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350 Phil. 918; 94 OG No. 48, 8248 (November 30, 1998)
FIRST DIVISION
[ 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.
D E C I S I O N
BELLOSILLO, J.:
On 17 June 1994
respondent Labor Arbiter dismissed for lack of jurisdiction NLRC RAB-VII Case
No. 03-0309-94 filed by private respondent Pantaleon de los Reyes against
petitioner Insular Life Assurance Co., Ltd. (INSULAR LIFE), for illegal dismissal
and nonpayment of salaries and back wages after findings no employer-employee
relationship between De los Reyes and petitioner INSULAR LIFE.[1] On appeal by private respondent,
the order of dismissal was reversed by the National Labor Relations Commission
(NLRC) which ruled that respondent De los Reyes was an employee of petitioner.[2] Petitioner’s motion for
reconsideration having been denied, the NLRC remanded the case to the Labor
Arbiter for hearing on the merits.
Seeking relief
through this special civil action for certiorari with prayer for a
restraining order and/or preliminary injunction, petitioner now comes to us
praying for annulment of the decision of respondent NLRC dated 3 March 1995 and
its Order dated 6 April 1995 denying the motion for reconsideration of the
decision. It faults NLRC for acting without jurisdiction and/or with grave
abuse of discretion when, contrary to established facts and pertinent law and
jurisprudence, it reversed the decision of the Labor Arbiter and held instead that
the complaint was properly filed as an employer-employee relationship existed
between petitioner and private respondent.
Petitioner
reprises the stand it assumed below that it never had any employer-employee
relationship with private respondent, this being an express agreement between
them in the agency contracts, particularly reinforced by the stipulation
therein de los Reyes was allowed discretion to devise ways and means to fulfill
his obligations as agent and would be paid commission fees based on his actual
output. It further insists that the nature of this work status as described in
the contracts had already been squarely resolved by the Court in the earlier
case of Insular Life Assurance Co., Ltd. v. NLRC and Basiao [3]where the complainant therein,
Melecio Basiao, was similarly situated as respondent De los Reyes in that he
was appointed first as an agent and then promoted as agency manager, and the
contracts under which he was appointed contained terms and conditions Identical
to those of De los Reyes. Petitioner concludes that since Basiao was declared
by the Court to be an independent contractor and not an employee of petitioner,
there should be no reason why the status of De los Reyes herein vis-à-vis
petitioner should not be similarly determined.
We reject the
submissions of petitioner and hold that respondent NLRC acted appropriately
within the bounds of the law. The records of the case are replete with telltale
indicators of an existing employer-employee relationship between the two
parties despite written contractual disavowals.
These facts are
undisputed: on 21 August 1992 petitioner entered into an agency contract with
respondent Pantaleon de los Reyes[4] authorizing the latter to solicit
within the Philippines applications for life insurance and annuities for which
he would be paid compensation in the form of commissions. The contract was
prepared by petitioner in its entirety and De los Reyes merely signed his
conformity thereto. It contained the stipulation that no employer-employee
relationship shall be created between the parties and that the agent shall be
free to exercise his own judgment as to time, place and means of soliciting
insurance. De los Reyes however was prohibited by petitioner from working for
any other life insurance company, and violation of this stipulation was
sufficient ground for termination of the contract. Aside from soliciting
insurance for the petitioner, private respondent was required to submit to the
former all completed applications for insurance within ninety (90) consecutive
days, deliver policies, receive and collect initial premiums and balances of
first year premiums, renewal premiums, deposits on applications and payments on
policy loans. Private respondent was also bound to turn over to the company
immediately any and all sums of money collected by him. In a written
communication by petitioner to respondent De los Reyes, the latter was urged to
register with the Social Security System as a self-employed individual as provided under PD No. 1636.[5]
On 1 March 1993
petitioner and private respondent entered into another contract[6]where the latter was appointed as
Acting Unit Manager under its office – the Cebu DSO V (157). As such, the
duties and responsibilities of De los Reyes included the recruitment, training,
organization and development within his designated territory of a sufficient
number of qualified, competent and trustworthy underwriters, and to supervise
and coordinate the sales efforts of the underwriters in the active solicitation
of new business and in the furtherance of the agency’s assigned goals. It was
similarly provIded in the management contract that the relation of the acting
unit manager and/or the agents of his unit to the company shall be that of
independent contractor. If the appointment was terminated for any reason other
than for cause, the acting unit manager would be reverted to agent status and
assigned to any unit. As in the previous agency contract, De los Reyes together
with his unit force was granted freedom to exercise judgment as to time, place
and means of soliciting insurance. Aside from being granted override
commissions, the acting unit manager was given production bonus, development
allowance and a unit development financing scheme euphemistically termed
“financial assistance” consisting of payment to him of a free portion of P300.00
per month and a valIdate portion of P1,200.00. While the latter amount
was deemed as an advance against expected commissions, the former was not and
would be freely given to the unit manager by the company only upon fulfillment
by him of certain manpower and premium quota requirements. The agents
and underwriters recruited and trained by the acting unit manager would be
attached to the unit but petitioner reserved the right to determine if such
assignment would be made or, for any reason, to reassign them elsewhere.
Aside from
soliciting insurance, De los Reyes was also expressly obliged to participate in
the company’s conservation program, i.e., preservation and maintenance of
existing insurance policies, and to accept moneys duly receipted on agent’s
receipts provided the same were turned over to the company. As long as he was
unit manager in an acting capacity, De los Reyes was prohibited from working
for other life insurance companies or with the government. He could not also
accept a managerial or supervisory position in any firm doing business in the
Philippines without the written consent of petitioner.
Private
respondent worked concurrently as agent and Acting Unit Manager until he was
notified by petitioner on 18 November 1993 that his services were terminated
effective 18 December 1993. On 7 March 1994 he filed a complaint before the
Labor Arbiter on the ground that he was illegally dismissed and that he was not
paid his salaries and separation pay.
Petitioner filed
a motion to dismiss the complaint of De los Reyes for lack of jurisdiction,
citing the absence of employer-employee relationship. it reasoned out that
based on the criteria for determining the existence of such relationship or the
so-called “four-fold test,” i.e., (a) selection and engagement of employee, (b)
payment of wages, (c) power of dismissal, and, (d) power of control, De los
Reyes was not an employee but an independent contractor.
On 17 June 1994
the motion of petitioner was granted by the Labor Arbiter and the case was
dismissed on the ground that the element of control was not sufficiently
established since the rules and guidelines set by petitioner in its agency
agreement with respondent De los Reyes were formulated only to achieve the
desired result without dictating the means or methods of attaining it.
Respondent NLRC
however appreciated the evidence from a different perspective. It determined
that respondent De los Reyes was under the effective control of petitioner
in the critical and most important aspects of his work as Unit Manager.
This conclusion was derived from the provisions in the contract which appointed
private respondent as Acting Unit Manager, to wit: (a) De los Reyes was to
serve exclusively the company, therefore, he was not an independent contractor;
(b) he was required to meet certain manpower and production quota; and,
(c) petitioner controlled the assignment to and removal of soliciting agents
from his unit.
The NLRC also
took into account other circumstances showing that petitioner exercised
employer’s prerogatives over De los Reyes, e.g., (a) limiting the work of
respondent De los Reyes to selling a life insurance policy known as “Salary
Deduction Insurance” only to members of the Philippine National Police,
public and private school teachers and other employees of private companies;
(b) assigning private respondent to a particular place and table where he
worked whenever he has not in the field; (c) paying private respondent during
the period of twelve (12) months of his appointment as Acting Unit Manager the
amount of P1,500.00 as Unit Development Financing of which 20% formed
his salary and the rest, i.e., 80%, as advance of his expected commissions; and
(d) promising that upon completion of certain requirements, he would be
promoted to Unit Manager with the right of petitioner to revert him to agent
status when warranted.
Parenthetically,
both petitioner and respondent NLRC treated the agency contract and the
management contract entered into between petitioner and De los Reyes as
contracts of agency. We however hold otherwise. Unquestionably there exist
major distinctions between the two agreements. While the first has the earmarks
of an agency contract, the second is far removed from the concept of agency in
that provided therein are conditionalities that indicate an employer-employee
relationship. the NLRC therefore was correct in finding that private respondent
was an employee of petitioner, but this holds true only insofar as the
management contract is concerned. In view thereof, he Labor Arbiter has
jurisdiction over the case.
It is axiomatic
that the existence of an employer-employee relationship cannot be negated by
expressly repudiating it in the management contract and providing therein that
the “employee” is an independent contractor when the terms of agreement clearly
show otherwise. For, the employment status of a person is defined and
prescribed by law and not by what the parties say it should be.[7] In determining the status of the
management contract, the “four-fold test” on employment earlier mentioned has
to be applied.
Petitioner
contends that De los Reyes was never required to go through the pre-employment
procedures and that the probationary employment status was reserved only to
employees of petitioner. On this score, it insists that the first requirement
of selection and engagement of the employee was not met.
A look at the
provisions of the contract shows that private respondent was appointed as
Acting Unit Manager only upon recommendation of the District Manager.[8] This indicates that private
respondent was hired by petitioner because of the favorable endorsement of its
duly authorized officer. But, this approbation could only have been based on
the performance of De los Reyes with petitioner was nothing more than a trial
or probationary period for his eventual appointment as Acting Unit Manager of
petitioner. Then, again, the very designation of the appointment of private
respondent as “acting” unit manager obviously implies a temporary employment
status which may be made permanent only upon compliance with company standards
such as those enumerated under Sec. 6 of the management contract.[9]
On the matter of
payment of wages, petitioner points out that respondent was compensated
strictly on commission basis, the amount of which was totally dependent on his
total output. But, the manager’s contract speaks differently. Thus –
4. Performance Requirements.- To maintain your appointment as Acting Unit Manager you must meet the following manpower and production requirements:
Quarter Active Calendar Year
Production Agents Cumulative
FYP
Production
1ST 2 P125,000
2ND 3 250,000
3RD 4 375,000
4TH 5 500,000
5.4 Unit Development Financing (UDF). – As an Acting Unit Manager you shall be given during the first 12 months of your appointment a financial assistance which is composed of two parts:
5.4.1 Free
Portion amounting to P300 per month, subject to your meeting prescribed
minimum performance requirement on manpower and premium production. The free
portion is not payable by you.
5.4.2 Validate
Portion amounting to P1,200 per month, also subject to meeting the same
prescribed minimum performance requirements on manpower and premium production.
The valIdated portion is an advance against expected compensation during the
UDF period and thereafter as may be necessary.
The above
provisions unquestionably demonstrate that the performance requirement imposed
on De los Reyes was applicable quarterly while his entitlement to the
free portion (P300) and the validated portion (P1,200) was monthly
starting on the first month of the twelve (12) months of the appointment. Thus,
it has to be admitted that even before the end of the first quarter and prior
to the so-called quarterly performance evaluation, private respondent was
already entitled to be paid both the free and validated portions of the UDF
every month because his production performance could not be determined until
after the lapse of the quarter involved. This indicates quite clearly that the
unit manager’s quarterly performance had no bearing at all on his entitlement
at least to the free portion of the UDF which for all intents and purposes
comprised the salary regularly paid to him by petitioner. Thus it cannot be
validly claimed that the financial assistance consisting of the free portion of
the UDF was purely dependent on the premium production of the agent. Be that as
it may, it is worth considering that the payment of compensation by way of
commission does not militate against the conclusion that private respondent was
an employee of petitioner. Under Art. 97 of the Labor Code, “wage” shall mean
“however designated, capable of being expressed in terms of money, whether
fixed or ascertained on a time, task, price or commission basis x x x x” [10]
As to the matter
involving the power of dismissal and control by the employer, the latter of
which is the most important of the test, petitioner asserts that its
termination of De los Reyes was but an exercise of its inherent right as
principal under the contracts and that the rules and guIdelines it set forth in
the contract cannot, by any stretch of imagination, be deemed as an exercise of
control over the private respondent as these were merely directives that fixed
the desired result without dictating the means or method to be employed in
attaining it. The following factual findings of the NLRC[11] however contradict such claims:
A perusal of the appointment of complainant as Acting Unit Manager reveals that:
1. Complainant
was to “exclusively” serve respondent company. Thus it is provIded: x x x 7..7
Other causes of Termination: This Appointment may likewise be terminated for
any of the following causes: x x x 7..7..2. Your entering the service of the
government or another life insurance company; 7..7..3. Your accepting a
managerial or supervisory position in any firm doing business in the
Philippines without the written consent of the Company; x x x
2. Complainant
was required to meet certain manpower and production quotas.
3. Respondent
(herein petitioner) controlled the assignment and removal of soliciting agents
to and from complainant’s unit, thus: x x x 7..2. Assignment of Agents: Agents
recruited and trained by you shall be attached to your unit unless for reasons of
Company policy, no such assignment should be made. The Company retains the
exclusive right to assign new soliciting agents appointed and assigned to the
saId unit x x x x
It would not be
amiss to state the respondent’s duty to collect the company’s premiums using
company receipts under Sec. 7.4 of the management contract is further evIdence
of petitioner’s control over respondent, thus:
xxxx
7.4 Acceptance and Remittance of Premiums. – x x x x the Company hereby authorizes you to accept and receive sums of money in payment of premiums, loans, deposits on applications, with or without interest, due from policy holders and applicants for insurance, and the like, specially from policyholders of business solicited and sold by the agents attached to your unit provIded however, that all such payments shall be duly receipted by you on the corresponding Company’s “Agents’ Receipt” to be provIded you for this purpose and to be covered by such rules and accounting regulations the Company may issue from time to time on the matter. Payments received by you shall be turned over to the Company’s designated District or Service Office clerk or directly to the Home Office not later than the next working day from receipt thereof x x x x
Petitioner would
have us apply our ruling in Insular Life Assurance Co., Ltd. v. NLRC and
Basiao [12] to the instant case under the
doctrine of stare decisis, postulating that both cases involve parties
similarly situated and facts which are almost Identical.
But we are not
convinced that the cited case is on all fours with the case at bar. In Basiao,
the agent was appointed Agency Manager under an Agency Manager Contract. To
implement his end of the agreement, Melecio Basiao organized an agency office
to which he gave the name M. Basiao and Associates. The Agency Manager
Contract practically contained the same terms and conditions as the Agency
Contract earlier entered into, and the Court observed that “drawn from the
terms of the contract they had entered into, (which) either expressly or by
necessary implication, Basiao (was) made the master of his own time and selling
methods, left to his own judgment the time, place and means of soliciting
insurance, set no accomplishment quotas and compensated him on the bases
of results obtained. He was not bound to observe any schedule of working hours
or report to any regular station; he could seek and work on his prospects
anywhere and anytime he chose to and was free to adopt the selling methods he
deemed most effective.” Upon these premises, Basiao was considered as agent –
an independent contractor – of petitioner INSULAR LIFE.
Unlike Basiao,
herein respondent De los Reyes was appointed Acting Unit Manager, not
agency manager. There is not evidence that to implement his obligations under
the management contract, De los Reyes had organized an office. Petitioner in
fact has admitted that it provIded De los Reyes a place and a table at its
office where he reported for and worked whenever he was not out in the field.
Placed under petitioner’s Cebu District Service Office, the unit was given a
name by petitioner – De los Reyes and Associates – and assigned Code No. 11753
and Recruitment No. 109398. Under the managership contract, De los Reyes was
obliged to work exclusively for petitioner in life insurance solicitation and
was imposed premium production quotas. Of course, the acting unit
manager could not underwrite other lines of insurance because his Permanent
Certificate of Authority was for life insurance only and for no other. He was proscribed
from accepting a managerial or supervisory position in any other office
including the government without the written consent of petitioner. De los
Reyes could only be promoted to permanent unit manager if he met certain
requirements and his promotion was recommended by the petitioner’s District
Manager and Regional Manager and approved by its Division Manager. As Acting
Unit Manager, De los Reyes performed functions beyond mere solicitation of
insurance business for petitioner. As found by the NLRC, he exercised
administrative functions which were necessary and beneficial to the business of
INSULAR LIFE.
In Great
Pacific Life Insurance Company v. NLRC[13] which is closer in application that Basiao to
this present controversy, we found that “the relationships of the Ruiz brothers
and Grepalife were those of employer-employee. First, their work at the time of
their dismissal as zone supervisor and district manager was necessary and
desirable to the usual business of the insurance company. They were entrusted
with supervisory, sales and other functions to guard Grepalife’s business
interests and to bring in more clients to the company, and even with
administrative functions to ensure that all collections, reports and data are
faithfully brought to the company x x x x A cursory reading of their respective
functions as enumerated in their contracts reveals that the company practically
dictates the manner by which their jobs are to be carried out x x x x” We need
elaborate no further.
Exclusivity of
service, control of assignments and removal of agents under private
respondent’s unit, collection of premiums, furnishing of company facilities and
materials as well as capital described as Unit Development Fund are but
hallmarks of the management system in which herein private respondent worked.
This obtaining, there is no escaping the conclusion that private respondent
Pantaleon de los Reyes was an employee of herein petitioner.
WHEREFORE, the petition of Insular Life
Assurance Company, Ltd., is DENIED and the Decision of the National Labor
Relations Commission dated 3 March 1995 and its Order of 6 April 1996
sustaining it are AFFIRMED. Let this case be REMANDED to the Labor Arbiter a
quo who is directed to hear and dispose of this case with deliberate
dispatch in light of the views expressed herein.
SO ORDERED.
[1] Decision penned by Labor Arbiter Nicasio C.
Aninon, Rollo, p. 35.
[2] Penned by Commissioner Amorito V. Anete, concurred
in by PresIding Commissioner Irenea E. Ceniza and Commissioner Bernabe S.
Batuhan, Id., p. 45.
[3] G.R. No. 84484, 15 November 1989, 179 SCRA 459.
[4] Agency Contract, Rollo, p. 72.
[5] Letter dated 24 August 1992 sent by petitioner
through its supervisor Gracia A. Refugia to Pantaleon de los Reyes, Id., p. 50.
[6] Office Memorandum of petitioner dated 5 March
1993 addressed to respondent De los Reyes, Id., pp. 51-57.
[7] Industrial Timber Corporation v. NLRC, G.R. No.
83616, 20 January 1989, 169 SCRA 341.
[8] Rollo, p. 51.
[9] Ibid.
[10] Cosmopolitan Funeral Homes, Inc. v. Maulat, G.R.
No. 86693, 2 July 1990, 187 SCRA 109.
[11] Rollo, p. 36.
[12] See Note 3.
[13] G.R. Nos. 80750-51, 23 July 1990, 187 SCRA 694, 698.