G.R. No. 138051 June 10, 2004 career.

We consider these acts of the

station violative of the Agreement and
JOSE Y. SONZA, petitioner, the station as in breach thereof. In this
vs. connection, we hereby serve notice of
ABS-CBN BROADCASTING CORPORATION, respondent. rescission of said Agreement at our
instance effective as of date.
DECISION
Mr. Sonza informed us that he is
waiving and renouncing recovery of the
CARPIO, J.:
remaining amount stipulated in
paragraph 7 of the Agreement but
The Case reserves the right to seek recovery of
the other benefits under said
Before this Court is a petition for review on certiorari1 assailing the 26 Agreement.
March 1999 Decision2 of the Court of Appeals in CA-G.R. SP No.
49190 dismissing the petition filed by Jose Y. Sonza ("SONZA"). The Thank you for your attention.
Court of Appeals affirmed the findings of the National Labor Relations
Commission ("NLRC"), which affirmed the Labor Arbiter’s dismissal
Very truly yours,
of the case for lack of jurisdiction.

(Sgd.)
The Facts
JOSE Y.
SONZA
In May 1994, respondent ABS-CBN Broadcasting Corporation ("ABS- President
CBN") signed an Agreement ("Agreement") with the Mel and Jay and Gen.
Management and Development Corporation ("MJMDC"). ABS-CBN Manager4
was represented by its corporate officers while MJMDC was
represented by SONZA, as President and General Manager, and
On 30 April 1996, SONZA filed a complaint against ABS-CBN before
Carmela Tiangco ("TIANGCO"), as EVP and Treasurer. Referred to
the Department of Labor and Employment, National Capital Region in
in the Agreement as "AGENT," MJMDC agreed to provide SONZA’s
Quezon City. SONZA complained that ABS-CBN did not pay his
services exclusively to ABS-CBN as talent for radio and television.
salaries, separation pay, service incentive leave pay, 13th month
The Agreement listed the services SONZA would render to ABS-
pay, signing bonus, travel allowance and amounts due under the
CBN, as follows:
Employees Stock Option Plan ("ESOP").
a. Co-host for Mel & Jay radio program, 8:00 to
On 10 July 1996, ABS-CBN filed a Motion to Dismiss on the ground
10:00 a.m., Mondays to Fridays;
that no employer-employee relationship existed between the parties.
SONZA filed an Opposition to the motion on 19 July 1996.
b. Co-host for Mel & Jay television program, 5:30
to 7:00 p.m., Sundays.3
Meanwhile, ABS-CBN continued to remit SONZA’s monthly talent
fees through his account at PCIBank, Quezon Avenue Branch,
ABS-CBN agreed to pay for SONZA’s services a monthly talent fee Quezon City. In July 1996, ABS-CBN opened a new account with the
of ₱310,000 for the first year and ₱317,000 for the second and third same bank where ABS-CBN deposited SONZA’s talent fees and
year of the Agreement. ABS-CBN would pay the talent fees on the other payments due him under the Agreement.
10th and 25th days of the month.
In his Order dated 2 December 1996, the Labor Arbiter5 denied the
On 1 April 1996, SONZA wrote a letter to ABS-CBN’s President, motion to dismiss and directed the parties to file their respective
Eugenio Lopez III, which reads: position papers. The Labor Arbiter ruled:

Dear Mr. Lopez, In this instant case, complainant for having

invoked a claim that he was an employee of
We would like to call your attention to respondent company until April 15, 1996 and that
the Agreement dated May 1994 he was not paid certain claims, it is sufficient
entered into by your goodself on behalf enough as to confer jurisdiction over the instant
of ABS-CBN with our company relative case in this Office. And as to whether or not such
to our talent JOSE Y. SONZA. claim would entitle complainant to recover upon
the causes of action asserted is a matter to be
As you are well aware, Mr. Sonza resolved only after and as a result of a hearing.
irrevocably resigned in view of recent Thus, the respondent’s plea of lack of employer-
events concerning his programs and employee relationship may be pleaded only as a
1
 matter of defense. It behooves upon it the duty to appended to these benefits. Apropos to this is the
prove that there really is no employer-employee rule that the term or nomenclature given to a
relationship between it and the complainant. stipulated benefit is not controlling, but the intent
of the parties to the Agreement conferring such
The Labor Arbiter then considered the case submitted for resolution. benefit."
The parties submitted their position papers on 24 February 1997.
The fact that complainant was made subject
On 11 March 1997, SONZA filed a Reply to Respondent’s Position to respondent’s Rules and Regulations,
Paper with Motion to Expunge Respondent’s Annex 4 and Annex 5 likewise, does not detract from the absence of
from the Records. Annexes 4 and 5 are affidavits of ABS-CBN’s employer-employee relationship. As held by
witnesses Soccoro Vidanes and Rolando V. Cruz. These witnesses the Supreme Court, "The line should be drawn
stated in their affidavits that the prevailing practice in the television between rules that merely serve as guidelines
and broadcast industry is to treat talents like SONZA as independent towards the achievement of the mutually desired
contractors. 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
The Labor Arbiter rendered his Decision dated 8 July 1997
party hired to the use of such means. The first,
dismissing the complaint for lack of jurisdiction.6 The pertinent parts
which aim only to promote the result, create no
of the decision read as follows:
employer-employee relationship unlike the
second, which address both the result and the
xxx means to achieve it." (Insular Life Assurance Co.,
Ltd. vs. NLRC, et al., G.R. No. 84484, November
While Philippine jurisprudence has not yet, with 15, 1989).
certainty, touched on the "true nature of the
contract of a talent," it stands to reason that a x x x (Emphasis supplied)7
"talent" as above-described cannot be
considered as an employee by reason of the
SONZA appealed to the NLRC. On 24 February 1998, the NLRC
peculiar circumstances surrounding the
rendered a Decision affirming the Labor Arbiter’s decision. SONZA
engagement of his services.
filed a motion for reconsideration, which the NLRC denied in its
Resolution dated 3 July 1998.
It must be noted that complainant was engaged
by respondent by reason of his peculiar skills
On 6 October 1998, SONZA filed a special civil action for certiorari
and talent as a TV host and a radio
before the Court of Appeals assailing the decision and resolution of
broadcaster. Unlike an ordinary employee, he
the NLRC. On 26 March 1999, the Court of Appeals rendered a
was free to perform the services he undertook
Decision dismissing the case.8
to render in accordance with his own style.
The benefits conferred to complainant under the
May 1994 Agreement are certainly very much Hence, this petition.
higher than those generally given to employees.
For one, complainant Sonza’s monthly talent fees The Rulings of the NLRC and Court of Appeals
amount to a staggering ₱317,000. Moreover, his
engagement as a talent was covered by a The Court of Appeals affirmed the NLRC’s finding that no employer-
specific contract. Likewise, he was not bound to employee relationship existed between SONZA and ABS-CBN.
render eight (8) hours of work per day as he Adopting the NLRC’s decision, the appellate court quoted the
worked only for such number of hours as may be following findings of the NLRC:
necessary.
x x x the May 1994 Agreement will readily reveal
The fact that per the May 1994 Agreement that MJMDC entered into the contract merely as
complainant was accorded some benefits an agent of complainant Sonza, the principal. By
normally given to an employee is all indication and as the law puts it, the act of the
inconsequential. Whatever benefits agent is the act of the principal itself. This fact is
complainant enjoyed arose from specific made particularly true in this case, as admittedly
agreement by the parties and not by reason of MJMDC ‘is a management company devoted
employer-employee relationship. As correctly exclusively to managing the careers of Mr. Sonza
put by the respondent, "All these benefits are and his broadcast partner, Mrs. Carmela C.
merely talent fees and other contractual benefits Tiangco.’ (Opposition to Motion to Dismiss)
and should not be deemed as ‘salaries, wages
and/or other remuneration’ accorded to an
Clearly, the relations of principal and agent only
employee, notwithstanding the nomenclature
accrues between complainant Sonza and
2
MJMDC, and not between ABS-CBN and Under paragraph 9 of (the May 1994
MJMDC. This is clear from the provisions of the Agreement), complainant is entitled to
May 1994 Agreement which specifically referred a commutable travel benefit amounting
to MJMDC as the ‘AGENT’. As a matter of fact, to at least One Hundred Fifty Thousand
when complainant herein unilaterally rescinded Pesos (₱150,000.00) per year.’
said May 1994 Agreement, it was MJMDC which
issued the notice of rescission in behalf of Mr. Thus, it is precisely because of complainant-
Sonza, who himself signed the same in his appellant’s own recognition of the fact that his
capacity as President. contractual relations with ABS-CBN are founded
on the New Civil Code, rather than the Labor
Moreover, previous contracts between Mr. Sonza Code, that instead of merely resigning from ABS-
and ABS-CBN reveal the fact that historically, the CBN, complainant-appellant served upon the
parties to the said agreements are ABS-CBN and latter a ‘notice of rescission’ of Agreement with
Mr. Sonza. And it is only in the May 1994 the station, per his letter dated April 1, 1996,
Agreement, which is the latest Agreement which asserted that instead of referring to unpaid
executed between ABS-CBN and Mr. Sonza, that employee benefits, ‘he is waiving and renouncing
MJMDC figured in the said Agreement as the recovery of the remaining amount stipulated in
agent of Mr. Sonza. paragraph 7 of the Agreement but reserves the
right to such recovery of the other benefits under
We find it erroneous to assert that MJMDC is a said Agreement.’ (Annex 3 of the respondent
mere ‘labor-only’ contractor of ABS-CBN such ABS-CBN’s Motion to Dismiss dated July 10,
that there exist[s] employer-employee 1996).
relationship between the latter and Mr. Sonza.
On the contrary, We find it indubitable, that Evidently, it is precisely by reason of the alleged
MJMDC is an agent, not of ABS-CBN, but of the violation of the May 1994 Agreement and/or the
talent/contractor Mr. Sonza, as expressly Stock Purchase Agreement by respondent-
admitted by the latter and MJMDC in the May appellee that complainant-appellant filed his
1994 Agreement. complaint. Complainant-appellant’s claims being
anchored on the alleged breach of contract on
It may not be amiss to state that jurisdiction over the part of respondent-appellee, the same can be
the instant controversy indeed belongs to the resolved by reference to civil law and not to labor
regular courts, the same being in the nature of an law. Consequently, they are within the realm of
action for alleged breach of contractual obligation civil law and, thus, lie with the regular courts. As
on the part of respondent-appellee. As squarely held in the case of Dai-Chi Electronics
apparent from complainant-appellant’s Position Manufacturing vs. Villarama, 238 SCRA 267, 21
Paper, his claims for compensation for services, November 1994, an action for breach of
‘13th month pay’, signing bonus and travel contractual obligation is intrinsically a civil
allowance against respondent-appellee are not dispute.9 (Emphasis supplied)
based on the Labor Code but rather on the
provisions of the May 1994 Agreement, while his The Court of Appeals ruled that the existence of an employer-
claims for proceeds under Stock Purchase employee relationship between SONZA and ABS-CBN is a factual
Agreement are based on the latter. A portion of question that is within the jurisdiction of the NLRC to resolve.10 A
the Position Paper of complainant-appellant special civil action for certiorari extends only to issues of want or
bears perusal: excess of jurisdiction of the NLRC.11 Such action cannot cover an
inquiry into the correctness of the evaluation of the evidence which
‘Under [the May 1994 Agreement] with served as basis of the NLRC’s conclusion.12 The Court of Appeals
respondent ABS-CBN, the latter added that it could not re-examine the parties’ evidence and
contractually bound itself to pay substitute the factual findings of the NLRC with its own.13
complainant a signing bonus consisting
of shares of stocks…with FIVE The Issue
HUNDRED THOUSAND PESOS
(₱500,000.00). In assailing the decision of the Court of Appeals, SONZA contends
that:
Similarly, complainant is also entitled to
be paid 13th month pay based on an THE COURT OF APPEALS GRAVELY ERRED
amount not lower than the amount he IN AFFIRMING THE NLRC’S DECISION AND
was receiving prior to effectivity of (the) REFUSING TO FIND THAT AN EMPLOYER-
Agreement’. EMPLOYEE RELATIONSHIP EXISTED
BETWEEN SONZA AND ABS-CBN, DESPITE
3
 THE WEIGHT OF CONTROLLING LAW, broadcasters of possibly similar experience and qualification as
JURISPRUDENCE AND EVIDENCE TO complainant belies respondent’s claim of independent
SUPPORT SUCH A FINDING.14 contractorship."

The Court’s Ruling Independent contractors often present themselves to possess unique
skills, expertise or talent to distinguish them from ordinary
We affirm the assailed decision. 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
No convincing reason exists to warrant a reversal of the decision of
conclusive, of an independent contractual relationship. If SONZA did
the Court of Appeals affirming the NLRC ruling which upheld the
Labor Arbiter’s dismissal of the case for lack of jurisdiction. 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
The present controversy is one of first impression. Although employee.
Philippine labor laws and jurisprudence define clearly the elements of
an employer-employee relationship, this is the first time that the Court
In any event, the method of selecting and engaging SONZA does not
will resolve the nature of the relationship between a television and
conclusively determine his status. We must consider all the
radio station and one of its "talents." There is no case law stating that
circumstances of the relationship, with the control test being the most
a radio and television program host is an employee of the broadcast
station. important element.

B. Payment of Wages
The instant case involves big names in the broadcast industry,
namely Jose "Jay" Sonza, a known television and radio personality,
and ABS-CBN, one of the biggest television and radio networks in ABS-CBN directly paid SONZA his monthly talent fees with no part of
the country. 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
SONZA contends that the Labor Arbiter has jurisdiction over the case
because he was an employee of ABS-CBN. On the other hand, ABS- he would not have enjoyed if he were truly the subject of a valid job
contract."
CBN insists that the Labor Arbiter has no jurisdiction because
SONZA was an independent contractor.
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 or Independent Contractor?
employee, there would be no need for the parties to stipulate on
benefits such as "SSS, Medicare, x x x and 13th month pay"20 which
The existence of an employer-employee relationship is a question of the law automatically incorporates into every employer-employee
fact. Appellate courts accord the factual findings of the Labor Arbiter contract.21 Whatever benefits SONZA enjoyed arose from contract
and the NLRC not only respect but also finality when supported by and not because of an employer-employee relationship.22
substantial evidence.15 Substantial evidence means such relevant
evidence as a reasonable mind might accept as adequate to support
a conclusion.16 A party cannot prove the absence of substantial SONZA’s talent fees, amounting to ₱317,000 monthly in the second
and third year, are so huge and out of the ordinary that they indicate
evidence by simply pointing out that there is contrary evidence on
more an independent contractual relationship rather than an
record, direct or circumstantial. The Court does not substitute its own
judgment for that of the tribunal in determining where the weight of employer-employee relationship. ABS-CBN agreed to pay SONZA
such huge talent fees precisely because of SONZA’s unique skills,
evidence lies or what evidence is credible.17
talent and celebrity status not possessed by ordinary employees.
Obviously, SONZA acting alone possessed enough bargaining power
SONZA maintains that all essential elements of an employer- to demand and receive such huge talent fees for his services. The
employee relationship are present in this case. Case law has power to bargain talent fees way above the salary scales of ordinary
consistently held that the elements of an employer-employee employees is a circumstance indicative, but not conclusive, of an
relationship are: (a) the selection and engagement of the employee; independent contractual relationship.
(b) the payment of wages; (c) the power of dismissal; and (d) the
employer’s power to control the employee on the means and
The payment of talent fees directly to SONZA and not to MJMDC
methods by which the work is accomplished.18 The last element, the
so-called "control test", is the most important element.19 does not negate the status of SONZA as an independent contractor.
The parties expressly agreed on such mode of payment. Under the
Agreement, MJMDC is the AGENT of SONZA, to whom MJMDC
A. Selection and Engagement of Employee would have to turn over any talent fee accruing under the Agreement.

ABS-CBN engaged SONZA’s services to co-host its television and C. Power of Dismissal
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
4
For violation of any provision of the Agreement, either party may disputes that this factor favors independent
terminate their relationship. SONZA failed to show that ABS-CBN contractor status because WIPR provided the
could terminate his services on grounds other than breach of "equipment necessary to tape the show."
contract, such as retrenchment to prevent losses as provided under Alberty’s argument is misplaced. The equipment
labor laws.23 necessary for Alberty to conduct her job as host
of "Desde Mi Pueblo" related to her appearance
During the life of the Agreement, ABS-CBN agreed to pay SONZA’s on the show. Others provided equipment for
talent fees as long as "AGENT and Jay Sonza shall faithfully and filming and producing the show, but these were
completely perform each condition of this Agreement."24 Even if it not the primary tools that Alberty used to perform
suffered severe business losses, ABS-CBN could not retrench her particular function. If we accepted this
SONZA because ABS-CBN remained obligated to pay SONZA’s argument, independent contractors could never
talent fees during the life of the Agreement. This circumstance work on collaborative projects because other
indicates an independent contractual relationship between SONZA individuals often provide the equipment required
and ABS-CBN. for different aspects of the collaboration. x x x

SONZA admits that even after ABS-CBN ceased broadcasting his Third, WIPR could not assign Alberty work in
programs, ABS-CBN still paid him his talent fees. Plainly, ABS-CBN addition to filming "Desde Mi Pueblo."
adhered to its undertaking in the Agreement to continue paying Alberty’s contracts with WIPR specifically
SONZA’s talent fees during the remaining life of the Agreement even provided that WIPR hired her "professional
if ABS-CBN cancelled SONZA’s programs through no fault of services as Hostess for the Program Desde Mi
SONZA.25 Pueblo." There is no evidence that WIPR
assigned Alberty tasks in addition to work related
to these tapings. x x x28 (Emphasis supplied)
SONZA assails the Labor Arbiter’s interpretation of his rescission of
the Agreement as an admission that he is not an employee of ABS-
CBN. The Labor Arbiter stated that "if it were true that complainant Applying the control test to the present case, we find that SONZA is
was really an employee, he would merely resign, instead." SONZA not an employee but an independent contractor. The control test is
did actually resign from ABS-CBN but he also, as president of the most important test our courts apply in distinguishing an
MJMDC, rescinded the Agreement. SONZA’s letter clearly bears this employee from an independent contractor.29 This test is based on the
out.26 However, the manner by which SONZA terminated his extent of control the hirer exercises over a worker. The greater the
relationship with ABS-CBN is immaterial. Whether SONZA rescinded supervision and control the hirer exercises, the more likely the worker
the Agreement or resigned from work does not determine his status is deemed an employee. The converse holds true as well – the less
as employee or independent contractor. control the hirer exercises, the more likely the worker is considered
an independent contractor.30
D. Power of Control
First, SONZA contends that ABS-CBN exercised control over the
means and methods of his work.
Since there is no local precedent on whether a radio and television
program host is an employee or an independent contractor, we refer
to foreign case law in analyzing the present case. The United States SONZA’s argument is misplaced. ABS-CBN engaged SONZA’s
Court of Appeals, First Circuit, recently held in Alberty-Vélez v. services specifically to co-host the "Mel & Jay" programs. ABS-CBN
Corporación De Puerto Rico Para La Difusión Pública ("WIPR")27 did not assign any other work to SONZA. To perform his work,
that a television program host is an independent contractor. We SONZA only needed his skills and talent. How SONZA delivered his
quote the following findings of the U.S. court: 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
Several factors favor classifying Alberty as an
rehearsals and tapings of the shows, as well as pre- and post-
independent contractor. First, a television
production staff meetings.31 ABS-CBN could not dictate the contents
actress is a skilled position requiring talent
of SONZA’s script. However, the Agreement prohibited SONZA from
and training not available on-the-job. x x x In
criticizing in his shows ABS-CBN or its interests.32 The clear
this regard, Alberty possesses a master’s degree
implication is that SONZA had a free hand on what to say or discuss
in public communications and journalism; is
in his shows provided he did not attack ABS-CBN or its interests.
trained in dance, singing, and modeling; taught
with the drama department at the University of
Puerto Rico; and acted in several theater and We find that ABS-CBN was not involved in the actual performance
television productions prior to her affiliation with that produced the finished product of SONZA’s work.33 ABS-CBN did
"Desde Mi Pueblo." Second, Alberty provided not instruct SONZA how to perform his job. ABS-CBN merely
the "tools and instrumentalities" necessary reserved the right to modify the program format and airtime schedule
for her to perform. Specifically, she provided, or "for more effective programming."34 ABS-CBN’s sole concern was the
obtained sponsors to provide, the costumes, quality of the shows and their standing in the ratings. Clearly, ABS-
jewelry, and other image-related supplies and CBN did not exercise control over the means and methods of
services necessary for her appearance. Alberty performance of SONZA’s work.
5
SONZA claims that ABS-CBN’s power not to broadcast his shows The code of conduct imposed on SONZA under the Agreement refers
proves ABS-CBN’s power over the means and methods of the to the "Television and Radio Code of the Kapisanan ng mga
performance of his work. Although ABS-CBN did have the option not Broadcaster sa Pilipinas (KBP), which has been adopted by the
to broadcast SONZA’s show, ABS-CBN was still obligated to pay COMPANY (ABS-CBN) as its Code of Ethics."42 The KBP code
SONZA’s talent fees... Thus, even if ABS-CBN was completely applies to broadcasters, not to employees of radio and television
dissatisfied with the means and methods of SONZA’s performance of stations. Broadcasters are not necessarily employees of radio and
his work, or even with the quality or product of his work, ABS-CBN television stations. Clearly, the rules and standards of performance
could not dismiss or even discipline SONZA. All that ABS-CBN could referred to in the Agreement are those applicable to talents and not
do is not to broadcast SONZA’s show but ABS-CBN must still pay his to employees of ABS-CBN.
talent fees in full.35
In any event, not all rules imposed by the hiring party on the hired
Clearly, ABS-CBN’s right not to broadcast SONZA’s show, burdened party indicate that the latter is an employee of the former.43 In this
as it was by the obligation to continue paying in full SONZA’s talent case, SONZA failed to show that these rules controlled his
fees, did not amount to control over the means and methods of the performance. We find that these general rules are merely guidelines
performance of SONZA’s work. ABS-CBN could not terminate or towards the achievement of the mutually desired result, which are
discipline SONZA even if the means and methods of performance of top-rating television and radio programs that comply with standards
his work - how he delivered his lines and appeared on television - did of the industry. We have ruled that:
not meet ABS-CBN’s approval. This proves that ABS-CBN’s control
was limited only to the result of SONZA’s work, whether to broadcast Further, not every form of control that a party reserves to himself over
the final product or not. In either case, ABS-CBN must still pay the conduct of the other party in relation to the services being
SONZA’s talent fees in full until the expiry of the Agreement. rendered may be accorded the effect of establishing an employer-
employee relationship. The facts of this case fall squarely with the
In Vaughan, et al. v. Warner, et al.,36 the United States Circuit Court case of Insular Life Assurance Co., Ltd. vs. NLRC. In said case, we
of Appeals ruled that vaudeville performers were independent held that:
contractors although the management reserved the right to delete
objectionable features in their shows. Since the management did not Logically, the line should be drawn between rules
have control over the manner of performance of the skills of the that merely serve as guidelines towards the
artists, it could only control the result of the work by deleting achievement of the mutually desired result
objectionable features.37 without dictating the means or methods to be
employed in attaining it, and those that control or
SONZA further contends that ABS-CBN exercised control over his fix the methodology and bind or restrict the party
work by supplying all equipment and crew. No doubt, ABS-CBN hired to the use of such means. The first, which
supplied the equipment, crew and airtime needed to broadcast the aim only to promote the result, create no
"Mel & Jay" programs. However, the equipment, crew and airtime are employer-employee relationship unlike the
not the "tools and instrumentalities" SONZA needed to perform his second, which address both the result and the
job. What SONZA principally needed were his talent or skills and the means used to achieve it.44
costumes necessary for his appearance.38 Even though ABS-CBN
provided SONZA with the place of work and the necessary The Vaughan case also held that one could still be an independent
equipment, SONZA was still an independent contractor since ABS- contractor although the hirer reserved certain supervision to insure
CBN did not supervise and control his work. ABS-CBN’s sole the attainment of the desired result. The hirer, however, must not
concern was for SONZA to display his talent during the airing of the deprive the one hired from performing his services according to his
programs.39 own initiative.45

A radio broadcast specialist who works under minimal supervision is Lastly, SONZA insists that the "exclusivity clause" in the Agreement
an independent contractor.40 SONZA’s work as television and radio is the most extreme form of control which ABS-CBN exercised over
program host required special skills and talent, which SONZA him.
admittedly possesses. The records do not show that ABS-CBN
exercised any supervision and control over how SONZA utilized his
This argument is futile. Being an exclusive talent does not by itself
skills and talent in his shows.
mean that SONZA is an employee of ABS-CBN. Even an
independent contractor can validly provide his services exclusively to
Second, SONZA urges us to rule that he was ABS-CBN’s employee the hiring party. In the broadcast industry, exclusivity is not
because ABS-CBN subjected him to its rules and standards of necessarily the same as control.
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 hiring of exclusive talents is a widespread and accepted practice
in the entertainment industry.46 This practice is not designed to
The Agreement stipulates that SONZA shall abide with the rules and control the means and methods of work of the talent, but simply to
standards of performance "covering talents"41 of ABS-CBN. The protect the investment of the broadcast station. The broadcast station
Agreement does not require SONZA to comply with the rules and normally spends substantial amounts of money, time and effort "in
standards of performance prescribed for employees of ABS-CBN.
6
building up its talents as well as the programs they appear in and Instruction No. 40 is not binding on this Court, especially when the
thus expects that said talents remain exclusive with the station for a classification has no basis either in law or in fact.
commensurate period of time."47 Normally, a much higher fee is paid
to talents who agree to work exclusively for a particular radio or Affidavits of ABS-CBN’s Witnesses
television station. In short, the huge talent fees partially compensates
for exclusivity, as in the present case.
SONZA also faults the Labor Arbiter for admitting the affidavits of
Socorro Vidanes and Rolando Cruz without giving his counsel the
MJMDC as Agent of SONZA
opportunity to cross-examine these witnesses. SONZA brands these
SONZA protests the Labor Arbiter’s finding that he is a talent of witnesses as incompetent to attest on the prevailing practice in the
MJMDC, which contracted out his services to ABS-CBN. The Labor radio and television industry. SONZA views the affidavits of these
Arbiter ruled that as a talent of MJMDC, SONZA is not an employee witnesses as misleading and irrelevant.
of ABS-CBN. SONZA insists that MJMDC is a "labor-only" contractor
and ABS-CBN is his employer.
While SONZA failed to cross-examine ABS-CBN’s witnesses, he was
never prevented from denying or refuting the allegations in the
In a labor-only contract, there are three parties involved: (1) the affidavits. The Labor Arbiter has the discretion whether to conduct a
"labor-only" contractor; (2) the employee who is ostensibly under the formal (trial-type) hearing after the submission of the position papers
employ of the "labor-only" contractor; and (3) the principal who is of the parties, thus:
deemed the real employer. Under this scheme, the "labor-only"
contractor is the agent of the principal. The law makes the
Section 3. Submission of Position
principal responsible to the employees of the "labor-only contractor"
Papers/Memorandum
as if the principal itself directly hired or employed the employees.48
These circumstances are not present in this case.
xxx
There are essentially only two parties involved under the Agreement,
namely, SONZA and ABS-CBN. MJMDC merely acted as SONZA’s These verified position papers shall cover only
agent. The Agreement expressly states that MJMDC acted as the those claims and causes of action raised in the
"AGENT" of SONZA. The records do not show that MJMDC acted as complaint excluding those that may have been
ABS-CBN’s agent. MJMDC, which stands for Mel and Jay amicably settled, and shall be accompanied by all
Management and Development Corporation, is a corporation supporting documents including the affidavits of
organized and owned by SONZA and TIANGCO. The President and their respective witnesses which shall take the
General Manager of MJMDC is SONZA himself. It is absurd to hold place of the latter’s direct testimony. x x x
that MJMDC, which is owned, controlled, headed and managed by
SONZA, acted as agent of ABS-CBN in entering into the Agreement Section 4. Determination of Necessity of Hearing.
with SONZA, who himself is represented by MJMDC. That would – Immediately after the submission of the parties
make MJMDC the agent of both ABS-CBN and SONZA. of their position papers/memorandum, the Labor
Arbiter shall motu propio determine whether there
As SONZA admits, MJMDC is a management company devoted is need for a formal trial or hearing. At this stage,
exclusively to managing the careers of SONZA and his broadcast he may, at his discretion and for the purpose of
partner, TIANGCO. MJMDC is not engaged in any other business, making such determination, ask clarificatory
not even job contracting. MJMDC does not have any other function questions to further elicit facts or information,
apart from acting as agent of SONZA or TIANGCO to promote their including but not limited to the subpoena of
careers in the broadcast and television industry.49 relevant documentary evidence, if any from any
party or witness.50
Policy Instruction No. 40
The Labor Arbiter can decide a case based solely on the position
papers and the supporting documents without a formal trial.51 The
SONZA argues that Policy Instruction No. 40 issued by then Minister
holding of a formal hearing or trial is something that the parties
of Labor Blas Ople on 8 January 1979 finally settled the status of
cannot demand as a matter of right.52 If the Labor Arbiter is confident
workers in the broadcast industry. Under this policy, the types of
that he can rely on the documents before him, he cannot be faulted
employees in the broadcast industry are the station and program
for not conducting a formal trial, unless under the particular
employees.
circumstances of the case, the documents alone are insufficient. The
proceedings before a Labor Arbiter are non-litigious in nature.
Policy Instruction No. 40 is a mere executive issuance which does Subject to the requirements of due process, the technicalities of law
not have the force and effect of law. There is no legal presumption and the rules obtaining in the courts of law do not strictly apply in
that Policy Instruction No. 40 determines SONZA’s status. A mere proceedings before a Labor Arbiter.
executive issuance cannot exclude independent contractors from the
class of service providers to the broadcast industry. The classification
Talents as Independent Contractors
of workers in the broadcast industry into only two groups under Policy

7
ABS-CBN claims that there exists a prevailing practice in the SO ORDERED.
broadcast and entertainment industries to treat talents like SONZA as
independent contractors. SONZA argues that if such practice exists,
it is void for violating the right of labor to security of tenure.

The right of labor to security of tenure as guaranteed in the

Constitution53 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. If radio and television program hosts
can render their services only as employees, the station owners and
managers can dictate to the radio and television hosts what they say
in their shows. This is not conducive to freedom of the press.

Different Tax Treatment of Talents and Broadcasters

The National Internal Revenue Code ("NIRC")54 in relation to

Republic Act No. 7716,55 as amended by Republic Act No. 8241,56
treats talents, television and radio broadcasters differently. Under the
NIRC, these professionals are subject to the 10% value-added tax
("VAT") on services they render. Exempted from the VAT are those
under an employer-employee relationship.57 This different tax
treatment accorded to talents and broadcasters bolters our
conclusion that they are independent contractors, provided all the
basic elements of a contractual relationship are present as in this
case.

Nature of SONZA’s Claims

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 SONZA’s 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, SONZA’s cause of action is for breach of
contract which is intrinsically a civil dispute cognizable by the regular
courts.58

WHEREFORE, we DENY the petition. The assailed Decision of the

Court of Appeals dated 26 March 1999 in CA-G.R. SP No. 49190 is
AFFIRMED. Costs against petitioner.