GREGORIO TONGKO, v. MANUFACTURERS LIFE INSURANCE CO. (PHILS.), INC. ET AL.

G.R. No. 167622, July 29, 2010

Brion, J.:

DOCTRINE:

FACTS:

Tongko and Manulife entered into a career agent’s agreement and, subsequently, the
former was appoint as unit manager in Manulife’s Sales Agency Organization. Tongko’s
gross earnings consisted of commissions, persistency income, and management overrides.
Since the beginning, Tongko consistently declared himself self-employed in his income tax
returns. Thus, under oath, he declared his gross business income and deducted his business
expenses to arrive at his taxable business income. Manulife withheld the corresponding
10% tax on Tongko’s earnings. In 2001, Manulife instituted manpower development
programs at the regional sales management level. Respondent Renato Vergel de Dios wrote
Tongko a letter regarding the performance of the latter’s managing in the assigned region;
subsequently, respondent de Dios a wrote Tongko a letter again terminating their agency
agreement. Thus, Tongko filed a complaint for illegal dismissal. The labor arbiter decreed
that no employer-employee relationship existed between the parties. However, the NLRC
reversed the labor arbiter’s decision on appeal; it found the existence of an employer-
employee relationship and concluded that Tongko had been illegally dismissed. In the
petition for certiorari with the Court of Appeals (CA), the appellate court found that the
NLRC gravely abused its discretion in its ruling and reverted to the labor arbiter’s decision
that no employer-employee relationship existed between Tongko and Manulife.

In the previous decision of the Supreme Court in this case, it ruled that there is
employer-employee relationship between Tongko and Manulife. Citing the prior Insular v.
delos Reyes, where it held that the Insular case did not foreclose the possibility of an
insurance agent becoming an employee of an insurance company; if evidence exists
showing that the company promulgated rules or regulations that effectively controlled or
restricted an insurance agent’s choice of methods or the methods themselves in selling
insurance, an employer-employee relationship would be present. The determination of the
existence of an employer-employee relationship is thus on a case-to-case basis depending
on the evidence on record.
ISSUE/S:

Whether or not there is employer-employee relationship between Manulife and Tongko

RULING:

No, the Court reconsidered its previous decision and thus ruled that there is no
employer -employee relationship between Manulife and Tongko.
Generally, the determinative element is the control exercised over the one rendering
service. The employer controls the employee both in the results and in the means and manner
of achieving this result. The principal in an agency relationship, on the other hand, also has
the prerogative to exercise control over the agent in undertaking the assigned task based on
the parameters outlined in the pertinent laws.
It was found that only an Agency Agreement was presented by Tongko. And while
Tongko was later on designated unit manager in 1983, Branch Manager in 1990, and
Regional Sales Manager in 1996, no formal contract regarding these undertakings appears in
the records of the case. Any such contract or agreement, had there been any, could have at the
very least provided the bases for properly ascertaining the juridical relationship established
between the parties.
By the Agreement’s express terms, Tongko served as an "insurance agent" for
Manulife, not as an employee. Significantly, evidence shows that Tongko’s role as an
insurance agent never changed during his relationship with Manulife. If changes occurred at
all, the changes did not appear to be in the nature of their core relationship. Tongko
essentially remained an agent, but moved up in this role through Manulife’s recognition that
he could use other agents approved by Manulife, but operating under his guidance and in
whose commissions he had a share. For want of a better term, Tongko perhaps could be
labeled as a "lead agent" who guided under his wing other Manulife agents similarly tasked
with the selling of Manulife insurance.