also to the internal affairs of the insurance company. 12 Rules and
regulations governing the conduct of the business are provided for in the
Insurance Code and enforced by the Insurance Commissioner. It is,
therefore, usual and expected for an insurance company to promulgate a set
of rules to guide its commission agents in selling its policies that they may
not run afoul of the law and what it requires or prohibits. Of such a character
are the rules which prescribe the qualifications of persons who may be
insured, subject insurance applications to processing and approval by the
Company, and also reserve to the Company the determination of the
premiums to be paid and the schedules of payment. None of these really
invades the agent's contractual prerogative to adopt his own selling methods
or to sell insurance at his own time and convenience, hence cannot
justifiably be said to establish an employer-employee relationship between
him and the company.
There is no dearth of authority holding persons similarly placed as
respondent Basiao to be independent contractors, instead of employees of
the parties for whom they worked. In Mafinco Trading Corporation vs. Ople,
13 the Court ruled that a person engaged to sell soft drinks for another, using
a truck supplied by the latter, but with the right to employ his own workers,
sell according to his own methods subject only to prearranged routes,
observing no working hours fixed by the other party and obliged to secure
his own licenses and defray his own selling expenses, all in consideration of
a peddler's discount given by the other party for at least 250 cases of soft
drinks sold daily, was not an employee but an independent contractor. cdrep
3. Rollo, p. 17.
4. Docketed as RAB Case No. VI-0010-83.
5. Rollo, p. 17.
11. Feati University vs. Bautista, 18 SCRA 119; Dy Keh Beng vs. International
Labor and Marine Union of the Phil., 90 SCRA 163; Rosario Bros. vs. Ople, 131
SCRA 72; National Mines and Allied Workers Union (NAMAWU) vs. Valero, 132
SCRA 578.
12. Am. Jur. 2d, pp. 73-91.
13. 70 SCRA 139.
14. 21 SCRA 924 (1967).