Insular Life Assurance Co.

Ltd vs National Labor Relations Commission

GR No. 84484 November 15, 1989

Facts: On July 2, 1968, Insular Life Assurance Co. Ltd and Melecio T. Basiao entered into a contract by
which:

Basiao was “authorized to solicit within the Philippines applications for insurance policies and annuities
in accordance with the existing rules and regulations” of the company;

He would receive “compensation, in the form of commissions.. as provided in the schedule of

commissions” of the contract to “constitute a part of the consideration of (said) agreement,” and;

The “rules in (the company) rate book and its agent’s manual as well as all circulars and those which may
from time to time be promulgated by it,” were made part of said contract.

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 this commitments under the first contract
with the company.

In May 1979, the company terminated the Agency Manager’s contract. After seeking a reconsideration,
Basiao sued the company in a civil action and this was later to claim, prompted the latter to terminate
also his engagement under the first contract and to stop payment of his commission starting April 1,
1980.

Issue: Whether or not there is an employer employee relationship

Held: None. In determining the existence of employer-employee relationship, the following elements
are generally considered namely:

The selection and engagement of the employee;

The payment of wages;

The power of dismissal; and

The power to control the employee’s conduct

— although the latter is the most important element.

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 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 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 prescribes 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 agents 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 on employer-
employee relationship between him and the company.

The labor arbiter’s decision makes reference to Basiao’s claim of having been connected with the
company for 25 years whatever this is meant to imply, the obvious reply would be that what is germane
here is Basiao’s status under the contract of July 2, 1968, not the length of his relationship with the
company.

The court, therefore, rules that under the contract invoked by him, Basiao was not an employee of the
petitioner, but a commission agent, an independent contractor whose claim for unpaid commissions
should have been litigated in an ordinary civil action. The labor arbiter erred in taking cognizance of and
adjudicating, said claim, being without jurisdiction to do so, as did the respondent NLRC in affirming the
arbiter’s decision. This conclusion renders it unnecessary and premature to consider Basiao’s claim for
commission on its merits.
Insular Life Assurance v. NLRC and Pantaleon De Los Reyes (G.R. No. 119930)

Facts:

Petitioner Insular Life entered into an agency contract with respondent Pantaleon de los Reyes
authorizing the latter to solicit applications for life insurance for which he would be paid compensation
in the form of commissions. Sometime after, the parties entered into another contract where Pantaleon
was appointed as Acting Unit Manager responsible for recruitment, training, organization, development
and furtherance of the agency’s goals. He was prohibited from working for other life insurance
companies or with the government. Pantaleon worked concurrently as agent and Acting Unit Manager
until he was notified of his termination. He thus filed a complaint for illegal dismissal before the Labor
Arbiter. The Labor Arbiter dismissed the complaint but on appeal was reversed by the NLRC tribunal
ruling that Pantaleon was an employee of petitioner. Petitioner contends that nature of the work has
already been resolved by the Court in the earlier case of Insular Life v. Basiao where Basiao is declared
an independent contractor and not an employee of petitioner.

Issue:

Whether or not there exists employer-employee relationship between petitioner and Pantaleon.

Ruling: YES.

As to the matter involving the power of dismissal and control by the employer, the latter of which is the
most important of the test, unlike Basiao, herein respondent De los Reyes was appointed Acting Unit
Manager, not agency manager. Petitioner in fact has admitted that it provided De los Reyes a place and
a table at its office where he reported for and worked whenever he was not out in the field.

Under the managership contract, De los Reyes was obliged to work exclusively for petitioner in life
insurance solicitation and was imposed premium production quotas. He was proscribed from accepting
a managerial or supervisory position in any other office including the government without the written
consent of petitioner. De los Reyes could only be promoted to permanent unit manager if he met certain
requirements and his promotion was recommended by the petitioner’s District Manager and Regional
Manager and approved by its Division Manager. As Acting Unit Manager, De los Reyes performed
functions beyond mere solicitation of insurance business for petitioner. As found by the NLRC, he
exercised administrative functions which were necessary and beneficial to the business of INSULAR LIFE.

Exclusivity of service, control of assignments and removal of agents under private respondent’s unit,
collection of premiums, furnishing of company facilities and materials as well as capital described as Unit
Development Fund are but hallmarks of the management system in which herein private respondent
worked. This obtaining, there is no escaping the conclusion that private respondent Pantaleon de los
Reyes was an employee of herein petitioner.

*In contrast to the case decided by the Court 10 years earlier, Insular Life Assurance v. NLRC and Basiao,
as quoted:

Petitioner would have us apply our ruling in Insular Life Assurance Co., Ltd. v. NLRC and Basiao to the
instant case under the doctrine of stare decisis, postulating that both cases involve parties similarly
situated and facts which are almost identical. But we are not convinced that the cited case is on all fours
with the case at bar. In Basiao, the agent was appointed Agency Manager under an Agency Manager
Contract. To implement his end of the agreement, Melecio Basiao organized an agency office to which
he gave the name M. Basiao and Associates. The Agency Manager Contract practically contained the
same terms and conditions as the Agency Contract earlier entered into, and the Court observed that,
“drawn from the terms of the contract they had entered into, (which) either expressly or by necessary
implication, Basiao (was) made the master of his own time and selling methods, left to his own
judgment the time, place and means of soliciting insurance, set no accomplishment quotas and
compensated him on the bases of results obtained. He was not bound to observe any schedule of
working hours or report to any regular station; he could seek and work on his prospects anywhere and
at anytime he chose to and was free to adopt the selling methods he deemed most effective.” Upon
these premises, Basiao was considered as agent — an independent contractor — of petitioner INSULAR
LIFE.