Tongko v. Manufacturers LIfe Insurance Co. (Phils.), Inc.

LABOR LAW: Four-Fold Test to Determine the Existence of an Employer-Employee Relationship Tongko v. Manufacturers LIfe Insurance Co. (Phils.), Inc. (570 SCRA 503) FACTS: The contractual relationship between Tongko and Manulife had two basic phases. The first phase began on July 1, 1977, under a Career Agent’s 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 Manulife’s Sales Agency Organization. In 1990, he became a Branch Manager. In 1996), Tongko became a Regional Sales Manager. Tongko’s 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 Tongko’s 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 Manulife’s employee before he was illegally dismissed. The labor arbiter decreed that no employer-employee relationship existed between the parties. 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. The Court of Appeals 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: Is there an employer-employee relationship between Tongko and Manulife? . HELD: 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 employer’s power to control the employee’s 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 employeremployee 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 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. Claimant clearly failed to substantiate his claim of employment relationship by the quantum of evidence the Labor Code requires. 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. Dispositive: We REVERSE our Decision of November 7, 2008, GRANT Manulife’s motion for reconsideration and, accordingly, DISMISS Tongko’s petition.