Labor I: Elements of Relationship - 17
Basil Maguigad
TONGKO vs MANUFACTURERS LIFE
G.R. NO. 167622, June 29, 2010 and January 25, 2011
BRION J.,
This resolves the Motion for Reconsideration dated
December 3, 2008 filed by respondent The Manufacturers
Life Insurance Co. (Phils.), Inc. (Manulife) to set aside our
Decision of November 7, 2008. In the assailed decision, we
found that an employer-employee relationship existed
between Manulife and petitioner Gregorio Tongko and
ordered Manulife to pay Tongko backwages and separation
pay for illegal dismissal.
FACTS
The contractual relationship between Tongko and
Manulife had two basic phases.
The first phase began on July 1, 1977, under a
Career Agents Agreement, which provided that the
Agent is an independent contractor
and nothing contained herein shall be construed
or interpreted as creating an employer-
employee relationship between the Company
and the Agent.
The second phase started in 1983 when Tongko
was named Unit Manager in Manulifes Sales
Agency Organization. In 1990, he became a
Branch Manager. In 1996), Tongko became a
Regional Sales Manager. Tongkos gross earnings
consisted of commissions, persistency income, and
management overrides. Since the beginning,
Tongko consistently declared himself self-employed
in his income tax returns. Under oath, he declared
his gross business income and deducted his
business expenses to arrive at his taxable business
income.
Respondent Renato Vergel de Dios, sales manager,
wrote Tongko a letter dated November 6, 2001 on
concerns that were brought up during the Metro North
Sales Managers Meeting, expressing dissatisfaction of
Tongkos performance in their agent recruiting business,
which resulted in some changes on how Tongko would
conduct his duties, including that Tongko hire at his
expense a competent assistant to unload him of routine
tasks, which he had been complaining to be too taxing
for him.
On December 18, 2001, de Dios wrote Tongko another
letter which served as notice of termination of his
Agency Agreement with the company effective fifteen
days from the date of the letter.
Tongko filed an illegal dismissal complaint with
the National Labor Relations Commission (NLRC),
alleging that despite the clear terms of the letter
terminating his Agency Agreement, that he was
Manulifes employee before he was illegally
dismissed.
The labor arbiter decreed that no employer-employee
relationship existed between the parties.
The NLRC reversed the labor arbiters decision on
appeal; it found the existence of an employer-employee
relationship and concluded that Tongko had been
illegally dismissed.
The Court of Appeals found that the NLRC gravely
abused its discretion in its ruling and reverted to the
labor arbiters decision that no employer-employee
relationship existed between Tongko and Manulife.
ISSUE(S)
Whether or not there was employer-employee
relationship between Tongko and Manulife. (NO)
RULING
NO. In the determination of whether an employer-
employee relationship exists between 2 parties, this
court applies the four-fold test to determine the
existence of the elements of such relationship.
Jurisprudence is firmly settled that whenever the
existence of an employment relationship is in
dispute, four elements constitute the reliable
yardstick: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power
of dismissal; and (d) the employers power to
control the employees conduct.
IT is the so-called control test which constitutes the
most important index of existence of the employer-
employee relationship that is, whether the employer
controls or has reserved the right to control the employee
not only as to the result of the work to be done but also as
to the means and methods by which the same is to be
accomplished.
Stated otherwise, an employer-employee relationship
exists where the person for whom the services are
performed reserves the right to control not only the end
to be achieved but also the means to be used in
reaching such end.
In the case at bar, the absence of evidence showing
Manulifes control over Tongkos 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.
Claimant clearly failed to substantiate his claim of
employment relationship by the quantum of
evidence the Labor Code requires.
Tongkos failure to comply with the guidelines of de Dios
letter, as a ground for termination of Tongkos 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.
 Labor I: Elements of Relationship - 17
Basil Maguigad
We REVERSE our Decision of November 7, 2008, GRANT than employer directives into how specific tasks are
Manulifes motion for reconsideration and, accordingly, to be done.
DISMISS Tongkos petition.

MOTION FOR RECONSIDERATION

Same facts

ISSUE

Whether or not the Supreme Court erred in issuing the

June 29, 2010 resolution, reversing its earlier decision
that an employer-employee relationship existed.

RULING

The Supreme Court finds no reason to reverse the June

29, 2010 decision.
Control over the performance of the task of one
providing service both with respect to the means
and manner, and the results of the service is the
primary element in determining whether an
employment relationship exists.
The Supreme Court ruled petitioners Motion
against his favor since he failed to show that the
control Manulife exercised over him was the
control required to exist in an employer-
employee relationship; Manulifes control fell
short 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.

In the Supreme Courts June 29, 2010 Resolution, they

noted that there are built-in elements of control
specific to an insurance agency, which do not amount to
the elements of control that characterize an
employment relationship governed by the Labor Code.
The Insurance Code provides definite parameters in
the way an agent negotiates for the sale of the
companys insurance products, his collection
activities and his delivery of the insurance contract
or policy. They do not reach the level of control into
the means and manner of doing an assigned task
that invariably characterizes an employment
relationship as defined by labor law.

To reiterate, guidelines indicative of labor law "control"

do not merely relate to the mutually desirable result
intended by the contractual relationship; they must
have the nature of dictating the means and methods to
be employed in attaining the result.
Tested by this norm, Manulifes instructions
regarding the objectives and sales targets, in
connection with the training and engagement of
other agents, are among the directives that the
principal may impose on the agent to achieve the
assigned tasks. They are targeted results that
Manulife wishes to attain through its agents.
Manulifes codes of conduct, likewise, do not
necessarily intrude into the insurance agents means
and manner of conducting their sales. Codes of
conduct are norms or standards of behavior rather