Tongko v. Manulife Case Digest

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 Agent’s 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 Manulife’s 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 Tongko’s 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 Management’s 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 Tongko—YES, there is (2) If yes, whether Manulife is guilty of illegal dismissal—YES 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 employer’s power to control the employee’s conduct. The “control test” is that which constitutes the most important index of the existence of the employer-employee relationship—whether 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 employee’s 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 it—in this case no employer-employee relationship is created—and 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 company’s goals. Manulife’s 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 Tongko’s alleged failure to follow this principle of recruitment that led to the termination of his employment—that is the director of Manulife of becoming a major agency-led distribution company whereby greater agency recruitment is required of the managers including Tongko.