GREGORIO V. TONGKO vs. THE MANUFACTURERS LIFE INSURANCE CO.

G.R. No. 167622

June 29, 2010

Doctrine:

A commitment to abide by the rules and regulations of an insurance company does not ipso facto make
the insurance agent an employee. Neither do guidelines somehow restrictive of the insurance agent’s
conduct necessarily indicate "control" as this term is defined in jurisprudence. Guidelines indicative of
labor law "control," should not merely relate to the mutually desirable result intended by the contractual
relationship; they must have the nature of dictating the means or methods to be employed in attaining the
result, or of fixing the methodology and of binding or restricting the party hired to the use of these means.

Facts:

Petitioner Tongko entered into a Career Agent’s Agreement with respondent Manulife with the duty of
being an agent who canvasses applications for group policies and other products of the company.  The
agreement stated that Tongko is an agent and an independent contractor and nothing shall be construed as
creating and employer-employee relationship between respondent Manulife and petitioner Tongko.
Thereafter, petitioner Tongko was promoted as unit manager, branch manager and regional sales
manager. However, he was subsequently terminated when he failed to comply with the policies of
respondent Manulife.

Petioner Tongko then filed a complaint alleging that despite the clear terms of the letter terminating his
Agency Agreement, he was an employee of respondent before he was illegally dismissed.

Issue:

Whether or not there exists an employer-employee relationship between petitioner Tongko and
respondent Manulife

Ruling:

There is no existence of an employer-employee relationship between petitioner and respondent.

By the Agreement’s express terms, Tongko served as an "insurance agent" for Manulife, not as an
employee. To be sure, the Agreement’s legal characterization of the nature of the relationship cannot be
conclusive and binding on the courts; as clearly stated, the characterization of the juridical relationship
the Agreement embodied is a matter of law that is for the courts to determine. At the same time, though,
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. The parties’ legal characterization of their intent, although
not conclusive, is critical in this case because this intent is not illegal or outside the contemplation of law,
particularly of the Insurance and the Civil Codes.
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.

That Tongko assumed a leadership role but nevertheless wholly remained an agent is the inevitable
conclusion that results from the reading of the Agreement and his continuing role thereunder as sales
agent, from the perspective of the Insurance and the Civil Codes and in light of what Tongko himself
attested to as his role as Regional Sales Manager.

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. Another interesting point the dissent raised with respect to the Agreement is its
conclusion that the Agreement negated any employment relationship between Tongko and Manulife so
that the commissions he earned as a sales agent should not be considered in the determination of the
backwages and separation pay that should be given to him.

From jurisprudence, an important lesson that the first Insular Life case teaches us is that a commitment to
abide by the rules and regulations of an insurance company does not ipso facto make the insurance agent
an employee. Neither do guidelines somehow restrictive of the insurance agent’s conduct necessarily
indicate "control" as this term is defined in jurisprudence. Guidelines indicative of labor law "control," as
the first Insular Life case tells us, should not merely relate to the mutually desirable result intended by the
contractual relationship; they must have the nature of dictating the means or methods to be employed in
attaining the result, or of fixing the methodology and of binding or restricting the party hired to the use of
these means.

As previously discussed, what simply happened in Tongko’s case was the grant of an expanded sales
agency role that recognized him as leader amongst agents in an area that Manulife defined. 

Under this legal situation, the only conclusion that can be made is that the absence of evidence showing
Manulife’s control over Tongko’s contractual duties points to the absence of any employer-employee
relationship between Tongko and Manulife. In the context of the established evidence, Tongko remained
an agent all along; although his subsequent duties made him a lead agent with leadership role, he was
nevertheless only an agent whose basic contract yields no evidence of means-and-manner control.