Tongko v Manulife

FACTS: (2010)
The contractual relationship between Tongko and Manulife had two basic phases. The first or initial
phase began on July 1, 1977, under a Career Agent’s Agreement. Hence it is should be understood that
the an agent is an independent contractor which has no EER:

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 to or 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) day notice in writing.

The second phase started in 1983 when Tongko was named Unit Manager in Manulife’s Sales Agency
Organization. In 1990, he became a Branch Manager. Six years later (or in 1996), Tongko became a
Regional Sales Manager.

However, Respondent Renato Vergel de Dios wrote Tongko a letter on concerns that were brought up
during the Metro North Sales Managers Meeting that the latter’s views and comments unaligned with
the directions the company was taking. The allegations stated that some Managers were unhappy with
their earnings. However, no Managers confirmed the said allegations. De Dios worried about Tongko’s
inability to push for the company’s development and growth.

Subsequently, de Dios wrote Tongko another letter, dated December 18, 2001, terminating Tongko’s
services. Tongko responded by filing an illegal dismissal complaint with the NLRC Arbitration Branch. He
essentially alleged – despite the clear terms of the letter terminating his Agency Agreement – that he
was Manulife’s employee before he was illegally dismissed.

Labor arbiter:  no employer-employee relationship existed between the parties.

NLRC Ruling: 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.
CA Ruling: 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.

ISSUE:
W/N There is an existence of EER between Tongko and Manulife

RULING:
No, there is no EER. He failed to show that the control Manulife exercised over him was the control
required to exist in an employer-employee relationship; Manulifes control fellshort 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.

By the Agreement’s express terms, Tongko served as an "insurance agent" for Manulife, not as an
employee.  the characterization the parties gave to their relationship in the Agreement cannot simply be
brushed aside because it embodies their intent at the time they entered the Agreement, and they were
governed by this understanding throughout their relationship.

In the case at bar, Tongko’s role as an insurance agent never changed during his relationship with
Manulife. 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. Evidence indicates that Tongko consistently clung to the view
that he was an independent agent selling Manulife insurance products since he invariably declared
himself a business or self-employed person in his income tax returns.

There case is the lack of evidence on record showing that Manulife ever exercised means-and-manner
control, even to a limited extent, over Tongko during his ascent in Manulife’s sales ladder. The best
evidence of control – the agreement or directive relating to Tongko’s duties and responsibilities – was
never introduced as part of the records of the case. The reality is, prior to de Dios’ letter, Manulife had
practically left Tongko alone not only in doing the business of selling insurance, but also in guiding the
agents under his wing.

Evidence indicates that Tongko consistently clung to the view that he was an independent agent selling
Manulife insurance products since he invariably declared himself a business or self-employed person in
his income tax returns.

Moreover, Tongko also presented that he follows the codes and regulation of Manulife. H owever, it is
not per se indicative of labor law control as the law and jurisprudence teach us. In the case, It is the
insurance code that shall govern. The general law on agency, on the other hand, expressly allows the
principal an element of control over the agent in a manner consistent with an agency relationship.
However, such control is not within the purview of the labor code