ABS-CBN BROADCASTING CORPORATION vs. MARLYN NAZARENO et al.

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. It sells and deals in or otherwise utilizes the airtime it
generates from its radio and television operations. It has a FRANCHISE as a
broadcasting company, and was likewise issued a license and authority to operate
by the National Telecommunications Commission.
Petitioner employed respondents Nazareno, Gerzon, Deiparine, and Lerasan as
production assistants (PAs) on different dates. They were assigned at the news and
public affairs, for various radio programs in the Cebu Broadcasting Station. 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 rendered judgment in favor of the
respondents, and declared that they were regular employees of petitioner as such,
they were awarded monetary benefits. NLRC affirmed the decision of the Labor
Arbiter. Petitioner filed a motion for reconsideration but CA dismissed it.
Issue: Whether or not the respondents were considered regular employees of ABSCBN.
Ruling:
The respondents are regular employees of ABS-CBN. It was held that where a
person has rendered at least one year of service, regardless of the nature of the
activity performed, or where the work is continuous or intermittent, the employment
is considered regular as long as the activity exists, the reason being that a
customary appointment is not indispensable before one may be formally declared
as having attained regular status.
In Universal Robina Corporation v. Catapang, the Court states that the primary
standard, therefore, of determining regular employment is the reasonable
connection between the particular activity performed by the employee in relation to
the usual trade or business of the employer. The test is whether the former is
usually necessary or desirable in the usual business or trade of the employer. The
connection can be determined by considering the nature of work performed and its
relation to the scheme of the particular business or trade in its entirety. Also, 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.
Additionally, respondents cannot be considered as project or program employees
because no evidence was presented to show that the duration and scope of the
project were determined or specified at the time of their engagement. In the case at
bar, however, the employer-employee relationship between petitioner and
respondents has been proven. In the selection and engagement of respondents, no
peculiar or unique skill, talent or celebrity status was required from them because
they were merely hired through petitioners personnel department just like any
ordinary employee. Respondents did not have the power to bargain for huge talent
fees, a circumstance negating independent contractual relationship. Respondents
are highly dependent on the petitioner for continued work. The degree of control
and supervision exercised by petitioner over respondents through its supervisors
negates the allegation that respondents are independent contractors.
The presumption is that when the work done is an integral part of the regular
business of the employer and when the worker, relative to the employer, does not
furnish an independent business or professional service, such work is a regular
employment of such employee and not an independent contractor. As regular
employees, respondents are entitled to the benefits granted to all other regular
employees of petitioner under the CBA . Besides, only talent-artists were excluded
from the CBA and not production assistants who are regular employees of the
respondents. Moreover, under Article 1702 of the New Civil Code: In case of doubt,
all labor legislation and all labor contracts shall be construed in favor of the safety
and decent living of the laborer.

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 Sonzas 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 employeeemployer relationship existed between the parties. However, ABS-CBN continued
to remit Sonzas monthly talent fees but opened another account for the same
purpose.
The Labor Arbiter dismissed the complaint and found that there is no employeeemployer 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 employers power to control the employee on the
means and methods by which the work is accomplished. The last element, the socalled "control test", is the most important element.
A. Selection and Engagement of Employee
ABS-CBN engaged SONZAs services to co-host its television and radio programs
because of SONZAs 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 respondents 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-CBNs 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 employeremployee contract. Whatever benefits SONZA enjoyed arose from contract and not
because of an employer-employee relationship. In addition, SONZAs 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 SONZAs 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 SONZAs talent fees as
long as AGENT and Jay Sonza shall faithfully and completely perform each
condition of this Agreement. Even if it suffered severe business losses, ABS-CBN
could not retrench SONZA because ABS-CBN remained obligated to pay SONZAs
talent fees during the life of the Agreement. This circumstance indicates an
independent contractual relationship between SONZA and ABS-CBN.
SONZA admits that even after ABS-CBN ceased broadcasting his programs, ABSCBN still paid him his talent fees. Plainly, ABS-CBN adhered to its undertaking in
the Agreement to continue paying SONZAs talent fees during the remaining life of
the Agreement even if ABS-CBN cancelled SONZAs 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. SONZAs argument is misplaced. ABS-CBN engaged
SONZAs 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-CBNs 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 SONZAs 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-CBNs employee because ABSCBN subjected him to its rules and standards of performance. SONZA claims that
this indicates ABS-CBNs 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.

BRENT SCHOOL, INC.DIMACHE vs. RONALDO ZAMORA and DOROTEO R.

ALEGRE
G.R. No. L-48494 February 5, 1990 en banc

FACTS:
Private respondent Doroteo R. Alegre was engaged as athletic director by petitioner
Brent School, Inc. at a yearly compensation of P20,000.00. The contract fixed a
specific term for its existence, five (5) years, i.e., from July 18, 1971, the date of
execution of the agreement, to July 17, 1976. Subsequent subsidiary agreements
dated March 15, 1973, August 28, 1973, and September 14, 1974 reiterated the
same terms and conditions, including the expiry date, as those contained in the
original contract of July 18, 1971.
On April 20,1976, Alegre was given a copy of the report filed by Brent School with
the Department of Labor advising of the termination of his services effective on July
16, 1976. The stated ground for the termination was "completion of contract,
expiration of the definite period of EMPLOYMENT." Although protesting the
announced termination stating that his services were necessary and desirable in the
usual business of his employer, and his EMPLOYMENT lasted for 5 years - therefore
he had acquired the status of regular employee - Alegre accepted the amount of
P3,177.71, and signed a receipt therefor containing the phrase, "in full payment of
services for the period May 16, to July 17, 1976 as full payment of contract."
The Regional Director considered Brent School's report as an application for
clearance to terminate EMPLOYMENT (not a report of termination), and accepting
the recommendation of the Labor Conciliator, refused to give such clearance and
instead required the reinstatement of Alegre, as a "permanent employee," to his
former position without loss of seniority rights and with full back wages.
ISSUE:
Whether or not the provisions of the Labor Code, as amended, have anathematized
"fixed period EMPLOYMENT" or EMPLOYMENT for a term.
RULING:
Respondent Alegre's contract of EMPLOYMENT with Brent School having lawfully
terminated with and by reason of the expiration of the agreed term of period
thereof, he is declared not entitled to reinstatement.
The employment contract between Brent School and Alegre was executed on July
18, 1971, at a time when the Labor Code of the Philippines (P.D. 442) had not yet
been promulgated. At that time, the validity of term employment was impliedly
recognized by the Termination Pay Law, R.A. 1052, as amended by R.A. 1787. Prior,
thereto, it was the Code of Commerce (Article 302) which governed employment
without a fixed period, and also implicitly acknowledged the propriety of
employment with a fixed period. The Civil Code of the Philippines, which was
approved on June 18, 1949 and became effective on August 30,1950, itself deals
with obligations with a period. No prohibition against term-or fixed-period
employment is contained in any of its articles or is otherwise deducible therefrom.
It is plain then that when the employment contract was signed between Brent
School and Alegre, it was perfectly legitimate for them to include in it a stipulation

fixing the duration thereof Stipulations for a term were explicitly recognized as valid
by this Court.
The status of legitimacy continued to be enjoyed by fixed-period employment
contracts under the Labor Code (PD 442), which went into effect on November 1,
1974. The Code contained explicit references to fixed period employment, or
employment with a fixed or definite period. Nevertheless, obscuration of the
principle of licitness of term employment began to take place at about this time.
Article 320 originally stated that the "termination of employment of probationary
employees and those employed WITH A FIXED PERIOD shall be subject to such
regulations as the Secretary of Labor may prescribe." Article 321 prescribed the just
causes for which an employer could terminate "an employment without a definite
period." And Article 319 undertook to define "employment without a fixed period" in
the following manner: 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 service to be
performed is seasonal in nature and the employment is for the duration of the
season.
Subsequently, the foregoing articles regarding employment with "a definite period"
and "regular" employment were amended by Presidential Decree No. 850, effective
December 16, 1975.
Article 320, dealing with "Probationary and fixed period employment," was altered
by eliminating the reference to persons "employed with a fixed period," and was
renumbered (becoming Article 271).
As it is evident that Article 280 of the Labor Code, under a narrow and literal
interpretation, not only fails to exhaust the gamut of employment contracts to
which the lack of a fixed period would be an anomaly, but would also appear to
restrict, without reasonable distinctions, the right of an employee to freely stipulate
with his employer the duration of his engagement, it logically follows that such a
literal interpretation should be eschewed or avoided. The law must be given a
reasonable interpretation, to preclude absurdity in its application. Outlawing the
whole concept of term employment and subverting to boot the principle of freedom
of contract to remedy the evil of employer's using it as a means to prevent their
employees from obtaining security of tenure is like cutting off the nose to spite the
face or, more relevantly, curing a headache by lopping off the head.
Such interpretation puts the seal on Bibiso upon the effect of the expiry of an
agreed period of employment as still good rulea rule reaffirmed in the recent case
of Escudero vs. Office of the President (G.R. No. 57822, April 26, 1989) where, in the
fairly analogous case of a teacher being served by her school a notice of
termination following the expiration of the last of three successive fixed-term
employment contracts, the Court held:
Reyes (the teacher's) argument is not persuasive. It loses sight of the fact that her
employment was probationary, contractual in nature, and one with a definitive

period. At the expiration of the period stipulated in the contract, her appointment
was deemed terminated and the letter informing her of the non-renewal of her
contract is not a condition sine qua non before Reyes may be deemed to have
ceased in the employ of petitioner UST. The notice is a mere reminder that Reyes'
contract of employment was due to expire and that the contract would no longer be
renewed. It is not a letter of termination.
Paraphrasing Escudero, respondent Alegre's employment was terminated upon the
expiration of his last contract with Brent School on July 16, 1976 without the
necessity of any notice. The advance written advice given the Department of Labor
with copy to said petitioner was a mere reminder of the impending expiration of his
contract, not a letter of termination, nor an application for clearance to terminate
which needed the approval of the Department of Labor to make the termination of
his services effective. In any case, such clearance should properly have been given,
not denied.

ANGELINA FRANCISCO, Petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, KASEI CORPORATION, SEIICHIRO TAKAHASHI,
Respondents

Angelina Francisco the petitioner was hired by the respondent Kasei Corporation
during its incorporation stage. She was designated as an Accountant and Corporate
Secretary and was assigned to handle the accounting needs of the company. She
was also designated as a Liason Officer to the City of Manila to process or secure
the necessary permits for the operation of the company.
In 1996, Petitioner was promoted as an Acting Manager. She was assigned to
handle recruitment of all employees and perform management administration
functions. In 2001, she was replaced by Liza Fuentes as Manager. The Treasurer
despite being replaced by Ms. Fuentes, she will be connected with Kasei Corporation
as a technical assistant to Seiji Kamura who is in charge of all the BIR matters.
Thereafter, Kasie reduced her salary amounting to 2,500 a month beginning January
up to September 201 for a total deduction of 22,500 as of September 2001. She
was allegedly also did not receive her mid-year bonus because the company
allegedly is not earning. On October 15, 2001, she was informed that she is no
longer connected with the company. Because of this, she filed an action for
constructive dismissal with the Labor Arbiter.
The Labor Arbiter found that the petitioner was illegally dismissed. NLRC affirmed
the decision while CA reversed it.
Kasei Corporation claimed that Francisco was not their employee, having been
designated as technical consultant who performed work at her own discretion
without the control and supervision of the corporation, and that her consultancy

may be terminated any time considering that her services were only temporary in
nature and dependent on the needs of the corporation.
To prove that petitioner was not an employee of the corporation, private
respondents submitted a list of employees for the years 1999 and 2000 duly
received by the BIR showing that the petitioner was not among the employees
reported to the BIR, as well as the list of payees subject to expanded withholding
tax which included petitioner. SSS records were also submitted showing that
petitioners latest employer was Seiji Corporation.
Issue:
Whether or not there was an employer-employee relationship between Francisco
and Kasei Corporation; and whether Francisco was illegally dismissed.
Held:
Yes. There was an employer-employee relationship.
There has been no uniform test to determine the existence of an employeremployee relation. There are instances when, aside from the employers power to control the
employee with respect to the means and methods by which the work is to be accomplished, economic
realities of the employment relations help provide a comprehensive analysis of the true classification
of the individual, whether as employee, independent contractor, corporate officer or some other
capacity.
The better approach would therefore be to adopt a two-tiered test involving: (1) the putative
employers power to control the employee with respect to the means and methods by which the work
is to be accomplished; and (2) the underlying economic realities of the activity or relationship.
This two-tiered test would provide us with a framework of analysis, which would take into
consideration the totality of circumstances surrounding the true nature of the relationship between the
parties. This is especially appropriate in this case where there is no written agreement or terms of
reference to base the relationship on; and due to the complexity of the relationship based on the
various positions and responsibilities given to the worker over the period of the latters employment.
Thus, the determination of the relationship between employer and employee depends upon the
circumstances of the whole economic activity, such as: (1) the extent to which the services performed
are an integral part of the employers business; (2) the extent of the workers investment in
equipment and facilities; (3) the nature and degree of control exercised by the employer; (4) the
workers opportunity for profit and loss; (5) the amount of initiative, skill, judgment or foresight
required for the success of the claimed independent enterprise; (6) the permanency and duration of
the relationship between the worker and the employer; and (7) the degree of dependency of the
worker upon the employer for his continued employment in that line of business. The proper standard
of economic dependence is whether the worker is dependent on the alleged employer for his continued
employment in that line of business.