Republic of the
GREGORIO V. TONGKO,
- versus -
THE MANUFACTURERS LIFE INSURANCE CO. (PHILS.), INC. and RENATO A. VERGEL DE DIOS,
G.R. No. 167622
January 25, 2011
R E S O L U T I O N
We resolve petitioner Gregorio V. Tongkos bid, through his Motion for Reconsideration, to set aside our June 29, 2010 Resolution that reversed our Decision of November 7, 2008. With the reversal, the assailed June 29, 2010 Resolution effectively affirmed the Court of Appeals ruling in CA-G.R. SP No. 88253 that the petitioner was an insurance agent, not the employee, of the respondent The Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife).
In his Motion for Reconsideration, petitioner reiterates the arguments he had belabored in his petition and various other submissions. He argues that for 19 years, he performed administrative functions and exercised supervisory authority over employees and agents of Manulife, in addition to his insurance agent functions. In these 19 years, he was designated as a Unit Manager, a Branch Manager and a Regional Sales Manager, and now posits that he was not only an insurance agent for Manulife but was its employee as well.
We find no basis or any error to merit the reconsideration of our June 29, 2010 Resolution.
A. Labor Law Control = Employment Relationship
Control over the performance of the task of one providing service both with respect to the means and manner, and the results of the service is the primary element in determining whether an employment relationship exists. We resolve the petitioners Motion against his favor since he failed to show that the control Manulife exercised over him was the control required to exist in an employer-employee relationship; Manulifes control fell short of this norm and carried only the characteristic of the relationship between an insurance company and its agents, as defined by the Insurance Code and by the law of agency under the Civil Code.
The petitioner asserts in his Motion that Manulifes labor law control over him was demonstrated (1) when it set the objectives and sales targets regarding production, recruitment and training programs; and (2) when it prescribed the Code of Conduct for Agents and the Manulife Financial Code of Conduct to govern his activities. We find no merit in these contentions.
In our June 29, 2010 Resolution, we noted that there are built-in elements of control specific to an insurance agency, which do not amount to the elements of control that characterize an employment relationship governed by the Labor Code. The Insurance Code provides definite parameters in the way an agent negotiates for the sale of the companys insurance products, his collection activities and his delivery of the insurance contract or policy. In addition, the Civil Code defines an agent as a person who binds himself to do something in behalf of another, with the consent or authority of the latter. Article 1887 of the Civil Code also provides that in the execution of the agency, the agent shall act in accordance with the instructions of the principal.
All these, read without any clear understanding of fine legal distinctions, appear to speak of control by the insurance company over its agents. They are, however, controls aimed only at specific results in undertaking an insurance agency, and are, in fact, parameters set by law in defining an insurance agency and the attendant duties and responsibilities an insurance agent must observe and undertake. They do not reach the level of control into the means and manner of doing an assigned task that invariably characterizes an employment relationship as defined by labor law. From this perspective, the petitioners contentions cannot prevail.
To reiterate, guidelines indicative of labor law control do not merely relate to the mutually desirable result intended by the contractual relationship; they must have the nature of dictating the means and methods to be employed in attaining the result. Tested by this norm, Manulifes instructions regarding the objectives and sales targets, in connection with the training and engagement of other agents, are among the directives that the principal may impose on the agent to achieve the assigned tasks. They are targeted results that Manulife wishes to attain through its agents. Manulifes codes of conduct, likewise, do not necessarily intrude into the insurance agents means and manner of conducting their sales. Codes of conduct are norms or standards of behavior rather than employer directives into how specific tasks are to be done. These codes, as well as insurance industry rules and regulations, are not per se indicative of labor law control under our jurisprudence.
The duties that the petitioner enumerated in his Motion are not supported by evidence and, therefore, deserve scant consideration. Even assuming their existence, however, they mostly pertain to the duties of an insurance agent such as remitting insurance fees to Manulife, delivering policies to the insured, and after-sale services. For agents leading other agents, these include the task of overseeing other insurance agents, the recruitment of other insurance agents engaged by Manulife as principal, and ensuring that these other agents comply with the paperwork necessary in selling insurance. That Manulife exercises the power to assign and remove agents under the petitioners supervision is in keeping with its role as a principal in an agency relationship; they are Manulife agents in the same manner that the petitioner had all along been a Manulife agent.
The petitioner also questions Manulifes act of investing him with different titles and positions in the course of their relationship, given the respondents position that he simply functioned as an insurance agent. He also considers it an unjust and inequitable situation that he would be unrewarded for the years he spent as a unit manager, a branch manager, and a regional sales manager.
Based on the evidence on record, the petitioners occupation was to sell Manulifes insurance policies and products from 1977 until the termination of the Career Agents Agreement (Agreement). The evidence also shows that through the years, Manulife permitted him to exercise guiding authority over other agents who operate under their own agency agreements with Manulife and whose commissions he shared. Under this scheme an arrangement that pervades the insurance industry petitioner in effect became a lead agent and his own commissions increased as they included his share in the commissions of the other agents; he also received greater reimbursements for expenses and was allowed to use Manulifes facilities. His designation also changed from unit manager to branch manager and then to regional sales manager, to reflect the increase in the number of agents he recruited and guided, as well as the increase in the area where these agents operated.
As our assailed Resolution concluded and as we now similarly conclude, these arrangements, and the titles and positions the petitioner was invested with, did not change his status from the insurance agent that he had always been (as evidenced by the Agreement that governed his relationship with Manulife from the start to its disagreeable end). The petitioner simply progressed from his individual agency to being a lead agent who could use other agents in selling insurance and share in the earnings of these other agents.
In sum, we find absolutely no
evidence of labor law control, as extensively discussed in our Resolution of
B. No Resulting Inequity
We also do not agree that our assailed
Resolution has the effect of fostering an inequitable or unjust situation. The
records show that the petitioner was very amply paid for his services as an
insurance agent, who also shared in the commissions of the other agents under
his guidance. In 1997, his income was
in 1998, P4,805,166.34; in 1999, P6,797,814.05; in 2001, P6,214,737.11;
and in 2002, P8,003,180.38. All
these he earned as an insurance agent, as he failed to ever prove that he
earned these sums as an employee. In technical terms, he could not have earned
all these as an employee because he failed to provide the substantial evidence
required in administrative cases to support the finding that he was a Manulife
employee. No inequity results under this legal situation; what would be unjust
is an award of backwages and separation pay amounts that are not due him
because he was never an employee.
The Dissents discussion on this aspect of the case begins with the wide disparity in the status of the parties that Manulife is a big Canadian insurance company while Tongko is but a single agent of Manulife. The Dissent then went on to say that [i]f is but just, it is but right, that the Court interprets the relationship between Tongko and Manulife as one of employment under labor laws and to uphold his constitutionally protected right, as an employee, to security of tenure and entitlement to monetary award should such right be infringed. We cannot simply invoke the magical formula by creating an employment relationship even when there is none because of the unavoidable and inherently weak position of an individual over a giant corporation.
The Dissent likewise alluded to an ambiguity in the true relationship of the parties after Tongkos successive appointments. We already pointed out that the legal significance of these appointments had not been sufficiently explained and that it did not help that Tongko never bothered to present evidence on this point. The Dissent recognized this but tried to excuse Tongko from this failure in the subsequent discussion, as follows:
[o]ther evidence was adduced to show such duties and
responsibilities. For one, in his letter
This Court (and all adjudicators for that matter) cannot and should not fill in the evidentiary gaps in a partys case that the party failed to support; we cannot and should not take the cudgels for any party. Tongko failed to support his cause and we should simply view him and his case as they are; our duty is to sit as a judge in the case that he and the respondent presented.
To support its arguments on equity, the Dissent uses the Constitution and the Civil Code, using provisions and principles that are all motherhood statements. The mandate of the Court, of course, is to decide cases based on the facts and the law, and not to base its conclusions on fundamental precepts that are far removed from the particular case presented before it. When there is no room for their application, of capacity of principles, reliance on the application of these fundamental principles is misplaced.
C. Earnings were Commissions
That his earnings were agents commissions arising from his work as an insurance agent is a matter that the petitioner cannot deny, as these are the declarations and representations he stated in his income tax returns through the years. It would be doubly unjust, particularly to the government, if he would be allowed at this late point to turn around and successfully claim that he was merely an employee after he declared himself, through the years, as an independent self-employed insurance agent with the privilege of deducting business expenses. This aspect of the case alone considered together with the probative value of income tax declarations and returns filed prior to the present controversy should be enough to clinch the present case against the petitioners favor.
D. The Dissents Solution:
Unwieldy and Legally Infirm
The Dissent proposes that Tongko should be considered as part employee (as manager) and part insurance agent; hence, the original decision should be modified to pertain only to the termination of his employment as a manager and not as an insurance agent. Accordingly, the backwages component of the original award to him should not include the insurance sales commissions. This solution, according to the line taken by the Dissent then, was justified on the view that this was made on a case-to-case basis.
Decisions of the Supreme Court, as the Civil Code provides, form part of the law of the land. When the Court states that the determination of the existence of an employment relationship should be on a case-to-case basis, this does not mean that there will be as many laws on the issue as there are cases. In the context of this case, the four-fold test is the established standard for determining employer-employee relationship and the existence of these elements, most notably control, is the basis upon which a conclusion on the absence of employment relationship was anchored. This simply means that a conclusion on whether employment relationship exists in a particular case largely depends on the facts and, in no small measure, on the parties evidence vis--vis the clearly defined jurisprudential standards. Given that the parties control what and how the facts will be established in a particular case and/or how a particular suit is to be litigated, deciding the issues on a case-to-case basis becomes an imperative.
Another legal reality, a more important one, is that the duty of a court is to say what the law is. This is the same duty of the Supreme Court that underlies the stare decisis principle. This is how the public, in general and the insurance industry in particular, views the role of this Court and courts in general in deciding cases. The lower courts and the bar, most specially, look up to the rulings of this Court for guidance. Unless extremely unavoidable, the Court must, as a matter of sound judicial policy, resist the temptation of branding its ruling pro hac vice.
The compromise solution of declaring Tongko both an employee and an agent is legally unrealistic, unwieldy and is, in fact, legally infirm, as it goes against the above basic principles of judicial operation. Likewise, it does not and cannot realistically solve the problem/issue in this case; it actually leaves more questions than answers.
As already pointed out, there is no legal basis (be it statutory or jurisprudential) for the part-employee/part-insurance agent status under an essentially principal-agent contractual relation which the Dissent proposes to accord to Tongko. If the Dissent intends to establish one, this is highly objectionable for this would amount to judicial legislation. A legal relationship, be it one of employment or one based on a contract other than employment, exists as a matter of law pursuant to the facts, incidents and legal consequences of the relationship; it cannot exist devoid of these legally defined underlying facts and legal consequences unless the law itself creates the relationship an act that is beyond the authority of this Court to do.
Additionally, the Dissents conclusion completely ignores an unavoidable legal reality that the parties are bound by a contract of agency that clearly subsists notwithstanding the successive designation of Tongko as a unit manager, a branch manager and a regional sales manager. (As already explained in our Resolution granting Manulifes motion for reconsideration, no evidence on record exists to provide the Court with clues as to the precise impact of all these designations on the contractual agency relationship.) The Dissent, it must be pointed out, concludes that Tongkos employment as manager was illegally terminated; thus, he should be accordingly afforded relief therefor. But, can Tongko be given the remedies incidental to his dismissal as manager separately from his status as an insurance agent? In other words, since the respondents terminated all relationships with Tongko through the termination letter, can we simply rule that his role as a manager was illegally terminated without touching on the consequences of this ruling on his status as an insurance agent? Expressed in these terms, the inseparability of his contract as agent with any other relationship that springs therefrom can thus be seen as an insurmountable legal obstacle.
The Dissents compromise approach would also sanction split jurisdiction. The labor tribunals shall have jurisdiction over Tongkos employment as manager while another entity shall decide the issues/cases arising from the agency relationship. If the managerial employment is anchored on the agency, how will the labor tribunals decide an issue that is inextricably linked with a relationship that is outside the loop of their jurisdiction? As already mentioned in the Resolution granting Manulifes reconsideration, the DOMINANT relationship in this case is agency and no other.
E. The Dissents Cited Cases
The Dissent cites the cases of Great Pacific Life Assurance Corporation v. National Labor Relations Commission and Insular Life Assurance Co., Ltd. v. National Labor Relations Commission to support the allegation that Manulife exercised control over the petitioner as an employer.
In considering these rulings, a reality that cannot but be recognized is that cases turn and are decided on the basis of their own unique facts; the ruling in one case cannot simply be bodily lifted and applied to another, particularly when notable differences exist between the cited cases and the case under consideration; their respective facts must be strictly examined to ensure that the ruling in one applies to another. This is particularly true in a comparison of the cited cases with the present case. Specifically, care should be taken in reading the cited cases and applying their rulings to the present case as the cited cases all dealt with the proper legal characterization of subsequent management contracts that superseded the original agency contract between the insurance company and the agent.
In Great Pacific Life, the Ruiz brothers were appointed to positions different from their original positions as insurance agents, whose duties were clearly defined in a subsequent contract. Similarly, in Insular, de los Reyes, a former insurance agent, was appointed as acting unit manager based on a subsequent contract. In both cases, the Court anchored its findings of labor control on the stipulations of these subsequent contracts.
In contrast, the present case is remarkable for the absence of evidence of any change in the nature of the petitioners employment with Manulife. As previously stated above and in our assailed Resolution, the petitioner had always been governed by the Agreement from the start until the end of his relationship with Manulife. His agency status never changed except to the extent of being a lead agent. Thus, the cited cases where changes in company-agent relationship expressly changed and where the subsequent contracts were the ones passed upon by the Court cannot be totally relied upon as authoritative.
We cannot give credit as well to the petitioners claim of employment based on the affidavits executed by other Manulife agents describing their duties, because these same affidavits only affirm their status as independent agents, not as employees. To quote these various claims:
1.a. I have no fixed wages or salary since my services are compensated by way of commissions based on the computed premiums paid in full on the policies obtained thereat;
1.b. I have no fixed working hours and employ my own method in soliciting insurance at a time and place I see fit;
1.c. I have my own assistant and messenger who handle my daily work load;
1.d. I use my own facilities, tools, materials and supplies in carrying out my business of selling insurance;
x x x x
6. I have my own staff that handles day to day operations of my office;
7. My staff are my own employees and received salaries from me;
x x x x
9. My commission and incentives are all reported to the Bureau of Internal Revenue (BIR) as income by a self-employed individual or professional with a ten (10) percent creditable withholding tax. I also remit monthly for professionals.
The petitioner cannot also rely on the letter written by respondent Renato Vergel de Dios to prove that Manulife exercised control over him. As we already explained in the assailed Resolution:
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 operations with Manulifes re-directed goal of being a big league player. The method is to expand coverage through the use of more agents. This requirement for the recruitment of more agents is not a means-and-method control as it relates, more than anything else, and is directly relevant, to Manulifes objective of expanded business operations through the use of a bigger sales force whose members are all on a principal-agent relationship. An important point to note here is that Tongko was not supervising regular full-time employees of Manulife engaged in the running of the insurance business; Tongko was effectively guiding his corps of sales agents, who are bound to Manulife through the same agreement that he had with manulife, all the while sharing in these agents commissions through his overrides.
Lastly, in assailing the Agreement between him and Manulife, the petitioner cites Paguio v. National Labor Relations Commission on the claim that the agreement that the parties signed did not conclusively indicate the legal relationship between them.
The evidentiary situation in the present case, however, shows that despite the petitioners insistence that the Agreement was no longer binding between him and Manulife, no evidence was ever adduced to show that their relationship changed so that Manulife at some point controlled the means and method of the petitioners work. In fact, his evidence only further supports the conclusion that he remained an independent insurance agent a status he admits, subject only to the qualification that he is at the same time an employee. Thus, we can only conclude that the Agreement governed his relations with Manulife.
Additionally, it is not lost on us that Paguio is a ruling based on a different factual setting; it involves a publishing firm and an account executive, whose repeated engagement was considered as an indication of employment. Our ruling in the present case is specific to the insurance industry, where the law permits an insurance company to exercise control over its agents within the limits prescribed by law, and to engage independent agents for several transactions and within an unlimited period of time without the relationship amounting to employment. In light of these realities, the petitioners arguments on his last argument must also fail.
The dissent also erroneously cites eight other cases Social Security System v. Court of Appeals, Cosmopolitan Funeral Homes, Inc. v. Maalat, Algon Engineering Construction Corporation v. National Labor Relations Commission, Equitable Banking Corporation v. National Labor Relations Commission, Lazaro v. Social Security Commission, Dealco Farms, Inc. v. National Labor Relations Commission, South Davao Development Company, Inc. v. Gamo, and Abante, Jr. v. Lamadrid Bearing & Parts Corporation. The dissent cited these cases to support its allegation that labor laws and jurisprudence should be applied in cases, to the exclusion of other laws such as the Civil Code or the Insurance Code, even when the latter are also applicable.
In Social Security System, Cosmopolitan Funeral Homes, Dealco Farms, and South Davao Development, the issue that repeats itself is whether complainants were employees or independent contractors; the legal relationships involved are both labor law concepts and make no reference to the Civil Code (or even the Insurance Code). The provisions cited in the Dissent Articles 1458-1637 of the Civil Code and Articles 1713-1720 of the Civil Code  do not even appear in the decisions cited.
In Algon, the issue was whether the lease contract should dictate the legal relationship between the parties, when there was proof of an employer-employee relationship. In the cited case, the lease provisions on termination were thus considered irrelevant because of a substantial evidence of an employment relationship. The cited case lacks the complexity of the present case; Civil Code provisions on lease do not prescribe that lessees exercise control over their lessors in the way that the Insurance Code and the Civil provide that insurance companies and principals exercised control over their agents.
The issue in Equitable, on the other hand, is whether a lawyer-client relationship or an employment relationship governs the legal relation between parties. Again, this case is inapplicable as it does not illustrate the predominance of labor laws and jurisprudence over other laws, in general, and the Insurance Code and Civil Code, in particular. It merely weighed the evidence in favor of an employment relationship over that of a lawyer-client relationship. Similarly in Lazaro, the Court found ample proof of control determinative of an employer-employee relationship. Both cases are not applicable to the present case, which is attended by totally different factual considerations as the petitioner had not offered any evidence of the companys control in the means and manner of the performance of his work.
On the other hand, we find it strange that the dissent cites Abante as a precedent, since the Court, in this case, held that an employee-employer relationship is notably absent in this case as the complainant was a sales agent. This case better supports the majoritys position that a sales agent, who fails to show control in the concept of labor law, cannot be considered an employee, even if the company exercised control in the concept of a sales agent.
It bears stressing that our ruling in this case is not about which law has primacy over the other, but that we should be able to reconcile these laws. We are merely saying that where the law makes it mandatory for a company to exercise control over its agents, the complainant in an illegal dismissal case cannot rely on these legally prescribed control devices as indicators of an employer-employee relationship. As shown in our discussion, our consideration of the Insurance Code and Civil Code provisions does not negate the application of labor laws and jurisprudence; ultimately, we dismissed the petition because of its failure to comply with the control test.
WHEREFORE, premises considered, we hereby DENY the Motion for Reconsideration WITH FINALITY for lack of merit. No further pleadings shall be entertained. Let entry of judgment proceed in due course.
ARTURO D. BRION
RENATO C. CORONA
ANTONIO T. CARPIO
PRESBITERO J. VELASCO, JR.
I join the dissent of Justice Velasco
TERESITA J. LEONARDO-DE CASTRO
I join the dissent of Justice Velasco
LUCAS P. BERSAMIN
ROBERTO A. ABAD
I maintain my original vote, hence, I dissent
CONCHITA CARPIO MORALES
I join J.Velascos dissent
ANTONIO EDUARDO B. NACHURA
DIOSDADO M. PERALTA
MARTIN S. VILLARAMA, JR.
MARIA LOURDES P. A. SERENO
RENATO C. CORONA
 The Dissent considered the referral of the motion for reconsideration to the En Banc as an APPEAL from the Second Division to the En Banc (page 11 of the Dissent). Attention must be called to this matter for the use of the word APPEAL might give the impression that there is an appeal remedy from the decision of a division to the Court En Banc. The Court En Banc is not, as repeatedly held by the Supreme Court, an appellate court of any of its divisions.
 Motion for Reconsideration dated
 Sections 300, 301 and 306 of the Insurance Code.
 Article 1868 of the Civil Code.
 Insular Life Assurance Co., Ltd. v. National Labor Relations Commission, G.R. No. 84484, November 15, 1989, 179 SCRA 459, 465.
 Rollo, pp. 977-978; Motion for
Petitioner asserts that:
Aside from soliciting insurance for Manulife, petitioner was required to submit to the Company all completed applications for insurance and to deliver policies, receive, collect and remit premiums to respondent Manulife. Petitioner was required to use only sales materials and illustrations that were approved by Manulife. He was even required to provide after-sales services, including the forwarding of all written complaints to Manulifes Head Office. Petitioner as also obliged to turn over to Manulife any and all sums of money collected by him. He was further tasked to interview potential recruits both for his direct unit and units under the Metro North Region of Manulife. However, the appointment of these recruits is subject to the approval of Manulife. Likewise, he coordinated planning Key Result Areas for all the subordinate managers and distribute to subordinate managers and agents Manulife memos, copies of the Official Receipt, Daily Exception Reports, Overdue Notice Reports, Policy Contracts, Returned Check Notices, and Agents Statement of Accounts and post on the bulletin board the Daily Production Report, Back-ended Cases Report and Daily Collection Reports. To reiterate, petitioner was tasked to supervise agents and managers assigned to his unit, the Metro North Region. It was Manulife who exercised the power to assign and remove agents under his supervision.
 Rollo, p. 966.
 The Decision cites the Affidavits of other agents, wherein they described their duties and conditions of employment, all of which support the finding that they are independent agents and not employees of Manulife.
 Rollo, p. 970. The petitioner admits in this motion that he was paid overriding commissions earned by agents under him.
 Dissent of Justice Presbitero J. Velasco, Jr., p. 12.
 Marbury v.
 350 Phil. 918 (1998).
 Motion for Reconsideration, dated December 3, 2008, quoting from the Affidavit of John Chua (Regional Sales Manager) dated April 28, 2003, Affidavit of Amanda Tolentino (Branch Manager) dated April 29, 2003, and Affidavit of Lourdes Samson (Unit Manager) dated April 28, 2003; rollo, p. 803.
 Tongko v. The Manufacturers Life Insurance
Co. (Phils.), Inc. and Renato A. Vergel de Dios, G.R. No. 167622, Resolution dated
 451 Phil. 243 (2003).
 240 Phil. 364 (1987).
 345 Phil. 408 (1997).
 339 Phil. 541 (1997).
 479 Phil. 384 (2004).
 Dissent of Justice Velasco, p. 14.
 Supra note 30 at 379-380. The Court specifically noted that: While it is true that he [petitioner therein] occasionally reported the Manila office to attend conferences on marketing strategies, it was intended not to control the manner and means to be used in reaching the desired end, but to serve as a guide and to upgrade his skills for a more efficient marketing performance.