INSULAR LIFE ASSURANCE CO. LTD, v.
NLRC AND MELECIO BASIAO
G.R. No.84484, November 15, 1989
Nervasa, J.:
DOCTRINE:
... In determining the existence of employer-employee relationship, the following
elements are generallyconsidered, 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 themost important element
(35 Am. Jur. 445).
FACTS:
Basiao and the petitioner entered into a contract, which contained, among others:
“RELATION WITH THE COMPANY. The Agent shall be free to exercise his own judgment as
to time, place and means of soliciting insurance. Nothing herein contained shall therefore
be construed to create the relationship of employee and employer between the Agent and
the Company. However, the Agent shall observe and conform to all rules and regulations
which the Company may from time to time prescribe.” Four years had passed, Basiao
organized his own agency, and both parties entered into an agency manager’s contract
again, while concurrently fulfilling his commitments under the first contract. 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. 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, 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. The labor arbiter rendered a
decision in favor of Basiao. Upon appeal, the NLRC affirmed the said labor arbiter’s
decision.
ISSUE/S:
Whether or not there is employer-employee relationship between Insular Assurance Co.
Ltd. and Basiao
RULING:
No, the Court ruled that there is no employer-employee relationship between the
Insular Assurance Co. Ltd and Basiao.
Basiao is a mere commission agent of the petitioner. It held that 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.
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."
