Tongko v.

Manulife
G.R. No. 167622
November 7, 2008
FACTS: This case involves respondent Manulife who is engaged in life insurance business.
Petitioner Gregorio V. Tongko started his professional relationship with Manulife on July 1,
1977 by virtue of a Career Agents Agreement he executed with Manlike. The agreement
stated that Tongko is an Agent and an independent contractor and nothing shall be
construed as creating an employer-employee relationship between the Company and the
Agent. In 1983, Tongko was named as Unit Manager in Manulifes Sales Agency Organization
and eventually he became a Branch Manager. A problem started in 2001, when Manulife
instituted manpower development programs in the regional sales management level. De
Dios, the President and CEO, addressed a letter to Tongko regarding their Metro North Sales
Managers Meeting. In their meeting they stated the poor performance of Tongkos Region in
terms of recruiting and his ability to lead the group. That the management was disappointed
with Tongko and how he has not been proactive all these years when it comes to agency
growth. In order to address such the company directed Tongko to: (1) to hire at his expense
a competent assistant who can unload him of the routine tasks which can be easily
delegated (2) Effective immediately, Kevin and the rest of the Agency Operation will deal
with the North Star Branch (NSB) in autonomous fashion. Subsequently De Dios wrote a
termination letter to Tongko on December 2001 due to the fact that he failed to help align
his directions with the Managements desire for agency growth. On account of such, the
Management exercised its prerogative under Section 14 of the Agents Contract to terminate
the agent by giving him a written notice within 15 says from the time of the discovery of the
breach in the contract. Tongko filed a complaint with the NLRC against Manulife for illegal
dismissal which the Labor Arbiter dismissed the complaint for lack of employer-employee
relationship. Upon appeal, the NLRC found that there was an existing employer-employee
relationship between Manulife and Tongko applying the 4-fold test and held Manulife liable
for illegal dismissal. On an MR to the CA, it found that there was no employer-employee
relationship between the parties and deemed that the NLRC has no jurisdiction over the
case.
ISSUE: (1) Whether or not there is an employer-employee relationship between Manulife
and TongkoYES, there is
(2) If yes, whether Manulife is guilty of illegal dismissalYES
HELD:
(1) YES, the court applied the 4-fold test to determine the existence of the elements of such
relationship. In Pacific Consultants International v. Schonfeld, the court set out the elements
of an employer-employee relationship: (1) the selection and engagement of the employee
(2) the payment of wages; (c) the power of dismissal; and (d) the employers power to
control the employees conduct. The control test is that which constitutes the most
important index of the existence of the employer-employee relationshipwhether the
employer controls or has reserved the right to control the employee not only as to the result
of the work to be sone but also as to the means and methods by which the same is to be
accomplished. In concluding differently, the CA and NLRC reached an impasse on the sole
issue of control over an employees conduct. It bears clarifying that such control not only
applies to the work or goal to be done but also to the means and methods to accomplish it.
Not every form of control affect an employer-employee relationship. The line should be
drawn between the rules that merely serves as guidelines towards the achievement of the
mutually desired result without dictating the means or methods to be employed in attaining
itin this case no employer-employee relationship is createdand the that control or fix the
methodology and bind or restrict the party hired to use such means which establishes the

employer-employee relationship. In this case, if the specific rules and regulations that are
enforced against insurance agents or managers are such that would directly affect the
means and methods by which such agents or managers would achieve the objectives set by
the insurance company, they are employees of the insurance company.
In this case, Manulife has the power of control over Tongko that would make him its
employee. The factors that contribute to this conclusion are:
(1) The agreement dated July 1, 1977 executed between Tongko and Manulife the provisions
of which state that an agent of Manlike must comply with 3 requirements (1) compliance
with the regulations and requirement of the company (2) maintenance of a level of
knowledge of the company products that is satisfactory to the company (3) compliance with
a quota of new businesses. Among the company regulations of Manlike are codes such as
the Agent Code of Conduct, Manulife Financial Code of Conduct, and Manulife Financial Code
of Conduct Agreement which demonstrate the power of control exercised by the company
over Tongko. Thus, with the company regulations and requirements alone, the fact that
Tongko was an employee of Manulife may already be established. These requirements
controlled the means and methods by which Tongko was to achieve the companys goals.
Manulifes evidence established that Tongko was tasked to perform administrative duties
that establishes his employment with Manulife. In examining the affidavits of the Regional
Sales Manager and Branch Manager and Unit Manager we can find that they exercise
administrative duties similar to the case of Great Pacific Life Assurance Corporation.
Additionally it must be pointed out that Tongko was tasked with recruiting a certain number
of agents in addition to his other administrative functions, that leads to no other conclusion
that he was an employee of Manulife. More importantly, it is Tongkos alleged failure to
follow this principle of recruitment that led to the termination of his employmentthat is the
director of Manulife of becoming a major agency-led distribution company whereby greater
agency recruitment is required of the managers including Tongko.