JOSE Y. SONZA vs.

ABS-CBN BROADCASTING CORPORATION

[G.R. No. 138051. June 10, 2004] CARPIO, J.

FACTS

In May 1994, respondent ABS-CBN Broadcasting Corporation (ABS-CBN) signed an Agreement (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 Carmela Tiangco (TIANGCO), as EVP and Treasurer. Referred to in the Agreement as
AGENT, MJMDC agreed to provide SONZAs services exclusively to ABS-CBN as talent for radio and television.

On 1 April 1996, SONZA wrote a letter to ABS-CBNs President, Eugenio Lopez III, informing that Sonza is waiving and renouncing recovery
of the remaining amount stipulated in paragraph 7 of the Agreement but reserves the right to seek recovery of the other benefits under said
Agreement.

On 30 April 1996, SONZA filed a complaint against ABS-CBN before the Department of Labor and Employment, National Capital Region
in Quezon City. SONZA complained that ABS-CBN did not pay his salaries, separation pay, service incentive leave pay, 13th month pay, signing
bonus, travel allowance and amounts due under the Employees Stock Option Plan (ESOP).

The Labor Arbiter rendered his Decision dated 8 July 1997 dismissing the complaint for lack of jurisdiction because of lack of employer-
employee relationship between ABS-CBN and Sonza.

SONZA appealed to the NLRC. On 24 February 1998, the NLRC rendered a Decision affirming the Labor Arbiters decision. SONZA filed a
motion for reconsideration, which the NLRC denied in its Resolution dated 3 July 1998.

On 6 October 1998, SONZA filed a special civil action for certiorari before the Court of Appeals assailing the decision and resolution of the
NLRC. On 26 March 1999, the Court of Appeals rendered a Decision dismissing the case. Hence, this petition.

RULING

Applying the control test to the present case, we find that 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.

We find that 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. Clearly, ABS-CBN did not
exercise control over the means and methods of performance of SONZAs work.

Clearly, 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.

SONZA further contends that ABS-CBN exercised control over his work by supplying all equipment and crew. 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. Even though ABS-CBN provided SONZA with the place of work and the necessary equipment, SONZA was still an
independent contractor since ABS-CBN did not supervise and control his work. ABS-CBNs sole concern was for SONZA to display his talent
during the airing of the programs.

SONZA seeks the recovery of allegedly unpaid talent fees, 13th month pay, separation pay, service incentive leave, signing bonus, travel
allowance, and amounts due under the Employee Stock Option Plan. We agree with 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.

NOTES

Elements of Employer-Employee Relationship

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.

Labor-only contract

Three parties involved: (1) the labor-only contractor; (2) the employee who is ostensibly under the employ of the labor-only contractor; and (3)
the principal who is deemed the real employer.
Under this scheme, the labor-only contractor is the agent of the principal. The law makes the principal responsible to the employees of
the labor-only contractor as if the principal itself directly hired or employed the employees.

Control

Vaughan, et al. v. Warner, et al.

 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.
 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.

Further, not every form of control that a party reserves to himself over the conduct of the other party in relation to the services being rendered
may be accorded the effect of establishing an employer-employee relationship.

Insular Life Assurance Co., Ltd. vs. NLRC.

 Logically, the line should be drawn between rules that merely serve as guidelines towards the achievement of the mutually desired
result without dictating the means or methods to be employed in attaining it, and those that control or fix the methodology and bind
or restrict the party hired to the use of such means.
 The first, which aim only to promote the result, create no employer-employee relationship unlike the second, which address both
the result and the means used to achieve it.

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.

Talents as Independent Contractor

The right of labor to security of tenure as guaranteed in the Constitution arises only if there is an employer-employee relationship under labor
laws. Not every performance of services for a fee creates an employer-employee relationship. To hold that every person who renders services
to another for a fee is an employee - to give meaning to the security of tenure clause - will lead to absurd results.

Individuals with special skills, expertise or talent enjoy the freedom to offer their services as independent contractors. The right to life and
livelihood guarantees this freedom to contract as independent contractors. The right of labor to security of tenure cannot operate to deprive an
individual, possessed with special skills, expertise and talent, of his right to contract as an independent contractor. An individual like an artist
or talent has a right to render his services without any one controlling the means and methods by which he performs his art or craft. This Court
will not interpret the right of labor to security of tenure to compel artists and talents to render their services only as employees.