SONZA v ABS-CBN

GR 138051 June 10, 2004

Facts:

ABS-CBN represented by corporate officers and Mel and Jay Management and Development Corporation
(MJMDC) represented by Sonza, as President and General Manager signed an Agreement, and MJMDC
referred in the Agreement as ‘Agent’ agreed that Sonza’s services will be exclusive to former as talent for
radio and television, and that 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.

Then Sonza resigned on 1996 through letter. Subsequently, he filed a complaint against ABS-CBN 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). Respondent then
contended that there was no employer-employee relationship existed between them.

Labor Arbiter dismissed the complaint for lack of jurisdiction and ruled that there is no ER-EE relationship.
This was affirmed by NLRC and CA.

Issue:

WON there is ER-EE relation between petitioner and respondent.

Ruling:

NO, Sonza is an independent contractor and not an employee. Based on the essential elements of an ER-
EE relationship:

(1) selection and engagement of EE – selection and hiring of Sonza is 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;

(2) payment of wages – benefits and talent fees paid to Sonza were result of negotiations and/or
agreement and not because of er-ee relationship, if Sonza were employee of ABS-CBN, there’s no need
to stipulate benefits such as SSS, Medicare et al because the law automatically incorporates such into
every er-ee contract;

(3) power of dismissal – Sonza failed to show that ABS-CBN could terminate his services on the ground
other than breach of contract, such as retrenchment, in fact ABS-CBN could not retrench Sonza even if it
suffered business losses it remained obligated to pay his talent fees during the life of Agreement; and

(4) power of control – most important element, ABS-CBN did not exercise control over the means and
methods of performance of Sonza, his work as television and radio program host required special skills
and talent, which he admittedly possesses. Actually, ABS-CBN control was limited only to the result of
Sonza’s work, whether to broadcast the final product or not, but either way still ABS paid the talent fee
of Sonza in full. Moreover, the rules and standard of performance abide by Sonza was the ‘Television and
Radio Code of KBP’, which was adopted by ABS, such code of ethics are applicable only to talents and not
to the employees of ABS.