G.R. No. L-74113 May 29, 1987
GREAT PACIFIC LIFE ASSURANCE CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and VICTOR T. SAREN, respondents.

FACTS

Victor T. Saren applied to become an insurance agent for Great Pacific Life Assurance Corporation (GREPALIFE). A prerequisite was passing the Insurance Commission’s examination. To prepare him, GREPALIFE accepted Saren as a “Trainee” effective July 26, 1976, as confirmed in a letter stating he would receive a training subsidy, not a salary, and would not be entitled to commissions until issued a Certificate of Authority. GREPALIFE terminated this training relationship on February 12, 1977. Saren later filed a complaint for unjust dismissal, claiming he was a regular employee entitled to labor standard benefits.
The Regional Director initially ruled Saren was an employee unjustly dismissed. On appeal, Deputy Minister Vicente Leogardo, Jr. reversed this, finding Saren was merely a trainee and not a regular employee. Saren did not appeal this Order, making it final. The case was then indorsed to a Labor Arbiter solely for compulsory arbitration on any potential money claims. However, Labor Arbiter Potenciano Cenizares, Jr., exceeding the limited jurisdiction, ruled that Saren was a regular employee entitled to full salary and benefits. The NLRC affirmed this arbiter’s decision.

ISSUE

The primary issue is whether an employer-employee relationship existed between GREPALIFE and Victor T. Saren. A secondary procedural issue is whether the Labor Arbiter had jurisdiction to alter a final and unappealed order from the Deputy Minister.

RULING

The Supreme Court ruled in favor of GREPALIFE, finding no employer-employee relationship and condemning the Labor Arbiter’s procedural overreach. On the substantive issue, the Court emphasized that Saren was engaged as a trainee to prepare for a mandatory government licensure examination, as clearly stipulated in his acceptance letter and required by Section 299 of the Insurance Code. He received a training subsidy, not a salary, and his role was contingent upon obtaining a license. The work of a trainee preparing for an exam is not “necessary and desirable” to GREPALIFE’s usual business in the context of defining regular employment under the Labor Code. The company could not legally employ him as an agent without the license.
Procedurally, the Court held the Labor Arbiter committed grave abuse of discretion. The Deputy Minister’s order, which correctly categorized Saren as a trainee and not a regular employee, had become final and executory due to Saren’s failure to appeal it. This final order limited the Arbiter’s jurisdiction strictly to adjudicating money claims based on that status. By altering the final finding on the nature of the relationship, the Arbiter acted without jurisdiction. A final judgment, whether correct or erroneous, cannot be altered, and proceedings founded on a void order are themselves worthless. The Court thus set aside the NLRC resolution and dismissed Saren’s complaint.