1. G.R. No.

73887 December 21, 1989

GREAT PACIFIC LIFE ASSURANCE CORPORATION, petitioner,
vs.
HONORATO JUDICO and NATIONAL LABOR RELATIONS COMMISSION, respondents.
FACTS:
Honorato Judico filed a complaint for illegal dismissal against Grepalife. Judico entered into an
agreement of agency with petitioner Grepalife to become a debit agent attached to the industrial life
agency in Cebu City. Judico had definite work assignments including but not limited to collection of
premiums from policy holders and selling insurance to prospective clients. On June 28, 1982,
complainant was dismissed by way of termination of his agency contract.

ISSUE:
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.

HELD:
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, the time and the effort they spend in their work depend entirely upon their own will and
initiative; 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). 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 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.

2. INSULAR LIFE VS NLRC 179 SCRA 459
G.R. No. 84484 November 15, 1989
INSULAR LIFE ASSURANCE CO., LTD., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and MELECIO BASIAO, respondents.
FACTS:
Melecio T. Basiao entered into a contract with Insular Life as a commission agent containing provision
of: the "rules in ... (the Company's) Rate Book and its Agent's Manual, as well as all its circulars ... and
those which may from time to time be promulgated by it, ..." were made part of said contract.
In May, 1979, the Company terminated the Agency Manager's Contract. Basiao sued the Company in a
civil action which prompted the latter to terminate also his engagement under the first contract and to
stop payment of his commissions starting April 1, 1980. Basiao thereafter filed with the then Ministry of
Labor a complaint against the Company and its president.

ISSUE: W/N every form of control that the hiring party reserves to himself over the conduct of the party
hired in relation to the services rendered may be accorded the effect of establishing an employer-
employee relationship between them in the legal or technical sense of the term

HELD: Rules and regulations governing the conduct of the business are provided for in the Insurance
Code and enforced by the Insurance Commissioner. It is, therefore, usual and expected for an insurance
company to promulgate a set of rules to guide its commission agents in selling its policies that they may
not run afoul of the law and what it requires or prohibits. None of these really invades the agent's
contractual prerogative to adopt his own selling methods or to sell insurance at his own time and
convenience, hence cannot justifiably be said to establish an employer-employee relationship between
him and the company.
In Mafinco Trading Corporation vs. Ople,13 the Court ruled that a person engaged to sell soft drinks for
another, using a truck supplied by the latter, but with the right to employ his own workers, sell
according to his own methods subject only to prearranged routes, observing no working hours fixed by
the other party and obliged to secure his own licenses and defray his own selling expenses, all in
consideration of a peddler's discount given by the other party for at least 250 cases of soft drinks sold
daily, was not an employee but an independent contractor.

3. ENCYCLOPEDIA BRITTANICA VS NLRC 264 SCRA 7

FACTS:
Benjamin Limjoco was a Sales Division Manager of petitioner Encyclopaedia Britannica and was in
charge of selling petitioners products through some sales representatives. As compensation, Limjoco
received commissions from the products sold by his agents. He was also allowed to use Brittanicas
name, goodwill and logo. It was, however, agreed upon that office expenses would be deducted from
Limjocos commissions. Brittanica would also be informed about appointments, promotions, and
transfers of employees in private respondents district. Limjoco receives memoranda from Brittanica and
has been required to submit regular reports.
On June 14, 1974, Limjoco resigned from office to pursue his private business. Then on October 30,
1975, he filed a complaint against petitioner Encyclopaedia Britannica with the Department of Labor and
Employment, claiming for non-payment of separation pay and other benefits, and also illegal deduction
from his sales commissions

ISSUE: W/N an employer-employee relationship exists despite the memoranda and report
submissions?
HELD:
In determining the existence of an employer-employee relationship the following elements must be
present: 1) selection and engagement of the employee; 2) payment of wages; 3) power of dismissal; and
4) the power to control the employees conduct. Of the above, control of employees conduct is
commonly regarded as the most crucial and determinative indicator of the presence or absence of an
employer-employee relationship.[3] Under the control test, an employer-employee relationship exists
where the person for whom the services are performed reserves the right to control not only the end to
be achieved, but also the manner and means to be used in reaching that end.
The fact that petitioner issued memoranda to private respondents and to other division sales managers
did not prove that petitioner had actual control over them. The different memoranda were merely
guidelines on company policies which the sales managers follow and impose on their respective agents.
It should be noted that in petitioners business of selling encyclopedias and books, the marketing of
these products was done through dealership agreements. The sales operations were primarily
conducted by independent authorized agents who did not receive regular compensations but only
commissions based on the sales of the products. These independent agents hired their own sales
representatives, financed their own office expenses, and maintained their own staff. Thus, there was a
need for the petitioner to issue memoranda to private respondent so that the latter would be apprised
of the company policies and procedures. Nevertheless, private respondent Limjoco and the other agents
were free to conduct and promote their sales operations. The periodic reports to the petitioner by the
agents were but necessary to update the company of the latters performance and business income. As
stated earlier, the element of control is absent; where a person who works for another does so more or
less at his own pleasure and is not subject to definite hours or conditions of work, and in turn is
compensated according to the result of his efforts and not the amount thereof, we should not find that
the relationship of employer and employee exists.