G.R. No. 45419 - Santos vs. People

The case involves Insular Life Assurance Co., Ltd. (petitioner) and Pantaleon de los Reyes (private respondent), concerning whether an employer-employee relationship existed between them.
Two separate contracts governed the relationship:

An agency contract entered into on 21 August 1992.
A management contract entered into on 1 March 1993, appointing de los Reyes as Acting Unit Manager.

The contract allowed de los Reyes discretion in soliciting insurance as an independent agent.
It explicitly stated that no employer-employee relationship would be created between the parties.
De los Reyes was to submit completed applications and other relevant documents, and remit all collections to the petitioner.
Petitioner even encouraged him to register as a self-employed individual.

De los Reyes was appointed as Acting Unit Manager with additional managerial duties including recruitment, training, and supervising soliciting agents.
The contract imposed performance requirements relating to manpower and premium production quotas on a quarterly basis.
Compensation consisted not only of commissions but also included a monthly financial assistance package (comprising a free portion and a validated portion) that in effect resembled a regular salary.
The contract contained several restrictions on de los Reyes, such as exclusivity (prohibition from working for other companies or accepting other managerial positions) and subjecting him to termination for violations.

Although the contracts expressly denied the creation of an employer-employee relationship, the terms and operating practices exhibited characteristics typical of employment.
The petitioner argued that de los Reyes maintained complete discretion in his tasks, citing the so-called “four-fold test” (selection and engagement, payment of wages, power of dismissal, and control) to justify his independent status.
In contrast, the evidence indicated that petitioner exercised control over de los Reyes:

On 17 June 1994, the Labor Arbiter dismissed de los Reyes’s complaint against petitioner on the ground of lack of jurisdiction, based on the absence of an employer-employee relationship.
The National Labor Relations Commission (NLRC) reversed the dismissal by finding that an employer-employee relationship existed, and remanded the case for a hearing on the merits.
Petitioner elevated the matter by filing a special civil action for certiorari, challenging the NLRC’s findings and alleging grave abuse of discretion in reversing the Labor Arbiter’s decision.

Whether there existed an employer-employee relationship between petitioner Insular Life Assurance Co., Ltd. and respondent Pantaleon de los Reyes, in spite of the contractual stipulations to the contrary.
Whether the NLRC committed grave abuse of discretion and/or acted without jurisdiction when it reversed the Labor Arbiter’s dismissal, thereby characterizing de los Reyes as an employee.
Whether the specific provisions in the management contract (such as control over work methods, performance requirements, and a structured payment system) are determinative in establishing an employment relationship, regardless of the parties’ expressed intention to classify de los Reyes as an independent contractor.