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May 5, 2008

G.R. No. 118086, Dec. 15, 1997

  • LABOR LAW: Employment Relationship vs. Independent Contractorship; Employer's Control


Susan Carungcong is an “agent to solicit applications for insurance and annuity policies” of Sun Life Assurance Company of Canada. Later, Carungcong was named New Business Manager but per agreement, it was emphasized that she shall be considered an independent contractor and not an employee. Some time later, the Internal Audit Department discovered some anomalies in the special fund availments of Carungcong, leading to an inquiry and her subsequent termination. Carungcong, therefore, instituted proceedings to vindicate her case. The favorable decision of the Labor Arbiter was, however, reversed later by the NLRC, stating that no employment relationship existed between Carungcong and Sun Life.


  • W/N there is an employer-employee relationship


…It is true that complainant Carungcong’s duties and functions derived from then existing agreements/contracts were made subject to rules and regulations issued by respondent company, and for that matter, have likewise been made subject of certain limitations imposed by said respondent company. Nonetheless, these are not sufficient to accord the effect of establishing employer-employee relationship absent in this case. This is so because the insurance business is not just any other ordinary business. It is one that is imbued with public interest hence, it must be governed by the rules and regulations of the state. The controls adverted to by complainant are latent in the kind of business she is into and are mainly aimed at promoting the results the parties so desire and do not necessarily create any employer-employee relationships, where the employers’ controls have to interfere in the methods and means by which the employee would like to employ to arrive at the desired results.

This is not without any jurisprudential support as earlier pointed out by herein respondent. The Supreme Court in the case of Insular Life Assurance Co., Ltd. versus National Labor Relations Commission and Melencio Basiao (179 SCRA 459) emphatically discoursed in this wise:

Logically, the line should be drawn between rules that merely serve as guidelines towards the achievement of the mutually desired result without dictating the means or methods to be employed in attaining it, and those that control to fix the methodology and bind or restrict the party hired to the use of such means. The first, which aim only to promote the result, create no employer-employee relationship unlike the second, which address both the result and the means used to achieve it. The distinction acquires particular relevance in the case of an enterprise affected with public interest and is on that account subject to regulation by the State with respect, not only to the relations between insurer and insured but also to the internal affairs of the Insurance company. 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.

For that matter, complainant Carungcong was never paid a fixed wage or salary but was mainly paid by commissions, depending on the level and volume of her performance/production, the number of trained agents, when taken in and assigned to her, being responsible for her added income as she gets a certain percentage from the said agents' production as part of her commission.


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