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    Insular Life Assurance Co vs. NLRC

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    Xavier Bataan
    The court ruled that Melecio Basiao was an independent contractor, not an employee of Insular Life Assurance Co. Basiao had signed contracts allowing him freedom in soliciting insurance and was not subject to the company's control over his methods. As an independent contractor, Basiao was not entitled to employee benefits or back pay claimed in his complaint. The court relied on previous cases that also distinguished independent contractors from employees based on lack of employer control over means and methods used.

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    Insular Life Assurance Co vs. NLRC

    Uploaded by

    Xavier Bataan
    775 views2 pages
    The court ruled that Melecio Basiao was an independent contractor, not an employee of Insular Life Assurance Co. Basiao had signed contracts allowing him freedom in soliciting insurance and was not subject to the company's control over his methods. As an independent contractor, Basiao was not entitled to employee benefits or back pay claimed in his complaint. The court relied on previous cases that also distinguished independent contractors from employees based on lack of employer control over means and methods used.

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    The court ruled that Melecio Basiao was an independent contractor, not an employee of Insular Life Assurance Co. Basiao had signed contracts allowing him freedom in soliciting insurance and was not subject to the company's control over his methods. As an independent contractor, Basiao was not entitled to employee benefits or back pay claimed in his complaint. The court relied on previous cases that also distinguished independent contractors from employees based on lack of employer control over means and methods used.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    775 views2 pages

    Insular Life Assurance Co vs. NLRC

    Uploaded by

    Xavier Bataan
    The court ruled that Melecio Basiao was an independent contractor, not an employee of Insular Life Assurance Co. Basiao had signed contracts allowing him freedom in soliciting insurance and was not subject to the company's control over his methods. As an independent contractor, Basiao was not entitled to employee benefits or back pay claimed in his complaint. The court relied on previous cases that also distinguished independent contractors from employees based on lack of employer control over means and methods used.

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    Bataan, X.B.K.

    Case Title: Insular Life Assurance Co., Ltd. vs. NLRC; 179 SCRA 459; November
    15, 1989.

    Legal Doctrine: The power of control to create employer–employee relationship


    does not only refer to control the result, control power refers to both the means
    and result of the work.

    Facts: In 1968, Insular, the company, and Melecio Basiao entered into a contract
    by which the latter is authorized to solicit within the Philippines for insurance
    policiesl receive compensation in the form of commission; and the rules in the
    company rate book. The contract also provides that “the agent is free to exercise
    his own judgment as to soliciting insurance”; for “illegal practices”; and
    “termination of contract at the will of the company without notice to the agent.” In
    1972, Basiao and the company entered into another contract, “Agency Manager's
    Contract” and to implement his end of it Basiao organized an agency or office to
    which he gave the name M. Basiao and Associates, while concurrently fulfilling his
    commitments under the first contract with the Company. In 1979, the company
    terminated the contracts entered into by them. Basiao filed a complaint before the
    LA against the company and sought to recover commissions allegedly unpaid
    thereunder, plus attorney's fees. The company argued that Basiao is not entitled to
    the claim as he is an independent contractor. The LA and NLRC ruled for Basiao
    reasoning that there is an employer–employee relationship. On certiorari petition,
    the company is arguing that LA has no jurisdiction as Basiao is not an employee of
    the company.

    Issue: W/N Basiao is an employee of herein Company.

    Ruling of the Court: No, Basiao is not an employee of herein Company. Basiao is
    an independent contractor. In determining the existence of employer-employee
    relationship, the following elements are generally considered, namely: (1) the
    selection and engagement of the employee; (2) the payment of wages; (3) the
    power of dismissal; and (4) the power to control the employees' conduct —
    although the latter is the most important element. 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 or 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. Here, no showing has been made
    that any such rules or regulations were in fact promulgated, much less that any
    rules existed or were issued which effectively controlled or restricted his choice of
    methods — or the methods themselves — of selling insurance. Absent such
    showing, the Court will not speculate that any exceptions or qualifications were
    imposed on the express provision of the contract leaving Basiao “free to exercise
    his own judgment as to the time, place and means of soliciting insurance.” Hence,
    no employer–employee relationship.

    Disposition: WHEREFORE, the appealed Resolution of the National Labor Relations


    Commission is set aside, and that complaint of private respondent Melecio T. Basiao
    in RAB Case No. VI-0010-83 is dismissed. No pronouncement as to costs. SO
    ORDERED.

    Notes: In Mafinco Trading Corporation vs. Ople, 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.

    In Investment Planning Corporation of the Philippines us. Social Security System a


    case almost on all fours with the present one, this Court held that there was no
    employer-employee relationship between a commission agent and an investment
    company, but that the former was an independent contractor where said agent and
    others similarly placed were: (a) paid compensation in the form of commissions
    based on percentages of their sales, any balance of commissions earned being
    payable to their legal representatives in the event of death or registration; (b)
    required to put up performance bonds; (c) subject to a set of rules and regulations
    governing the performance of their duties under the agreement with the company
    and termination of their services for certain causes; (d) not required to report for
    work at any time, nor to devote their time exclusively to working for the company
    nor to submit a record of their activities, and who, finally, shouldered their own
    selling and transportation expenses.

    More recently, in Sara vs. NLRC, it was held that one who had been engaged by a
    rice miller to buy and sell rice and palay without compensation except a certain
    percentage of what he was able to buy or sell, did work at his own pleasure without
    any supervision or control on the part of his principal and relied on his own
    resources in the performance of his work, was a plain commission agent, an
    independent contractor and not an employee.

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