G.R. No. 119930 March 12, 1998
INSULAR LIFE ASSURANCE CO., LTD., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION (Fourth Division, Cebu City), LABOR ARBITER NICASIO P. ANINON and PANTALEON DE LOS REYES, respondents.

FACTS

Petitioner Insular Life Assurance Co., Ltd. entered into two contracts with private respondent Pantaleon de los Reyes. The first, dated 21 August 1992, was an agency contract authorizing De los Reyes to solicit insurance applications for commissions, stipulating that no employer-employee relationship existed and that he was free to exercise his own judgment. He was prohibited from working for other life insurance companies. On 1 March 1993, a second contract appointed De los Reyes as Acting Unit Manager, with duties including recruitment, training, and supervision of underwriters. This contract also stated the relationship was that of an independent contractor. He received a “Unit Development Financing” of P1,500 monthly, with 20% as a free portion and 80% as an advance against commissions. His services were terminated on 18 December 1993. De los Reyes filed a complaint for illegal dismissal and nonpayment of salaries. The Labor Arbiter dismissed the case for lack of jurisdiction, finding no employer-employee relationship. On appeal, the NLRC reversed the Labor Arbiter, ruled that an employer-employee relationship existed, and remanded the case for hearing on the merits. Insular Life filed this certiorari petition, arguing that based on the precedent of Insular Life Assurance Co., Ltd. v. NLRC and Basiao, De los Reyes was an independent contractor.

ISSUE

Whether an employer-employee relationship existed between Insular Life Assurance Co., Ltd. and Pantaleon de los Reyes, particularly under the management contract, thereby vesting jurisdiction in the Labor Arbiter over the illegal dismissal complaint.

RULING

Yes, an employer-employee relationship existed under the management contract. The Supreme Court denied the petition and affirmed the NLRC decision. The Court applied the four-fold test for employment. (1) Selection and Engagement: De los Reyes was appointed Acting Unit Manager upon recommendation of the District Manager and approval by the Division Manager, indicating hiring by the company. (2) Payment of Wages: The “Unit Development Financing” of P1,500, part of which was a non-recoverable “free portion” given upon meeting quotas, constituted a form of salary or wage. (3) Power of Dismissal: Petitioner had the power to terminate the management contract. (4) Power of Control: The management contract provisions demonstrated effective control. De los Reyes was required to work exclusively for the company, meet specific manpower and production quotas, and was subject to control over the assignment and removal of agents in his unit. His duties extended beyond solicitation to administrative and supervisory functions necessary to the company’s business. The Court distinguished the case from Basiao, noting the management contract involved different conditionalities, and aligned it with Great Pacific Life Insurance Company v. NLRC, where similar supervisory roles were found to be employer-employee relationships. The stipulation in the contract labeling De los Reyes as an independent contractor could not negate the employer-employee relationship established by the terms of the agreement and the surrounding circumstances. The case was remanded to the Labor Arbiter for hearing on the merits.