GREAT PACIFIC LIFE ASSURANCE CORPORATION, PETITIONER, VS. HONORATO JUDICO AND NATIONAL LABOR RELATIONS COMMISSION, RESPONDENTS.

Before Us is a Petition for Certiorari to review the
decision of the National Labor Relations Commission (NLRC, for brevity) dated
September 9, 1985 reversing the decision of Labor Arbiter Vito J. Minoria, dated June 9, 1983, by 1) ordering petitioner
insurance company, Great Pacific Life Assurance Corporation (Grepalife, for brevity) to recognize private respondent Honorato Judico, as its regular
employee as defined under Art. 281 of the Labor Code and 2) remanding the case
to its origin for the determination of private respondent Judico’s
money claims.

The records of the case show that Honorato
Judico filed a complaint for illegal dismissal
against Grepalife, a duly organized insurance firm,
before the NLRC Regional Arbitration Branch No. VII, Cebu City
on August 27, 1982.  Said complaint prayed for award of money
claims consisting of separation pay, unpaid salary and 13th month pay, refund
of cash bond, moral and exemplary damages and attorney’s fees.

Both parties appealed to the NLRC when a decision was rendered by
the Labor Arbiter dismissing the complaint on the ground that the
employer-employee relations did not exist between the parties but ordered Grepalife to pay complainant the sum of P1,000.00 by reason
of Christian Charity.

On appeal, said decision was reversed by the NLRC ruling that complainant
is a regular employee as defined
under Art. 281 of the Labor Code and declaring the appeal of Grepalife questioning the legality of the payment of P1,000.00 to complainant
moot and academic.  Nevertheless, for the
purpose of revoking the supersedeas bond of said
company it ruled that the Labor Arbiter erred in awarding P1,000.00 to
complainant in the absence of any legal or factual basis to support its
payment.

Petitioner company moved to reconsider,
which was denied, hence this petition for review raising four legal issues to
wit:

I.  Whether the relationship between insurance
agents and their principal, the insurance company, is that of agent and
principal to be governed by the
Insurance Code and the Civil Code provisions on agency, or one of employer-employee,
to be governed by the Labor Code.

II.  Whether insurance agents are entitled
to the employee benefits prescribed by the Labor Code.

III. Whether the
public respondent NLRC has jurisdiction to take cognizance of a controversy
between insurance agent and the insurance company, arising from their agency
relations.

IV. Whether the
public respondent acted correctly in setting aside the decision of Labor
Arbiter Vito J. Minoria and in ordering the case remanded to said Labor Arbiter for further proceedings.  (p. 159, Rollo)

The crux of these issues boil down to the
question of whether or not employer-employee relationship existed between
petitioner and private respondent.

Petitioner admits that on June
9, 1976, private respondent Judico
entered into an agreement of agency with petitioner Grepalife
to become a debit agent attached to the industrial life agency in Cebu City.  Petitioner defines a debit agent as “an insurance
agent selling/servicing industrial life plans and policy holders.  Industrial life plans are those whose
premiums are payable either daily, weekly or monthly and which are collectible
by the debit agents at the home
or any place designated by the policy holder” (p. 156, Rollo).  Such admission is in
line with the findings of public respondent that as such debit agent, private
respondent Judico had definite work assignments
including but not limited to collection of premiums from policy holders and selling insurance to prospective clients.  Public respondent NLRC also found out that
complainant was initially paid P200.00 as allowance for thirteen (13)
weeks regardless of production and later a certain percentage denominated as
sales reserve of his total collections but not lesser than P200.00.  Sometime in September 1981, complainant was
promoted to the position of Zone Supervisor and was given additional
(supervisor’s) allowance fixed at P110.00 per week.  During the third week of November 1981, he was reverted to his former position
as debit agent but, for unknown reasons, not paid so-called weekly sales
reserve of at least P200.00.  Finally on June 28, 1982, complainant was
dismissed by way of termination of his agency contract.

Petitioner assails the findings of the NLRC that private
respondent is an employee of the former. 
Petitioner argues that Judico’s compensation
was not based on any fixed number of hours he was required to devote to the
service of petitioner company but rather it was the production or result of his
efforts or his work that was being compensated and that the so-called allowance
for the first thirteen weeks that Judico worked as
debit agent, cannot be construed as salary but as a subsidy or a way of
assistance for transportation and meal expenses of a new debit agent during the
initial period of his training which was fixed for thirteen (13) weeks.  Stated otherwise, petitioner contends that Judico’s compensation, in the form of commissions and
bonuses, was based on actual production, (insurance plans sold and premium
collections).

Said contentions of petitioner are strongly rejected by private
respondent.  He maintains that he
received a definite amount as his wage known as “sales reserve” the
failure to maintain the same would bring him back to a beginner’s employment
with a fixed
weekly wage of P200.00 regardless of production.  He was assigned a definite place in the
office to work on when he is not in the field; and in addition to canvassing
and making regular reports, he was burdened with the job of collection and to make
regular weekly report thereto for which
an anemic performance would mean a dismissal. 
He earned out of his faithful and productive service, a promotion to
Zone Supervisor with additional supervisor’s allowance, (a definite or
fixed amount of P110.00) that he was dismissed primarily because of anemic
performance and not because of the termination of the contract of agency
substantiate the fact that he was indeed an employee of the petitioner and not
an insurance agent in the ordinary meaning of the term.

That private respondent Judico was an agent
of the petitioner is unquestionable. 
But, as
We have held in Investment Planning Corp, vs. SSS, 21 SCRA 294, an insurance
company may have two classes of agents
who sell its insurance policies:  (1)
salaried employees who keep definite hours and work under the control and
supervision of the company; and (2) registered representatives who work on
commission basis.  The agents who belong
to the second category are not required to report for work at anytime, they do
not have to devote their time exclusively to or work solely for the company
since the time and the effort they spend in their work depend entirely upon
their own will and initiative; they are not required to account for their time
nor submit a report of their
activities; they shoulder their own selling expenses as well as trasportation; and they are paid their commission based on a certain
percentage of their sales.  One salient
point in the determination of employer-employee relationship which cannot be easily ignored is the fact that the compensation
that these agents on commission received is not paid by the insurance company
but by the investor (or the person insured). 
After determining the commission earned by an agent on his sales the
agent directly deducts it from the amount he received from the investor or the
person insured and turns over to the insurance company the amount invested
after such deduction is made.  The test
therefore is whether the “employer” controls or has reserved the
right to control the “employee” not only as to the result of the work
to be done but also as to the means and methods by which the same is to be
accomplished.

Applying the aforementioned test to the case at bar, We can
readily see that the element of control by the petitioner on Judico was very much present.  The record shows that petitioner Judico received a definite minimum amount per week as his wage
known as “sales reserve” wherein the failure to maintain the same
would bring him back to a beginner’s employment with a fixed weekly wage of P200.00 for thirteen
weeks regardless of production.  He was
assigned a definite place in the office to work on when he is not in the field;
and in addition
to his canvassing work he was burdened with the job of collection.  In both cases he was required to make regular
report to the company regarding this duties, and for
which an anemic performance would mean
a dismissal.  Conversely faithful and
productive service earned him a promotion to Zone Supervisor with additional
supervisor’s allowance, a definite amount of P110.00 aside from the regular P200.00 weekly “allowance”.  Furthermore, his contract of services with
petitioner is not for a piece of work nor for a
definite period.

On the other hand, an
ordinary commission insurance agent works at his own volition or at his own
leisure without fear of dismissal from the company and short of committing acts
detrimental to the business interest of the company or against the latter, whether he produces or not is of no moment as his salary is based
on his production, his anemic
performance or even dead result does not become a ground for dismissal.  Whereas, in private respondent’s case, the
undisputed facts show that he was controlled by petitioner insurance company
not only as to the kind of work;
the amount of results, the kind of performance but also the power of
dismissal.  Undoubtedly, private
respondent, by nature of his position and work, had been a regular employee of
petitioner and is therefore entitled to the protection of the law and could not
just be terminated without valid and justifiable cause.

Premises considered, the appealed decision is hereby
AFFIRMED in toto.

SO ORDERED.

Melencio-Herrera, (Chairman),
Padilla, Sarmiento, and
Regalado, JJ., concur.