Tongko V Manulife

6/20/2017 G.R. No.
167622

RepublicofthePhilippines
SupremeCourt
Manila

ENBANC

GREGORIOV.TONGKO, G.R.No.167622
Petitioner,
Present:

CORONA,C.J.,
CARPIO,
versus CARPIOMORALES,
VELASCO,JR.,
NACHURA,
LEONARDODECASTRO,
BRION,
THEMANUFACTURERSLIFE PERALTA,
INSURANCECO.(PHILS.),INC. BERSAMIN,
andRENATOA.VERGELDE DELCASTILLO,
DIOS, ABAD,
Respondents. VILLARAMA,JR.,
PEREZ,and
MENDOZA,JJ.
Promulgated:

June29,2010
xx

RESOLUTION

BRION,J.:

[1]
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
DecisionofNovember7,2008.In the assailed decision, we found that an employeremployee
relationshipexistedbetweenManulifeandpetitionerGregorioTongkoandorderedManulifeto
payTongkobackwagesandseparationpayforillegaldismissal.

http://sc.judiciary.gov.ph/jurisprudence/2010/june2010/167622.htm 1/28
6/20/2017 G.R. No. 167622
The following facts have been stated in our Decision of November 7, 2008, now under
reconsideration,butarerepeated,simplyforpurposesofclarity.
The contractual relationship between Tongko and Manulife had two basic phases.
The first or initial phase began on July 1, 1977, under a Career Agents Agreement
(Agreement)thatprovided:

It is understood and agreed that the Agent is an independent contractor and nothing
containedhereinshallbeconstruedorinterpretedascreatinganemployeremployeerelationship
betweentheCompanyandtheAgent.

xxxx

a)TheAgentshallcanvassforapplicationsforLifeInsurance,Annuities,Grouppolicies
and other products offered by the Company, and collect, in exchange for provisional receipts
issuedbytheAgent,moneyduetoorbecomeduetotheCompanyinrespectofapplicationsor
policiesobtainedbyorthroughtheAgentorfrompolicyholdersallottedbytheCompanytothe
Agentforservicing,subjecttosubsequentconfirmationofreceiptofpaymentbytheCompanyas
evidencedbyanOfficialReceiptissuedbytheCompanydirectlytothepolicyholder.

xxxx

The Company may terminate this Agreement for any breach or violation of any of the
provisionshereofbytheAgentbygivingwrittennoticetotheAgentwithinfifteen(15)daysfrom
thetimeofthediscoveryofthebreach.Nowaiver,extinguishment,abandonment,withdrawalor
cancellationoftherighttoterminatethisAgreementbytheCompanyshallbeconstruedforany
previousfailuretoexerciseitsrightunderanyprovisionofthisAgreement.

Either of the parties hereto may likewise terminate his Agreement at any time without
[2]
cause,bygivingtotheotherpartyfifteen(15)daysnoticeinwriting.

Tongkoadditionallyagreed(1)tocomplywithallregulationsandrequirementsofManulife,and
(2) to maintain a standard of knowledge and competency in the sale of Manulifes products,
satisfactorytoManulifeandsufficienttomeetthevolumeofthenewbusiness,requiredbyhis
[3]
ProductionClubmembership.

Thesecondphasestartedin1983whenTongkowasnamedUnitManagerinManulifes
SalesAgencyOrganization.In1990,hebecameaBranchManager.Sixyearslater(orin1996),
[4]
TongkobecameaRegionalSalesManager.

Tongkosgrossearningsconsistedofcommissions,persistencyincome,andmanagement
overrides. Since the beginning, Tongko consistently declared himself selfemployed in his
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incometaxreturns.Thus,under oath, he declared his gross business income and deducted

his business expenses to arrive at his taxable business income. Manulife withheld the
[5]
corresponding10%taxonTongkosearnings.

In 2001, Manulife instituted manpower development programs at the regional sales
managementlevel.RespondentRenatoVergeldeDioswroteTongkoaletterdatedNovember6,
2001 on concerns that were brought up during the October 18, 2001 Metro North Sales
ManagersMeeting.DeDioswrote:

ThefirststeptotransformingManulifeintoabigleagueplayerhasbeenverycleartoincreasethe
numberofagentstoatleast1,000strongforastart.Thismayseemdiametricallyopposedtothe
way Manulife was run when you first joined the organization. Since then, however, substantial
changeshavetakenplaceintheorganization,asthesehavebeeninfluencedbydevelopmentsboth
fromwithinandwithoutthecompany.

xxxx

The issues around agent recruiting are central to the intended objectives hence the need for a
SeniorManagersmeetingearlierlastmonthwhenKevinOConnor,SVPAgency,tooktothefloor
to determine from our senior agency leaders what more could be done to bolster manpower
development.Atearliermeetings,Kevinhadpresentedinformationwhereevidently,yourRegion
wasthelowestperformer(onaperManagerbasis)intermsofrecruitingin2000and,asoftoday,
continuestoremainoneofthelaggardsinthisarea.

Whilediscussions,ingeneral,werepositiveotherthanforcertaincommentsfromyourendwhich
were perceived to be uncalled for, it became clear that a oneonone meeting with you was
necessarytoensurethatyouandmanagement,wereonthesameplane.Asgleanedfromsomeof
yourpreviouscommentsinpriormeetings(bothingroupandoneonone),itwasnotclearthat
wewereproceedinginthesamedirection.

Kevinheldsubsequentseriesofmeetingswithyouasaresult,oneofwhichIjoinedbriefly.In
thosesubsequentmeetingsyoureiteratedcertainviews,thevalidityofwhichwechallengedand
subsequentlyfoundashavingnobasis.

With such views coming from you, I was a bit concerned that the rest of the Metro North
Managersmaybeabitconfusedastothedirectionsthecompanywastaking.Forthisreason,I
soughtameetingwitheveryoneinyourmanagementteam,includingyou,tocleartheair,soto
speak.

ThisnoteisintendedtoconfirmtheitemsthatwerediscussedatthesaidMetroNorthRegions
SalesManagersmeetingheldatthe7/FConferenceroomlast18October.

xxxx

Issue # 2: Some Managers are unhappy with their earnings and would want to revert to the
positionofagents.

ThisisanoftenrepeatedissueyouhaveraisedwithmeandwithKevin.Forthisreason,Iplaced
theissueonthetablebeforetherestofyourRegionsSalesManagerstoverifyitsvalidity.Asyou
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musthavenoted,noSalesManagercameforwardontheirowntoconfirmyourstatementandit
tookyoutonameMalouSamsonasasourceofthesame,anallegationthatMalouherselfdenied
atourmeetingandinyourverypresence.

Thisonlyconfirms,Greg,thatthosepriorcommentshavenosolidbasisatall.Inowbelievewhat
Ihadthoughtallalong,thattheseallegationsweresimplymeanttomuddletheissuessurrounding
theinabilityofyourRegiontomeetitsagencydevelopmentobjectives!

Issue#3:SalesManagersaredoingwhatthecompanyasksthemtodobut,intheprocess,they
earnless.

xxxx

Alltheabovenotwithstanding,wehadyourownrecordscheckedandwefoundthatyoumadea
lotmoremoneyintheYear2000versus1999.Inaddition,youalsovolunteeredtheinformation
toKevinwhenyousaidthatyouprobablywillmakemoremoneyintheYear2001comparedto
Year2000.Obviously,yourabovestatementaboutmakinglessmoneydidnotrefertoyoubutthe
way you argued this point had us almost believing that you were spouting the gospel of truth
whenyouwerenot.xxx

xxxx

Allofasudden,Greg,Ihavebecomemuchmoreworriedaboutyourabilitytoleadthisgroup
towardsthenewdirectionthatwehavebeendiscussingthesepastfewweeks,i.e.,Manulifesgoal
tobecomeamajoragencyleddistributioncompanyinthePhilippines.Whileasyouclaim,you
have not stopped anyone from recruiting, I have never heard you proactively push for greater
agencyrecruiting.Youhavenotbeenproactivealltheseyearswhenitcomestoagencygrowth.

xxxx

Icannotaffordtoseeamajorregionfailtodeliveronitsdevelopmentalgoalsnextyearandso,
wearemakingthefollowingchangesintheinterim:

1. Youwillhireatyourexpenseacompetentassistantwhocanunloadyouofmuchof
theroutinetaskswhichcanbeeasilydelegated.Thisassistantshouldbesochosenasto
complementyourskillsandhelpyouintheareaswhereyoufeelmaynotbeyourcupof
tea.

Youhavestated,ifnotimplied,thatyourworkasRegionalManagermaybetootaxingfor
youandforyourhealth.Theabovecouldsolvethisproblem.

xxxx

2.Effectiveimmediately,KevinandtherestoftheAgencyOperationswilldealwiththe
NorthStarBranch(NSB)inautonomousfashion.xxx
Ihavedecidedtomakethischangesoastoreduceyourspanofcontrolandallowyouto
concentrate more fully on overseeing the remaining groups under Metro North, your
Central Unit and the rest of the Sales Managers in Metro North. I will hold you solely
responsibleformeetingtheobjectivesoftheseremaininggroups.
xxxx

The above changes can end at this point and they need not go any further. This, however, is
entirely dependent upon you. But you have to understand that meeting corporate objectives by
everyone is primary and will not be compromised. We are meeting tough challenges next year,
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and I would want everybody on board. Any resistance or holding back by anyone will be dealt
[6]
withaccordingly.

Subsequently,deDioswroteTongkoanotherletter,datedDecember18,2001,terminating
Tongkosservices:

Itwouldappear,however,thatdespitetheseriesofmeetingsandcommunications,bothoneon
onemeetingsbetweenyourselfandSVPKevinOConnor,someofthemwithme,aswellasgroup
meetings with your Sales Managers, all these efforts have failed in helping you align your
directionswithManagementsavowedagencygrowthpolicy.

xxxx

On account thereof, Management is exercising its prerogative under Section 14 of yourAgents
ContractaswearenowissuingthisnoticeofterminationofyourAgencyAgreementwithus
[7]
effectivefifteendaysfromthedateofthisletter.

Tongko responded by filing an illegal dismissal complaint with the National Labor
Relations Commission (NLRC) Arbitration Branch. He essentially alleged despite the clear
termsoftheletterterminatinghisAgencyAgreementthathewasManulifesemployeebeforehe
[8]
wasillegallydismissed.

Thus,thethresholdissueistheexistenceofanemploymentrelationship.Afindingthat
none exists renders the question of illegal dismissal moot a finding that an employment
relationshipexists,ontheotherhand,necessarilyleadstotheneedtodeterminethevalidityof
theterminationoftherelationship.
A.TongkosCaseforEmploymentRelationship

Tongko asserted that as Unit Manager, he was paid an annual overrider not exceeding
P50,000.00,regardlessofproductionlevelsattainedandexclusiveofcommissionsandbonuses.
He also claimed that as Regional Sales Manager, he was given a travel and entertainment
allowanceofP36,000.00peryearinadditiontohisoverridingcommissionshewastaskedwith
numerous administrative functions and supervisory authority over Manulifes employees, aside
from merely selling policies and recruiting agents for Manulife and he recommended and
recruitedinsuranceagentssubjecttovettingandapprovalbyManulife.Hefurtherallegesthathe
was assigned a definite place in the Manulife offices when he was not in the field at the 3rd
Floor,Manulife Center, 108 Tordesillas corner Gallardo Sts., Salcedo Village, Makati City for
which he never paid any rental. Manulife provided the office equipment he used, including
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tables, chairs, computers and printers (and even office stationery), and paid for the electricity,
waterandtelephonebills.AsRegionalSalesManager,Tongkoadditionallyassertsthathewas
[9]
requiredtofollowatleastthreecodesofconduct.

B.ManulifesCaseAgencyRelationshipwithTongko

Manulife argues that Tongko had no fixed wage or salary. Under the Agreement,Tongko was
paidcommissionsofvaryingamounts,computedbasedonthepremiumpaidinfullandactually
receivedbyManulifeonpoliciesobtainedthroughanagent.Assalesmanager,Tongkowaspaid
overriding sales commission derived from sales made by agents under his
unit/structure/branch/region. Manulife also points out that it deducted and withheld a 10% tax
from all commissions Tongko received Tongko even declared himself to be selfemployed and
consistentlypaidtaxesassuchi.e.,heavailedoftaxdeductionssuchasordinaryandnecessary
trade,businessandprofessionalexpensestowhichabusinessisentitled.

ManulifeassertsthatthelabortribunalshavenojurisdictionoverTongkosclaimashewasnot
its employee as characterized in the fourfold test and our ruling in Carungcong v. National
[10]
LaborRelationsCommission.

TheConflictingRulingsoftheLowerTribunals

The labor arbiter decreed that no employeremployee relationship existed between the
parties.However,theNLRCreversedthelaborarbitersdecisiononappealitfoundtheexistence
ofanemployeremployeerelationshipandconcludedthatTongkohadbeenillegallydismissed.
InthepetitionforcertiorariwiththeCourtofAppeals(CA),theappellatecourtfoundthatthe
NLRCgravelyabuseditsdiscretioninitsrulingandrevertedtothelaborarbitersdecisionthat
noemployeremployeerelationshipexistedbetweenTongkoandManulife.

OurDecisionofNovember7,2008

In our Decision of November 7, 2008, we reversed the CA ruling and found that an
employment relationship existed between Tongko and Manulife. We concluded that Tongko is
Manulifesemployeeforthefollowingreasons:

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[11]
1.OurrulinginthefirstInsular casedidnotforeclosethepossibilityofaninsurance
agent becoming an employee of an insurance company if evidence exists showing that the
companypromulgatedrulesorregulationsthateffectivelycontrolledorrestrictedaninsurance
agentschoiceofmethodsorthemethodsthemselvesinsellinginsurance,anemployeremployee
relationship would be present. The determination of the existence of an employeremployee
relationshipisthusonacasetocasebasisdependingontheevidenceonrecord.

2. Manulife had the power of control over Tongko, sufficient to characterize him as an
employee,asshownbythefollowingindicators:

2.1 TongkoundertooktocomplywithManulifesrules,regulationsandother
requirements,i.e.,thedifferentcodesofconductsuchastheAgentCodeofConduct,the
ManulifeFinancialCodeofConduct,andtheFinancialCodeofConductAgreement

2.2 ThevariousaffidavitsofManulifesinsuranceagentsandmanagers,who
occupied similar positions as Tongko, showed that they performed administrative duties
[12]
thatestablishedemploymentwithManulife and

2.3 Tongko was tasked to recruit some agents in addition to his other
administrativefunctions.DeDiosletterharpedonthedirectionManulifeintendedtotake,
viz., greater agency recruitment as the primary means to sell more policies Tongkos
alleged failure to follow this directive led to the termination of his employment with
Manulife.

TheMotionforReconsideration

ManulifedisagreedwithourDecisionandfiledthepresentmotionforreconsiderationon
thefollowingGROUNDS:

1. The November 7[, 2008] Decision violates Manulifes right to due process by: (a)
confiningthereviewonlytotheissueofcontrolandutterlydisregardingalltheotherissuesthat
hadbeenjoinedinthiscase(b)mischaracterizingthedivergenceofconclusionsbetweentheCA
and the NLRC decisions as confined only to that on control (c) grossly failing to consider the
findingsandconclusionsoftheCAonthemajorityofthematerialevidence,especially[Tongkos]
6/20/2017 G.R. No. 167622
declaration in his income tax returns that he was a business person or selfemployed and (d)
allowing[Tongko]torepudiatehisswornstatementinapublicdocument.

2.TheNovember7[,2008]Decisioncontravenessettledrulesincontractlawandagency,
distortsnotonlythelegalrelationshipsofagenciestosellbutalsodistributorshipandfranchising,
andignorestheconstitutionalandpolicycontextofcontractlawvisvislaborlaw.

3.TheNovember7[,2008]DecisionignoresthefindingsoftheCAonthethreeelements
ofthefourfoldtestotherthanthecontroltest,reverseswellsettleddoctrinesoflawonemployer
employeerelationships,andgrosslymisappliesthecontroltest,byselecting,withoutbasis,afew
itemsofevidencetotheexclusionofmorematerialevidencetosupportitsconclusionthatthereis
control.

4.TheNovember7[,2008]Decisionisjudiciallegislation,beyondthescopeauthorized
byArticles8and9oftheCivilCode,beyondthepowersgrantedtothisCourtunderArticleVIII,
Section 1 of the Constitution and contravenes through judicial legislation, the constitutional
prohibitionagainstimpairmentofcontractsunderArticleIII,Section10oftheConstitution.

5. For all the above reasons, the November 7[, 2008] Decision made unsustainable and
reversible errors, which should be corrected, in concluding that Respondent Manulife and
Petitionerhadanemployeremployeerelationship,thatRespondentManulifeillegallydismissed
Petitioner, and for consequently ordering Respondent Manulife to pay Petitioner backwages,
[13]
separationpay,nominaldamagesandattorneysfees.

THECOURTSRULING

A.TheInsuranceandtheCivilCodes
thePartiesIntentandEstablished
IndustryPractices

We cannot consider the present case purely from a labor law perspective, oblivious that
thefactualantecedentsweresetintheinsuranceindustrysothattheInsuranceCodeprimarily
governs.ChapterIV,Title1ofthisCodeiswhollydevotedtoInsuranceAgentsandBrokersand
specifically defines the agents and brokers relationship with the insurance company and how
theyaregovernedbytheCodeandregulatedbytheInsuranceCommission.

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TheInsuranceCode,ofcourse,doesnotwhollyregulatetheagencythatitspeaksof,as
agency is a civil law matter governed by the Civil Code. Thus, at the very least, three sets of
lawsnamely,theInsuranceCode,theLaborCodeandtheCivilCodehavetobeconsideredin
lookingatthepresentcase.Nottobeforgotten,too,istheAgreement(partlyreproducedonpage
2ofthisDissentandwhichnoonedisputes)thatthepartiesadoptedtogoverntheirrelationship
forpurposesofsellingtheinsurancethecompanyoffers.Toforgettheseotherlawsistotakea
myopicviewofthepresentcaseandtoaddtotheuncertaintiesthatnowexistinconsideringthe
legalrelationshipbetweentheinsurancecompanyanditsagents.

Themainissueofwhetheranagencyoranemploymentrelationshipexistsdependsonthe
incidents of the relationship. The Labor Code concept of control has to be compared and
distinguishedwiththecontrolthatmustnecessarilyexistinaprincipalagentrelationship. The
principal cannot but also have his or her say in directing the course of the principalagent
relationship,especiallyincaseswherethecompanyrepresentativerelationshipintheinsurance
industryisanagency.

a.Thelawsoninsuranceandagency

The business of insurance is a highly regulated commercial activity in the country, in
termsparticularlyofwhocanbeintheinsurancebusiness,whocanactforandinbehalfofan
insurer,andhowthesepartiesshallconductthemselvesintheinsurancebusiness.Section186of
the Insurance Code provides that No person, partnership, or association of persons shall
transactanyinsurancebusinessinthePhilippines except as agent of a person or corporation
authorized to do the business of insurance in the Philippines. Sections 299 and 300 of the
InsuranceCodeonInsuranceAgentsandBrokers,amongotherprovisions,provide:

Section 299. No insurance company doing business in the Philippines, nor any agent thereof,
shall pay any commission or other compensation to any person for services in obtaining
insurance,unlesssuchpersonshallhavefirstprocuredfromtheCommissioneralicensetoactas
aninsuranceagentofsuchcompanyorasaninsurancebrokerashereinafterprovided.

Nopersonshallactasaninsuranceagentorasaninsurancebrokerinthesolicitationor
procurement of applications for insurance, or receive for services in obtaining insurance, any
commission or other compensation from any insurance company doing business in the
Philippines or any agent thereof, without first procuring a license so to act from the
Commissioner x x x The Commissioner shall satisfy himself as to the competence and
trustworthiness of the applicant and shall have the right to refuse to issue or renew and to
suspendorrevokeanysuchlicenseinhisdiscretion.
6/20/2017 G.R. No. 167622

Section300.Any person who 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
contractofinsurancetoorfromsuchcompanyoroffersorassumestoactinthenegotiatingof
such insurance shall be an insurance agent within the intent of this section and shall thereby
becomeliabletoalltheduties,requirements,liabilitiesandpenaltiestowhichaninsuranceagent
issubject.

Theapplicationforaninsuranceagentslicenserequiresawrittenexamination,andtheapplicant
mustbeofgoodmoralcharacterandmustnothavebeenconvictedofacrimeinvolvingmoral
[14]
turpitude. Theinsuranceagentwhocollectspremiumsfromaninsuredpersonforremittance
to the insurance company does so in a fiduciary capacity, and an insurance company which
deliversaninsurancepolicyorcontracttoanauthorizedagentisdeemedtohaveauthorizedthe
[15]
agent to receive payment on the companys behalf. Section 361 further prohibits the offer,
negotiation,orcollectionofanyamountotherthanthatspecifiedinthepolicyandthiscovers
any rebate from the premium or any special favor or advantage in the dividends or benefit
accruingfromthepolicy.

Thus,undertheInsuranceCode,theagentmust,asamatterofqualification,belicensed
andmustalsoactwithintheparametersoftheauthoritygrantedunderthelicenseandunderthe
contractwiththeprincipal.Otherthantheneedforalicense,theagentislimitedinthewayhe
offersandnegotiatesforthesaleofthecompanysinsuranceproducts,inhiscollectionactivities,
andinthedeliveryoftheinsurancecontractorpolicy.Rulesregardingthedesiredresults(e.g.,
therequiredvolumetocontinuetoqualifyasacompanyagent,rulestocheckontheparameters
ontheauthoritygiventotheagent,andrulestoensurethatindustry,legalandethicalrulesare
followed) are builtin elements of control specific to an insurance agency and should not and
cannot be read as elements of control that attend an employment relationship governed by the
LaborCode.
On the other hand, the Civil Code defines an agent as a person [who] binds himself to
render some service or to do something in representation or on behalf of another, with the
[16]
consentorauthorityofthelatter. Whilethisisaverybroaddefinitionthatonitsfacemay
evenencompassanemploymentrelationship,thedistinctionsbetweenagencyandemployment
aresufficientlyestablishedbylawandjurisprudence.

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Generally, the determinative element is the control exercised over the one rendering
service.Theemployercontrolstheemployeebothintheresultsandinthemeansandmannerof
achieving this result. The principal in an agency relationship, on the other hand, also has the
prerogative to exercise control over the agent in undertaking the assigned task based on the
parametersoutlinedinthepertinentlaws.

Under the general law on agency as applied to insurance, an agency must be express in
lightoftheneedforalicenseandforthedesignationbytheinsurancecompany.Inthepresent
case,theAgreementfullyservesasgrantofauthoritytoTongkoasManulifesinsuranceagent.
[17]
This agreement is supplemented by the companys agency practices and usages, duly
[18]
accepted by the agent in carrying out the agency. By authority of the Insurance Code, an
[19]
insuranceagencyisforcompensation, amattertheCivilCodeRulesonAgencypresumesin
[20]
theabsenceofprooftothecontrary. Otherthanthecompensation,theprincipalisboundto
advanceto,ortoreimburse,theagenttheagreedsumsnecessaryfortheexecutionoftheagency.
[21]
ByimplicationatleastunderArticle1994oftheCivilCode,theprincipalcanappointtwo
[22]
or more agents to carry out the same assigned tasks, based necessarily on the specific
instructionsanddirectivesgiventothem.

WithparticularrelevancetothepresentcaseistheprovisionthatIntheexecutionofthe
[23]
agency, the agent shall act in accordance with the instructions of the principal. This
provisionispertinentforpurposesofthenecessarycontrolthattheprincipalexercisesoverthe
agentinundertakingtheassignedtask,andisanareawheretheinstructionscanintrudeintothe
labor law concept of control so that minute consideration of the facts is necessary. A related
article is Article 1891 of the Civil Code which binds the agent to render an account of his
transactionstotheprincipal.

B.TheCitedCase

The Decision of November 7, 2008 refers to the first Insular and Grepalife cases to
establishthatthecompanyrulesandregulationsthatanagenthastocomplywithareindicative
[24]
of an employeremployee relationship. The Dissenting Opinions of Justice Presbitero
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Velasco,Jr.andJusticeConchitaCarpioMoralesalsociteInsularLifeAssuranceCo.v.National
[25]
Labor Relations Commission (second Insular case) to support the view that Tongko is
Manulifesemployee.Ontheotherhand,ManulifecitestheCarungcongcaseandAFP Mutual
[26]
Benefit Association, Inc. v. National Labor Relations Commission (AFPMBAI case) to
supportitsallegationthatTongkowasnotitsemployee.

A caveat has been given above with respect to the use of the rulings in the cited cases
becausenoneofthemisonallfourswiththepresentcasetheuniquenessofthefactualsituation
ofthepresentcasepreventsitfrombeingdirectlyandreadilycastinthemoldofthecitedcases.
Thesecitedcasesarethemselvesdifferentfromoneanotherthisdifferenceunderscorestheneed
toreadandquotetheminthecontextoftheirownfactualsituations.

The present case at first glance appears aligned with the facts in the Carungcong, the
Grepalife,andthesecondInsularLifecases.Acriticaldifference,however,existsasthesecited
cases dealt with the proper legal characterization of a subsequent management contract
thatsupersededtheoriginalagencycontractbetweentheinsurancecompanyanditsagent.
CarungcongdealtwithasubsequentAgreementmakingCarungcongaNewBusinessManager
thatclearlysupersededtheAgreementdesignatingCarungcongasanagentempoweredtosolicit
applications for insurance. The Grepalife case, on the other hand, dealt with the proper legal
characterization of the appointment of the Ruiz brothers to positions higher than their original
positionasinsuranceagents.Thus,afteranalyzingthedutiesandfunctionsoftheRuizbrothers,
as these were enumerated in their contracts, we concluded that the company practically
dictatedthemannerbywhichtheRuizbrothersweretocarryouttheirjobs.Finally,thesecond
InsularLifecasedealtwiththeimplicationsofdelosReyesappointmentasactingunitmanager
which, like the subsequent contracts in the Carungcong and the Grepalife cases, was clearly
definedunderasubsequentcontract.Inallthesecitedcases,adeterminationofthepresence
of the Labor Code element of control was made on the basis of the stipulations of the
subsequentcontracts.
InstarkcontrastwiththeCarungcong, the Grepalife, and the second Insular Life cases,
the only contract or document extant and submitted as evidence in the present case is the
AgreementapureagencyagreementintheCivilCodecontextsimilartotheoriginalcontractin
thefirstInsularLifecaseandthecontractintheAFPMBAIcase.AndwhileTongkowaslateron
designated unit manager in 1983, Branch Manager in 1990, and Regional Sales Manager in
1996, no formal contract regarding these undertakings appears in the records of the case. Any
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suchcontractoragreement,hadtherebeenany,couldhaveattheveryleastprovidedthebases
forproperlyascertainingthejuridicalrelationshipestablishedbetweentheparties.

Thesecriticaldifferences,particularlybetweenthepresentcaseandtheGrepalifeandthe
second Insular Life cases, should therefore immediately drive us to be more prudent and
cautiousinapplyingtherulingsinthesecases.

C.AnalysisoftheEvidence

c.1.TheAgreement

TheprimaryevidenceinthepresentcaseistheJuly1,1977Agreementthatgovernedand
definedthepartiesrelationsuntiltheAgreementsterminationin2001.ThisAgreementstoodfor
morethantwodecadesand,basedontherecordsofthecase,wasnevermodifiedornovated.It
assumes primacy because it directly dealt with the nature of the parties relationship up to the
veryendmoreover,bothpartiesneverdisputeditsauthenticityortheaccuracyofitsterms.

BytheAgreementsexpressterms,TongkoservedasaninsuranceagentforManulife,not
as an employee. To be sure, the Agreements legal characterization of the nature of the
relationship cannot be conclusive and binding on the courts as the dissent clearly stated, the
characterizationofthejuridicalrelationshiptheAgreementembodiedisamatteroflawthatis
for the courts to determine. At the same time, though, the characterization the parties gave to
their relationship in the Agreement cannot simply be brushed aside because it embodies their
intent at the time they entered the Agreement, and they were governed by this understanding
throughout their relationship. At the very least, the provision on the absence of employer
employee relationship between the parties can be an aid in considering the Agreement and its
implementation,andinappreciatingtheotherevidenceonrecord.

Thepartieslegalcharacterizationoftheirintent,althoughnotconclusive,iscriticalinthis
case because this intent is not illegal or outside the contemplation of law, particularly of the
Insurance and the Civil Codes. From this perspective, the provisions of the Insurance Code
cannotbedisregardedasthisCode(asheretoforealreadynoted)expresslyenvisionsaprincipal
agent relationship between the insurance company and the insurance agent in the sale of
insurance to the public. For this reason, we can take judicial notice that as a matter of
Insurance Codebased business practice, an agency relationship prevails in the insurance
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industry for the purpose of selling insurance. The Agreement, by its express terms, is in
accordancewiththeInsuranceCodemodelwhenitprovidedforaprincipalagentrelationship,
and thus cannot lightly be set aside nor simply be considered as an agreement that does not
reflect the parties true intent. This intent, incidentally, is reinforced by the system of
compensation the Agreement provides, which likewise is in accordance with the production
basedsalescommissionstheInsuranceCodeprovides.

Significantly, evidence shows that Tongkos role as an insurance agent never changed
duringhisrelationshipwithManulife.Ifchangesoccurredatall,thechangesdidnotappearto
beinthenatureoftheircorerelationship.Tongkoessentiallyremainedanagent,butmovedup
inthisrolethroughManulifesrecognitionthathecoulduseotheragentsapprovedbyManulife,
butoperatingunderhisguidanceandinwhosecommissionshehadashare.Forwantofabetter
term, Tongko perhaps could be labeled as a lead agent who guided under his wing other
ManulifeagentssimilarlytaskedwiththesellingofManulifeinsurance.

Like Tongko, the evidence suggests that these other agents operated under their own
agency agreements. Thus, if Tongkos compensation scheme changed at all during his
relationshipwithManulife,thechangewassolelyforpurposesofcreditinghimwithhissharein
the commissions the agents under his wing generated. As an agent who was recruiting and
guiding other insurance agents, Tongko likewise moved up in terms of the reimbursement of
expenses he incurred in the course of his lead agency, a prerogative he enjoyed pursuant to
Article1912oftheCivilCode.Thus,Tongkoreceivedgreaterreimbursementsforhisexpenses
andwasevenallowedtouseManulifefacilitiesinhisinteractionswiththeagents,allofwhom
were, in the strict sense, Manulife agents approved and certified as such by Manulife with the
InsuranceCommission.

ThatTongkoassumedaleadershiprolebutneverthelesswhollyremainedanagentisthe
inevitable conclusion that results from the reading of the Agreement (the only agreement on
recordinthiscase)andhiscontinuingrolethereunderassalesagent,fromtheperspectiveofthe
Insurance and the Civil Codes and in light of what Tongko himself attested to as his role as
Regional Sales Manager. To be sure, this interpretation could have been contradicted if other
agreementshadbeensubmittedasevidenceoftherelationshipbetweenManulifeandTongkoon
the latters expanded undertakings. In the absence of any such evidence, however, this reading
basedontheavailableevidenceandtheapplicableinsuranceandcivillawprovisionsmuststand,
6/20/2017 G.R. No. 167622
subject only to objective and evidentiary Labor Code tests on the existence of an employer
employeerelationship.

InapplyingsuchLaborCodetests,however,theenforcementoftheAgreementduringthe
course of the parties relationship should be noted. From 1977 until the termination of the
Agreement, Tongkos occupation was to sell Manulifes insurance policies and products. Both
parties acquiesced with the terms and conditions of the Agreement. Tongko, for his part,
acceptedallthebenefitsflowingfromtheAgreement,particularlythegenerouscommissions.

EvidenceindicatesthatTongkoconsistentlyclungtotheviewthathewasanindependent
agentsellingManulifeinsuranceproductssinceheinvariablydeclaredhimselfabusinessorself
employedpersoninhisincometaxreturns.Thisconsistencywith,andactionmadepursuant
totheAgreementwerepiecesofevidencethatwerenevermentionednorconsideredinour
DecisionofNovember7,2008.Hadtheybeenconsidered,theycould,attheveryleast,serveas
Tongkos admissions against his interest. Strictly speaking, Tongkos tax returns cannot but be
legally significant because he certified under oath the amount he earned as gross business
income,claimedbusinessdeductions,leadingtohisnettaxableincome.Thisshouldbeevidence
ofthefirstorderthatcannotbebrushedasidebyameredenial.Evenonalaymansviewthatis
devoid of legal considerations, the extent of his annual income alone renders his claimed
[27]
employmentstatusdoubtful.
Handinhandwiththeconceptofadmissionagainstinterestinconsideringthetaxreturns,
[28]
the concept of estoppel a legal and equitable concept necessarily must come into play.
Tongkospreviousadmissionsinseveralyearsoftaxreturnsasanindependentagent,asagainst
hisbelatedclaimthathewasallalonganemployee,aretoodiametricallyopposedtobesimply
dismissed or ignored. Interestingly, Justice Velascos dissenting opinion states that Tongko was
forcedtodeclarehimselfabusinessorselfemployedpersonbyManulifespersistentrefusalto
[29]
recognize him as its employee. Regrettably, the dissent has shown no basis for this
conclusion,anunderstandableomissionsincenoevidenceinfactexistsonthispointinthe
recordsofthecase.Infact,whattheevidenceshowsisTongkosfullconformitywith,andaction
as,anindependentagentuntilhisrelationshipwithManulifetookabadturn.

AnotherinterestingpointthedissentraisedwithrespecttotheAgreementisitsconclusionthat
theAgreementnegatedanyemploymentrelationshipbetweenTongkoandManulifesothatthe
6/20/2017 G.R. No. 167622
commissions he earned as a sales agent should not be considered in the determination of the
backwages and separation pay that should be given to him. This part of the dissent is correct
although it went on to twist this conclusion by asserting that Tongko had dual roles in his
relationshipwithManulifehewasanagent,notanemployee,insofarashesoldinsurancefor
Manulife, but was an employee in his capacity as a manager.Thus, the dissent concluded that
TongkosbackwagesshouldonlybewithrespecttohisroleasManulifesmanager.

The conclusion with respect to Tongkos employment as a manager is, of course,
unacceptableforthelegal,factualandpracticalreasonsdiscussedinthisResolution.Inbrief,the
factualreason is grounded on the lack of evidentiary support of the conclusion that Manulife
exercised control over Tongko in the sense understood in the Labor Code. The legal reason,
partly based on the lack of factual basis, is the erroneous legal conclusion that Manulife
controlledTongkoandwasthusitsemployee. The practical reason, on the other hand, is the
havocthatthedissentsunwarrantedconclusionwouldcausetheinsuranceindustrythat,bythe
lawsowndesign,operatedalongthelinesofprincipalagentrelationshipinthesaleofinsurance.

c.2.OtherEvidenceofAllegedControl
A glaring evidentiary gap for Tongko in this case is the lack of evidence on record
showingthatManulifeeverexercisedmeansandmannercontrol,eventoalimitedextent,over
Tongko during his ascent in Manulifes sales ladder. In 1983, Tongko was appointed unit
manager. Inexplicably, Tongko never bothered to present any evidence at all on what this
designation meant. This also holds true for Tongkos appointment as branch manager in 1990,
andasRegionalSalesManagerin1996.Thebestevidenceofcontroltheagreementordirective
relatingtoTongkosdutiesandresponsibilitieswasneverintroducedaspartoftherecordsofthe
case.Therealityis,priortodeDiosletter,ManulifehadpracticallyleftTongkoalonenotonlyin
doing the business of selling insurance, but also in guiding the agents under his wing. As
discussedbelow,theallegeddirectivescoveredbydeDiosletter,heretoforequotedinfull,were
policydirectionsandtargetedresultsthatthecompanywantedTongkoandtheothersalesgroups
to realign with in their own selling activities. This is the reality that the parties presented
evidenceconsistentlytellsus.
What,toTongko,serveasevidenceoflaborlawcontrolarethecodesofconductthatManulife
imposes on its agents in the sale of insurance. The mere presentation of codes or of rules and
regulations,however,isnotperseindicativeoflaborlawcontrolasthelawandjurisprudence
teachus.

6/20/2017 G.R. No. 167622
Asalreadyrecitedabove,theInsuranceCodeimposesobligationsonboththeinsurance
company and its agents in the performance of their respective obligations under the Code,
particularly on licenses and their renewals, on the representations to be made to potential
customers, the collection of premiums, on the delivery of insurance policies, on the matter of
compensation,andonmeasurestoensureethicalbusinesspracticeintheindustry.

Thegenerallawonagency,ontheotherhand,expresslyallowstheprincipalanelementof
control over the agent in a manner consistent with an agency relationship. In this sense, these
controlmeasurescannotbereadasindicativeoflaborlawcontrol.Foremostamongthesearethe
directivesthattheprincipalmayimposeontheagenttoachievetheassignedtasks,totheextent
that they do not involve the means and manner of undertaking these tasks. The law likewise
obligates the agent to render an account in this sense, the principal may impose on the agent
specificinstructionsonhowanaccountshallbemade,particularlyonthematterofexpensesand
reimbursements.Totheseextents,controlcanbeimposedthroughrulesandregulationswithout
intrudingintothelaborlawconceptofcontrolforpurposesofemployment.

Fromjurisprudence,animportantlessonthatthefirstInsularLifecaseteachesusisthata
commitmenttoabidebytherulesandregulationsofaninsurancecompanydoesnotipsofacto
make the insurance agent an employee. Neither do guidelines somehow restrictive of the
insurance agents conduct necessarily indicate control as this term is defined in jurisprudence.
Guidelinesindicativeoflaborlawcontrol,asthefirstInsularLifecasetellsus,shouldnot
merely relate to the mutually desirable result intended by the contractual relationship
theymusthavethenatureofdictatingthemeansormethodstobeemployedinattaining
theresult,oroffixingthemethodologyandofbindingorrestrictingthepartyhiredtothe
use of these means. In fact, resultswise, the principal can impose production quotas and can
determine how many agents, with specific territories, ought to be employed to achieve the
companys objectives. These are management policy decisions that the labor law element of
control cannot reach. Our ruling in these respects in the first Insular Life case was practically
reiteratedinCarungcong.Thus,aswillbeshownmorefullybelow,Manulifescodesofconduct,
[30]
allofwhichdonotintrudeintotheinsuranceagentsmeansandmannerofconductingtheir
salesandonlycontrolthemastothedesiredresultsandInsuranceCodenorms,cannotbeused
asbasisforafindingthatthelaborlawconceptofcontrolexistedbetweenManulifeandTongko.
The dissent considers the imposition of administrative and managerial functions on Tongko as
indicative of labor law control thus, Tongko as manager, but not as insurance agent, became
6/20/2017 G.R. No. 167622
Manulifesemployee.ItdrewthisconclusionfromwhattheotherManulifemanagersdisclosed
in their affidavits (i.e., their enumerated administrative and managerial functions) and after
comparing these statements with the managers in Grepalife. The dissent compared the control
exercisedbyManulifeoveritsmanagersinthepresentcasewiththecontrolthemanagersinthe
[31]
Grepalifecaseexercisedovertheiremployeesbypresentingthefollowingmatrix:
DutiesofManulifesManager DutiesofGrepalifesManagers/Supervisors

to render or recommend prospective trainunderstudiesforthepositionofdistrict
agents to be licensed, trained and manager
contracted to sell Manulife products and
whowillbepartofmyUnit

to coordinate activities of the agents properly account, record and document the
under [the managers] Unit in [the agents] companys funds, spotcheck and audit the
daily, weekly and monthly selling workofthezonesupervisors,xxxfollowup
activities,makingsurethattheirrespective the submission of weekly remittance reports
salestargetsaremet ofthedebitagentsandzonesupervisors

to conduct periodic training sessions for direct and supervise the sales activities of
[the] agents to further enhance their sales the debit agents under him, x x x undertake
skilland anddischargethefunctionsofabsenteedebit
agents,spotchecktherecordofdebitagents,
to assist [the] agents with their sales andinsureproperdocumentationofsalesand
activities by way of joint fieldwork, collectionsofdebitagents.
consultations and oneonone evaluation
andanalysisofparticularaccounts
Asidefromtheseaffidavitshowever,nootherevidenceexistsregardingtheeffectsofTongkos
additionalrolesinManulifessalesoperationsonthecontractualrelationshipbetweenthem.

Tothedissent,Tongkosadministrativefunctionsasrecruiter,trainer,orsupervisorofother
sales agents constituted a substantive alteration of Manulifes authority over Tongko and the
performanceofhisendoftherelationshipwithManulife.WecouldnotdenythoughthatTongko
remained,firstandforemost,aninsuranceagent,andthathisadditionalroleasBranchManager
didnotlessenhismainanddominantroleasinsuranceagentthisrolecontinuedtodominatethe
relations betweenTongko and Manulife even after Tongko assumed his leadership role among
agents. This conclusion cannot be denied because it proceeds from the undisputed fact that
TongkoandManulifeneveralteredtheirJuly1,1977Agreement,adistinctionthepresentcase
has with the contractual changes made in the second Insular Life case. Tongkos resultsbased
commissions,too,attesttotheprimacyhegavetohisroleasinsurancesalesagent.

6/20/2017 G.R. No. 167622
Thedissentapparentlydidnotalsoproperlyanalyzeandappreciatethegreatqualitative
differencethatexistsbetween:
theManulifemanagersroleistocoordinateactivitiesoftheagentsunderthe
managersUnitintheagentsdaily,weekly,andmonthlysellingactivities,makingsurethattheir
respectivesalestargetsaremet.

the District Managers duty in Grepalife is to properly account, record, and
documentthecompany'sfunds,spotcheckandaudittheworkofthezonesupervisors,conserve
thecompany'sbusinessinthedistrictthroughreinstatements,followupthesubmissionofweekly
remittancereportsofthedebitagentsandzonesupervisors,preservecompanypropertyingood
condition, train understudies for the position of district managers, and maintain his quota of
sales(thefailureofwhichisagroundfortermination).

theZoneSupervisors(alsoinGrepalife)hasthedutytodirectandsupervisethe
sales activities of the debit agents under him, conserve company property through
reinstatements, undertake and discharge the functions of absentee debit agents, spotcheck the
recordsofdebitagents,andinsureproperdocumentationofsalesandcollectionsbythedebit
agents.

Thesejobcontentsareworldsapartintermsofcontrol.InGrepalife,thedetailsofhowtodothe
jobarespecifiedandpredeterminedinthepresentcase,theoperativewordsarethesalestarget,
themethodologybeingleftundefinedexcepttotheextentofbeingcoordinative.To be sure, a
coordinativestandardforamanagercannotbeindicativeofcontrolthestandardonlyessentially
describeswhataBranchManageristhepersonintheleadwhoorchestratesactivitieswithinthe
group.Tocoordinate,andtherebytoleadandtoorchestrate,isnotsomuchamatterofcontrol
byManulifeitissimplyastatementofabranchmanagersroleinrelationwithhisagentsfrom
thepointofviewofManulifewhosebusinessTongkossalesgroupcarries.

A disturbing note, with respect to the presented affidavits and Tongkos alleged
administrative functions, is the selective citation of the portions supportive of an employment
relationship and the consequent omission of portions leading to the contrary conclusion. For
example, the following portions of the affidavit of Regional Sales Manager John Chua, with
counterpartsintheotheraffidavits,werenotbroughtoutintheDecisionofNovember7,2008,
6/20/2017 G.R. No. 167622
while the other portions suggesting labor law control were highlighted. Specifically, the
[32]
followingportionsoftheaffidavitswerenotbroughtout:

1.a.Ihavenofixedwagesorsalarysincemyservicesarecompensatedbywayofcommissions
basedonthecomputedpremiumspaidinfullonthepoliciesobtainedthereat

1.b.Ihavenofixedworkinghoursandemploymyownmethodinsoliticinginsuranceatatime
andplaceIseefit

1.c.Ihavemyownassistantandmessengerwhohandlemydailyworkload

1.d.Iusemyownfacilities,tools,materialsandsuppliesincarryingoutmybusinessofselling
insurance

xxxx

6.Ihavemyownstaffthathandlesthedaytodayoperationsofmyoffice

7.Mystaffaremyownemployeesandreceivedsalariesfromme

xxxx

9. My commission and incentives are all reported to the Bureau of Internal Revenue (BIR) as
income by a selfemployed individual or professional with a ten (10) percent creditable
withholdingtax.Ialsoremitmonthlyforprofessionals.

These statements, read with the above comparative analysis of the Manulife and the Grepalife
cases,wouldhavereadilyyieldedtheconclusionthatnoemployeremployeerelationshipexisted
betweenManulifeandTongko.

Even de Dios letter is not determinative of control as it indicates the least amount of
intrusion into Tongkos exercise of his role as manager in guiding the sales agents. Strictly
viewed, de Dios directives are merely operational guidelines on how Tongko could align his
operationswithManulifesredirectedgoalofbeingabigleagueplayer.Themethodistoexpand
coveragethroughtheuseofmoreagents.Thisrequirementfortherecruitmentofmoreagentsis
notameansandmethodcontrolasitrelates,morethananythingelse,andisdirectlyrelevant,to
Manulifes objective of expanded business operations through the use of a bigger sales force
whosemembersareallonaprincipalagentrelationship. An important point to note here is
that Tongko was not supervising regular fulltime employees of Manulife engaged in the
runningoftheinsurancebusinessTongkowaseffectivelyguidinghiscorpsofsalesagents,
whoareboundtoManulifethroughthesameAgreementthathehadwithManulife,allthe
while sharing in these agents commissions through his overrides. This is the lead agent
6/20/2017 G.R. No. 167622
conceptmentionedaboveforwantofamoreappropriateterm,sincethetitleofBranchManager
used by the parties is really a misnomer given that what is involved is not a specific regular
branch of the company but a corps of nonemployed agents, defined in terms of covered
territory, through which the company sells insurance. Still another point to consider is that
Tongko was not even setting policies in the way a regular company manager does company
aimsandobjectivesweresimplyrelayedtohimwithsuggestionsonhowtheseobjectivescanbe
reachedthroughtheexpansionofanonemployeesalesforce.

Interestingly, a large part of de Dios letter focused on income, which Manulife
demonstrated,inTongkoscase,tobeunaffectedbythenewgoalanddirectionthecompanyhad
set.Incomeininsuranceagency,ofcourse,isdependentonresults,notonthemeansandmanner
ofsellingamatterforTongkoandhisagentstodetermineandanareaintowhichManulifehad
not waded. Undeniably, de Dios letter contained a directive to secure a competent assistant at
Tongkosownexpense.Whilecouchedintermsofadirective,itcannotstrictlybeunderstoodas
an intrusion into Tongkos method of operating and supervising the group of agents within his
delineatedterritory.Morethananythingelse,thedirectivewasasignaltoTongkothathisresults
were unsatisfactory, and was a suggestion on how Tongkos perceived weakness in delivering
results could be remedied. It was a solution, with an eye on results, for a consistently
underperforminggroupitsobviousintentwastosaveTongkofromtheresultthathethenfailed
tograspthathecouldloseevenhisownstatusasanagent,asheinfacteventuallydid.

ThepresentcasemustbedistinguishedfromthesecondInsularLifecasethatshowedthe
hallmarks of an employeremployee relationship in the management system established. These
were: exclusivity of service, control of assignments and removal of agents under the private
respondentsunit,andfurnishingofcompanyfacilitiesandmaterialsaswellascapitaldescribed
as Unit Development Fund. All these are obviously absent in the present case. If there is a
commonalityinthesecases,itisinthecollectionofpremiumswhichisabasicauthoritythatcan
bedelegatedtoagentsundertheInsuranceCode.

As previously discussed, what simply happened in Tongkos case was the grant of an
expanded sales agency role that recognized him as leader amongst agents in an area that
Manulife defined. Whether this consequently resulted in the establishment of an
employment relationship can be answered by concrete evidence that corresponds to the
followingquestions:

6/20/2017 G.R. No. 167622
as lead agent, what were Tongkos specific functions and the terms of his additional
engagement
washepaidadditionalcompensationasasocalledAreaSalesManager,apartfromthe
commissionshereceivedfromtheinsurancesaleshegenerated
whatcanbeManulifesbasistoterminatehisstatusasleadagent

canManulifeterminatehisroleasleadagentseparatelyfromhisagencycontractand

to what extent does Manulife control the means and methods of Tongkos role as lead
agent?

Theanswerstothesequestionsmay,tosomeextent,bededucedfromtheevidenceathand,as
partlydiscussedabove.Butstrictlyspeaking,thequestionscannotdefinitivelyandconcretelybe
answered through the evidence on record. The concrete evidence required to settle these
questionsissimplynotthere,sinceonlytheAgreementandtheanecdotalaffidavitshavebeen
markedandsubmittedasevidence.

Given this anemic state of the evidence, particularly on the requisite confluence of the
factors determinative of the existence of employeremployee relationship, the Court cannot
conclusivelyfindthattherelationshipexistsinthepresentcase,evenifsuchrelationshiponly
referstoTongkosadditionalfunctions.While a rough deduction can be made, the answer will
notbefullysupportedbythesubstantialevidenceneeded.

Under this legal situation, the only conclusion that can be made is that the absence of
evidence showing Manulifes control over Tongkos contractual duties points to the absence of
any employeremployee relationship between Tongko and Manulife. In the context of the
establishedevidence,Tongkoremainedanagentallalongalthoughhissubsequentdutiesmade
himaleadagentwithleadershiprole,hewasneverthelessonlyanagentwhosebasiccontract
yieldsnoevidenceofmeansandmannercontrol.

Thisconclusionrendersunnecessaryanyfurtherdiscussionofthequestionofwhetheran
agent may simultaneously assume conflicting dual personalities. But to set the record straight,
theconceptofasinglepersonhavingthedualroleofagentandemployeewhiledoingthesame
taskisanoveloneinourjurisprudence,whichmustbeviewedwithcautionespeciallywhenitis
devoid of any jurisprudential support or precedent. The quoted portions in Justice Carpio
[33]
Morales dissent, borrowed from both the Grepalife and the second Insular Life cases, to
6/20/2017 G.R. No. 167622
supportthedualityapproachoftheDecisionofNovember7,2008,areregrettablyfarremoved
fromtheircontexti.e.,thecasesfactualsituations,theissuestheydecidedandthetotalityofthe
rulingsinthesecasesandcannotyieldtheconclusionsthatthedissentingopinionsdrew.

TheGrepalifecasedealtwiththesoleissueofwhethertheRuizbrothersappointmentas
zonesupervisoranddistrictmanagermadethememployeesofGrepalife.Indeed,becauseofthe
presence of the element of control in their contract of engagements, they were considered
Grepalifes employees. This did not mean, however, that they were simultaneously considered
agents as well as employees of Grepalife the Courts ruling never implied that this situation
existedinsofarastheRuizbrotherswereconcerned.The Courts statement the Insurance Code
maygovernthelicensingrequirementsandotherparticulardutiesofinsuranceagents,butitdoes
not bar the application of the Labor Code with regard to labor standards and labor relations
simply means that when an insurance company has exercised control over its agents so as to
makethemtheiremployees,therelationshipbetweentheparties,whichwasotherwiseonefor
agencygovernedbytheCivilCodeandtheInsuranceCode,willnowbegovernedbytheLabor
Code. The reason for this is simple the contract of agency has been transformed into an
employeremployeerelationship.

ThesecondInsularLifecase,ontheotherhand,involvedtheissueofwhetherthelabor
bodies have jurisdiction over an illegal termination dispute involving parties who had two
contracts first, an original contract (agency contract), which was undoubtedly one for agency,
and another subsequent contract that in turn designated the agent acting unit manager (a
managementcontract).BoththeInsularLifeandthelaborarbiterwereoneinthepositionthat
bothwereagencycontracts.TheCourtdisagreedwiththisconclusionandheldthatinsofarasthe
management contract is concerned, the labor arbiter has jurisdiction. It is in this light that we
remandedthecasetothelaborarbiterforfurtherproceedings.Weneversaidinthiscasethough
thattheinsuranceagenthadeffectivelyassumeddualpersonalitiesforthesimplereasonthatthe
agencycontracthasbeeneffectivelysupersededbythemanagementcontract.Themanagement
contractprovidedthatiftheappointmentwasterminatedforanyreasonotherthanforcause,the
actingunitmanagerwouldberevertedtoagentstatusandassignedtoanyunit.
Thedissentpointedout,asanargumenttosupportitsemploymentrelationshipconclusion,that
anydoubtintheexistenceofanemployeremployeerelationshipshouldberesolvedinfavorof
[34]
theexistenceoftherelationship. This observation, apparently drawn from Article 4 of the
LaborCode,ismisplaced,asArticle4appliesonlywhenadoubtexistsintheimplementation
6/20/2017 G.R. No. 167622
andapplicationoftheLaborCodeanditsimplementingrulesitdoesnotapplywherenodoubt
existsasinasituationwheretheclaimantclearlyfailedtosubstantiatehisclaimofemployment
relationshipbythequantumofevidencetheLaborCoderequires.
OnthedissentslastpointregardingthelackofjurisprudentialvalueofourNovember7,
2008Decision,sufficeittostatethat,asdiscussedabove,theDecisionwasnotsupportedbythe
evidenceadducedandwasnotinaccordancewithcontrollingjurisprudence.Itshould,therefore,
be reconsidered and abandoned, but not in the manner the dissent suggests as the dissenting
opinionsareasfactuallyandaslegallyerroneousastheDecisionunderreconsideration.

In light of these conclusions, the sufficiency of Tongkos failure to comply with the
guidelinesofdeDiosletter,asagroundforterminationofTongkosagency,isamatterthatthe
labor tribunals cannot rule upon in the absence of an employeremployee relationship.
Jurisdiction over the matter belongs to the courts applying the laws of insurance, agency and
contracts.

WHEREFORE, considering the foregoing discussion, we REVERSE our Decision of
November7,2008,GRANTManulifesmotionforreconsiderationand,accordingly,DISMISS
Tongkospetition.Nocosts.
SOORDERED.

ARTUROD.BRION
AssociateJustice

WECONCUR:

RENATOC.CORONA
ChiefJustice

CONCHITACARPIOMORALES
TONIOT.CARPIO AssociateJustice
ociateJustice

6/20/2017 G.R. No. 167622

ANTONIOEDUARDOB.NACHURA
ESBITEROJ.VELASCO,JR. AssociateJustice
ociateJustice

DIOSDADOM.PERALTA
RESITAJ.LEONARDODECASTRO AssociateJustice
ociateJustice

MARIANOC.DELCASTILLO
CASP.BERSAMIN AssociateJustice
ociateJustice

MARTINS.VILLARAMA,JR.
BERTOA.ABAD AssociateJustice
ociateJustice

JOSECATRALMENDOZA
PORTUGALPEREZ AssociateJustice
ociateJustice

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the
conclusions in the above Resolution had been reached in consultation before the case was
assignedtothewriteroftheopinionoftheCourt.

RENATOC.CORONA
ChiefJustice
6/20/2017 G.R. No. 167622
[1]
Rollo,pp.772819.
[2]
Tongkov.TheManufacturersLifeInsuranceCo.(Phils.),Inc.,G.R.No.167622,November7,2008,570SCRA503,506507.
[3]
Rollo,p.52.
[4]
Id.at53.
[5]
Ibid.
[6]
Supranote2,at508510.
[7]
Id.at511.
[8]
Rollo,pp.5758.
[9]
TongkosPetitionforReview,id.at346andSummaryofTongkosPositionintheSeptember27,2004decisionoftheNLRC(id.at
349351)andtheCAdecision(id.at5758).
[10]
347Phil.587(1997)seeSummaryofManulifesPositionintheSeptember27,2004decisionoftheNLRC(rollo,pp.351353)
andtheCAdecision(rollo,pp.5859).
[11]
InsularLifeAssuranceCo.,Ltd.v.NLRC,G.R.No.84484,November15,1989,179SCRA459.
[12]
InanAffidavitdatedApril28,2003,JohnD.Chua,aRegionalSalesManagerofManulife,stated:
4. OnSeptember1,1996,myserviceswereengagedbyManulifeasanAgencyRegionalSales
Manager ("RSM") for Metro South Region pursuant to an Agency Contract. As such RSM, I have the following
functions:
1.ReferandrecommendprospectiveagentstoManulife
2.Coachagentstobecomeproductive
3.Regularlymeetwith,andcoordinateactivitiesofagentsaffiliatedtomyregion.

WhileAmandaToledo,aBranchManagerofManulife,statedinherAffidavit,datedApril29,2003,that:
3. InJanuary1997,IwasassignedasaBranchManager("BM")ofManulifefortheMetroNorth
Sector
4.AssuchBM,Irenderthefollowingservices:
a.ReferandrecommendprospectiveagentstoManulife
b.Trainandcoordinateactivitiesofothercommissionagents
c. CoordinateactivitiesofAgencyManagerswho,inturn,trainandcoordinateactivitiesofother
commissionagents
d. AchieveagreedproductionobjectivesintermsofNetAnnualizedCommissionsandCaseCount
andrecruitmentgoalsand
e.SellthevariousproductsofManulifetomypersonalclients.

WhileMa.LourdesSamson,aUnitManagerofManulife,statedinherAffidavit,datedApril28,2003,that:
3. In1977,IwasassignedasaUnitManager("UM")ofNorthPeaksUnit,NorthStarBranch,
MetroNorthRegion
4.AssuchUM,Irenderthefollowingservices:
a.Torenderorrecommendprospectiveagentstobelicensed,trainedandcontractedtosellManulife
productsandwhowillbepartofmyUnit.
b. To coordinate activities of the agents under my Unit in their daily, weekly and monthly selling
activities,makingsurethattheirrespectivesalestargetsaremet.
c.Toconductperiodictrainingsessionsformyagentstofurtherenhancetheirsalesskills.
d.Toassistmyagentswiththeirsalesactivitiesbywayofjointfieldwork,consultationsandoneon
oneevaluationandanalysisofparticularaccounts.
e. Toprovideopportunitiestomotivatemyagentstosucceedlikeconductingpromostoincrease
salesactivitiesandencouragingthemtobeinvolvedincompanyandindustryactivities.
f. To provide opportunities for professional growth to my agents by encouraging them to be a
memberoftheLUCAP(LifeUnderwritersAssociationofthePhilippines).
[13]
Rollo,pp.776777.
6/20/2017 G.R. No. 167622
[14]
Sections303and304,InsuranceCode.
[15]
Section306,InsuranceCode.
[16]
Article1868,CivilCode.
[17]
[18]
[19]
Section299,InsuranceCode.
[20]
[21]
Articles1886and1918,CivilCode.
[22]
[23]
[24]
Supranote2,at519520.
[25]
G.R.No.119930,March12,1998,287SCRA476.
[26]
G.R.No.102199,January28,1997,267SCRA47.
[27]
In 1997, his income wasP2,822.620.00 in 1998P4,805,166.34 in 1999,P6,797,814.05 in 2001, P6,214,737.11 and in 2002,
P8,003,180.38.
[28]
Articles1431to1439oftheCivilCode.
[29]
JusticeVelascosDissentingOpinion,p.10.JusticeVelascomaintainsthatTongkosdeclarationinhistaxreturnsthathewasself
employedwasforceduponhimbyManulife,whichrefusedandstillrefusestoconsiderhimasitsemployee,andwithheld10%of
Tongkosincomeasanagentfortaxes.TongkothereforehadnochoicebuttousethewithholdingtaxcertificatesissuedtoManulife
in connection with the taxes it paid on his income as an agent and he could not have been faulted for declaring himself as self
employed.

[30]
These include the Agent Code of Conduct, the Manulife Financial Code of Conduct, and the Manulife Code of Conduct
Agreement.
[31]
JusticeVelascosDissentingOpinion,pp.34.
[32]
MotionforReconsiderationdatedDecember3,2008quotingtheAffidavitofJohnChua(RegionalSalesManager)datedApril
28,2003,AffidavitofAmandaTolentino(BranchManager)datedApril29,2003,andAffidavitofLourdesSamson(UnitManager)
datedApril28,2003.Rollo,p.803.
[33]
SeparateDissentingOpinionofJusticeConchitaCarpioMorales,pp.12.JusticeCarpioMoralesassertsthatanagentmay,atthe
sametime,beanemployeeofalifeinsurancecompanyandquotestheGrepalifecase:

True, it cannot be denied that based on the definition of an insurance agent in the Insurance Code some of the
functionsperformedbyprivaterespondentswerethoseofinsuranceagents.Nevertheless,itdoesnotfollowthatthey
are not employees of Grepalife. The Insurance Code may govern the licensing requirements and other particular
dutiesofinsuranceagents,butitdoesnotbartheapplicationoftheLaborCodewithregardtolaborstandardsand
laborrelations.

SheadditionallypositsthatthehybridmodelisnotnovelthesecondInsularLifecasepurportedlyheldthatPantaleondelos
Reyes,acting unit manager, was an employee of Insular Life only insofar as the management contract is concerned, quoting in
supportofthisassertionthefollowingdiscussioninthesecondInsularLifecase:

Parenthetically, both petitioner and respondent NLRC treated the agency contract and the management contract
entered into between petitioner and De los Reyes as contracts of agency. We, however, hold otherwise.
Unquestionablythereexistmajordistinctionsbetweenthetwoagreements.Whilethefirsthastheearmarksofan
agency contract, the second is far removed from the concept of agency in that provided therein are
conditionalitiesthatindicateanemployeremployeerelationship.TheNLRCthereforewascorrectinfindingthat
6/20/2017 G.R. No. 167622
privaterespondentwasanemployeeofpetitioner,butthisholdstrueonlyinsofarasthemanagementcontract
isconcerned.Inviewthereof,theLaborArbiterhasjurisdictionoverthecase.
[34]
JusticePresbiteroVelasco,Jr.sDissentingOpinion,p.12.

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incometaxreturns.Thus,under oath, he declared his gross business income and deducted

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