.SONZA VS. ABS-CBN BROADCASTING CORP.

Carpio, J:
Case Overview: The case is a precedent regarding the difference between an
employee and an individual contractor. The SC ruled and cited US jurisprudence to
support the decision.
FACTS:
May 1994, Jose Y. Sonza, through its agent Mel & Jay Management and Development
Corporation (MJMDC), signed an agreement with ABS-CBN, to provide Sonzas
services exclusively to ABS-CBN as talent (co-host) for radio and television. ABSCBN agreed to pay Sonzas services a monthly talent fee of P310,000 for the first
year and P317,000 for the second and third year of the Agreement. However, during
some time, ABS-CBN decided not to broadcast some of the shows. This prompted
Sonza to write a notice of recession to ABS-CBNs President, Eugenio Lopez III of the
Agreement. Sonza, waived his right to the remaining amount stated in paragraph 7
of the agreement, however, reserving the right to seek recovery of the other
benefits under the Agreement.
Sonza filed a complaint against ABS-CBN before DOLE, NCR QC, alleging that ABSCBN did not pay his salaries, separation pay, service incentive leave pay and other
dues under the Employees Stock Option Plan (ESOP). ABS-CBN filed a motion to
dismiss averring that there was no employer-employee relationship between the
parties.
Meanwhile, ABS-CBN continued to remit Sonzas monthly talent fees in the bank and
even opened an account where Sonzas fees and other payments were deposited.
Labor Arbiters Decision: After the case was submitted for resolution, the Labor
Arbiter dismissed the complaint for lack of jurisdiction. It reasoned that a talent
cannot be considered as an employee by reason of the peculiar circumstances
surrounding the engagement of his services. Unlike an ordinary employee, he was
free to perform the services he undertook to render in accordance with his own style
and whatever benefits the complainant enjoyed arose from specific agreement by
the parties and not by reason of employer-employee relationship.
NLRC:Sonza appealed to NLRC. NLRC, however, affirmed the decision of the Labor
Arbiter. Thus, the provisions of the Civil Code apply, not the Labor Code. It is evident
that the notice of rescission made by Sonza that there is contractual relations
between the parties. Therefore, an
action of breach of contractual obligation is intrinsically a civil dispute and thus
under the jurisdiction of the regular courts.
CA: CA affirmed the NLRC decision. CA ruled that the existence of an employeremployee relationship between the parties is a factual question that is within the
jurisdiction of the NLRC to resolve.A special civil action for certiorari extends only to
issues of want or excess of jurisdiction of the NLRC.Such action cannot cover an
inquiry into the correctness of the evaluation of the evidence which served as basis

of the NLRCs conclusion. The Court of Appeals added that it could not re-examine
the parties evidence and substitute the factual findings of the NLRC with its own.
ISSUE: WON there was AN EMPLOYER-EMPLOYEE RELATIONSHIP EXISTED BETWEEN
SONZA AND ABS-CBN.
SC Ruling: No. Petition denied. Case law has consistently held that the elements of
an employeremployee relationship are: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal; and (d) the
employers power to control the employee on the means and methods by which the
work is accomplished.The last element, the so-called control test, is the most
important element.
SELECTION AND ENGAGEMENT OF EMPLOYEE
The specific selection and hiring of SONZA, because of his unique skills, talent and
celebrity status not possessed by ordinary employees, is a circumstance indicative,
but not conclusive, of an independent contractual relationship. If SONZA did not
possess such unique skills, talent and celebrity status, ABS-CBN would not have
entered into the Agreement with SONZA but would have hired him through its
personnel department just like any other employee.
PAYMENT OF WAGES
All the talent fees and benefits paid to SONZA were the result of negotiations that
led to the Agreement. If SONZA were ABS-CBNs employee, there would be no need
for the parties to stipulate on benefits such as SSS, Medicare, x xx and 13th month
pay which the law automatically incorporates into every employer-employee
contract. Whatever benefits SONZA enjoyed arose from contract and not because of
an employer-employee relationship.
POWER OF DISMISSAL
For violation of any provision of the Agreement, either party may terminate their
relationship. SONZA failed to show that ABS-CBN could terminate his services on
grounds other than breach of contract, such as retrenchment to prevent losses as
provided under labor laws. The Labor Arbiter stated that if it were true that
complainant was really an employee, he would merely resign, instead. SONZA did
actually resign from ABS-CBN but he also, as president of MJMDC, rescinded the
Agreement.
During the life of the Agreement, ABS-CBN agreed to pay SONZAs talent fees as
long as AGENT and Jay Sonza shall faithfully and completely perform each condition
of this Agreement.Even if it suffered severe business losses, ABS-CBN could not
retrench SONZA because ABS-CBN remained obligated to pay SONZAs talent fees
during the life of the Agreement. This circumstance indicates an independent
contractual relationship between SONZA and ABS-CBN.
POWER OF CONTROL
Citing US case, Alberty-Vlez v. Corporacin De Puerto Rico Para La DifusinPblica
(WIPR) that a television program host is an independent contractor. Applying the
control test to the present case, SONZA is not an employee but an independent

contractor. The control test is the most important test our courts apply in
distinguishing an employee from an independent contractor.This test is based on
the extent of control the hirer exercises over a worker. The greater the supervision
and control the hirer exercises, the more likely the worker is deemed an employee.
The converse holds true as well the less control the hirer exercises, the more likely
the worker is considered an independent contractor.
ABS-CBN was not involved in the actual performance that produced the finished
product of SONZAs work. ABS-CBN did not instruct SONZA how to perform his job.
ABS-CBN merely reserved the right to modify the program format and airtime
schedule for more effective programming.ABS-CBNs sole concern was the quality
of the shows and their standing in the ratings. ABS-CBNs right not to broadcast
SONZAs show, burdened as it was by the obligation to continue paying in full
SONZAs talent fees, did not amount to control over the means and methods of the
performance of SONZAs work. ABS-CBN could not terminate or discipline SONZA
even if the means and methods of performance of his work - how he delivered his
lines and appeared on television - did not meet ABS-CBNs approval. This proves
that ABS-CBNs control was limited only to the result of SONZAs work, whether to
broadcast the final product or not. In either case, ABS-CBN must still pay SONZAs
talent fees in full until the expiry of the Agreement. Clearly, ABS-CBN did not
exercise control over the means and methods of performance of SONZAs work.
In Vaughan, et al. v. Warner, et al., the US Circuit Court of Appeals ruled that
vaudeville performers were independent contractors although the management
reserved the right to delete objectionable features in their shows. Since the
management did not have control over the manner of performance of the skills of
the artists, it could only control the result of the work by deleting objectionable
features. The Vaughan case also held that one could still be an independent
contractor although the hirer reserved certain supervision to insure the attainment
of the desired result. The hirer, however, must not deprive the one hired from
performing his services according to his own initiative.
No doubt, ABS-CBN supplied the equipment, crew and airtime needed to broadcast
the Mel & Jay programs. However, the equipment, crew and airtime are not the
tools and instrumentalities SONZA needed to perform his job. What SONZA
principally needed were his talent or skills and the costumes necessary for his
appearance.
Being an exclusive talent does not by itself mean that SONZA is an employee of
ABS-CBN. Even an independent contractor can validly provide his services
exclusively to the hiring party. In the broadcast industry, exclusivity is not
necessarily the same as control.The hiring of exclusive talents is a widespread and
accepted practice in the entertainment industry.This practice is not designed to
control the means and methods of work of the talent, but simply to protect the
investment of the broadcast station. The broadcast station normally spends
substantial amounts of money, time and effort in building up its talents as well as
the programs they appear in and thus expects that said talents remain exclusive
with the station for a commensurate period of time.Normally, a much higher fee is
paid to talents who agree to work exclusively for a particular radio or television
station. In short, the huge talent fees partially compensates for exclusivity, as in
the present case.

The findings of the Labor Arbiter and the Court of Appeals that SONZAs claims are
all based on the May 1994 Agreement and stock option plan, and not on the Labor
Code. Clearly, the present case does not call for an application of the Labor Code
provisions but an interpretation and implementation of the May 1994 Agreement. In
effect, SONZAs cause of action is for breach of contract which is intrinsically a civil
dispute cognizable by the regular courts.

NELSON V. BEGINO, GENER DEL VALLE, MONINA A VILA-LLORIN AND MA. CRISTINA
SUMAYAO, Petitioners, vs. ABS-CBN CORPORATION (FORMERLY, ABS-CBN
BROADCASTING CORPORATION) AND AMALIA VILLAFUERTE, Respondents.
G.R. No. 199166, 20 April 2015.
PEREZ, J.:

Respondent ABS-CBN, through Respondent Villafuerte, engaged the services of

Petitioners as cameramen, editors or reporters for TV Broadcasting. Petitioners
signed regularly renewed Talent Contracts (3 months - 1 year) and Project
Assignment Forms which detailed the duration, budget and daily technical
requirements of a particular project. Petitioners were tasked with coverage of news
items for subsequent daily airings in Respondents TV Patrol Bicol Program.
The Talent Contract has an exclusivity clause and provides that nothing therein shall
be deemed or construed to establish an employer-employee relationship between
the parties.
Petitioners filed against Respondents a complaint for regularization before the
NLRC's Arbitration branch.
In support of their complaint, Petitioners claimed that they worked under the direct
control of Respondent Villafuerte - they were mandated to wear company IDs, they
were provided the necessary equipment, they were informed about the news to be
covered the following day, and they were bound by the companys policy on
attendance and punctuality.
Respondents countered that, pursuant to their Talent Contracts and Project
Assignment Forms, Petitioners were hired as talents to act as reporters, editors
and/or cameramen. Respondents further claimed they never imposed control as to
how Petitioners discharged their duties. At most, they were briefed regarding the
general requirements of the project to be executed.
While the case was pending, Petitioners contracts were terminated, prompting the
latter to file a second complaint for illegal dismissal.
The Arbitration Branch ruled that Petitioners were regular employees, and ordered
Respondents to reinstate the Petitioners.
The NLRC affirmed the ruling, but the CA overturned the decision.

ISSUE: W/N Petitioners are regular employees of Respondents.

RULING: Yes.

Of the criteria to determine whether there is an employer-employee relationship,

the so-called "control test" is generally regarded as the most crucial and
determinative indicator of the said relationship.
Under this test, an employer-employee relationship is said to exist where the person
for whom the services are performed reserves the right to control not only the end
result but also the manner and means utilized to achieve the same.
Notwithstanding the nomenclature of their Talent Contracts and/or Project
Assignment Forms and the terms and condition embodied therein, petitioners are
regular employees of ABS-CBN.
As cameramen, editors and reporters, it appears that Petitioners were subject to the
control and supervision of Respondents which provided them with the equipment
essential for the discharge of their functions. The exclusivity clause and prohibitions
in their Talent Contract were likewise indicative of Respondents' control over them,
however obliquely worded.
Also,the presumption is that when the work done is an integral part of the regular
business of the employer and when the worker does not furnish an independent
business or professional service, such work is a regular employment of such
employee and not an independent contractor.

NATIONAL SERVICE CORPORATION (NASECO) AND ARTURO L. PEREZ, petitioners,

vs. THE HONORABLE THIRD DIVISION, NATIONAL LABOR RELATIONS COMMISSION,
MINISTRY OF LABOR AND EMPLOYMENT, MANILA AND EUGENIA C. CREDO,
respondents.G.R. No. 70295November 29, 1988EUGENIA C. CREDO, petitioner,
vs.NATIONAL LABOR RELATIONS COMMISSION, NATIONAL SERVICES CORPORATION
AND ARTURO L. PEREZ, respondents.
FACTS:
Eugenia Credo was an employee of the National Service Corporation (NASECO). She
wascharged with an administrative case for non-compliance with a company memo
issued by hersuperior and for her disrespect to the latter in the presence of other
co-workers. NASECOsCommittee on Personnel Affairs recommended her
termination from work with forfeiture of benefits and was later given a notice of
termination. Hence Credo filed a complaint for illegaldismissal. The Labor Arbiter
dismissed Credos complaint and directed NASECO to pay herseparation pay. Both
appealed to the NLRC to which rendered a decision ordering NASECO toreinstate
Credo and pay her back wages but not granting Credos claim for attorneys fee,
moraland exemplary damages. Hence, this appeal. NASECO contends that, as a
governmentcorporation by virtue of its being a subsidiary of the National
Investment and DevelopmentCorporation , a subsidiary wholly owned by the
Philippine National Bank, which in turn is agovernment owned corporation), the
terms and conditions of employment of its employees aregoverned by the Civil
Service Law, rules and regulations.
ISSUE:
Does the Labor Code Apply to an illegal dismissal case between a government
ownedand/or controlled corporation and its employee?
HELD:
Yes, the Labor Code applies to employees of government owned and/or
controlledcorporation, provided that such corporation is without original charter
such as NASECO in thecase at bar. Therefore, the provisions of the Labor Code
applies in this case and the NLRC hasthe jurisdiction to decide over the case. Unlike
in the case of NCH vs. NLRC, which wasgoverned by the 1973 Constitution, it is the
1987 constitution that governs the instant case. The1987 Constitution provides that
The civil service embraces all branches, subdivisions,instrumentalities, and
agencies of the Government, including government-owned or controlled
corporations with original charter, hence, by clear implication, the Civil Service
does notinclude government-owned or controlled corporations which are organized
as subsidiaries ofgovernment-owned or controlled corporations under the general
corporation law.

G.R. No. L-64313January 17, 1985NATIONAL HOUSING CORPORATION, petitioner,

vs.BENJAMIN JUCO AND THE NATIONAL LABOR RELATIONS COMMISSION,
respondents.
FACTS:
Benjamin Juco (Juco) was a project engineer of the National Housing
Corporation(NHC). Juco was dismissed from work by NHC for having been implicated
on a crime oftheft and malversation of public funds involving the iron scraps owned
by thecorporation and appropriating the proceeds to his own benefits. Juco filed a
complaintfor illegal dismissal against NHC with the Department of Labor. The Labor
Arbiter,however, dismissed the case for lack of jurisdiction. On appeal, the NLRC set
aside thedecision of the Labor Arbiter and remanding it back to the latter for the
settlement of theillegal dismissal case. Its contention was that the case of
Fernandez vs. Cedro whichruled that NHC is a government owned and controlled
corporation does not preclude itfrom taking a contrary stand if by doing so the ends
of justice could be better served.Hence, this appeal.
ISSUE:
Can the Labor Code be applied to the illegal dismissal of employees of government
owned and controlled corporations such as the National Housing Corporation?
RULIUNG:
No, the Code does not apply to employees of government owned and
controlledcorporation like the National Housing Corporation. What governs them are
laws andregulations governing civil service. Section 1, Article XII-B of the
Constitution providesthat the Civil Service embraces every branch, agency,
subdivision, and instrumentalityof the Government, including every governmentowned or controlled corporation, andas ruled on previous cases NHC is deemed a
government owned and controlledcorporation. The Art. 227 of the Labor Code itself
provides that the terms andconditions of employment of all government
employees, including employees ofgovernment-owned and controlled corporations
shall be governed by the Civil ServiceLaw, rules and regulations. Clearly, The NHC
comes under the jurisdiction of the CivilService Commission, not the Ministry of
Labor and Employment nor its subordinate. Wherefore, the petition of NHC is
granted, the decision of the NLRC is set aside and thedecision of the Labor Arbiter
dismissing the case for lack of jurisdiction is reinstated.