G.R. No. 84484 November 15, 1989
INSULAR LIFE ASSURANCE CO., LTD., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and MELECIO BASIAO, respondents.
FACTS
On July 2, 1968, petitioner Insular Life Assurance Co., Ltd. and private respondent Melecio T. Basiao entered into a contract authorizing Basiao to solicit insurance applications. The contract explicitly stipulated that Basiao was free to exercise his own judgment as to the time, place, and means of soliciting insurance and that nothing therein created an employer-employee relationship. His compensation was solely based on commissions per a schedule. The contract incorporated company rules but also provided for termination at will by either party. In 1979, the Company terminated a separate Agency Manager’s Contract with Basiao. Subsequently, Basiao claimed the Company also stopped paying his commissions under the 1968 contract. He filed a complaint with the Ministry of Labor to recover these unpaid commissions.
The Labor Arbiter ruled in Basiao’s favor, finding an employer-employee relationship existed, thus conferring jurisdiction over the money claim. The National Labor Relations Commission (NLRC) affirmed this decision. Insular Life assailed the rulings via certiorari, contending Basiao was an independent contractor, and therefore, the Labor Arbiter lacked jurisdiction over his claim for unpaid commissions, which should be litigated in an ordinary civil action.
ISSUE
The central issue is whether an employer-employee relationship existed between Insular Life and Basiao under their 1968 contract, thereby vesting jurisdiction over his claim for unpaid commissions in the Labor Arbiter under the Labor Code.
RULING
The Supreme Court ruled that no employer-employee relationship existed. The Court emphasized the “control test” as the decisive determinant. The contract expressly granted Basiao independence: he was free to exercise his own judgment regarding the time, place, and means of soliciting insurance; no accomplishment quotas were set; he was not bound to observe working hours or report to a regular station; and his compensation was purely commission-based, dependent on results. While the contract obligated him to observe company rules, there was no showing that any promulgated rules effectively controlled or restricted his methods of selling. The contractual provision granting him freedom of judgment was not qualified by proven company regulations. The length of Basiao’s association with the company was deemed irrelevant to his legal status under the specific contract. Consequently, Basiao was a commission agent and an independent contractor. His claim for unpaid commissions arose from a contractual civil obligation, not from an employer-employee relationship. Therefore, the Labor Arbiter and the NLRC had no jurisdiction over the case. The Court set aside the NLRC resolution and dismissed Basiao’s complaint for lack of jurisdiction, without delving into the merits of the claim for commissions.