Television and Production Exponents, Inc. v.
Servana January 28, TAPE averred that respondent was an independent contractor
2008 G.R. No. 167648 542 SCRA 578
Facts: Television and Production Exponents (TAPE) is a domestic
corporation engaged in the production of television programs, such
as the long-running variety program, “Eat Bulaga”. Servana had
served as a security guard for TAPE. Respondent filed a complaint
for illegal dismissal and non-payment of benefits against TAPE. He
alleged that he was first connected with Agro-Commercial Security
Agency but was later absorbed by TAPE as a regular company guard.
On March 2, 2000, respondent received a memorandum informing
him of his impending dismissal on account of TAPE’s decision to
contract the services of a professional security agency. At the time
of his termination, respondent was receiving a monthly salary
P6,000. Servana contended that his dismissal was undertaken
without due process and violation of existing labor laws, aggravated
by non-payment of separation pay. He insisted that he was a regular
employee having been engaged to perform an activity that is
necessary and desirable to TAPE’s business for 13 years.
TAPE contended that there is no employer-employee relationship
between the parties. TAPE engaged respondent’s services, as part of
the support group to provide security service and it was agreed that
complainant would render his services until such time that
respondent company shall have engaged the services of a
professional security agency. TAPE started negotiations for the
engagement of a professional security agency , the Sun Shield
Security Agency.
falling under the talent group category and was working under a
special arrangement which is recognized in the industry.
Issue: WON the Servana is an independent contractor.
Ruling:
TAPE failed to establish that respondent is an independent
contractor.
Jurisprudence is abound with cases that recite the factors to be
considered in determining the existence of employer-employee
relationship, namely:
a. The selection and engagement of the employee
Respondent was first connected with Agro-Commercial Security
Agency, which assigned him to assist TAPE in its live productions.
When the security agency’s contract with RPN-9 expired,
respondent was absorbed by TAPE , or in the latter’s language,
“retained as talent”. Clearly, respondent was hired by TAPE.
Respondent presented his identification card. It has been in held
that in business establishment, an identification card is usually
provided not just as a security measure but to mainly identify the
holder thereof as a bona fide employee of the firm who issues it.
b. The payment of wages
Respondent claims to have been receiving P5,444.44 as his monthly
salary while TAPE prefers to designate such amount as talent
fees. Wages, as defined in the Labor Code, are remuneration or
earnings, however designated, capable of being expressed in terms
of money, whether fixed or ascertained on a time, task, piece or
commission basis, or other method of calculating the same, which is
payable by an employer to an employee under a written or
unwritten contract of employment for work done or to be done, or
for service rendered or to be rendered.
c. The power of dismissal
The Memorandum informing respondent of the discontinuance of
his service proves that TAPE had the power to dismiss respondent.
d. The employer’s power to control the employee with respect
to the means and method by which the work is to be
accomplished.
Control is manifested in the bundy cards submitted by respondent
in evidence. He was required to report daily and observes definite
work hours.
ABS-CBN BROADCASTING CORPORATION vs. MARLYN NAZARENO,
MERLOU GERZON, JENNIFER DEIPARINE, and JOSEPHINE LERASAN
(G.R. No. 164156, September 26, 2006)
Facts: Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is
engaged in the broadcasting business and owns a network of
television and radio stations, whose operations revolve around the
broadcast, transmission, and relay of telecommunication signals.
The respondents Nazareno, Gerzon, Deiparine, and Lerasan as
production assistants (PAs) on different dates were employed by
the Petitioner, assigned at the news and public affairs, for various
radio programs in the Cebu Broadcasting Station, with a monthly
compensation of P4,000. They were issued ABS-CBN employees’
identification cards and were required to work for a minimum of
eight hours a day, including Sundays and holidays. They were under
the control and supervision of Assistant Station Manager Dante J.
Luzon, and News Manager Leo Lastimosa.
On December 19, 1996, petitioner and the ABS-CBN Rank-and-File
Employees executed a Collective Bargaining Agreement (CBA) to be
effective during the period from December 11, 1996 to December
11, 1999. However, since petitioner refused to recognize PAs as part
of the bargaining unit, respondents were not included to the CBA.
On October 12, 2000, respondents filed a Complaint for Recognition
of Regular Employment Status, Underpayment of Overtime Pay,
Holiday Pay, Premium Pay, Service Incentive Pay, Sick Leave Pay,
and 13th Month Pay with Damages against the petitioner before the
NLRC. The Labor Arbiter directed the parties to submit their
respective position paper however they failed to file their position
papers within the reglementary period, Labor Arbiter Jose G.
Gutierrez dismissed the complaint without prejudice for lack of
interest to pursue the case. Respondents received a copy of the
Order on May 16, 2001. Instead of re-filing their complaint with the
NLRC within 10 days from May 16, 2001, they filed, on June 11,
2001, an Earnest Motion to Refile Complaint with Motion to Admit
Position Paper and Motion to Submit Case for Resolution. The Labor
Arbiter granted this motion in an Order dated June 18, 2001, and
forthwith admitted the position paper of the complainants.
On July 30, 2001, the Labor Arbiter rendered judgment in favor of
the respondents, and declared that they were regular employees of
petitioner; as such, they were awarded monetary benefits. On
appeal to the NLRC, it ruled that respondents were entitled to the
benefits under the CBA because they were regular employees who
contributed to the profits of petitioner through their
labor. Petitioner thus filed a petition for certiorari under Rule 65 of
the Rules of Court before the CA, raising both procedural and
substantive issues. CA Affirmed the ruling of the NLRC.
ISSUE: Whether the appellate court committed palpable and serious
error of law when it affirmed the rulings of the NLRC, and
entertained respondents’ appeal from the decision of the Labor
Arbiter despite the admitted lapse of the reglementary period
within which to perfect the appeal.
HELD: We agree with petitioner’s contention that the perfection of
an appeal within the statutory or reglementary period is not only
mandatory, but also jurisdictional; failure to do so renders the
assailed decision final and executory and deprives the appellate
court or body of the legal authority to alter the final judgment,
much less entertain the appeal. However, this Court has time and
again ruled that in exceptional cases, a belated appeal may be given
due course if greater injustice may occur if an appeal is not given
due course than if the reglementary period to appeal were strictly
followed. The Court resorted to this extraordinary measure even at
the expense of sacrificing order and efficiency if only to serve the
greater principles of substantial justice and equity.
In the case at bar, the NLRC did not commit a grave abuse of its
discretion in giving Article 223 of the Labor Code a liberal
application to prevent the miscarriage of justice. Technicality should
not be allowed to stand in the way of equitably and completely
resolving the rights and obligations of the parties. We have held in a
catena of cases that technical rules are not binding in labor cases
and are not to be applied strictly if the result would be detrimental
to the workingman.
FARLEY FULACHE, MANOLO JABONERO, DAVID CASTILLO, JEFFREY
LAGUNZAD, MAGDALENA MALIG-ON BIGNO, FRANCISCO CABAS,
JR., HARVEY PONCE and ALAN C. ALMENDRAS, Petitioners, v. ABS-
CBN BROADCASTING CORPORATION, Respondent.
BRION,J.:
FACTS:
The petitioners alleged that on December 17, 1999, ABS-CBN and
the ABS-CBN Rank-and-File Employees Union executed a collective
bargaining agreement (CBA) effective December 11, 1999 to
December 10, 2002. When they obtained copies of the agreement,
they learned that they had been excluded from its coverage as ABS-
CBN considered them temporary and not regular employees, in
violation of the Labor Code. They claimed they had already
rendered more than a year of service in the company and,
therefore, should have been recognized as regular employees
entitled to security of tenure and to the privileges and benefits
enjoyed by regular employees. They asked that they be paid
overtime, night shift differential, holiday, rest day and service
incentive leave pay. They also prayed for an award of moral
damages and attorneys fees.
Labor Arbiter Rendoque rendered his decisionholding that the
petitioners were regular employees of ABS-CBN, not independent
contractors, and are entitled to the benefits and privileges of
regular employees.
While the appeal before the NLRC was pending, ABS-CBN dismissed
Fulache, Jabonero, Castillo, Lagunzad and Atinen (all drivers) for
their refusal to sign up contracts of employment with service
contractor Able Services. The four drivers and Atinen responded by
filing a complaint for illegal dismissal (illegal dismissal case). In
defense, ABS-CBN alleged that even before the labor arbiter
rendered his decision of January 17, 2002 in the regularization case,
it had already undertaken a comprehensive review of its existing
organizational structure to address its operational requirements.
In her April 21, 2003 decision in the illegal dismissal case,Labor
Arbiter Rendoque upheld the validity of ABS-CBN's contracting out
of certain work or services in its operations. The labor arbiter found
that petitioners Fulache, Jabonero, Castillo, Lagunzad and Atinen
had been dismissed due to redundancy, an authorized cause under
the law.
The NLRC reversed the labor arbiters ruling in the illegal dismissal
case; it found that petitioners Fulache, Jabonero, Castillo, Lagunzad
and Atinen had been illegally dismissed and awarded them
backwages and separation pay in lieu of reinstatement. The
petitioners moved for reconsideration, contending that Fulache,
Jabonero, Castillo and Lagunzad are entitled to reinstatement and
full backwages, salary increases and other CBA benefits as well as
13th month pay, cash conversion of sick and vacation leaves,
medical and dental allowances, educational benefits and service
awards.
ABS-CBN likewise moved for the reconsideration of the decision,
reiterating that Fulache, Jabonero, Castillo and Lagunzad were
independent contractors. The NLRC stood by the ruling that the
petitioners were regular employees entitled to the benefits and
privileges of regular employees. On the illegal dismissal case, the
petitioners, while recognized as regular employees, were declared
dismissed due to redundancy.
Petitioners filed a petition for certiorari before the CA, contending
that the NLRC committed grave abuse of discretion in denying them
benefits under the CBA. The CA ruled that the petitioners failed to
prove their claim to CBA benefits since they never raised the issue in
the compulsory arbitration proceedings, and did not appeal the
labor arbiters decision which was silent on their entitlement to CBA
benefits. On the illegal dismissal issue, the CA upheld the NLRC
decision holding that Fulache, Jabonero, Castillo and Lagunzad were
not illegally dismissed as their separation from the service was due
to redundancy.
The petitioners moved for reconsideration, but the CA denied the
motion in a resolution promulgated on July 8, 2008. Hence, the
present petition.
ISSUE:
Whether or not petitioners are entitled to CBA benefits
Whether or petitioners were illegally dismissed
HELD:
LABOR LAW
As regular employees, the petitioners fall within the coverage of the
bargaining unit and are therefore entitled to CBA benefits as a
matter of law and contract
The LA decision which was affirmed by the NLRC and the CA, finding
petitioners to be regular employees and not independent
contractors. This declaration unequivocally settled the petitioners
employment status: they are ABS-CBNs regular employees entitled
to the benefits and privileges of regular employees. These benefits
and privileges arise from entitlements under the law (specifically,
the Labor Code and its related laws), and from their employment
contract as regular ABS-CBN employees, part of which is the CBA if
they fall within the coverage of this agreement.
Under these terms, the petitioners are members of the appropriate
bargaining unit because they are regular rank-and-file employees
and do not belong to any of the excluded categories. Specifically,
nothing in the records shows that they are supervisory or
confidential employees; neither are they casual nor probationary
employees. Most importantly, the labor arbiters decision of January
17, 2002 affirmed all the way up to the CA level ruled against ABS-
CBNs submission that they are independent contractors. Thus, as
regular rank-and-file employees, they fall within CBA coverage
under the CBAs express terms and are entitled to its benefits.
LABOR LAW
The termination of employment of the four drivers occurred under
highly questionable circumstances and with plain and unadulterated
bad faith.
The records show that the regularization case was in fact the root of
the resulting bad faith as this case gave rise and led to the dismissal
case.First, the regularization case was filed leading to the labor
arbiters decision declaring the petitioners, including Fulache,
Jabonero, Castillo and Lagunzad, to be regular employees. ABS-CBN
appealed the decision and maintained its position that the
petitioners were independent contractors.
In the course of this appeal, ABS-CBN took matters into its own
hands and terminated the petitioners services, clearly disregarding
its own appeal then pending with the NLRC. Notably, this appeal
posited that the petitioners were not employees. To justify the
termination of service, the company cited redundancy as its
authorized cause but offered no justificatory supporting evidence. It
merely claimed that it was contracting out the petitioners activities
in the exercise of its management prerogative.
By doing all these, ABS-CBN forgot labor law and its realities.
It forgot that by claiming redundancy as authorized cause for
dismissal, it impliedly admitted that the petitioners were regular
employees whose services, by law, can only be terminated for the
just and authorized causes defined under the Labor Code.
Likewise ABS-CBN forgot that it had an existing CBA with a union,
which agreement must be respected in any move affecting the
security of tenure of affected employees; otherwise, it ran the risk
of committing unfair labor practice both a criminal and an
administrative offense. It similarly forgot that an exercise of
management prerogative can be valid only if it is undertaken in
good faith and with no intent to defeat or circumvent the rights of
its employees under the laws or under valid agreements.
Lastly, it forgot that there was a standing labor arbiters decision
that, while not yet final because of its own pending appeal, cannot
simply be disregarded. By implementing the dismissal action at the
time the labor arbiters ruling was under review, the company
unilaterally negated the effects of the labor arbiters ruling while at
the same time appealing the same ruling to the NLRC. This unilateral
move is a direct affront to the NLRCs authority and an abuse of the
appeal process.
All these go to show that ABS-CBN acted with patent bad faith.
GRANTED
THELMA DUMPIT-MURILLO, petitioner,
vs.
COURT OF APPEALS, ASSOCIATED BROADCASTING
COMPANY, JOSE JAVIER AND EDWARD TAN,respondents.
DECISION
QUISUMBING, J.:
This petition seeks to reverse and set aside both the
Decision1 dated January 30, 2004 of the Court of Appeals in CA-
G.R. SP No. 63125 and its Resolution2 dated June 23, 2004
denying the motion for reconsideration. The Court of Appeals had
overturned the Resolution3 dated August 30, 2000 of the National
Labor Relations Commission (NLRC) ruling that petitioner was
illegally dismissed.
The facts of the case are as follows:
On October 2, 1995, under Talent Contract No. NT95-
1805,4 private respondent Associated Broadcasting Company
(ABC) hired petitioner Thelma Dumpit-Murillo as a newscaster
and co-anchor for Balitang-Balita, an early evening news
program. The contract was for a period of three months. It was
renewed under Talent Contracts Nos. NT95-1915, NT96-3002,
NT98-4984 and NT99-5649.5 In addition, petitioner’s services
were engaged for the program "Live on Five." On September 30,
1999, after four years of repeated renewals, petitioner’s talent
contract expired. Two weeks after the expiration of the last
contract, petitioner sent a letter to Mr. Jose Javier, Vice President
for News and Public Affairs of ABC, informing the latter that she
was still interested in renewing her contract subject to a salary
increase. Thereafter, petitioner stopped reporting for work. On
November 5, 1999, she wrote Mr. Javier another letter,6 which we
quote verbatim:
xxxx
Dear Mr. Javier:
On October 20, 1999, I wrote you a letter in answer to your query
by way of a marginal note "what terms and conditions" in
response to my first letter dated October 13, 1999. To date, or for
more than fifteen (15) days since then, I have not received any
formal written reply. xxx
In view hereof, should I not receive any formal response from you
until Monday, November 8, 1999, I will deem it as a constructive
dismissal of my services.
xxxx
7
A month later, petitioner sent a demand letter to ABC,
demanding: (a) reinstatement to her former position; (b) payment
of unpaid wages for services rendered from September 1 to
October 20, 1999 and full backwages; (c) payment of 13th month
pay, vacation/sick/service incentive leaves and other monetary
benefits due to a regular employee starting March 31, 1996. ABC
replied that a check covering petitioner’s talent fees for
September 16 to October 20, 1999 had been processed and
prepared, but that the other claims of petitioner had no basis in
fact or in law.
On December 20, 1999, petitioner filed a complaint8 against ABC,
Mr. Javier and Mr. Edward Tan, for illegal constructive dismissal,
nonpayment of salaries, overtime pay, premium pay, separation
pay, holiday pay, service incentive leave pay, vacation/sick
leaves and 13th month pay in NLRC-NCR Case No. 30-12-
00985-99. She likewise demanded payment for moral, exemplary
and actual damages, as well as for attorney’s fees.
The parties agreed to submit the case for resolution after
settlement failed during the mandatory conference/conciliation.
On March 29, 2000, the Labor Arbiter dismissed the complaint.9
On appeal, the NLRC reversed the Labor Arbiter in a Resolution
dated August 30, 2000. The NLRC held that an employer-
employee relationship existed between petitioner and ABC; that
the subject talent contract was void; that the petitioner was a
regular employee illegally dismissed; and that she was entitled to
reinstatement and backwages or separation pay, aside from 13th
month pay and service incentive leave pay, moral and exemplary
damages and attorney’s fees. It held as follows:
WHEREFORE, the Decision of the Arbiter dated 29 March 2000
is hereby REVERSED/SET ASIDE and a NEW
ONE promulgated:
1) declaring respondents to have illegally dismissed complainant
from her regular work therein and thus, ordering them to reinstate
her in her former position without loss of seniority right[s] and
other privileges and to pay her full backwages, inclusive of
allowances and other benefits, including 13th month pay based
on her said latest rate of ₱28,000.00/mo. from the date of her
illegal dismissal on 21 October 1999 up to finality hereof, or at
complainant’s option, to pay her separation pay of one (1) month
pay per year of service based on said latest monthly rate,
reckoned from date of hire on 30 September 1995 until finality
hereof;
2) to pay complainant’s accrued SILP [Service Incentive Leave
Pay] of 5 days pay per year and 13th month pay for the years
1999, 1998 and 1997 of ₱19,236.00 and ₱84,000.00, respectively
and her accrued salary from 16 September 1999 to 20 October
1999 of ₱32,760.00 plus legal interest at 12% from date of judicial
demand on 20 December 1999 until finality hereof;
3) to pay complainant moral damages of ₱500,000.00, exemplary
damages of ₱350,000.00 and 10% of the total of the adjudged
monetary awards as attorney’s fees.
Other monetary claims of complainant are dismissed for lack of
merit.
SO ORDERED.10
After its motion for reconsideration was denied, ABC elevated the
case to the Court of Appeals in a petition for certiorari under Rule
65. The petition was first dismissed for failure to attach particular
documents,11 but was reinstated on grounds of the higher interest
of justice.12
Thereafter, the appellate court ruled that the NLRC committed
grave abuse of discretion, and reversed the decision of the
NLRC.13 The appellate court reasoned that petitioner should not
be allowed to renege from the stipulations she had voluntarily and
knowingly executed by invoking the security of tenure under the
Labor Code. According to the appellate court, petitioner was a
fixed-term employee and not a regular employee within the ambit
of Article 28014 of the Labor Code because her job, as anticipated
and agreed upon, was only for a specified time.15
Aggrieved, petitioner now comes to this Court on a petition for
review, raising issues as follows:
I.
THIS HONORABLE COURT CAN REVIEW THE FINDINGS OF
THE HONORABLE COURT OF APPEALS, THE DECISION OF
WHICH IS NOT IN ACCORD WITH LAW OR WITH THE
APPLICABLE DECISIONS OF THE SUPREME COURT[;]
II.
THE PRO-FORMA TALENT CONTRACTS, AS CORRECTLY
FOUND BY THE NLRC – FIRST DIVISION, ARE "ANTI-
REGULARIZATION DEVICES" WHICH MUST BE STRUCK
DOWN FOR REASONS OF PUBLIC POLICY[;]
III.
BY REASON OF THE CONTINUOUS AND SUCCESSIVE
RENEWALS OF THE THREE-MONTH TALENT CONTRACTS,
AN EMPLOYER-EMPLOYEE RELATIONSHIP WAS CREATED
AS PROVIDED FOR UNDER ARTICLE 280 OF THE LABOR
CODE[;]
IV.
BY THE CONSTRUCTIVE DISMISSAL OF HEREIN
PETITIONER, AS A REGULAR EMPLOYEE, THERE WAS A
DENIAL OF PETITIONER’S RIGHT TO DUE PROCESS THUS
ENTITLING HER TO THE MONEY CLAIMS AS STATED IN THE
COMPLAINT[.]16
The issues for our disposition are: (1) whether or not this Court
can review the findings of the Court of Appeals; and (2) whether
or not under Rule 45 of the Rules of Court the Court of Appeals
committed a reversible error in its Decision.
On the first issue, private respondents contend that the issues
raised in the instant petition are mainly factual and that there is no
showing that the said issues have been resolved arbitrarily and
without basis. They add that the findings of the Court of Appeals
are supported by overwhelming wealth of evidence on record as
well as prevailing jurisprudence on the matter.17
Petitioner however contends that this Court can review the
findings of the Court of Appeals, since the appellate court erred in
deciding a question of substance in a way which is not in accord
with law or with applicable decisions of this Court.18
We agree with petitioner. Decisions, final orders or resolutions of
the Court of Appeals in any case — regardless of the nature of
the action or proceeding involved — may be appealed to this
Court through a petition for review. This remedy is a continuation
of the appellate process over the original case,19 and considering
there is no congruence in the findings of the NLRC and the Court
of Appeals regarding the status of employment of petitioner, an
exception to the general rule that this Court is bound by the
findings of facts of the appellate court,20 we can review such
findings.
On the second issue, private respondents contend that the Court
of Appeals did not err when it upheld the validity of the talent
contracts voluntarily entered into by petitioner. It further stated
that prevailing jurisprudence has recognized and sustained the
absence of employer-employee relationship between a talent and
the media entity which engaged the talent’s services on a per
talent contract basis, citing the case of Sonza v. ABS-CBN
Broadcasting Corporation.21
Petitioner avers however that an employer-employee relationship
was created when the private respondents started to merely
renew the contracts repeatedly fifteen times or for four
consecutive years.22
Again, we agree with petitioner. The Court of Appeals committed
reversible error when it held that petitioner was a fixed-term
employee. Petitioner was a regular employee under
contemplation of law. The practice of having fixed-term contracts
in the industry does not automatically make all talent contracts
valid and compliant with labor law. The assertion that a talent
contract exists does not necessarily prevent a regular
employment status.23
Further, the Sonza case is not applicable. In Sonza, the television
station did not instruct Sonza how to perform his job. How Sonza
delivered his lines, appeared on television, and sounded on radio
were outside the television station’s control. Sonza had a free
hand on what to say or discuss in his shows provided he did not
attack the television station or its interests. Clearly, the television
station did not exercise control over the means and methods of
the performance of Sonza’s work.24 In the case at bar, ABC had
control over the performance of petitioner’s work. Noteworthy too,
is the comparatively low ₱28,000 monthly pay of
petitioner25 vis the ₱300,000 a month salary of Sonza,26 that all
the more bolsters the conclusion that petitioner was not in the
same situation as Sonza.
The contract of employment of petitioner with ABC had the
following stipulations:
xxxx
1. SCOPE OF SERVICES – TALENT agrees to devote his/her
talent, time, attention and best efforts in the performance of
his/her duties and responsibilities as Anchor/Program
Host/Newscaster of the Program, in accordance with the direction
of ABC and/or its authorized representatives.
1.1. DUTIES AND RESPONSIBILITIES – TALENT shall:
a. Render his/her services as a newscaster on the Program;
b. Be involved in news-gathering operations by conducting
interviews on- and off-the-air;
c. Participate in live remote coverages when called upon;
d. Be available for any other news assignment, such as writing,
research or camera work;
e. Attend production meetings;
f. On assigned days, be at the studios at least one (1) hour before
the live telecasts;
g. Be present promptly at the studios and/or other place of
assignment at the time designated by ABC;
h. Keep abreast of the news;
i. Give his/her full cooperation to ABC and its duly authorized
representatives in the production and promotion of the Program;
and
j. Perform such other functions as may be assigned to him/her
from time to time.
xxxx
1.3 COMPLIANCE WITH STANDARDS, INSTRUCTIONS AND
OTHER RULES AND REGULATIONS – TALENT agrees that
he/she will promptly and faithfully comply with the requests and
instructions, as well as the program standards, policies, rules and
regulations of ABC, the KBP and the government or any of its
agencies and instrumentalities.27
xxxx
In Manila Water Company, Inc. v. Pena,28 we said that the
elements to determine the existence of an employment
relationship are: (a) the selection and engagement of the
employee, (b) the payment of wages, (c) the power of dismissal,
and (d) the employer’s power to control. The most important
element is the employer’s control of the employee’s conduct, not
only as to the result of the work to be done, but also as to the
means and methods to accomplish it.29
The duties of petitioner as enumerated in her employment
contract indicate that ABC had control over the work of petitioner.
Aside from control, ABC also dictated the work assignments and
payment of petitioner’s wages. ABC also had power to dismiss
her. All these being present, clearly, there existed an employment
relationship between petitioner and ABC.
Concerning regular employment, the law provides for two kinds of
employees, namely: (1) those who are engaged to perform
activities which are usually necessary or desirable in the usual
business or trade of the employer; and (2) those who have
rendered at least one year of service, whether continuous or
broken, with respect to the activity in which they are
employed.30 In other words, regular status arises from either the
nature of work of the employee or the duration of his
employment.31 In Benares v. Pancho,32 we very succinctly said:
…[T]he primary standard for determining regular employment is
the reasonable connection between the particular activity
performed by the employee vis-à-vis the usual trade or business
of the employer. This connection can be determined by
considering the nature of the work performed and its relation to
the scheme of the particular business or trade in its entirety. If the
employee has been performing the job for at least a year, even if
the performance is not continuous and merely intermittent, the
law deems repeated and continuing need for its performance as
sufficient evidence of the necessity if not indispensability of that
activity to the business. Hence, the employment is considered
regular, but only with respect to such activity and while such
activity exists.33
In our view, the requisites for regularity of employment have been
met in the instant case. Gleaned from the description of the scope
of services aforementioned, petitioner’s work was necessary or
desirable in the usual business or trade of the employer which
includes, as a pre-condition for its enfranchisement, its
participation in the government’s news and public information
dissemination. In addition, her work was continuous for a period
of four years. This repeated engagement under contract of hire is
indicative of the necessity and desirability of the petitioner’s work
in private respondent ABC’s business.34
The contention of the appellate court that the contract was
characterized by a valid fixed-period employment is untenable.
For such contract to be valid, it should be shown that the fixed
period was knowingly and voluntarily agreed upon by the parties.
There should have been no force, duress or improper pressure
brought to bear upon the employee; neither should there be any
other circumstance that vitiates the employee’s consent.35 It
should satisfactorily appear that the employer and the employee
dealt with each other on more or less equal terms with no moral
dominance being exercised by the employer over the
employee.36 Moreover, fixed-term employment will not be
considered valid where, from the circumstances, it is apparent
that periods have been imposed to preclude acquisition of tenurial
security by the employee.37
In the case at bar, it does not appear that the employer and
employee dealt with each other on equal terms. Understandably,
the petitioner could not object to the terms of her employment
contract because she did not want to lose the job that she loved
and the workplace that she had grown accustomed to,38 which is
exactly what happened when she finally manifested her intention
to negotiate. Being one of the numerous
newscasters/broadcasters of ABC and desiring to keep her job as
a broadcasting practitioner, petitioner was left with no choice but
to affix her signature of conformity on each renewal of her
contract as already prepared by private respondents; otherwise,
private respondents would have simply refused to renew her
contract. Patently, the petitioner occupied a position of weakness
vis-à-vis the employer. Moreover, private respondents’ practice of
repeatedly extending petitioner’s 3-month contract for four years
is a circumvention of the acquisition of regular status. Hence,
there was no valid fixed-term employment between petitioner and
private respondents.
While this Court has recognized the validity of fixed-term
employment contracts in a number of cases, it has consistently
emphasized that when the circumstances of a case show that the
periods were imposed to block the acquisition of security of
tenure, they should be struck down for being contrary to law,
morals, good customs, public order or public policy.39
As a regular employee, petitioner is entitled to security of tenure
and can be dismissed only for just cause and after due
compliance with procedural due process. Since private
respondents did not observe due process in constructively
dismissing the petitioner, we hold that there was an illegal
dismissal.
WHEREFORE, the challenged Decision dated January 30, 2004
and Resolution dated June 23, 2004 of the Court of Appeals in
CA-G.R. SP No. 63125, which held that the petitioner was a
fixed-term employee, are REVERSED and SET ASIDE. The
NLRC decision is AFFIRMED.
Costs against private respondents.
SO ORDERED.
FUJI TELEVISION NETWORK, INC. VS. ARLENE S.
ESPIRITU
G.R. NO. 204944-45 DECEMBER 3, 2014
J. Leonen
FACTS: Arlene S. Espiritu (Arlene) was engaged by Fuji
Television Network, Inc. (Fuji) as a news
correspondent/producer tasked to report Philippine news to
Fuji through its Manila Bureau field office. The employment
contract was initially for one year, but was successively
renewed on a yearly basis with salary adjustments upon every
renewal.
In January 2009, Arlene was diagnosed with lung cancer. She
informed Fuji about her condition, and the Chief of News
Agency of Fuji, Yoshiki Aoki, informed the former that the
company had a problem with renewing her contract
considering her condition. Arlene insisted she was still fit to
work as certified by her attending physician.
After a series of verbal and written communications, Arlene
and Fuji signed a non-renewal contract. In consideration
thereof, Arlene acknowledged the receipt of the total amount
of her salary from March-May 2009, year-end bonus, mid-year
bonus and separation pay. However, Arlene executed the non-
renewal contract under protest.
Arlene filed a complaint for illegal dismissal with the NCR
Arbitration Branch of the NLRC, alleging that she was forced
to sign the non-renewal contract after Fuji came to know of her
illness. She also alleged that Fuji withheld her salaries and
other benefits when she refused to sign, and that she was left
with no other recourse but to sign the non-renewal contract to
get her salaries.
ISSUES:
1. Was Arlene an independent contractor?
2. Was Arlene a regular employee?
3. Was Arlene illegally dismissed?
4. Did the Court of Appeals correctly awarded
reinstatement, damages and attorney’s fees?
LAWS:
Art. 280. Regular and casual employment. The provisions of
written agreement to the contrary notwithstanding and
regardless of the oral agreement of the parties, an employment
shall be deemed to be regular where the employee has been
engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer,
except where the employment has been fixed for a specific
project or undertaking the completion or termination of which
has been determined at the time of the engagement of the
employee or where the work or services to be performed is
seasonal in nature and the employment is for the duration of
the season.
An employment shall be deemed to be casual if it is not
covered by the preceding paragraph; Provided, That, any
employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity in
which he is employed and his employment shall continue
while such activity exist.
Art. 279. Security of tenure. In cases of regular employment,
the employer shall not terminate the services of an employee
except for a just cause of when authorized by this Title. An
employee who is unjustly dismissed from work shall be
entitled to reinstatement without loss of seniority rights and
other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement.
Thus, on the right to security of tenure, no employee shall be
dismissed, unless there are just or authorized causes and only
after compliance with procedural and substantive due process
is conducted.
Art. 284. Disease as ground for termination. An employer
may terminate the services of an employee who has been
found to be suffering from any disease and whose continued
employment is prohibited by law or is prejudicial to his health
as well as to the health of his co-employees: Provided, That he
is paid separation pay equivalent to at least one (1) month
salary or to one-half (1/2) month salary for every year of
service, whichever is greater, a fraction of at least six (6)
months being considered as one (1) whole year.
Book VI, Rule 1, Section 8 of the Omnibus Rules
Implementing the Labor Code. Disease as a ground for
dismissal. – Where the employee suffers from a disease and his
continued employment is prohibited by law or prejudicial to
his health or to the health of his co-employees, the employer
shall not terminate his employment unless there is a
certification by a competent public health authority that the
disease is of such nature or at such a stage that it cannot be
cured within a period of six (6) months even with proper
medical treatment. If the disease or ailment can be cured
within the period, the employer shall not terminate the
employee but shall ask the employee to take a leave. The
employer shall reinstate such employee to his former position
immediately upon the restoration of his normal health.

CASE HISTORY:
Labor Arbiter dismissed the complaint and held that Arlene
was not a regular employee but an independent contractor.
The NLRC reversed the Labor Arbiter’s decision and ruled
that Arlene was a regular employee since she continuously
rendered services that were necessary and desirable to Fuji’s
business.
The Court of Appeals affirmed that NLRC ruling with
modification that Fuji immediately reinstate Arlene to her
position without loss of seniority rights and that she be paid
her backwages and other emoluments withheld from her. The
Court of Appeals agreed with the NLRC that Arlene was a
regular employee, engaged to perform work that was
necessary or desirable in the business of Fuji, and the
successive renewals of her fixed-term contract resulted in
regular employment. The case of Sonza does not apply in the
case because Arlene was not contracted on account of a special
talent or skill. Arlene was illegally dismissed because Fuji
failed to comply with the requirements of substantive and
procedural due process. Arlene, in fact, signed the non-
renewal contract under protest as she was left without a
choice.
Fuji filed a petition for review on certiorari under Rule 45
before the Supreme Court, alleging that Arlene was hired as
an independent contractor; that Fuji had no control over her
work; that the employment contracts were renewed upon
Arlene’s insistence; that there was no illegal dismissal because
she freely agreed not to renew her fixed-term contract as
evidenced by her email correspondences.
Arlene filed a manifestation stating that the SC could not take
jurisdiction over the case since Fuji failed to authorize Corazon
Acerden, the assigned attorney-in-fact for Fuji, to sign the
verification.
RULING:
1. Arlene was not an independent contractor.
Fuji alleged that Arlene was an independent contractor citing
the Sonza case. She was hired because of her skills. Her salary
was higher than the normal rate. She had the power to bargain
with her employer. Her contract was for a fixed term. It also
stated that Arlene was not forced to sign the non-renewal
agreement, considering that she sent an email with another
version of her non-renewal agreement.
Arlene argued (1) that she was a regular employee because
Fuji had control and supervision over her work; (2) that she
based her work on instructions from Fuji; (3) that the
successive renewal of her contracts for four years indicated
that her work was necessary and desirable; (4) that the
payment of separation pay indicated that she was a regular
employee; (5) that the Sonza case is not applicable because she
was a plain reporter for Fuji; (6) that her illness was not a
ground for her dismissal; (7) that she signed the non-renewal
agreement because she was not in a position to reject the same.
Distinctions among fixed-term employees, independent
contractors, and regular employees
Fixed Term Employment
1) The fixed period of employment was knowingly and
voluntarily agreed upon by the parties without any force,
duress, or improper pressure being brought to bear upon
the employee and absent any other circumstances
vitiating his consent; or
2) It satisfactorily appears that the employer and the
employee dealt with each other on more or less equal
terms with no moral dominance exercised by the former
or the latter.
These indications, which must be read together, make the
Brent doctrine applicable only in a few special cases
wherein the employer and employee are on more or less
in equal footing in entering into the contract. The reason
for this is evident: when a prospective employee, on
account of special skills or market forces, is in a position
to make demands upon the prospective employer, such
prospective employee needs less protection than the
ordinary worker. Lesser limitations on the parties’
freedom of contract are thus required for the protection
of the employee.155 (Citations omitted)
For as long as the guidelines laid down in Brent are
satisfied, this court will recognize the validity of the
fixed-term contract. (GMA Network, Inc. vs. Pabriga)
Independent Contractor
One who carries on a distinct and independent business
and undertakes to perform the job, work, or service on its
own account and under one’s own responsibility
according to one’s own manner and method, free from
the control and direction of the principal in all matters
connected with the performance of the work except as to
the results thereof.
No employer-employee relationship exists between the
independent contractors and their principals.
Art. 106. Contractor or subcontractor. Whenever an
employer enters into a contract with another person for
the performance of the former’s work, the employees of
the contractor and of the latter’s subcontractor, if any,
shall be paid in accordance with the provisions of this
Code.
XXX
The Secretary of Labor and Employment may, by
appropriate regulations, restrict or prohibit the
contracting-out of labor to protect the rights of workers
established under this Code. In so prohibiting or
restricting, he may make appropriate distinctions
between labor-only contracting and job contracting as
well as differentiations within these types of contracting
and determine who among the parties involved shall be
considered the employer for purposes of this Code, to
prevent any violation or circumvention of any provision
of this Code.
There is “labor-only” contracting where the person
supplying workers to an employer does not have
substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others,
and the workers recruited and placed by such person are
performing activities which are directly related to the
principal business of such employer. In such cases, the
person or intermediary shall be considered merely as an
agent of the employer who shall be responsible to the
workers in the same manner and extent as if the latter
were directly employed by him.
Department Order No. 18-A, Series of 2011, Section 3
(c) . . . an arrangement whereby a principal agrees to put
out or farm out with a contractor the performance or
completion of a specific job, work or service within a
definite or predetermined period, regardless of whether
such job, work or service is to be performed or completed
within or outside the premises of the principal.
This department order also states that there is a trilateral
relationship in legitimate job contracting and
subcontracting arrangements among the principal,
contractor, and employees of the contractor. There is no
employer-employee relationship between the contractor
and principal who engages the contractor’s services, but
there is an employer-employee relationship between the
contractor and workers hired to accomplish the work for
the principal.162chanRoblesvirtualLawlibrary

Jurisprudence has recognized another kind of
independent contractor: individuals with unique skills
and talents that set them apart from ordinary employees.
There is no trilateral relationship in this case because the
independent contractor himself or herself performs the
work for the principal. In other words, the relationship is
bilateral.
XXX
There are different kinds of independent contractors:
those engaged in legitimate job contracting and those
who have unique skills and talents that set them apart
from ordinary employees.
Since no employer-employee relationship exists between
independent contractors and their principals, their
contracts are governed by the Civil Code provisions on
contracts and other applicable laws.
Regular Employees
Contracts of employment are different and have a higher
level of regulation because they are impressed with
public interest. Article 13, Section 3 of the 1987
Constitution provides full protection to labor.
Apart from the Constitutional guarantee, Article 1700 of
the Civil Code states that : The relations between capital
and labor are not merely contractual. They are so
impressed with public interest that labor contracts must
yield to the common good. Therefore, such contracts are
subject to the special laws on labor unions, collective
bargaining, strikes and lockouts, closed shop, wages,
working conditions, hours of labor and similar subjects.
In contracts of employment, the employer and the
employee are not on equal footing. Thus, it is subject to
regulatory review by the labor tribunals and courts of
law. The law serves to equalize the unequal. The labor
force is a special class that is constitutionally protected
because of the inequality between capital and
labor.176 This presupposes that the labor force is weak.
The level of protection to labor should vary from case to caese.
When a prospective employee, on account of special skills or
market forces, is in a position to make demands upon the
prospective employer, such prospective employee needs less
protection than the ordinary worker.
The level of protection to labor must be determined on the
basis of the nature of the work, qualifications of the employee,
and other relevant circumstances such as but not limited to
educational attainment and other special qualifications. relationship; whereas those that control or fix the
methodology and bind or restrict the party hired to the use of
such means creates the relationship.
Fuji’s argument that Arlene was an independent contractor
under a fixed-term contract is contradictory. Employees under
fixed-term contracts cannot be independent contractors
In appliacation, Arlene was hired by Fuji as a news producer,
because in fixed-term contracts, an employer-employee
but there was no evidence that she was hired for her unique
relationship exists. The test in this kind of contract is not the
skills that would distinguish her from ordinary employees.
necessity and desirability of the employee’s activities, “but the
Her monthly salary appeared to be a substantial sum. Fuji had
day certain agreed upon by the parties for the commencement
the power to dismiss Arlene, as provided for in her
and termination of the employment relationship.” For regular
employment contract. The contract also indicated that Fuji had
employees, the necessity and desirability of their work in the
control over her work as she was rquired to report for 8 hours
usual course of the employer’s business are the determining
from Monday to Friday. Fuji gave her instructions on what to
factors. On the other hand, independent contractors do not
report and even her mode of transportation in carrying out her
have employer-employee relationships with their principals.
functions was controlled.

To determine the status of employment, the existence of

employer-employee relationship must first be settled with the Therefore, Arlene could not be an independent contractor.
use of the four-fold test, especially the qualifications for the
power to control.

2. Arlene was a regular employee with a fixed-term

contract.
The distinction is in this guise:

Rules that merely serve as guidelines towards the achievement In determining whether an employment should be considered
of a mutually desired result without dictating the means or regular or non-regular, the applicable test is the reasonable
methods to be employed creates no employer-employee connection between the particular activity performed by the
employee in relation to the usual business or trade of the and traveling to the regional office in Thailand.” She also had
employer. The standard, supplied by the law itself, is whether to report for work in Fuji’s office in Manila from Mondays to
the work undertaken is necessary or desirable in the usual Fridays, eight per day. She had no equipment and had to use
business or trade of the employer, a fact that can be assessed the facilities of Fuji to accomplish her tasks.
by looking into the nature of the services rendered and its
relation to the general scheme under which the business or
The successive renewals of her contract indicated the necessity
trade is pursued in the usual course. It is distinguished from a
and desirability of her work in the usual course of Fuji’s
specific undertaking that is divorced from the normal
business. Because of this, Arlene had become a regular
activities required in carrying on the particular business or
employee with the right to security of tenure.
trade.

Arlene’s contract indicating a fixed term did not automatically

However, there may be a situation where an employee’s work
mean that she could never be a regular employee. For as long
is necessary but is not always desirable in the usual course of
as it was the employee who requested, or bargained, that the
business of the employer. In this situation, there is no regular
contract have a “definite date of termination,” or that the
employment.
fixed-term contract be freely entered into by the employer and
the employee, then the validity of the fixed-term contract will
be upheld.
Fuji’s Manila Bureau Office is a small unit213 and has a few
employees. Arlene had to do all activities related to news
gathering.
3. Arlene was illegally dismissed.
A news producer “plans and supervises newscast *and+ works
with reporters in the field planning and gathering information, As a regular employee, Arlene was entitled to security of
including monitoring and getting news stories, rporting tenure under Article 279 of the Labor Code and could be
interviewing subjects in front of a video camera, submission of dismissed only for just or authorized causaes and after
news and current events reports pertaining to the Philippines, observance of due process.
 present medical certificates. Fuji immediately concluded that
Arlene could no longer perform her duties because of
The expiration of the contract does not negate the finding of
chemotherapy. Neither did it suggest for her to take a leave. It
illegal dismissal. The manner by which Fuji informed Arlene
did not present any certificate from a competent public health
of non-renewal through email a month after she informed Fuji
authority.
of her illness is tantamount to constructive dismissal. Further,
Arlene was asked to sign a letter of resignation prepared by Therefore, Arlene was illegally dismissed.
Fuji. The existence of a fixed-term contract should not mean
that there can be no illegal dismissal. Due process must still be
observed. 4. The Court of Appeals correctly awarded
reinstatement, damages and attorney’s fees.

Moreoever, disease as a ground for termination under Article

The Court of Appeals awarded moral and exemplary damages
284 of the Labor Code and Book VI, Rule 1, Section 8 of the
and attorney’s fees. It also ordered reinstatement, as the
Omnibus Rules Implementing the Labor Code require two
grounds when separation pay was awarded in lieu of
requirements to be complied with: (1) the employee’s disease
reinstatement were not proven.
cannot be cured within six months and his continued
employment is prohibited by law or prejudicial to his health as
well as to the health of his co-employees; and (2) certification
The Labor Code provides in Article 279 that illegally
issued by a competent public health authority that even with
dismissed employees are entitled to reinstatement, backwages
proper medical treatment, the disease cannot be cured within
including allowances, and all other benefits.
six months. The burden of proving compliance with these
requisites is on the employer. Non-compliance leads to illegal
dismissal. blesvirtualLawlibrary
Separation pay in lieu of reinstatement is allowed only (1)
Arlene was not accorded due process. After informing her when the employer has ceased operations; (2) when the
employer of her lung cancer, she was not given the chance to employee’s position is no longer available; (3) strained
relations; and (4) a substantial period has lapsed from date of withheld until May 5, 2009, when she had no other choice but
filing to date of finality. to sign the non-renewal contract.

With regard to the award of attorney’s fees, Article 111 of the

The doctrine of strained relations should be strictly applied to
Labor Code states that “*i+n cases of unlawful withholding of
avoid deprivation of the right to reinstatement. In the case at
wages, the culpable party may be assessed attorney’s fees
bar, no evidence was presented by Fuji to prove that
equivalent to ten percent of the amount of wages recovered.”
reinstatement was no longer feasible. Fuji did not allege that it
In actions for recovery of wages or where an employee was
ceased operations or that Arlene’s position was no longer
forced to litigate and, thus, incur expenses to protect his rights
feasible. Nothing showed that the reinstatement would cause
and interest, the award of attorney’s fees is legally and morally
an atmosphere of antagonism in the workplace.
justifiablen.” Due to her illegal dismissal, Arlene was forced to
litigate.

Moral damages are awarded “when the dismissal is attended

by bad faith or fraud or constitutes an act oppressive to labor, Therefore, the awards for reinstatement, damages and
or is done in a manner contrary to good morals, good customs attorney’s fees were proper.
or public policy.” On the other hand, exemplary damages may
be awarded when the dismissal was effected “in a wanton,
oppressive or malevolent manner.

NELSON V. BEGINO, GENER DEL VALLE, MONINA A VILA-LLORIN

After Arlene had informed Fuji of her cancer, she was
informed that there would be problems in renewing her
contract on account of her condition. This information caused
Arlene mental anguish, serious anxiety, and wounded
feelings. The manner of her dismissal was effected in an
oppressive approach with her salary and other benefits being
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 company’s 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.
JOSE SONZA vs. ABS-CBN BROADCASTING
CORPORATION
G.R. No. 138051 June 10, 2004
FACTS:
In May 1994, ABS-CBN signed an agreement with the Mel and Jay
Management and Development Corporation (MJMDC). ABS-CBN was
represented by its corporate officers while MJMDC was represented by
Sonza, as President and general manager, and Tiangco as its EVP and
treasurer. Referred to in the agreement as agent, MJMDC agreed to
provide Sonza’s services exclusively to ABS-CBN as talent for radio
and television. ABS-CBN agreed to pay Sonza a monthly talent fee of
P310, 000 for the first year and P317, 000 for the second and third year.
On April 1996, Sonza wrote a letter to ABS-CBN's President, Eugenio
Lopez III, where he irrevocably resigned in view of the recent events
concerning his program and career. The acts of the station are violative
of the Agreement and said letter will serve as notice of rescission of
said contract. The letter also contained the waiver and renunciation for
recovery of the remaining amount stipulated but reserves the right to
seek recovery of the other benefits under said Agreement.
After the said letter, Sonza filed with the Department of Labor and
Employment a complaint alleging that ABS-CBN did not pay his
salaries, separation pay, service incentive pay,13th month pay, signing
bonus, travel allowance and amounts under the Employees Stock
Option Plan (ESOP). ABS-CBN contended that no employee-
employer relationship existed between the parties. However, ABS-CBN
continued to remit Sonza’s monthly talent fees but opened another
account for the same purpose.
The Labor Arbiter dismissed the complaint and found that there is no
employee-employer relationship. The LA ruled that he is not an
employee by reason of his peculiar skill and talent as a TV host and a
radio broadcaster. Unlike an ordinary employee, he was free to perform
his services in accordance with his own style. NLRC and CA affirmed
the LA. Should there be any complaint, it does not arise from an
employer-employee relationship but from a breach of contract.
ISSUE: Whether or not there was employer-employee relationship
between the parties.
HELD:
There is no employer-employee relationship between Sonza and ABS-
CBN. Petition denied. Judgment decision affirmed.
Case law has consistently held that the elements of an employee-
employer relationship are selection and engagement of the employee,
the payment of wages, the power of dismissal and the employer’s
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.
A. Selection and Engagement of Employee
ABS-CBN engaged SONZA’s services to co-host its television and
radio programs because of SONZA’s peculiar skills, talent and celebrity
status. SONZA contends that the “discretion used by respondent in
specifically selecting and hiring complainant over other broadcasters of
possibly similar experience and qualification as complainant belies
respondent’s claim of independent contractorship.”
However, independent contractors often present themselves to possess
unique skills, expertise or talent to distinguish them from ordinary
employees. 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.
B. Payment of Wages
ABS-CBN directly paid SONZA his monthly talent fees with no part of
his fees going to MJMDC. SONZA asserts that this mode of fee
payment shows that he was an employee of ABS-CBN. SONZA also
points out that ABS-CBN granted him benefits and privileges “which
he would not have enjoyed if he were truly the subject of a valid job
contract.”
All the talent fees and benefits paid to SONZA were the result of
negotiations that led to the Agreement. If SONZA were ABS-CBN’s
employee, there would be no need for the parties to stipulate on
benefits such as “SSS, Medicare, x x x 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. In addition, SONZA’s
talent fees are so huge and out of the ordinary that they indicate more
an independent contractual relationship rather than an employer-
employee relationship. ABS-CBN agreed to pay SONZA such huge
talent fees precisely because of SONZA’s unique skills, talent and
celebrity status not possessed by ordinary employees.
C. 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.
During the life of the Agreement, ABS-CBN agreed to pay SONZA’s
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 SONZA’s talent fees
during the life of the Agreement. This circumstance indicates an
independent contractual relationship between SONZA and ABS-CBN.
SONZA admits that even after ABS-CBN ceased broadcasting his
programs, ABS-CBN still paid him his talent fees. Plainly, ABS-CBN
adhered to its undertaking in the Agreement to continue paying
SONZA’s talent fees during the remaining life of the Agreement even
if ABS-CBN cancelled SONZA’s programs through no fault of
SONZA.
D. Power of Control
First, SONZA contends that ABS-CBN exercised control over the
means and methods of his work. SONZA’s argument is misplaced.
ABS-CBN engaged SONZA’s services specifically to co-host the “Mel
& Jay” programs. ABS-CBN did not assign any other work to SONZA.
To perform his work, SONZA only needed his skills and talent. How
SONZA delivered his lines, appeared on television, and sounded on
radio were outside ABS-CBN’s control. SONZA did not have to
render eight hours of work per day. The Agreement required SONZA
to attend only rehearsals and tapings of the shows, as well as pre- and
post-production staff meetings. ABS-CBN could not dictate the
contents of SONZA’s script. However, the Agreement prohibited
SONZA from criticizing in his shows ABS-CBN or its interests. The
clear implication is that SONZA had a free hand on what to say or
discuss in his shows provided he did not attack ABS-CBN or its
interests.
Second, SONZA urges us to rule that he was ABS-CBN’s employee
because ABS-CBN subjected him to its rules and standards of
performance. SONZA claims that this indicates ABS-CBN’s control
“not only [over] his manner of work but also the quality of his work."
The Agreement stipulates that SONZA shall abide with the rules and
standards of performance “covering talents” of ABS-CBN. The
Agreement does not require SONZA to comply with the rules and
standards of performance prescribed for employees of ABS-CBN. The
code of conduct imposed on SONZA under the Agreement refers to
the “Television and Radio Code of the Kapisanan ng mga Broadcaster
sa Pilipinas (KBP), which has been adopted by the COMPANY (ABS-
CBN) as its Code of Ethics.” The KBP code applies to broadcasters,
not to employees of radio and television stations. Broadcasters are not
necessarily employees of radio and television stations. Clearly, the rules
and standards of performance referred to in the Agreement are those
applicable to talents and not to employees of ABS-CBN.
In any event, not all rules imposed by the hiring party on the hired
party indicate that the latter is an employee of the former. In this case,
SONZA failed to show that these rules controlled his performance. We
find that these general rules are merely guidelines towards the
achievement of the mutually desired result, which are top-rating
television and radio programs that comply with standards of the
industry.

Lastly, SONZA insists that the “exclusivity clause” in the Agreement is

the most extreme form of control which ABS-CBN exercised over him.
This argument is futile. 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.