Facts:
Insular Life, the petitioner, entered into a contract with Basiao, the
respondent which authorized the respondent “to solicit within the Philippines applications for insurance
policies and annuities” and 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;". Additionally, Basiao was allowed to exercise his own judgment
for soliciting insurance; was prohibited from giving, directly or indirectly,
rebates in any form, or from making any misrepresentation or over-selling, and,
in general, from doing or committing acts prohibited in the Agent's Manual and
in circulars of the Office of the Insurance Commissioner; can be terminated by
the Company at will, without any previous notice to the Agent, for or on
account of… (explicitly specified causes); and 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.
Four years later, the parties entered
to an an Agency Manager's Contract which caused Basiao to organize an agency to
which he gave the name M. Basiao and Associates, while concurrently fulfilling
his commitments under the first contract with the Company.
The Company terminated the agreement. 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.
Basiao thereafter
filed with the then Ministry of Labor a complaint against the Company and
its president. Without contesting the termination of the first contract, the
complaint sought to recover commissions allegedly unpaid thereunder. 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.
The Labor Arbiter
ruled in favor of 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.
The Company appealed
but NLRC affirmed the decision of the LA.
Issue:
Whether or not Basiao
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.
Held:
According to the
pronouncement of the Court in the 1956 case of Viana vs. Alejo
Al-Lagadan:
... In determining the existence of employer-employee
relationship, the following elements are generally considered, namely: (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 employees' conduct —
although the latter is the most important element (35 Am. Jur. 445). ...
It is without
question a valid test of the character of a contract or agreement 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. 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, 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.
In Investment
Planning Corporation of the Philippines us. Social Security System a
case almost on all fours with the present one, this Court held that there was
no employer-employee relationship between a commission agent and an investment
company, but that the former was an independent contractor where said agent and
others similarly placed were: (a) paid compensation in the form of commissions
based on percentages of their sales, any balance of commissions earned being
payable to their legal representatives in the event of death or registration;
(b) required to put up performance bonds; (c) subject to a set of rules and
regulations governing the performance of their duties under the agreement with
the company and termination of their services for certain causes; (d) not
required to report for work at any time, nor to devote their time exclusively
to working for the company nor to submit a record of their activities, and who,
finally, shouldered their own selling and transportation expenses.
More recently,
in Sara vs. NLRC, it was held that one who had been engaged by a
rice miller to buy and sell rice and palay without compensation except a
certain percentage of what he was able to buy or sell, did work at his own
pleasure without any supervision or control on the part of his principal and relied
on his own resources in the performance of his work, was a plain commission
agent, an independent contractor and not an employee.
The respondents limit
themselves to pointing out that Basiao's contract with the Company bound him to
observe and conform to such rules and regulations as the latter might from time
to time prescribe. No showing has been made that any such rules or regulations
were in fact promulgated, much less that any rules existed or were issued which
effectively controlled or restricted his choice of methods — or the methods
themselves — of selling insurance. Absent such showing, the Court will not
speculate that any exceptions or qualifications were imposed on the express
provision of the contract leaving Basiao "... free to exercise his own
judgment as to the time, place and means of soliciting insurance."
The Labor Arbiter's
decision makes reference to Basiao's claim of having been connected with the
Company for twenty-five 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 commissions on its merits.
No comments:
Post a Comment