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

),
INC.
G.R. No. 167622               June 29, 2010
EN BANC BRION, J.:

FACTS:

Tongko and Manulife had two basic phases The contractual relationship between. The first or
initial phase began on July 1, 1977, under a Career Agent’s Agreement (Agreement) that
provided that he is an Agent, considered independent contractor and that there was no
employer-employee relationship between them. It also stated that the company or the agent
may terminate for any breach or violations of provisions by giving fifteen (15) days’ notice in
writing. Tongko additionally agreed (1) to comply with all regulations and requirements of
Manulife, and (2) to maintain a standard of knowledge and competency in the sale of
Manulife’s products, satisfactory to Manulife and sufficient to meet the volume of the new
business, required by his Production Club membership

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. Tongko’s gross earnings consisted of commissions,
persistency income, and management overrides.

In 2001, Manulife instituted manpower development programs at the regional sales

management level. Respondent Renato Vergel de Dios wrote Tongko a letter dated November
6, 2001 on concerns that were brought up during the October 18, 2001 Metro North Sales
Managers Meeting. Subsequently, de Dios wrote Tongko another letter, dated December 18,
2001, terminating Tongko’s services. Stating that all these efforts have failed in helping him
align your directions with Management’s avowed agency growth policy. It stated also that the
Management is exercising its prerogative under Section 14 of your Agents Contract as we are
now issuing this notice of termination of your Agency Agreement with us effective fifteen
days from the date of this letter.

Tongko responded by filing an illegal dismissal complaint with the National Labor Relations
Commission (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.

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.

ISSUE:

Whether there exist and employer-employee relationship between Tongko and Manulife.

HELD:

The Supreme Court ruled that there was no employer-employee relationship.

The primary evidence in the present case is the July 1, 1977 Agreement that governed and
defined the parties’ relations until the Agreement’s termination in 2001. This Agreement stood
for more than two decades and, based on the records of the case, was never modified or
novated. It assumes primacy because it directly dealt with the nature of the parties’
relationship up to the very end; moreover, both parties never disputed its authenticity or the
accuracy of its terms.
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; 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. At the very least, the provision on the absence of employer-employee relationship
between the parties can be an aid in considering the Agreement and its implementation, and in
appreciating the other evidence on record.

Tongko’s was the granted of an expanded sales agency role that recognized him as leader
amongst agents in an area that Manulife defined. 

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.

The sufficiency of Tongko’s failure to comply with the guidelines of de Dios’ letter, as a
ground for termination of Tongko’s agency, is a matter that the labor tribunals cannot rule
upon in the absence of an employer-employee relationship. Jurisdiction over the matter
belongs to the courts applying the laws of insurance, agency and contracts.