Digest Insular Life vs. NLRC (JALapinig)

 

Case Digest for Labor Review Employer – Employee Relationship Insular Life Assurance Co. Ltd. vs. NLRC and Melecio Basiao

G.R. No. 88484

November 15, 1989

Narvasa, J.

Melecio Basiao and Insular Life Assurance Co. Ltd. (Insular) entered into a contract authorizing Basiao to solicit applications for insurance policies and annuities within the Philippines. Basiao will receive commissions in consideration thereof. The rules in Insular’s Rate Book & its Agent Manual as well as its circulars and those which may from time to time be promulgated by the company were made part of said contract. contra ct. The contract contract likewise contained contained provision provisions s governing governing the relations relations of the party. Among Among others others it provided provided that “the “the Agent shall be free to exercise his own  judgment  judgm ent as to time, place and means of soliciting soliciting insurance. insurance. Nothing Nothing herein contained shall therefore be construed to create the relationship of employee and employer between the Agent and the Company.”  Facts:

Four years later, Insular & Basiao entered e ntered into another contract, an Agency Manager's Contract. Contr act. To implement implement his end of it, Basiao organiz organized ed an agency agency (M. Basiao and Associates) while concurrently fulfilling his commitments under the first contract. Insular Insul ar terminated terminated the Agency Agency Manager's Manager's Contract Contract after seven years. years. After vainly vainly seeking reconsideration, Basiao sued Insular in a civil action and this, he claimed, prompted Insular to terminate also his engagement under the first contract and to stop payment of his commissions. Basiao filed with the Ministry of Labor a complaint against Insular. Without contesting the termination of the first contract, the complaint sought to recover commissions allegedly allege dly unpaid unpaid thereunder, thereunder, plus attorney's attorney's fees. Insular disputed disputed the Ministry's Ministry's  jurisdictio  juris diction n over Basiao's Basiao's claim, asserting asserting that he was not the Company's Company's employee, employee, but an independent contractor.  The Labor Arbiter ruled in favor of Basiao. Basiao. Said decision decision was affirmed affirmed on appeal by the NLRC. NLRC. NLRC NLRC contended contended that the contract contract’s ’s provisio provisions ns do not constitu constitute te the decisi dec isive ve determi determina nant nt of the nature nature of Basiao Basiao’s ’s engage engagemen ment. t. The critica criticall featur feature e distinguishing the status of an employee from that of an independent contractor is control, that is, whether or not the party who engages the services of another has the power to control control the latter's conduct conduct in rendering such such services. services. The provisions provisions of  Basiao's contract obliging him to "... observe and conform to all rules and regulations which the Company may from time to time prescribe ...," as well as to the fact that the company prescribed the qualifications of applicants for insurance, processed their appl ap plic icat atio ions ns and and dete determ rmin ined ed th the e amou amount nts s of in insu sura ranc nce e co cove verr to be issu issued ed as indicative of the control, which made Basiao, in legal contemplation, an employee of  the company. Issue:

Is Basiao to be considered c onsidered an employee of Insular?

NO. While “control control” ” is a valid test of the character of a contract or agreement to render service, 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

Held:

 

accorded the effect of establishing an employer-employee relationship between them in the legal or technical sense of the term. A line should be drawn between (1) 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 (2) rules 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, no employer-employee second, which address both create the result and the means usedrelationship to achieve unlike it. Thethe 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. Rules and regulations governing the conduct of the business are provided for in the Insurance Code and enforced by the Insura Ins urance nce Commis Commissio sione ner. r. It is, theref therefore ore,, usual usual and expecte expected d for an insur insuranc ance e 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 in insu sure red, d, subj subjec ectt in insu sura ranc nce e appl applic icat atio ions ns to proc proces essi sing ng and and appr approv oval al by th the e company, and also reserve to the company the determination of the premiums to be paid pa id and and th the e sche schedu dule les s of paym paymen ent. t. None None of th thes ese e real really ly in inva vade des s th the e agen agent's t'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 employeremployee relationship between him and the company. Hence, Henc e, Basi Basiao ao was was not not an empl employ oyee ee of In Insu sula lar, r, but but a comm commis issi sion on agen agent, t, an indepe ind epende ndent nt contra contracto ctorr whose whose claim claim for unpaid unpaid commis commissio sions ns should should have have been litigated litigat ed in an ordinary ordinary civil action. action. The appealed appealed resolution resolution of the NLRC was set aside, and Basiao’s complaint was dismissed.