Sonza vs ABS CBN

Sonza vs ABS CBN

JOSE Y. SONZA, petitioner,
vs.
ABS-CBN BROADCASTING CORPORATION, respondent.

G.R. No. 138051
June 10, 2004

FACTS: 

In May 1994, respondent ABS-CBN Broadcasting Corporation (“ABSCBN”) 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 Carmela Tiangco (“TIANGCO”), as 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 for SONZA’s services a monthly talent fee of P310, 000 for the first year andP317, 000 for the second and third year of the Agreement.  ABS-CBN would pay the talent fees on the 10^thand 25^th days of the month.

On 1 April 1996, SONZA wrote a letter to ABS-CBN’s President, Eugenio Lopez III, stating in the letter that Mr. Sonza irrevocably resigned in view of recent events** concerning his programs and career; that these were due to acts of the station in violation and breach of their agreement; that the letter served as notice of rescission of said agreement; and that he 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, 13^th month pay, signing bonus, travel allowance and amounts due under the Employees Stock Option Plan (“ESOP”).

On 10 July 1996, ABS-CBN filed a Motion to dismiss on the ground that no employer-employee relationship existed between the parties, to which SONZA filed an opposition to the motion.

LA: The Labor Arbiter denied the motion to dismiss. The Labor Arbiter ruled:

“In this instant case, complainant for having invoked a claim that he was an employee of respondent company until April 15, 1996 and that he was not paid certain claims, it is sufficient enough as to confer jurisdiction over the instant case in this Office.  And as to whether or not such claim would entitle complainant to recover upon the causes of action asserted is a matter to be resolved only after and as a result of a hearing.  Thus, the respondent’s plea of lack of employer-employee relationship may be pleaded only as a matter of defense.  It behooves upon it the duty to prove that there really is no employer-employee relationship between it and the complainant.”

The Labor Arbiter then considered the case submitted for resolution. The parties submitted their position papers on 24 February 1997. The Labor Arbiter rendered his Decision dated 8 July 1997 dismissing the complaint for lack of jurisdiction:

“It must be noted that complainant was engaged by respondent by reason of his peculiar skills and talent as a TV host and a radio broadcaster.  Unlike an ordinary employee, he was free to perform the services he undertook to render in accordance with his own style… Whatever benefits complainant enjoyed arose from specific agreement by the parties and not by reason of employer-employee relationship… The fact that complainant was made subject to respondent’s Rules and Regulations, likewise, does not detract from the absence of employer-employee relationship.”

NLRC: Affirmed the LA’s decision of lack of jurisdiction. Motion for reconsideration denied.

 MJMDC is an agent of SONZA, not a mere ‘labor-only’ contractor of ABSCBN such that there exists an employer-employee relationship between the latter and SONZA. Jurisdiction over the instant controversy belongs to the regular courts, the same being in the nature of an action for alleged breach of contractual obligation on the part of respondent-appellee. The compensation and bonuses for Mr. Sonza’s services are not based on the Labor Code but rather on the provisions of their agreement.

CA: Petitioner filed a special civil action for certiorari, to which the CA dismissed the case.

The Court of Appeals affirmed the NLRC’s finding that no employer-employee relationship existed between SONZA and ABS-CBN.

The Court of Appeals ruled that the existence of an employer-employee relationship between SONZA and ABS-CBN is a factual question that is within the jurisdiction of the NLRC to resolve. A special civil action for certiorari extends only to issues of want or excess of jurisdiction of the NLRC.  Such action cannot cover an inquiry into the correctness of the evaluation of the evidence which served as basis of the NLRC’s conclusion.

ISSUES:

Whether the Court of Appeals gravely erred in affirming the NLRC’s decision and refusing to find that an Employer-Employee relationship existed between SONZA and ABS-CBN.

HELD:

NO, the Court of Appeals did not. No convincing reason exists to warrant a reversal of the decision of the Court of Appeals affirming the NLRC ruling which upheld the Labor Arbiter’s dismissal of the case for lack of jurisdiction.

SONZA maintains that all essential elements of an employer-employee relationship are present in this case. Case law has consistently held that the elements of an employer-employee 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 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.

• On Selection: ABS-CBN engaged SONZA’s services to co-host its television and radio programs because of SONZA’s peculiar skills, talent and celebrity status. 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.
• On wages: All the talent fees and benefits paid to SONZA were the result of negotiations that led to the Agreement. Whatever benefits SONZA enjoyed arose from contract and not because of an employer-employee relationship.
• On 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.

• On control: Applying the control test to the present case, we find that SONZA is not an employee but an independent contractor.  ABSCBN was not involved in the actual performance that produced the finished product of SONZA’s 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-CBN’s 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 SONZA’s work.

Although ABS-CBN did have the option not to broadcast SONZA’s show, ABS-CBN was still obligated to pay SONZA’s talent fees.  Thus, even if ABS-CBN was completely dissatisfied with the means and methods of SONZA’s performance of his work, or even with the quality or product of his work, ABS-CBN could not dismiss or even discipline SONZA.  All that ABS-CBN could do is not to broadcast SONZA’s show but ABS-CBN must still pay his talent fees in full. 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.

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