TONGKO vs. MANUFACTURERS LIFE INSURANCE CO., INC.

GR. No. 167622; November 7, 2008

Velasco, Jr., J.

Doctrine:
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.

Facts:
Gregorio Tongko (Tongko) started a professional relationship with Manufacturers Life Insurance
Co., Inc. (Manulife) on July 1, 1977 by virtue of a Career Agent’s Agreement (Agreement) in the following
vein:

It is understood and agreed 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.

xxx xxx xxx

The Company may terminate this Agreement for any breach or violation of any of the
provisions hereof by the Agent by giving written notice to the Agent within fifteen (15) days from
the time of the discovery of the breach.

In 1983, Tongko was promoted to Unit Manager in Manulife’s Sales Agency Organization, and in
1990, he became a Branch Manager. The problem started sometime in 2001, when Manulife instituted
manpower development programs in the regional sales management level. In a letter to Tongko, Renato
De Dios (De Dios), President and CEO of Manulife at the time, wrote that Tongko’s region was the lowest
performer (on a per manager basis) in terms of recruiting agents in 2000, and continues to be one of the
laggards in this area. De Dios stated that he has “never heard [Tongko] push for greater agency recruiting.”

Subsequently, on December 18, 2001, De Dios wrote to Tongko another letter indicating
Manulife’s intention to terminate Tongko’s services for failure to adhere to the company’s agency growth
policies. Aggrieved, Tongko filed a complaint with the NLRC against Manulife for illegal dismissal.

In the complaint, Tongko asserted that there exists an employer-employee relationship between
Manulife and himself. He claimed that Manulife exercised control over him, as evidenced by the acts of
Manulife in promoting him and giving him various assignments, as well as prescribing a Code of Conduct
which governed in minute detail all the aspects of the work to be taken by the employees. Moreover, the
letters sent by De Dios left no doubt as to who was in control. Plainly, Manulife wielded control not only
as to the ends to be achieved, but also the ways and means of attaining such ends.

Meanwhile, the respondents insist that there is no employer-employee relationship between

Manulife and Tongko. Even assuming arguendo that Tongko is an employee of Manulife, his employment
was validly terminated based on gross and habitual neglect of duties, inefficiency, as well as willful
disobedience to the orders of Manulife.

Labor Arbiter ruling: Complaint dismissed. There is no employer-employee relationship.

NLRC ruling: Reversed Labor Arbiter ruling. Applying the four-fold test, there is an employer-employee
relationship. Hence, Tongko was a regular employee who was illegally dismissed.

CA ruling: Reinstated Labor Arbiter ruling. There is no employer-employee relationship.

Issues:

(1) W/n there is an employer-employee relationship between Manulife and Tongko

(2) W/n Tongko was illegally dismissed.

SC Ruling:

(1) YES. Based on jurisprudence, 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 the agreement between Tongko and Manulife, it was stated that Tongko “agrees to comply
with all the regulations and requirements of the Company xxx.” Manulife prescribed various Codes of
Conduct on their agents, which demonstrate the power of control that they hold over Tongko. The
fact that Tongko was obliged to obey and comply with the codes of conduct was not denied by the
respondents. Additionally, De Dios made it clear in his letters to Tongko that agent recruitment has
become the primary means by which Manulife intends to sell more insurance policies, and that it is
Tongko’s alleged failure to follow this principle of recruitment that led to the termination of his
employment with Manulife. With this, it is inescapable that Tongko was an employee of Manulife.

(2) YES. The Court has ruled time and time again that the burden of proving the validity of the termination
of employment rests with the employer. The Labor Code provides that an employer may terminate
the services of an employee for just cause, and this must be supported by substantial evidence. Failure
to discharge such evidentiary burden would necessarily mean that the dismissal was not justified, and,
therefore, illegal.
It is readily evident from the records that Manulife failed to cite a single iota of evidence to
support its claim that Tongko was validly dismissed on the ground of gross and habitual neglect of
duties, inefficiency, and willful disobedience. Manulife did not even point out which order or rule that
Tongko disobeyed. More importantly, Manulife did not point out the specific acts that Tongko was
guilty of that would constitute gross and habitual neglect of duty or disobedience, merely citing
Tongko’s alleged “laggard performance” without substantiating such claim, and equated the same to
disobedience and neglect of duty.
Mere conjectures cannot work to deprive employees of their means of livelihood. Thus, it must
be concluded that Tongko was illegally dismissed.