Tongko v. The Manufacturers Life (G.R. No. 167622; January 25, 2011)


FACTS: Taking from the November 2008 decision, the facts are as follows:

Manufacturers Life Insurance, Co. is a domestic corporation engaged in life insurance business. De Dios was its President and Chief Executive Officer. Petitioner Tongko started his relationship with Manulife in 1977 by virtue of a Career Agent's Agreement.Pertinent provisions of the agreement state that:

It is understood and agreed that the Agent is an independent contractor and nothing contained herein shall be construed or interpreted as creating an employer-employee relationship between the Company and the Agent.

a) The Agent shall canvass for applications for Life Insurance, Annuities, Group policies and other products offered by the Company, and collect, in exchange for provisional receipts issued by the Agent, money due or to become due to the Company in respect of applications or policies obtained by or through the Agent or from policyholders allotted by the Company to the Agent for servicing, subject to subsequent confirmation of receipt of payment by the Company as evidenced by an Official Receipt issued by the Company directly to the policyholder.

b) The Company may terminate this Agreement for any breach or violation of any of the provisions hereof by the Agent by giving written notice to the Agent within fifteen (15) days from the time of the discovery of the breach. No waiver, extinguishment, abandonment, withdrawal or cancellation of the right to terminate this Agreement by the Company shall be construed for any previous failure to exercise its right under any provision of this Agreement.

c) Either of the parties hereto may likewise terminate his Agreement at any time without cause, by giving to the other party fifteen (15) days notice in writing.

Sometime in 2001, De Dios addressed a letter to Tongko, then one of the Metro North Managers, regarding meetings wherein De Dios found Tongko's views and comments to be unaligned with the directions the company was taking. De Dios also expressed his concern regarding the Metro North Managers' interpretation of the company's goals. He maintains that Tongko's allegations are unfounded. Some allegations state that some Managers are unhappy with their earnings, that they're earning less than what they deserve and that these are the reasons why Tonko's division is unable to meet agency development objectives. However, not a single Manager came forth to confirm these allegations. Finally, De Dios related his worries about Tongko's inability to push for company development and growth.

De Dios subsequently sent Tongko a letter of termination in accordance with Tongko's Agents Contract. Tongko filed a complaint with the NLRC against Manulife for illegal dismissal, alleging that he had an employer-employee relationship with De Dios instead of a revocable agency by pointing out that the latter exercised control over him through directives regarding how to manage his area of responsibility and setting objectives for him relating to the business. Tongko also claimed that his dismissal was without basis and he was not afforded due process. The NLRC ruled that there was an employer-employee relationship as evidenced by De Dios's letter which contained the manner and means by which Tongko should do his work. The NLRC ruled in favor of Tongko, affirming the existence of the employer-employee relationship.

The Court of Appeals, however, set aside the NLRC's ruling. It applied the four-fold test for determining control and found the elements in this case to be lacking, basing its decision on the same facts used by the NLRC. It found that Manulife did not exert control over Tongko, there was no employer-employee relationship and thus the NLRC did not have jurisdiction over the case.

The Supreme Court reversed the ruling of the Court of Appeals and ruled in favor of Tongko. However, the Supreme Court issued another Resolution dated June 29, 2010, reversing its decision. Tongko filed a motion for reconsideration, which is now the subject of the instant case.

ISSUE: Did the Supreme Court err in issuing the June 29, 2010 resolution, reversing its earlier decision that an employer-employee relationship existed?

HELD: The Supreme Court finds no reason to reverse the June 29, 2010 decision. Control over the performance of the task of one providing service both with respect to the means and manner, and the results of the service is the primary element in determining whether an employment relationship exists. The Supreme Court ruled petitioners Motion against his favor since he failed to show that the control Manulife exercised over him was the control required to exist in an employer-employee relationship; Manulifes control fell short of this norm and carried only the characteristic of the relationship between an insurance company and its agents, as defined by the Insurance Code and by the law of agency under the Civil Code.

In the Supreme Courts June 29, 2010 Resolution, they noted that there are built-in elements of control specific to an insurance agency, which do not amount to the elements of control that characterize an employment relationship governed by the Labor Code.The Insurance Code provides definite parameters in the way an agent negotiates for the sale of the companys insurance products, his collection activities and his delivery of the insurance contract or policy. They do not reach the level of control into the means and manner of doing an assigned task that invariably characterizes an employment relationship as defined by labor law.

To reiterate, guidelines indicative of labor law "control" do not merely relate to the mutually desirable result intended by the contractual relationship; they must have the nature of dictating the means and methods to be employed in attaining the result. Tested by this norm, Manulifes instructions regarding the objectives and sales targets, in connection with the training and engagement of other agents, are among the directives that the principal may impose on the agent to achieve the assigned tasks.They are targeted results that Manulife wishes to attain through its agents. Manulifes codes of conduct, likewise, do not necessarily intrude into the insurance agents means and manner of conducting their sales. Codes of conduct are norms or standards of behavior rather than employer directives into how specific tasks are to be done.

In sum, the Supreme Court found absolutely no evidence of labor law control. DENIED.
DISSENT by Justice Presbitero J. Velasco, Jr.: GREGORIO V. TONGKO, petitioner, vs. THE MANUFACTURERS LIFE INSURANCE CO. (PHILS.), INC. and RENATO A. VERGEL DE DIOS, respondents. (G.R. No. 167622, January 25, 2011)

FACTS: The facts are culled from the main case.

ISSUE: Whether or not Tongko during all the time he was directly or indirectly connected with the company, first as an agent, pursuant to a Career Agents Agreement (Agreement), and then as unit, branch and eventually regional sales manager of Manulife's Sales Agency Organization was an employee of Manulife.

HELD: The petition is meritorious.

In resolving the issue of whether an employer-employee tie obtains, attention was focused, as jurisprudential trend dictates, on the four-fold test on employment developed and invariably invoked by labor officials and this Court as a guiding, if not governing norm, to determine, based on the facts and circumstances involved in a given situation, whether such relationship exists. These four elements are:
(1) the selection and engagement of the employee;
(2) the payment of wages;
(3) the power of dismissal; and
(4) the control test.
The control test meaning whether or not 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 the means and methods employed in reaching that end constitutes the most important index of the existence of an employer-employee relationship.

From the evidence on record, it appears that Manulife had control over the work of Tongko after his appointment as manager of the company's insurance sales force, indubitably implying the existence of an employer-employee relationship between them.

In the case of Great Pacific Life Assurance Corporation v. NLRC, Ernesto Ruiz and Rodrigo Ruiz (the Grepalife case), as Justice Velasco cites, it was held that the employer company practically dictated the manner by which jobs were to be carried out. The functions of the then district managers are similar to the functions of Tongko in the present case. Thus, if the district managers in the Grepalife case were held by the court to be employees then Tongko who is in the same situation, according to Justice Velasco, should also be deemed an employee of Manulife.

Also, he maintains that, similar to the respondent in the Grepa case who was an insurance agent but also had a management contract, the fact that the Agents Agreement was subsisting even after Tongko's appointment as manager does not militate against a conclusion that Tongko was Manulife's employee during his stint as a manager. While there was perhaps no written management contract whence Tongko's rights, duties and functions as unit/branch manager may easily be fleshed out as a prelude to determining if an employer-employee relationship with Manulife did exist, other evidence was adduced to show such duties and responsibilities.

The petition is partially granted such that Tongko may only be considered an employee of Manulife from the time of his appointment as manager.