Tongko vs. The Manufacturers Life Insurance Co., Inc. G.R. No. 167622, Nove !

er "7, 2""# $%CT&' - Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife) is a domestic corporation engaged in life insurance business. - Renato A. ergel !e !ios "as, during the period material, its President and Chief #$ecuti%e &fficer. - 'regorio . (ong)o started his professional relationship "ith Manulife on *ul+ ,, ,-.. b+ %irtue of a Career Agent/s Agreement (Agreement) he e$ecuted "ith Manulife. In the Agreement, it is pro%ided that0 ,. It is understood and agreed that the Agent is an independent contractor and nothing contained herein shall be construed or interpreted as creating an emplo+er-emplo+ee relationship bet"een the Compan+ and the Agent. (he Compan+ ma+ terminate this Agreement for an+ breach or %iolation of an+ of the pro%isions hereof b+ the Agent b+ gi%ing "ritten notice to the Agent "ithin fifteen (,1) da+s from the time of the disco%er+ of the breach. 2o "ai%er, e$tinguishment, abandonment, "ithdra"al or cancellation of the right to terminate this Agreement b+ the Compan+ shall be construed for an+ pre%ious failure to e$ercise its right under an+ pro%ision of this Agreement. #ither of the parties hereto ma+ li)e"ise terminate his Agreement at an+ time "ithout cause, b+ gi%ing to the other part+ fifteen (,1) da+s notice in "riting. - In ,-34, (ong)o "as named as a 5nit Manager in Manulife/s 6ales Agenc+ &rgani7ation. - In ,--8, he became a 9ranch Manager. - As the CA found, (ong)o/s gross earnings from his "or) at Manulife, consisting of commissions, persistenc+ income, and management o%errides. - (he problem started sometime in :88,, "hen Manulife instituted manpo"er de%elopment programs in the regional sales management le%el. Relati%e thereto, !e !ios addressed a letter dated 2o%ember ;, :88, to (ong)o regarding an &ctober ,3, :88, Metro 2orth 6ales Managers Meeting. 6tating that (ong)o<s Region "as the lo"est performer (on a per Manager basis) in terms of recruiting in :888 and, as of toda+, continues to remain one of the laggards in this area. &ther issues "ere0=6ome Managers are unhapp+ "ith their earnings and "ould "ant to re%ert to the position of agents.= And =6ales Managers are doing "hat the compan+ as)s them to do but, in the process, the+ earn less.= (ong)o "as then terminated. (herefrom, (ong)o filed a Complaint dated 2o%ember :1, :88: "ith the 2LRC against Manulife for illegal dismissalIn the Complaint. In a !ecision dated April ,1, :88>, Labor Arbiter dismissed the complaint for lac) of an emplo+er-emplo+ee relationship.

(he 2LRC/s ?irst !i%ision, "hile finding an emplo+eremplo+ee relationship bet"een Manulife and (ong)o appl+ing the four-fold test, held Manulife liable for illegal dismissal. (hus, Manulife filed an appeal "ith the CA. (hereafter, the CA issued the assailed !ecision dated March :-, :881, finding the absence of an emplo+er-emplo+ee relationship bet"een the parties and deeming the 2LRC "ith no @urisdiction o%er the case. Aence, (ong)o filed this petition. ,. :. I&&()' B&2 (ong)o "as an emplo+ee of Manulife B&2 (ong)o "as illegall+ dismissed. *)L+' Ces In the instant case, Manulife had the po"er of control o%er (ong)o that "ould ma)e him its emplo+ee. 6e%eral factors contribute to this conclusion. In the Agreement dated *ul+ ,, ,-.. e$ecuted bet"een (ong)o and Manulife, it is pro%ided that0 (he Agent hereb+ agrees to compl+ "ith all regulations and reDuirements of the Compan+ as herein pro%ided as "ell as maintain a standard of )no"ledge and competenc+ in the sale of the Compan+/s products "hich satisfies those set b+ the Compan+ and sufficientl+ meets the %olume of ne" business reDuired of Production Club membership.5nder this pro%ision, an agent of Manulife must compl+ "ith three (4) reDuirements0 (,) compliance "ith the regulations and reDuirements of the compan+E (:) maintenance of a le%el of )no"ledge of the compan+/s products that is satisfactor+ to the compan+E and (4) compliance "ith a Duota of ne" businesses. Among the compan+ regulations of Manulife are the different codes of conduct such as the Agent Code of Conduct, Manulife ?inancial Code of Conduct, and Manulife ?inancial Code of Conduct Agreement, "hich demonstrate the po"er of control e$ercised b+ the compan+ o%er (ong)o. (he fact that (ong)o "as obliged to obe+ and compl+ "ith the codes of conduct "as not diso"ned b+ respondents. (hus, "ith the compan+ regulations and reDuirements alone, the fact that (ong)o "as an emplo+ee of Manulife ma+ alread+ be established. Certainl+, these reDuirements controlled the means and methods b+ "hich (ong)o "as to achie%e the compan+/s goals. More importantl+, Manulife/s e%idence establishes the fact that (ong)o "as tas)ed to perform administrati%e duties that establishes his emplo+ment "ith Manulife. Additionall+, it must be pointed out that the fact that (ong)o "as tas)ed "ith recruiting a certain number of agents, in addition to his other administrati%e functions, leads to no other conclusion that he "as an emplo+ee of Manulife. :. Ces In its Petition for Certiorari dated *anuar+ ., :881F:;G filed before the CA, Manulife argued that e%en if (ong)o is considered as its emplo+ee, his emplo+ment "as %alidl+ terminated on the ground of

gross and habitual neglect of duties, inefficienc+, as "ell as "illful disobedience of the la"ful orders of Manulife. Manulife stated0 In the instant case, pri%ate respondent, despite the "ritten reminder from Mr. !e !ios refused to shape up and altogether disregarded the latter/s ad%ice resulting in his laggard performance clearl+ indicati%e of his "illful disobedience of the la"ful orders of his superior. As pri%ate respondent has patentl+ failed to perform a %er+ fundamental dut+, and that is to +ield obedience to all reasonable rules, orders and instructions of the Compan+, as "ell as gross failure to reach at least minimum Duota, the termination of his engagement from Manulife is highl+ "arranted and therefore, there is no illegal dismissal to spea) of. It is readil+ e%ident from the abo%e-Duoted portions of Manulife/s petition that it failed to cite a single iota of e%idence to support its claims. Manulife did not e%en point out "hich order or rule that (ong)o disobe+ed. More importantl+, Manulife did not point out the specific acts that (ong)o "as guilt+ of that "ould constitute gross and habitual neglect of dut+ or disobedience. Manulife merel+ cited (ong)o/s alleged =laggard performance,= "ithout substantiating such claim, and eDuated the same to disobedience and neglect of dut+. Apropos thereto, Art. :.., par. (b), of the Labor Code mandates in e$plicit terms that the burden of pro%ing the %alidit+ of the termination of emplo+ment rests on the emplo+er. ?ailure to discharge this e%idential burden "ould necessaril+ mean that the dismissal "as not @ustified, and, therefore, illegal. (he Labor Code pro%ides that an emplo+er ma+ terminate the ser%ices of an emplo+ee for @ust cause and this must be supported b+ substantial e%idence. (he settled rule in administrati%e and Duasi-@udicial proceedings is that proof be+ond reasonable doubt is not reDuired in determining the legalit+ of an emplo+er/s dismissal of an emplo+ee, and not e%en a preponderance of e%idence is necessar+ as substantial e%idence is considered sufficient. 6ubstantial e%idence is more than a mere scintilla of e%idence or rele%ant e%idence as a reasonable mind might accept as adeDuate to support a conclusion, e%en if other minds, eDuall+ reasonable, might concei%abl+ opine other"ise. Aere, Manulife failed to o%ercome such burden of proof. It must be reiterated that Manulife e%en failed to identif+ the specific acts b+ "hich (ong)o/s emplo+ment "as terminated much less support the same "ith substantial e%idence. (o repeat, mere con@ectures cannot "or) to depri%e emplo+ees of their means of li%elihood. (hus, it must be concluded that (ong)o "as illegall+ dismissed. Moreo%er, as to Manulife/s failure to compl+ "ith the t"in notice rule, it reasons that (ong)o not being its emplo+ee is not entitled to such notices. 6ince "e ha%e ruled that (ong)o is its emplo+ee, ho"e%er, Manulife clearl+ failed to afford (ong)o said notices. (hus, on this ground too, Manulife is guilt+ of illegal dismissal.

Republic of the Philippines Supreme Court Manila EN BANC

+RE+ORIO ,% TON+-O %etitioner,

+%R% No% (3*344 %resent1

"323'/, C.J., "/2%!3, * versus * "/2%!3 M32/ 45, 64 /5"3, 72#, '/"892/, 43'/2D3*D4 "/5T23, T.E MANU/ACTURERS LI/E :2!3', INSURANCE CO% 0P.ILS%1 INC% an$ %42/ T/, RENATO A% ,ER+EL 2E 2IOS :425/M!', 2espondents# D4 "/5T! 3, /:/D, 6! /2/M/, 72#, %424;, and M4'D3;/, JJ. %romul-ated1 7une 2<, 2010

+55555555555555555555555555555555555555555555555555555555555555555555555555555555+ RESOLUTION BRION J.: This resolves the Motion for Reconsideration[1] dated December 3, 2008 filed by respondent The Manufacturers ife !nsurance "o# $%hils#&, !nc# $Manulife& to set aside our Decision of 'ovember (, 2008# !n the assailed decision, )e found that an employer*employee relationship e+isted bet)een Manulife and petitioner ,re-orio Ton-.o and ordered Manulife to pay Ton-.o bac.)a-es and separation pay for ille-al dismissal# The follo)in- facts have been stated in our Decision of 'ovember (, 2008, no) under reconsideration, but are repeated, simply for purposes of clarity# The contractual relationship bet!een Ton"#o an$ Manulife ha$ t!o basic phases% The first or initial phase be"an on &ul' ( ()**, under a "areer /-ent0s /-reement $ Agreement& that provided1

!t is understood and a-reed that the /-ent is an independent contractor and nothincontained herein shall be construed or interpreted as creatin- an employer*employee relationship bet)een the "ompany and the /-ent# + + + +

start# This may seem diametrically opposed to the )ay Manulife )as run )hen you first =oined the or-ani@ation# 5ince then, ho)ever, substantial chan-es have ta.en place in the or-ani@ation, as these have been influenced by developments both from )ithin and )ithout the company# + + + +

a& The /-ent shall canvass for applications for ife !nsurance, /nnuities, ,roup policies and other products offered by the "ompany, and collect, in e+chan-e for provisional receipts issued by the /-ent, money due to or become due to the "ompany in respect of applications or policies obtained by or throu-h the /-ent or from policyholders allotted by the "ompany to the /-ent for servicin-, sub=ect to subse>uent confirmation of receipt of payment by the "ompany as evidenced by an 3fficial 2eceipt issued by the "ompany directly to the policyholder# + + + + The "ompany may terminate this /-reement for any breach or violation of any of the provisions hereof by the /-ent by -ivin)ritten notice to the /-ent )ithin fifteen $1?& days from the time of the discovery of the breach# 'o )aiver, e+tin-uishment, abandonment, )ithdra)al or cancellation of the ri-ht to terminate this /-reement by the "ompany shall be construed for any previous failure to e+ercise its ri-ht under any provision of this /-reement# 4ither of the parties hereto may li.e)ise terminate his /-reement at any time )ithout cause, by -ivin- to the other party fifteen $1?& days notice in )ritin-#[2] Ton-.o additionally a-reed $1& to comply )ith all re-ulations and re>uirements of Manulife, and $2& to maintain a standard of .no)led-e and competency in the sale of Manulife0s products, satisfactory to Manulife and sufficient to meet the volume of the ne) business, re>uired by his %roduction "lub membership#[3] The secon$ phase started in 1<83 )hen Ton-.o )as named 9nit Mana-er in Manulife0s 5ales /-ency 3r-ani@ation# !n 1<<0, he became a :ranch Mana-er# 5i+ years later $or in 1<<A&, Ton-.o became a 2e-ional 5ales Mana-er#[B] Ton-.o0s -ross earnin-s consisted of commissions, persistency income, and mana-ement overrides# Since the be"innin" Ton"#o consistentl' $eclare$ himself self5emplo'e$ in his income ta6 returns% Thus under oath, he declared his gross business income and deducted his business expenses to arrive at his taxable business income% Manulife !ithhel$ the correspon$in" (78 ta6 on Ton"#o9s earnin"s%:;< !n 2001, Manulife instituted manpo)er development pro-rams at the re-ional sales mana-ement level# 2espondent 2enato 6er-el de Dios )rote Ton-.o a letter dated 'ovember A, 2001 on concerns that )ere brou-ht up durin- the 3ctober 18, 2001 Metro 'orth 5ales Mana-ers Meetin-# De Dios )rote1 The first step to transformin- Manulife into a bilea-ue player has been very clear C to increase the number of a-ents to at least 1,000 stron- for a

The issues around a-ent recruitin- are central to the intended ob=ectives hence the need for a 5enior Mana-ers0 meetin- earlier last month )hen Devin 30"onnor, 56%*/-ency, too. to the floor to determine from our senior a-ency leaders )hat more could be done to bolster manpo)er development# /t earlier meetin-s, Devin had presented information )here evidently, your 2e-ion )as the lo)est performer $on a per Mana-er basis& in terms of recruitin- in 2000 and, as of today, continues to remain one of the la--ards in this area# Ehile discussions, in -eneral, )ere positive other than for certain comments from your end )hich )ere perceived to be uncalled for, it became clear that a one*on*one meetin- )ith you )as necessary to ensure that you and mana-ement, )ere on the same plane# /s -leaned from some of your previous comments in prior meetin-s $both in -roup and one*on*one&, it )as not clear that )e )ere proceedin- in the same direction# Devin held subse>uent series of meetin-s )ith you as a result, one of )hich ! =oined briefly# !n those subse>uent meetin-s you reiterated certain vie)s, the validity of )hich )e challen-ed and subse>uently found as havin- no basis# Eith such vie)s comin- from you, ! )as a bit concerned that the rest of the Metro 'orth Mana-ers may be a bit confused as to the directions the company )as ta.in-# For this reason, ! sou-ht a meetin- )ith everyone in your mana-ement team, includin- you, to clear the air, so to spea.# This note is intended to confirm the items that )ere discussed at the said Metro 'orth 2e-ion0s 5ales Mana-ers meetin- held at the (GF "onference room last 18 3ctober# + + + + !ssue H 21 I5ome Mana-ers are unhappy )ith their earnin-s and )ould )ant to revert to the position of a-ents#J This is an often repeated issue you have raised )ith me and )ith Devin# For this reason, ! placed the issue on the table before the rest of your 2e-ion0s 5ales Mana-ers to verify its validity# /s you must have noted, no 5ales Mana-er came for)ard on their o)n to confirm your statement and it too. you to name Malou 5amson as a source of the same, an alle-ation that Malou herself denied at our meetin- and in your very presence#

This only confirms, ,re-, that those prior comments have no solid basis at all# ! no) believe )hat ! had thou-ht all alon-, that these alle-ations )ere simply meant to muddle the issues surroundin- the inability of your 2e-ion to meet its a-ency development ob=ectivesK !ssue H 31 I5ales Mana-ers are doin- )hat the company as.s them to do but, in the process, they earn less#J + + + + /ll the above not)ithstandin-, )e had your o)n records chec.ed and )e found that you made a lot more money in the Lear 2000 versus 1<<<# !n addition, you also volunteered the information to Devin )hen you said that you probably )ill ma.e more money in the Lear 2001 compared to Lear 2000# 3bviously, your above statement about ma.in- Iless moneyJ did not refer to you but the )ay you ar-ued this point had us almost believin- that you )ere spoutin- the -ospel of truth )hen you )ere not# + + + + + + + /ll of a sudden, ,re-, ! have become much more )orried about your ability to lead this -roup to)ards the ne) direction that )e have been discussin- these past fe) )ee.s, i.e., Manulife0s -oal to become a ma=or a-ency*led distribution company in the %hilippines# Ehile as you claim, you have not stopped anyone from recruitin-, ! have never heard you proactively push for -reater a-ency recruitin-# Lou have not been proactive all these years )hen it comes to a-ency -ro)th# + + + + ! cannot afford to see a ma=or re-ion fail to deliver on its developmental -oals ne+t year and so, )e are ma.in- the follo)in- chan-es in the interim1 1# Lou )ill hire at your e+pense a competent assistant )ho can unload you of much of the routine tas.s )hich can be easily dele-ated# This assistant should be so chosen as to complement your s.ills and help you in the areas )here you feel Imay not be your cup of tea#J Lou have stated, if not implied, that your )or. as 2e-ional Mana-er may be too ta+in- for you and for your health# The above could solve this problem# + + + + 2# 4ffective immediately, Devin and the rest of the /-ency 3perations )ill deal )ith the 'orth 5tar :ranch $'5:& in autonomous fashion# + + + ! have decided to ma.e this chan-e so as to reduce your span of control and

allo) you to concentrate more fully on overseein- the remainin- -roups under Metro 'orth, your "entral 9nit and the rest of the 5ales Mana-ers in Metro 'orth# ! )ill hold you solely responsible for meetin- the ob=ectives of these remainin- -roups# + + + + The above chan-es can end at this point and they need not -o any further# This, ho)ever, is entirely dependent upon you# :ut you have to understand that meetin- corporate ob=ectives by everyone is primary and )ill not be compromised# Ee are meetin- tou-h challen-es ne+t year, and ! )ould )ant everybody on board# /ny resistance or holdin- bac. by anyone )ill be dealt )ith accordin-ly#[A] 5ubse>uently, de Dios )rote Ton-.o another letter, dated December 18, 2001, terminatin- Ton-.o0s services1 !t )ould appear, ho)ever, that despite the series of meetin-s and communications, both one*on* one meetin-s bet)een yourself and 56% Devin 30"onnor, some of them )ith me, as )ell as -roup meetin-s )ith your 5ales Mana-ers, all these efforts have failed in helpin- you ali-n your directions )ith Mana-ement0s avo)ed a-ency -ro)th policy# + + + + 3n account thereof, Mana-ement is e+ercisin- its prero-ative under 5ection 1B of your /-ents "ontract as )e are no) issuin- this notice of termination of 'our A"enc' A"reement !ith us effective fifteen days from the date of this letter#[(] Ton-.o responded by filin- an ille-al dismissal complaint )ith the 'ational abor 2elations "ommission $ NLRC& /rbitration :ranch# 8e essentially alle-ed C despite the clear terms of the letter terminating his Agency Agreement C that he )as Manulife0s employee before he )as ille-ally dismissed# [8] Thus, the threshol$ issue is the e+istence of an employment relationship# / findin- that none e+ists renders the >uestion of ille-al dismissal mootM a findin- that an employment relationship e+ists, on the other hand, necessarily leads to the need to determine the validity of the termination of the relationship# A. Tongkos Case for Employment Relationship Ton-.o asserted that as 9nit Mana-er, he )as paid an annual over*rider not e+ceedin- %?0,000#00, re-ardless of production levels attained and e+clusive of commissions and bonuses# 8e also claimed that as 2e-ional 5ales Mana-er, he )as -iven a travel and entertainment allo)ance of %3A,000#00 per year in addition to his overridin- commissionsM he )as tas.ed )ith numerous administrative functions and supervisory authority over Manulife0s employees, aside from merely sellin- policies and recruitin- a-ents for ManulifeM and he recommended and recruited insurance a-ents sub=ect to vettinand approval by Manulife# 8e further alle-es that he )as assi-ned a definite place in the Manulife offices )hen he )as not in the field C at the 3rd Floor, Manulife "enter, 108 Tordesillas corner ,allardo 5ts#, 5alcedo 6illa-e, Ma.ati "ity C for )hich he never paid any rental# Manulife provided the office e>uipment he used, includin-

tables, chairs, computers and printers $and even office stationery&, and paid for the electricity, )ater and telephone bills# /s 2e-ional 5ales Mana-er, Ton-.o additionally asserts that he )as re>uired to follo) at least three codes of conduct#[<] . Man!lifes Case " Agency Relationship #ith Tongko Manulife ar-ues that Ton-.o had no fi+ed )a-e or salary# 9nder the /-reement, Ton-.o )as paid commissions of varyin- amounts, computed based on the premium paid in full and actually received by Manulife on policies obtained throu-h an a-ent# /s sales mana-er, Ton-.o )as paid overridin- sales commission derived from sales made by a-ents under his unitGstructureGbranchGre-ion# Manulife also points out that it ded!cted and #ithheld a $%& ta' from all commissions Tongko recei(ed) Tongko e(en declared himself to *e self+employed and consistently paid ta'es as s!ch,i.e., he a(ailed of ta' ded!ctions s!ch as ordinary and necessary trade, *!siness and professional e'penses to #hich a *!siness is entitled. Manulife asserts that the labor tribunals have no =urisdiction over Ton-.o0s claim as he )as not its employee as characteri@ed in the four*fold test and our rulin- inCar!ngcong (. National La*or Relations Commission#[10] The Conflicting Rulings of the Lower Tribunals The labor arbiter decreed that no employer*employee relationship e+isted bet)een the parties# 8o)ever, the ' 2" reversed the labor arbiter0s decision on appealM it found the e+istence of an employer*employee relationship and concluded that Ton-.o had been ille-ally dismissed# !n the petition for certiorari )ith the "ourt of /ppeals $CA&, the appellate court found that the ' 2" -ravely abused its discretion in its rulin- and reverted to the labor arbiter0s decision that no employer*employee relationship e+isted bet)een Ton-.o and Manulife# Our ecision of !ovember ", #$$% !n our Decision of 'ovember (, 2008, )e reversed the "/ rulin- and found that an employment relationship e+isted bet)een Ton-.o and Manulife# Ee concluded that Ton-.o is Manulife0s employee for the follo)in- reasons1 1# 3ur rulin- in the first -ns!lar[11] case did not foreclose the possibility of an insurance a-ent becomin- an employee of an insurance companyM if evidence e+ists sho)in- that the company promul-ated rules or re-ulations that effectively controlled or restricted an insurance a-ent0s choice of methods or the methods themselves in sellin- insurance, an employer*employee relationship )ould be present# The determination of the e+istence of an employer* employee relationship is thus on a case*to*case basis dependin- on the evidence on record# 2# Manulife had the po)er of control over Ton-.o, sufficient to characteri@e him as an employee, as sho)n by the follo)in- indicators1 2#1 Ton-.o undertoo. to comply )ith Manulife0s rules, re-ulations and other re>uirements, i.e., the different codes of conduct such as the /-ent "ode of "onduct, the Manulife Financial "ode of "onduct, and the Financial "ode of "onduct /-reementM 2#2 The various affidavits of Manulife0s insurance a-ents and mana-ers, )ho occupied similar positions as Ton-.o, sho)ed that they performed administrative duties that established employment )ith ManulifeM[12] and

2#3 Ton-.o )as tas.ed to recruit some a-ents in addition to his other administrative functions# De Dios0 letter harped on the direction Manulife intended to ta.e,(i.., -reater a-ency recruitment as the primary means to sell more policiesM Ton-.o0s alle-ed failure to follo) this directive led to the termination of his employment )ith Manulife#

The &otion for Reconsideration Manulife disa-reed )ith our Decision and filed the present motion for reconsideration on the follo)in- +ROUN2S1 1# The 'ovember ([, 2008] Decision violates Manulife0s ri-ht to due process by1 $a& confinin- the revie) only to the issue of IcontrolJ and utterly disre-ardin- all the other issues that had been =oined in this caseM $b& mischaracteri@in- the diver-ence of conclusions bet)een the "/ and the ' 2" decisions as confined only to that on IcontrolJM $c& -rossly failin- to consider the findin-s and conclusions of the "/ on the ma=ority of the material evidence, especially [Ton-.o0s] declaration in his income ta+ returns that he )as a Ibusiness personJ or Iself*employedJM and $d& allo)in[Ton-.o] to repudiate his s)orn statement in a public document# 2# The 'ovember ([, 2008] Decision contravenes settled rules in contract la) and a-ency, distorts not only the le-al relationships of a-encies to sell but also distributorship and franchisin-, and i-nores the constitutional and policy conte+t of contract la) vis*N*vis labor la)# 3# The 'ovember ([, 2008] Decision i-nores the findin-s of the "/ on the three elements of the four*fold test other than the IcontrolJ test, reverses )ell*settled doctrines of la) on employer*employee relationships, and -rossly misapplies the Icontrol test,J by selectin-, )ithout basis, a fe) items of evidence to the e+clusion of more material evidence to support its conclusion that there is Icontrol#J B# The 'ovember ([, 2008] Decision is =udicial le-islation, beyond the scope authori@ed by /rticles 8 and < of the "ivil "ode, beyond the po)ers -ranted to this "ourt under /rticle 6!!!, 5ection 1 of the "onstitution and contravenes throu-h =udicial le-islation, the constitutional prohibition a-ainst impairment of contracts under /rticle !!!, 5ection 10 of the "onstitution# ?# For all the above reasons, the 'ovember ([, 2008] Decision made unsustainable and reversible errors, )hich should be corrected, in concludin- that 2espondent Manulife and %etitioner had an employer* employee relationship, that 2espondent Manulife ille-ally dismissed %etitioner, and for conse>uently orderin- 2espondent Manulife to pay %etitioner bac.)a-es, separation pay, nominal dama-es and attorney0s fees#[13]

T.E COURT9S RULIN+ '. The (nsurance and the Civil Codes) the *arties+ (ntent and ,stablished (ndustr- *ractices

'o person shall act as an insurance a-ent or as an insurance bro.er in the solicitation or procurement of applications for insurance, or receive for services in obtainininsurance, any commission or other compensation from any insurance company doin- business in the %hilippines or any a-ent thereof, )ithout first procurin- a license so to act from the "ommissioner + + + The "ommissioner shall satisfy himself as to the competence and trust)orthiness of the applicant and shall have the ri-ht to refuse to issue or rene) and to suspend or revo.e any such license in his discretion# 5ection 300# /ny person )ho for compensation solicits or obtains insurance on behalf of any insurance company or transmits for a person other than himself an application for a policy or contract of insurance to or from such company or offers or assumes to act in the ne-otiatin- of such insurance shall be an insurance a-ent )ithin the intent of this section and shall thereby become liable to all the duties, re>uirements, liabilities and penalties to )hich an insurance a-ent is sub=ect# The application for an insurance a-ent0s license re>uires a )ritten e+amination, and the applicant must be of -ood moral character and must not have been convicted of a crime involvin- moral turpitude# [1B] The insurance a-ent )ho collects premiums from an insured person for remittance to the insurance company does so in a fiduciary capacity, and an insurance company )hich delivers an insurance policy or contract to an authori@ed a-ent is deemed to have authori@ed the a-ent to receive payment on the company0s behalf# [1?] 5ection 3A1 further prohibits the offer, ne-otiation, or collection of any amount other than that specified in the policy and this covers any rebate from the premium or any special favor or advanta-e in the dividends or benefit accruin- from the policy# Thus, under the !nsurance "ode, the a-ent must, as a matter of >ualification, be licensed and must also act )ithin the parameters of the authority -ranted under the license and under the contract )ith the principal# 3ther than the need for a license, the a-ent is limited in the )ay he offers and ne-otiates for the sale of the company0s insurance products, in his collection activities, and in the delivery of the insurance contract or policy# 2ules re-ardin- the desired results $e.g., the re>uired volume to continue to >ualify as a company a-ent, rules to chec. on the parameters on the authority -iven to the a-ent, and rules to ensure that industry, le-al and ethical rules are follo)ed& are built*in elements of control specific to an insurance a-ency and should not and cannot be read as elements of control that attend an employment relationship -overned by the abor "ode# 3n the other hand, the "ivil "ode defines an a-ent as a Iperson [)ho] binds himself to render some service or to do somethin- in representation or on behalf of another, )ith the consent or authority of the latter#J [1A] Ehile this is a very broad definition that on its face may even encompass an employment relationship, the distinctions bet)een a-ency and employment are sufficiently established by la) and =urisprudence# ,enerally, the determinative element is the control e+ercised over the one renderin- service# The employer controls the employee both in the results and in the means and manner of achievin- this result# The principal in an a-ency relationship, on the other hand, also has the prero-ative to e+ercise control over the a-ent

Ee cannot consider the present case purely from a labor la) perspective, oblivious that the factual antecedents )ere set in the insurance industry so that the !nsurance "ode primarily -overns# "hapter !6, Title 1 of this "ode is )holly devoted to I!nsurance /-ents and :ro.ersJ and specifically defines the a-ents and bro.ers relationship )ith the insurance company and ho) they are -overned by the "ode and re-ulated by the !nsurance "ommission# The !nsurance "ode, of course, does not )holly re-ulate the Ia-encyJ that it spea.s of, as a-ency is a civil la) matter -overned by the "ivil "ode# Thus, at the very least, three sets of la)s C namely, the !nsurance "ode, the abor "ode and the "ivil "ode C have to be considered in loo.in- at the present case# 'ot to be for-otten, too, is the /-reement $partly reproduced on pa-e 2 of this Dissent and )hich no one disputes& that the parties adopted to -overn their relationship for purposes of sellin- the insurance the company offers# To for-et these other la)s is to ta.e a myopic vie) of the present case and to add to the uncertainties that no) e+ist in considerin- the le-al relationship bet)een the insurance company and its Ia-ents#J The main issue of )hether an a-ency or an employment relationship e+ists depends on the incidents of the relationship# The abor "ode concept of IcontrolJ has to be compared and distin-uished )ith the IcontrolJ that must necessarily e+ist in a principal*a-ent relationship# The principal cannot but also have his or her say in directin- the course of the principal*a-ent relationship, especially in cases )here the company*representative relationship in the insurance industry is an a-ency# a. The la#s on ins!rance and agency The business of insurance is a hi-hly re-ulated commercial activity in the country, in terms particularly of )ho can be in the insurance business, )ho can act for and in behalf of an insurer, and ho) these parties shall conduct themselves in the insurance business# 5ection 18A of the !nsurance "ode provides that /No person, partnership, or association of persons shall transact any ins!rance *!siness in the 0hilippines e'cept as agent of a person or corporation a!thori.ed to do the *!siness of ins!rance in the 0hilippines.15ections 2<< and 300 of the !nsurance "ode on !nsurance /-ents and :ro.ers, amon- other provisions, provide1 5ection 2<<# 'o insurance company doin- business in the %hilippines, nor any a-ent thereof, shall pa' an' commission or other compensation to an' person for ser=ices in obtainin" insurance, unless such person shall have first procured from the "ommissioner a license to act as an insurance a-ent of such company or as an insurance bro.er as hereinafter provided#

in underta.in- the assi-ned tas. based on the parameters outlined in the pertinent la)s# 9nder the -eneral la) on a-ency as applied to insurance, an a-ency must be e+press in li-ht of the need for a license and for the desi-nation by the insurance company# !n the present case, the /-reement fully serves as -rant of authority to Ton-.o as Manulife0s insurance a-ent#[1(] This a-reement is supplemented by the company0s a-ency practices and usa-es, duly accepted by the a-ent in carryin- out the a-ency#[18] :y authority of the !nsurance "ode, an insurance a-ency is for compensation, [1<] a matter the "ivil "ode 2ules on /-ency presumes in the absence of proof to the contrary# [20] 3ther than the compensation, the principal is bound to advance to, or to reimburse, the a-ent the a-reed sums necessary for the e+ecution of the a-ency# [21] :y implication at least under /rticle 1<<B of the "ivil "ode, the principal can appoint t)o or more a-ents to carry out the same assi-ned tas.s, [22] based necessarily on the specific instructions and directives -iven to them# Eith particular relevance to the present case is the provision that I!n the e+ecution of the a-ency, the a-ent shall act in accordance )ith the instructions of the principal#J [23] This provision is pertinent for purposes of the necessary control that the principal e+ercises over the a-ent in underta.in- the assi-ned tas., and is an area )here the instructions can intrude into the labor la) concept of control so that minute consideration of the facts is necessary# / related article is /rticle 18<1 of the "ivil "ode )hich binds the a-ent to render an account of his transactions to the principal# .. The Cited Case The Decision of 'ovember (, 2008 refers to the first -ns!lar and 2repalife cases to establish that the company rules and re-ulations that an a-ent has to comply )ith are indicative of an employer*employee relationship#[2B] The Dissentin- 3pinions of 7ustice %resbitero 6elasco, 7r# and 7ustice "onchita "arpio Morales also cite -ns!lar Life Ass!rance Co. (. National La*or Relations Commission $second !nsular case&[2?] to support the vie) that Ton-.o is Manulife0s employee# 3n the other hand, Manulife cites theCar!ngcong case and A30 M!t!al enefit Association, -nc. (. National La*or Relations Commission $/F%M:/! case&[2A] to support its alle-ation that Ton-.o )as not its employee# / ca(eat has been -iven above )ith respect to the use of the rulin-s in the cited cases because none of them is on all fours )ith the present caseM the uni>ueness of the factual situation of the present case prevents it from bein- directly and readily cast in the mold of the cited cases# These cited cases are themselves different from one anotherM this difference underscores the need to read and >uote them in the conte+t of their o)n factual situations# The present case at first -lance appears ali-ned )ith the facts in the Car!ngcong, the 2repalife, and the second -ns!lar Life cases# / critical difference, ho)ever, e+ists as these cite$ cases $ealt !ith the proper le"al characteri>ation of a subse/uent mana"ement contract that superse$e$ the ori"inal a"enc' contract bet!een the insurance compan' an$ its a"ent# Car!ngcong dealt )ith a subse>uent /-reement ma.in"arun-con- a 'e) :usiness Mana-er that clearly superseded the /-reement desi-natin- "arun-con- as an a-ent empo)ered to solicit applications for insurance# The 2repalife case, on the other hand, dealt )ith the proper le-al characteri@ation of the appointment of the 2ui@ brothers to positions hi-her than their ori-inal position as insurance a-ents# Thus, after analy@in- the duties and functions of the 2ui@ brothers, as these were enumerated in their contracts, )e concluded that the company practically dictated the manner by )hich the 2ui@ brothers )ere to carry out their =obs# Finally, the second -ns!lar Life case dealt )ith the implications of de los 2eyes0 appointment as actin- unit mana-er )hich, li.e the subse>uent

contracts in the Car!ngcong and the 2repalife cases, )as clearly defined under a subse>uent contract# In all these cite$ cases a $etermination of the presence of the Labor Co$e element of control !as ma$e on the basis of the stipulations of the subse?uent contracts% !n star. contrast )ith the Car!ngcong, the 2repalife, and the second -ns!lar Life cases, the only contract or document e6tant an$ submitte$ as e=i$ence in the present case is the /-reement C a pure a-ency a-reement in the "ivil "ode conte+t similar to the ori-inal contract in the first -ns!lar Life case and the contract in the A30M A- case# /nd )hile Ton-.o )as later on desi-nated unit mana-er in 1<83, :ranch Mana-er in 1<<0, and 2e-ional 5ales Mana-er in 1<<A, no formal contract re-ardin- these underta.in-s appears in the records of the case# /ny such contract or a-reement, had there been any, could have at the very least provided the bases for properly ascertainin- the =uridical relationship established bet)een the parties# These critical differences, particularly bet)een the present case and the 2repalife and the second -ns!lar Life cases, should therefore immediately drive us to be more prudent and cautious in applyin- the rulin-s in these cases# C. 'nal-sis of the ,vidence c#1# The /-reement The primary evidence in the present case is the 7uly 1, 1<(( /-reement that -overned and defined the parties0 relations until the /-reement0s termination in 2001# This /-reement stood for more than t)o decades and, base$ on the recor$s of the case )as never modified or novated# !t assumes primacy because it directly dealt )ith the nature of the parties0 relationship up to the very endM moreover, both parties never disputed its authenticity or the accuracy of its terms# :y the /-reement0s e+press terms, Ton-.o served as an Iinsurance a-entJ for Manulife, not as an employee# To be sure, the /-reement0s le-al characteri@ation of the nature of the relationship cannot be conclusive and bindin- on the courtsM as the dissent clearly stated, the characteri@ation of the =uridical relationship the /-reement embodied is a matter of la) that is for the courts to determine# /t the same time, thou-h, the characteri@ation the parties -ave to their relationship in the /-reement cannot simply be brushed aside because it embodies their intent at the time they entered the /-reement, and they )ere -overned by this understandinthrou-hout their relationship# /t the very least, the provision on the absence of employer*employee relationship bet)een the parties can be an aid in considerin- the /-reement and its implementation, and in appreciatin- the other evidence on record# The parties0 le-al characteri@ation of their intent, althou-h not conclusive, is critical in this case because this intent is not ille-al or outside the contemplation of la), particularly of the !nsurance and the "ivil "odes# From this perspective, the provisions of the !nsurance "ode cannot be disre-arded as this "ode $as heretofore already noted& e+pressly envisions a principal*a-ent relationship bet)een the insurance company and the insurance a-ent in the sale of insurance to the public# /or this reason !e can ta#e @u$icial notice that as a matter of Insurance Co$e5base$ business practice an a"enc' relationship pre=ails in the insurance in$ustr' for the purpose of sellin" insurance% The /-reement, by its e+press terms, is in accordance )ith the !nsurance "ode model )hen it provided for a principal*a-ent relationship, and thus cannot li-htly be set aside nor simply be considered as an a-reement that does not reflect the parties0 true intent# This intent, incidentally, is reinforced by the system of compensation the /-reement provides,

)hich li.e)ise is in accordance )ith the production*based sales commissions the !nsurance "ode provides# 5i-nificantly, evidence sho)s that Ton-.o0s role as an insurance a-ent never chan-ed durin- his relationship )ith Manulife# !f chan-es occurred at all, the chan-es did not appear to be in the nature of their core relationship# Ton-.o essentially remained an a-ent, but moved up in this role throu-h Manulife0s reco-nition that he could use other a-ents approved by Manulife, but operatinunder his -uidance and in )hose commissions he had a share# For )ant of a better term, Ton-.o perhaps could be labeled as a Ilead a-entJ )ho -uided under his )in- other Manulife a-ents similarly tas.ed )ith the sellin- of Manulife insurance# i.e Ton-.o, the evidence su--ests that these other a-ents operated under their o)n a-ency a-reements# Thus, if Ton-.o0s compensation scheme chan-ed at all durin- his relationship )ith Manulife, the chan-e )as solely for purposes of creditin- him )ith his share in the commissions the a-ents under his )in- -enerated# /s an a-ent )ho )as recruitin- and -uidin- other insurance a-ents, Ton-.o li.e)ise moved up in terms of the reimbursement of e+penses he incurred in the course of his lead a-ency, a prero-ative he en=oyed pursuant to /rticle 1<12 of the "ivil "ode# Thus, Ton-.o received -reater reimbursements for his e+penses and )as even allo)ed to use Manulife facilities in his interactions )ith the a-ents, all of )hom )ere, in the strict sense, Manulife a-ents approved and certified as such by Manulife )ith the !nsurance "ommission# That Ton-.o assumed a leadership role but nevertheless )holly remained an a-ent is the inevitable conclusion that results from the readin- of the /-reement $the only a-reement on record in this case& and his continuin- role thereunder as sales a-ent, from the perspective of the !nsurance and the "ivil "odes and in li-ht of )hat Ton-.o himself attested to as his role as 2e-ional 5ales Mana-er# To be sure, this interpretation could have been contradicted if other a-reements had been submitted as evidence of the relationship bet)een Manulife and Ton-.o on the latter0s e+panded underta.in-s# !n the absence of any such evidence, ho)ever, this readin- C based on the available evidence and the applicable insurance and civil la) provisions C must stand, sub=ect only to ob=ective and evidentiary abor "ode tests on the e+istence of an employer*employee relationship# !n applyin- such abor "ode tests, ho)ever, the enforcement of the /-reement durin- the course of the parties0 relationship should be noted# From 1<(( until the termination of the /-reement, Ton-.o0s occupation )as to sell Manulife0s insurance policies and products# :oth parties ac>uiesced )ith the terms and conditions of the /-reement# Ton-.o, for his part, accepted all the benefits flo)in- from the /-reement, particularly the -enerous commissions# 4vidence indicates that Ton-.o consistently clun- to the vie) that he )as an independent a-ent sellin- Manulife insurance products since he invariably declared himself a business or self* employed person in his income ta+ returns# This consistenc' !ith an$ action ma$e pursuant to the A"reement !ere pieces of e=i$ence that !ere ne=er mentione$ nor consi$ere$ in our 2ecision of No=ember * 477A% 8ad they been considered, they could, at the (ery least, serve as Ton-.o0s admissions a-ainst his interest# 5trictly spea.in-, Ton-.o0s ta+ returns cannot but be le-ally si-nificant because he certified under oath the amount he earned as -ross business income, claimed business deductions, leadin- to his net ta+able income# This should be evidence of the first order that cannot be brushed aside by a mere denial# 4ven on a layman0s vie) that is devoid of le-al considerations, the e+tent of his annual income alone renders his claimed employment status doubtful# [2(] 8and in hand )ith the concept of admission a-ainst interest in considerin- the ta+ returns, the concept of estoppel C a le-al and

e>uitable concept[28] C necessarily must come into play# Ton-.o0s previous admissions in several years of ta+ returns as an independent a-ent, as a-ainst his belated claim that he )as all alon- an employee, are too diametrically opposed to be simply dismissed or i-nored# -nterestingly, J!stice 4elascos dissenting opinion states that Tongko #as forced to declare himself a *!siness or self+ employed person *y Man!lifes persistent ref!sal to recogni.e him as its employee.0#12 Regrettabl-, the dissent has shown no basis for this conclusion, an understandable omission since no evidence in fact exists on this point in the records of the case. !n fact, )hat the evidence sho)s is Ton-.o0s full conformity )ith, and action as, an independent a-ent until his relationship )ith Manulife too. a bad turn# /nother interestin- point the dissent raised )ith respect to the /-reement is its conclusion that the /-reement ne-ated any employment relationship bet)een Ton-.o and Manulife so that the commissions he earned as a sales a-ent should not be considered in the determination of the bac.)a-es and separation pay that should be -iven to him# This part of the dissent is correct althou-h it )ent on to t)ist this conclusion by assertin- that Ton-.o had dual roles in his relationship )ith ManulifeM he )as an a-ent, not an employee, in so far as he sold insurance for Manulife, but )as an employee in his capacity as a mana-er# Thus, the dissent concluded that Ton-.o0s bac.)a-es should only be )ith respect to his role as Manulife0s mana-er# The conclusion )ith respect to Ton-.o0s employment as a mana-er is, of course, unacceptable for the le-al, factual and practical reasons discussed in this 2esolution# !n brief, the factual reason is -rounded on the lac. of evidentiary support of the conclusion that Manulife e+ercised control over Ton-.o in the sense understood in the abor "ode# The le"al reason, partly based on the lac. of factual basis, is the erroneous le-al conclusion that Manulife controlled Ton-.o and )as thus its employee# The practical reason, on the other hand, is the havoc that the dissent0s un)arranted conclusion )ould cause the insurance industry that, by the la)0s o)n desi-n, operated alon- the lines of principal*a-ent relationship in the sale of insurance# c#2# 3ther 4vidence of /lle-ed "ontrol / -larin- evidentiary -ap for Ton-.o in this case is the lac. of evidence on record sho)in- that Manulife ever e+ercised means*and*manner control, even to a limited e+tent, over Ton-.o durin- his ascent in Manulife0s sales ladder# !n 1<83, Ton-.o )as appointed unit mana-er# !ne+plicably, Ton-.o never bothered to present any evidence at all on )hat this desi-nation meant# This also holds true for Ton-.o0s appointment as branch mana-er in 1<<0, and as 2e-ional 5ales Mana-er in 1<<A# The best evidence of control C the a-reement or directive relatin- to Ton-.o0s duties and responsibilities C )as never introduced as part of the records of the case# The reality is, prior to de 5ios letter, Man!life had practically left Tongko alone not only in doing the *!siness of selling ins!rance, *!t also in g!iding the agents !nder his #ing. /s discussed belo), the alle-ed directives covered by de Dios0 letter, heretofore >uoted in full, )ere policy directions and tar-eted results that the company )anted Ton-.o and the other sales -roups to reali-n )ith in their o)n sellin- activities# This is the reality that the parties0 presented evidence consistently tells us# Ehat, to Ton-.o, serve as evidence of labor la) control are the codes of conduct that Manulife imposes on its a-ents in the sale of insurance# The mere presentation of codes or of rules and re-ulations, ho)ever, is not per se indicative of labor la) control as the la) and =urisprudence teach us# /s already recited above, the !nsurance "ode imposes obli-ations on both the insurance company and its a-ents in the

performance of their respective obli-ations under the "ode, particularly on licenses and their rene)als, on the representations to be made to potential customers, the collection of premiums, on the delivery of insurance policies, on the matter of compensation, and on measures to ensure ethical business practice in the industry# The -eneral la) on a-ency, on the other hand, e+pressly allo)s the principal an element of control over the a-ent in a manner consistent )ith an a-ency relationship# !n this sense, these control measures cannot be read as indicative of labor la) control# Foremost amon- these are the directives that the principal may impose on the a-ent to achieve the assi-ned tas.s, to the e+tent that they do not involve the means and manner of underta.in- these tas.s# The la) li.e)ise obli-ates the a-ent to render an accountM in this sense, the principal may impose on the a-ent specific instructions on ho) an account shall be made, particularly on the matter of e+penses and reimbursements# To these e+tents, control can be imposed throu-h rules and re-ulations )ithout intrudin- into the labor la) concept of control for purposes of employment# From =urisprudence, an important lesson that the first -ns!lar Life case teaches us is that a commitment to abide by the rules and re-ulations of an insurance company does not ipso facto ma.e the insurance a-ent an employee# 'either do -uidelines someho) restrictive of the insurance a-ent0s conduct necessarily indicate IcontrolJ as this term is defined in =urisprudence# +ui$elines in$icati=e of labor la! Bcontrol C as the first (nsular Life case tells us shoul$ not merel' relate to the mutuall' $esirable result inten$e$ b' the contractual relationshipD the' must ha=e the nature of $ictatin" the means or metho$s to be emplo'e$ in attainin" the result or of fi6in" the metho$olo"' an$ of bin$in" or restrictin" the part' hire$ to the use of these means% !n fact, results*)ise, the principal can impose production >uotas and can determine ho) many a-ents, )ith specific territories, ou-ht to be employed to achieve the company0s ob=ectives# These are mana-ement policy decisions that the labor la) element of control cannot reach# 3ur rulin- in these respects in the first -ns!lar Life case )as practically reiterated in Car!ngcong# Thus, as )ill be sho)n more fully belo), Manulife0s codes of conduct,[30] all of )hich do not intrude into the insurance a-ents0 means and manner of conductin- their sales and only control them as to the desired results and !nsurance "ode norms, cannot be used as basis for a findin- that the labor la) concept of control e+isted bet)een Manulife and Ton-.o# The dissent considers the imposition of administrative and mana-erial functions on Ton-.o as indicative of labor la) controlM thus, Ton-.o as manager, *!t not as ins!rance agent, became Manulife0s employee# !t dre) this conclusion from )hat the other Manulife mana-ers disclosed in their affidavits $ i.e., their enumerated administrative and mana-erial functions& and after comparin- these statements )ith the mana-ers in 2repalife# The dissent compared the control e+ercised by Manulife over its mana-ers in the present case )ith the control the mana-ers in the 2repalife case e+ercised over their employees by presentin- the follo)in- matri+1[31] Duties of Manulife0s Mana-er Duties of ,repalife0s Mana-ersG5upervisors

a-ents0] daily, )ee.ly and monthly sellin- activities, ma.in- sure that their respective sales tar-ets are metM * to conduct periodic trainin- sessions for [the] a-ents to further enhance their sales s.illM and

supervisors, + + + follo) up the submission of )ee.ly remittance reports of the debit a-ents and @one supervisors

* direct and supervise the sales activities of the debit a-ents under him, + + + underta.e and dischar-e the functions of absentee debit a-ents, spot*chec. the record of debit a-ents, and insure proper documentation of * to assist [the] a-ents )ith sales and collections of debit a-ents# their sales activities by )ay of =oint field)or., consultations and one*on* one evaluation and analysis of particular accounts /side from these affidavits ho)ever, no other evidence e+ists re-ardin- the effects of Ton-.o0s additional roles in Manulife0s sales operations on the contractual relationship bet)een them# To the dissent, Ton-.o0s administrative functions as recruiter, trainer, or supervisor of other sales a-ents constituted a substantive alteration of Manulife0s authority over Ton-.o and the performance of his end of the relationship )ith Manulife# Ee could not deny thou-h that Ton-.o remained, first and foremost, an insurance a-ent, and that his additional role as :ranch Mana-er did not lessen his main and dominant role as insurance a-entM this role continued to dominate the relations bet)een Ton-.o and Manulife even after Ton-.o assumed his leadership role amon- a-ents# This conclusion cannot be denied because it proceeds from the undisputed fact that Ton-.o and Manulife never altered their 7uly 1, 1<(( /-reement, a distinction the present case has #ith the contract!al changes made in the second -ns!lar Life case. Ton-.o0s results*based commissions, too, attest to the primacy he -ave to his role as insurance sales a-ent# The dissent apparently did not also properly analy@e and appreciate the -reat >ualitative difference that e+ists bet)een1 the &anulife managers+ role is to coordinate acti(ities of the agents !nder the managers 6nit in the agents daily, #eekly, and monthly selling acti(ities, making s!re that their respecti(e sales targets are met. the istrict &anager+s dutin 3repalife is to properly acco!nt, record, and doc!ment the company7s f!nds, spot+check and a!dit the #ork of the .one s!per(isors, conser(e the company7s *!siness in the district thro!gh /reinstatements,1 follo# !p the s!*mission of #eekly remittance reports of the de*it agents and .one s!per(isors, preser(e company property in good condition, train !nderst!dies for the position of district managers, and maintain his 8!ota of sales 9the fail!re of #hich is a gro!nd for termination:. the 4one 5upervisor+s 6also in 3repalife7 has the d!ty to direct and s!per(ise the sales acti(ities of the de*it agents !nder him, conser(e company property thro!gh /reinstatements,1 !ndertake and discharge the f!nctions of a*sentee de*it agents, spot+check the records of de*it agents, and ins!re proper doc!mentation of sales and collections *y the de*it agents. These =ob contents are )orlds apart in terms of Icontrol#J !n 2repalife, the details of ho) to do the =ob are specified and pre*determinedM in the present case, the operative )ords are the Isales tar-et,J the methodolo-y bein- left undefined e+cept to the e+tent of bein- Icoordinative#J To be sure, a IcoordinativeJ standard

* to render or recommend * train understudies for the position of prospective a-ents to be district mana-er licensed, trained and contracted to sell Manulife products and )ho )ill be part of my 9nit * to coordinate activities of * properly account, record and the a-ents under [the document the company0s funds, spot* mana-ers0] 9nit in [the chec. and audit the )or. of the @one

for a mana-er cannot be indicative of controlM the standard only essentially describes )hat a :ranch Mana-er is C the person in the lead )ho orchestrates activities )ithin the -roup# To Icoordinate,J and thereby to lead and to orchestrate, is not so much a matter of control by ManulifeM it is simply a statement of a branch mana-er0s role in relation )ith his a-ents from the point of vie) of Manulife )hose business Ton-.o0s sales -roup carries# / disturbin- note, )ith respect to the presented affidavits and Ton-.o0s alle-ed administrative functions, is the selective citation of the portions supportive of an employment relationship and the conse>uent omission of portions leadin- to the contrary conclusion# For e+ample, the follo)in- portions of the affidavit of 2e-ional 5ales Mana-er 7ohn "hua, )ith counterparts in the other affidavits, )ere not brou-ht out in the Decision of 'ovember (, 2008, )hile the other portions su--estin- labor la) control )ere hi-hli-hted# 5pecifically, the follo)in- portions of the affidavits )ere not brou-ht out1[32] 1#a# ! have no fi+ed )a-es or salary since my services are compensated by )ay of commissions based on the computed premiums paid in full on the policies obtained thereatM 1#b# ! have no fi+ed )or.in- hours and employ my o)n method in soliticin- insurance at a time and place ! see fitM 1#c# ! have my o)n assistant and messen-er )ho handle my daily )or. loadM 1#d# ! use my o)n facilities, tools, materials and supplies in carryin- out my business of sellininsuranceM + + + + A# ! have my o)n staff that handles the day to day operations of my officeM (# My staff are my o)n employees and received salaries from meM + + + + <# My commission and incentives are all reported to the :ureau of !nternal 2evenue $:!2& as income by a self*employed individual or professional )ith a ten $10& percent creditable )ithholdin- ta+# ! also remit monthly for professionals# These statements, read )ith the above comparative analysis of the Manulife and the 2repalife cases, )ould have readily yielded the conclusion that no employer*employee relationship e+isted bet)een Manulife and Ton-.o# 4ven de ios+ letter is not determinative of control as it indicates the least amount of intrusion into Ton-.o0s e+ercise of his role as mana-er in -uidin- the sales a-ents# 5trictly vie)ed, de Dios0 directives are merely operational -uidelines on ho) Ton-.o could ali-n his operations )ith Manulife0s re*directed -oal of bein- a Ibilea-ue player#J The method is to e+pand covera-e throu-h the use of more a-ents# This re>uirement for the recruitment of more a-ents is not a means*and*method control as it relates, more than anythinelse, and is directly relevant, to Manulife0s ob=ective of e+panded business operations throu-h the use of a bi--er sales force )hose members are all on a principal*a-ent relationship# An important point to note here is that Ton"#o !as not super=isin" re"ular

full5time emplo'ees of Manulife en"a"e$ in the runnin" of the insurance businessD Ton"#o !as effecti=el' "ui$in" his corps of sales a"ents !ho are boun$ to Manulife throu"h the same A"reement that he ha$ !ith Manulife all the !hile sharin" in these a"ents9 commissions throu"h his o=erri$es% This is the lead a-ent concept mentioned above for )ant of a more appropriate term, since the title of :ranch Mana-er used by the parties is really a misnomer -iven that )hat is involved is not a specific re-ular branch of the company but a corps of non*employed a-ents, defined in terms of covered territory, throu-h )hich the company sells insurance# 5till another point to consider is that Ton-.o )as not even settin- policies in the )ay a re-ular company mana-er doesM company aims and ob=ectives )ere simply relayed to him )ith su--estions on ho) these ob=ectives can be reached throu-h the e+pansion of a non*employee sales force# !nterestin-ly, a lar-e part of de Dios0 letter focused on income, )hich Manulife demonstrated, in Ton-.o0s case, to be unaffected by the ne) -oal and direction the company had set# !ncome in insurance a-ency, of course, is dependent on results, not on the means and manner of sellin- C a matter for Ton-.o and his a-ents to determine and an area into )hich Manulife had not )aded# 9ndeniably, de Dios0 letter contained a directive to secure a competent assistant at Ton-.o0s o)n e+pense# Ehile couched in terms of a directive, it cannot strictly be understood as an intrusion into Ton-.o0s method of operatin- and supervisin- the -roup of a-ents )ithin his delineated territory# More than anythin- else, the IdirectiveJ )as a si-nal to Ton-.o that his results )ere unsatisfactory, and )as a su--estion on ho) Ton-.o0s perceived )ea.ness in deliverin- results could be remedied# !t )as a solution, )ith an eye on results, for a consistently underperformin- -roupM its obvious intent )as to save Ton-.o from the result that he then failed to -rasp C that he could lose even his o)n status as an a-ent, as he in fact eventually did# The present case must be distin-uished from the second -ns!lar Life case that sho)ed the hallmar.s of an employer*employee relationship in the mana-ement system established# These )ere1 e+clusivity of service, control of assi-nments and removal of a-ents under the private respondent0s unit, and furnishin- of company facilities and materials as )ell as capital described as 9nit Development Fund# /ll these are obviously absent in the present case# !f there is a commonality in these cases, it is in the collection of premiums )hich is a basic authority that can be dele-ated to a-ents under the !nsurance "ode# /s previously discussed, )hat simply happened in Ton-.o0s case )as the -rant of an e+panded sales a-ency role that reco-ni@ed him as leader amon-st a-ents in an area that Manulife defined# Ehether this conse?uentl' resulte$ in the establishment of an emplo'ment relationship can be ans!ere$ b' concrete e=i$ence that correspon$s to the follo!in" ?uestionsF as lead a-ent, )hat )ere Ton-.o0s specific functions and the terms of his additional en-a-ementM )as he paid additional compensation as a so*called /rea 5ales Mana-er, apart from the commissions he received from the insurance sales he -eneratedM )hat can be Manulife0s basis to terminate his status as lead a-entM can Manulife terminate his role as lead a-ent separately from his a-ency contractM and to )hat e+tent does Manulife control the means and methods of Ton-.o0s role as lead a-entO

The ans)ers to these >uestions may, to some e+tent, be deduced from the evidence at hand, as partly discussed above# :ut strictly spea.in-, the >uestions cannot definitively and concretely be

ans)ered throu-h the evidence on record# The concrete evidence re/uired to settle these /uestions is simpl- not there, since onl- the 'greement and the anecdotal affidavits have been mar8ed and submitted as evidence. ,iven this anemic state of the evidence, particularly on the re>uisite confluence of the factors determinative of the e+istence of employer*employee relationship, the "ourt cannot conclusively find that the relationship e+ists in the present case, even if such relationship only refers to Ton-.o0s additional functions# Ehile a rou-h deduction can be made, the ans)er )ill not be fully supported by the substantial evidence needed# 9nder this le-al situation, the only conclusion that can be made is that the absence of evidence sho)in- Manulife0s control over Ton-.o0s contractual duties points to the absence of any employer* employee relationship bet)een Ton-.o and Manulife# !n the conte+t of the established evidence, Ton-.o remained an a-ent all alon-M althou-h his subse>uent duties made him a lead a-ent )ith leadership role, he )as nevertheless only an a-ent )hose basic contract yields no evidence of means*and*manner control# This conclusion renders unnecessary any further discussion of the >uestion of )hether an a-ent may simultaneously assume conflictin- dual personalities# :ut to set the record strai-ht, the concept of a sin-le person havin- the dual role of a-ent and employee )hile doin- the same tas. is a novel one in our =urisprudence, )hich must be vie)ed )ith caution especially )hen it is $e=oi$ of an' @urispru$ential support or prece$ent% The >uoted portions in 7ustice "arpio*Morales0 dissent,[33] borro)ed from both the2repalife and the second -ns!lar Life cases, to support the duality approach of the Decision of 'ovember (, 2008, are re-rettably far removed from their conte+t C i.e., the cases0 factual situations, the issues they decided and the totality of the rulin-s in these cases C and cannot yield the conclusions that the dissentin- opinions dre)# The 2repalife case dealt )ith the sole issue of )hether the 2ui@ brothers0 appointment as @one supervisor and district mana-er made them employees of 2repalife# !ndeed, because of the presence of the element of control in their contract of en-a-ements, they )ere considered 2repalifes employees# This did not mean, ho)ever, that they )ere simultaneously considered a-ents as )ell as employees of 2repalifeM the "ourt0s rulin- never implied that this situation e+isted insofar as the 2ui@ brothers )ere concerned# The "ourt0s statement C the !nsurance "ode may -overn the licensinre>uirements and other particular duties of insurance a-ents, but it does not bar the application of the abor "ode )ith re-ard to labor standards and labor relations C simply means that )hen an insurance company has e+ercised control over its a-ents so as to ma.e them their employees, the relationship bet)een the parties, )hich )as other)ise one for a-ency -overned by the "ivil "ode and the !nsurance "ode, )ill no) be -overned by the abor "ode# The reason for this is simple C the contract of a-ency has been transformed into an employer*employee relationship# The second -ns!lar Life case, on the other hand, involved the issue of )hether the labor bodies have =urisdiction over an ille-al termination dispute involvin- parties )ho had t)o contracts C first, an ori-inal contract $a-ency contract&, )hich )as undoubtedly one for a-ency, and another subse>uent contract that in turn desi-nated the a-ent actin- unit mana-er $a mana-ement contract&# :oth the !nsular ife and the labor arbiter )ere one in the position that both )ere a-ency contracts# The "ourt disa-reed )ith this conclusion and held that insofar as the mana-ement contract is concerned, the labor arbiter has =urisdiction# !t is in this li-ht that )e remanded the case to the labor arbiter for further proceedin-s# Ee never said in this case thou-h that the insurance a-ent had effectively assumed dual personalities for the simple reason that the a-ency contract has been effectively superseded by the mana-ement contract# The

mana-ement contract provided that if the appointment )as terminated for any reason other than for cause, the actin- unit mana-er )ould be reverted to a-ent status and assi-ned to any unit# The dissent pointed out, as an ar-ument to support its employment relationship conclusion, that any doubt in the e+istence of an employer*employee relationship should be resolved in favor of the e+istence of the relationship#[3B] This observation, apparently dra)n from /rticle B of the abor "ode, is misplaced, as /rticle B applies only )hen a doubt e+ists in the Iimplementation and applicationJ of the abor "ode and its implementin- rulesM it does not apply )here no doubt e+ists as in a situation )here the claimant clearly failed to substantiate his claim of employment relationship by the >uantum of evidence the abor "ode re>uires# 3n the dissent0s last point re-ardin- the lac. of =urisprudential value of our 'ovember (, 2008 Decision, suffice it to state that, as discussed above, the Decision )as not supported by the evidence adduced and )as not in accordance )ith controllin=urisprudence# !t should, therefore, be reconsidered and abandoned, but not in the manner the dissent su--ests as the dissentin- opinions are as factually and as le-ally erroneous as the Decision under reconsideration# !n li-ht of these conclusions, the sufficiency of Ton-.o0s failure to comply )ith the -uidelines of de Dios0 letter, as a -round for termination of Ton-.o0s a-ency, is a matter that the labor tribunals cannot rule upon in the absence of an employer*employee relationship# 7urisdiction over the matter belon-s to the courts applyin- the la)s of insurance, a-ency and contracts# E.ERE/ORE, considerin- the fore-oin- discussion, )e RE,ERSE our Decision of 'ovember (, 2008, +RANT Manulife0s motion for reconsideration and, accordin-ly, 2ISMISS Ton-.o0s petition# 'o costs# SO OR2ERE2# ARTURO BRION /ssociate 7ustice EE CONCURF 2%

c#

"oordinate activities of /-ency Mana-ers )ho, in turn, train and coordinate activities of other commission a-entsM RENATO C% CORONA "hief 7ustice

CERTI/ICATION %ursuant to 5ection 13, /rticle 6!!! of the "onstitution, it is hereby certified that the conclusions in the above 2esolution had been reached in consultation before the case )as assi-ned to the )riter of the opinion of the "ourt# RENATO C% CORONA "hief 7ustice

ANTONIO T% CARPIO /ssociate 7ustice

CONC.ITA CARPIO MORALES /ssociate 7ustice

[1]

PRESBITERO &% ,ELASCO &R% /ssociate 7ustice ANTONIO E2UAR2O B% NAC.URA /ssociate 7ustice

Rollo, pp# ((2*81<# [2] Tongko (. The Man!fact!rers Life -ns!rance Co. 90hils.:, -nc. , ,#2# 'o# 1A(A22, 'ovember (, 2008, ?(0 5"2/ ?03, ?0A*?0(# [3] Rollo, p# ?2# [B] -d. at ?3# [?] -*id. [A] ;!pra note 2, at ?08*?10# [(] -d. at ?11# [8] Rollo, pp# ?(*?8# [<] Ton-.o0s %etition for 2evie), id. at 3*BAM and 5ummary of Ton-.o0s %osition in the 5eptember 2(, 200B decision of the ' 2" $id. at 3B<*3?1& and the "/ decision $id. at ?(*?8&# [10] 3B( %hil# ?8( $1<<(&M see 5ummary of Manulife0s %osition in the 5eptember 2(, 200B decision of the ' 2" $ rollo, pp# 3?1*3?3& and the "/ decision $rollo, pp# ?8*?<&# [11] -ns!lar Life Ass!rance Co., Ltd. (. NLRC , ,#2# 'o# 8BB8B, 'ovember 1?, 1<8<, 1(< 5"2/ B?<# [12] !n an /ffidavit dated /pril 28, 2003, 7ohn D# "hua, a 2e-ional 5ales Mana-er of Manulife, stated1 B# 3n 5eptember 1, 1<<A, my services )ere en-a-ed by Manulife as an /-ency 2e-ional 5ales Mana-er $P25MP& for Metro 5outh 2e-ion pursuant to an /-ency "ontract# /s such 25M, ! have the follo)infunctions1 1# 2efer and recommend prospective a-ents to Manulife 2# "oach a-ents to become productive 3# 2e-ularly meet )ith, and coordinate activities of a-ents affiliated to my re-ion# Ehile /manda Toledo, a :ranch Mana-er of Manulife, stated in her /ffidavit, dated /pril 2<, 2003, that1 3# !n 7anuary 1<<(, ! )as assi-ned as a :ranch Mana-er $P:MP& of Manulife for the Metro 'orth 5ectorM B# /s such :M, ! render the follo)in- services1 a# 2efer and recommend prospective a-ents to ManulifeM b# Train and coordinate activities of other commission a-entsM

TERESITA &% LEONAR2O52E CASTRO 2IOS2A2O M% /ssociate 7ustice PERALTA /ssociate 7ustice

LUCAS P% BERSAMIN /ssociate 7ustice

MARIANO C% 2EL CASTILLO /ssociate 7ustice

ROBERTO A% ABA2 /ssociate 7ustice MARTIN S% ,ILLARAMA &R% /ssociate 7ustice &OSE PORTU+AL PEREG /ssociate 7ustice &OSE CATRAL MEN2OGA /ssociate 7ustice d# /chieve a-reed production ob=ectives in terms of 'et /nnuali@ed "ommissions and "ase "ount and recruitment -oalsM and 5ell the various products of Manulife to my personal clients#

e#

Ehile Ma# ourdes 5amson, a 9nit Mana-er of Manulife, stated in her /ffidavit, dated /pril 28, 2003, that1 3# !n 1<((, ! )as assi-ned as a 9nit Mana-er $P9MP& of 'orth %ea.s 9nit, 'orth 5tar :ranch, Metro 'orth 2e-ionM

B# follo)in- services1 a#

/s such 9M, ! render the To render or recommend prospective a-ents to be licensed, trained and contracted to sell Manulife products and )ho )ill be part of my 9nit# To coordinate activities of the a-ents under my 9nit in their daily, )ee.ly and monthly sellin- activities, ma.in- sure that their respective sales tar-ets are met# To conduct periodic trainin- sessions for my a-ents to further enhance their sales s.ills# To assist my a-ents )ith their sales activities by )ay of =oint field)or., consultations and one*on*one evaluation and analysis of particular accounts# To provide opportunities to motivate my a-ents to succeed li.e conductinpromos to increase sales activities and encoura-inthem to be involved in company and industry activities# To provide opportunities for professional -ro)th to my a-ents by encoura-in- them to be a member of the 9"/% $ ife 9nder)riters /ssociation of the %hilippines&#

[30]

b#

These include the /-ent "ode of "onduct, the Manulife Financial "ode of "onduct, and the Manulife "ode of "onduct /-reement# [31] 7ustice 6elasco0s Dissentin- 3pinion, pp# 3*B# [32] Motion for 2econsideration dated December 3, 2008M >uotin- the /ffidavit of 7ohn "hua $2e-ional 5ales Mana-er& dated /pril 28, 2003, /ffidavit of /manda Tolentino $:ranch Mana-er& dated /pril 2<, 2003, and /ffidavit of ourdes 5amson $9nit Mana-er& dated /pril 28, 2003# Rollo, p# 803# [33] 5eparate Dissentin- 3pinion of 7ustice "onchita "arpio Morales, pp# 1*2# 7ustice "arpio Morales asserts that an agent may, at the same time, *e an employee of a life ins!rance company and >uotes the 2repalife case1 True, it cannot be denied that based on the definition of an Iinsurance a-entJ in the !nsurance "ode some of the functions performed by private respondents )ere those of insurance a-ents# 'evertheless, it does not follo) that they are not employees of ,repalife# The !nsurance "ode may -overn the licensin- re>uirements and other particular duties of insurance a-ents, but it does not bar the application of the abor "ode )ith re-ard to labor standards and labor relations# 5he additionally posits that the hybrid model is not novelR the second !nsular ife case purportedly held that 0antaleon delos Reyes, actin- unit mana-er, #as an employee of -ns!lar Life onlinsofar as the management contract is concerned , >uotin- in support of this assertion the follo)in- discussion in the second -ns!lar Life case1 %arenthetically, both petitioner and respondent ' 2" treated the a-ency contract and the mana-ement contract entered into bet)een petitioner and De los 2eyes as contracts of a-ency# Ee, ho)ever, hold other)ise# 9n>uestionably there e+ist ma=or distinctions bet)een the t)o a-reements# Ehile the first has the earmar#s of an a"enc' contract the secon$ is far remo=e$ from the concept of a"enc' in that pro=i$e$ therein are con$itionalities that in$icate an emplo'er5 emplo'ee relationship# The ' 2" therefore )as correct in findin- that pri=ate respon$ent !as an emplo'ee of petitioner but this hol$s true onl' insofar as the mana"ement contract is concerne$# !n vie) thereof, the abor /rbiter has =urisdiction over the case# [3B] 7ustice %resbitero 6elasco, 7r#0s Dissentin- 3pinion, p# 12#

c#

d#

e#

f#

[13] [1B]

Rollo, pp# ((A*(((# 5ections 303 and 30B, !nsurance "ode# [1?] 5ection 30A, !nsurance "ode# [1A] /rticle 18A8, "ivil "ode# [1(] /rticle 18A<, "ivil "ode# [18] /rticle 18(0, "ivil "ode# [1<] 5ection 2<<, !nsurance "ode# [20] /rticle 18(?, "ivil "ode# [21] /rticles 188A and 1<18, "ivil "ode# [22] /rticle 18<B, "ivil "ode# [23] /rticle 188(, "ivil "ode# [2B] ;!pra note 2, at ?1<*?20# [2?] ,#2# 'o# 11<<30, March 12, 1<<8, 28( 5"2/ B(A# [2A] ,#2# 'o# 1021<<, 7anuary 28, 1<<(, 2A( 5"2/ B(# [2(] !n 1<<(, his income )as %2,822#A20#00M in 1<<8 C %B,80?,1AA#3BM in 1<<<, %A,(<(,81B#0?M in 2001, %A,21B,(3(#11M and in 2002, %8,003,180#38# [28] /rticles 1B31 to 1B3< of the "ivil "ode# [2<] 7ustice 6elasco0s Dissentin- 3pinion, p# 10# 7ustice 6elasco maintains that Ton-.o0s declaration in his ta+ returns that he )as self*employed )as forced upon him by Manulife, )hich refused and still refuses to consider him as its employee, and )ithheld 10Q of Ton-.o0s income as an a-ent for ta+es# Ton-.o therefore had no choice but to use the )ithholdin- ta+ certificates issued to Manulife in connection )ith the ta+es it paid on his income as an a-ent and he could not have been faulted for declarin- himself as self*employed#