JOSE Y. SONZA, petitioner, vs. ABS-CBN BROADCASTING CORPORATION, respondent.
G.R. No. 138051 June 10, 2004
Opinion: The case that started the never ending rift between Jay Sonza and ABS CBN. Independent contractors (talents) and not employees of the broadcasting company because the element of control on their means, manner and method is only minimal.
Facts:
In May 1994, ABS-CBN signed an Agreement with the Mel and Jay Management and Development Corporation (MJMDC). Referred to in the Agreement as "AGENT," MJMDC agreed to provide SONZA’s services exclusively to ABS-CBN as talent for radio and television.
On 1 April 1996, SONZA wrote a letter to ABS-CBN’s President, Eugenio Lopez III, regarding his decision to irrevocably resign in view of recent events concerning his programs and career. In the letter, he stated that he is waiving and renouncing recovery of the remaining amount stipulated 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 (NCR) alleging 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. ABS-CBN, on the other hand, filed a Motion to Dismiss on the ground that no employer-employee relationship existed between the parties. It insisted that SONZA is an independent contractor.
The Labor Arbiter dismissed SONZA’s complaint. It ratiocinated that whatever benefits SONZA enjoyed arose from the Agreement between him and ABS-CBN and not by reason of employer-employee relationship. NLRC and CA sustained the decision of the Labor Arbiter.
Issue:
Whether SONZA is an employee of ABS-CBN or an independent contractor.
Ruling:
The Supreme Court ruled that SONZA is not an employee of ABS-CBN but an independent contractor.
Selection and Engagement of Employees. 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.
Payment of Wages. All the talent fees and benefits paid to SONZA were the result of negotiations that led to the Agreement. If SONZA were ABS-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"20 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. SONZA’s talent fees, amounting to P317,000 monthly in the second and third year, are so huge and out of the ordinary that they indicate more an independent contractual relationship rather than an employer-employee relationship.
Power of Dismissal. 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.
Power of Control. Applying the control test to the present case, the Court found 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.