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ABS-CBN Case Digest

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 where he irrevocably resigned in view of the
recent events concerning his program and career. 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
employee-employer 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 employee-employer
relationship. NLRC affirmed the decision of the Labor Arbiter. CA also affirmed the decision of
Issue: Whether or not there was employer-employee relationship between the parties.
Ruling: 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 so-called "control test", is the most important
Sonzas services to co-host its television and radio programs are because of his peculiar
talents, skills and celebrity status. 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. All the talent fees and benefits paid to SONZA were the
result of negotiations that led to the Agreement. For violation of any provision of the Agreement,
either party may terminate their relationship. Applying the control test to the present case, we
find 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. 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. 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-CBNs 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
Sonzas work. A radio broadcast specialist who works under minimal supervision is an
independent contractor. Sonzas work as television and radio program host required special
skills and talent, which SONZA admittedly possesses.
ABS-CBN claims that there exists a prevailing practice in the broadcast and entertainment
industries to treat talents like Sonza as independent contractors. The right of labor to security of
tenure as guaranteed in the Constitution arises only if there is an employer-employee
relationship under labor laws. 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.

524 SCRA 290 Labor Law Labor Standards Fixed-Term Employee vs Regular Employee
Thelma Dumpit-Murillo was hired by ABC as a newscaster in 1995. Her contract with the TV
station was repeatedly renewed until 1999. She then wrote Jose Javier (VP for News and Public
Affairs of ABC) advising him of her intention to renew the contract.
Javier did not respond.
Dumpit then demanded reinstatement as well as her backwages, service incentive leave pays
and other monetary benefits.
ABC said they could only pay her backwages but her other claims had no basis as she was not
entitled thereto because she is considered as a talent and not a regular employee.
Dumpit sued ABC. The Labor Arbiter ruled against Dumpit. The National Labor Relations
Commission reversed the LA. The Court of Appeals reversed the NLRC and ruled that as per
the contract between ABC and Dumpit, Dumpit is a fixed term employee.
ISSUE: Whether or not Dumpit is a regular employee.
HELD: Yes. Dumpit was a regular employee under contemplation of law. The practice of having
fixed-term contracts in the industry does not automatically make all talent contracts valid and
compliant with labor law. The assertion that a talent contract exists does not necessarily prevent
a regular employment status.
The duties of Dumpit as enumerated in her employment contract indicate that ABC had control
over the work of Dumpit. Aside from control, ABC also dictated the work assignments and

payment of petitioners wages. ABC also had power to dismiss her. All these being present,
clearly, there existed an employment relationship between Dumpit and ABC.
In addition, her work was continuous for a period of four years. This repeated engagement
under contract of hire is indicative of the necessity and desirability of the Dumpits work in ABCs

Reynaldo Bautista vs. Hon. Amado Inciong G.R. No. L-52824, March 16, 1988
FACTS:Petitioner was employed by Associated Labor Unions(ALU) as organizer. Bautista went
on leave and when he went back to work, he was informed that he was already terminated. The
Director ruled in favor of Bautista. The Deputy Minister of Labor, however, set aside the order of
the Director finding that his membership coverage with the SSS which shows that respondent A
LU is the one paying the employers share in the premiums is not conclusive proof that responde
nt is the petitioners employer because such payments were performed by the respondent as a fa
vor for all those who were performing full time union activities with it to entitle them to SSS ben
efits. He then ruled that there was no emplore-employee relationship between ALU and Bautista
by the fact that ALU is not an entity for profit but a duly registered labor union whose sole purpo
se is the representation of its bonafide organization units.
ISSUE:Whether or not there can be employer-employee relationship between a labor union an
d its member.
HELD:Yes, the mere fact that the respondent is a labor union does not mean that it cannot be c
onsidered an employer of the persons who work for it.
Moreover, the four elements in determining the existence of an employer-employee relationship
was present in the case at bar. The Regional Director correctly found that the petitioner was an e
mployee of the respondent union as reflected in the latters individual payroll sheets and shown
by the petitioners membership with the Social Security System (SSS) and the respondent union
s share of remittances in the petitioners favor. Bautista was selected and hired by the union. AL
U had the power to dismiss him as indeed it dismissed him. And definitely, the Union tightly con
trolled the work of Bautista as one of its organizers
(by Cris Figueroa)GR No. 129076 November 25, 1998
Facts: 1.Petitioner Orlando Farm Growers Association (Anover is the president) is an
association of landowners engaged in the production of export quality bananas
located in Kinamayan, Sto. Tomas, Davao del Norte, established for the sole
purpose of dealing collectively with
Stanfilco on matters concerning technical
control, among

others.2.Respondents (about 20 complainants) were hired as farm workers

by several member-landowners but, nonetheless, were made to perform functions
as packers and harvesters in the plantation of petitioner association.3.January 8,
1993 July 30, 1994 respondents were dismissed on various dates. Thus, they filed
against petitioner for illegal dismissal and monetary benefits.
to complainants
responsibleofficers.4.September 6, 1995



and solidary,



LABOR ARBITER SANCHO: ordered reinstatement of respondents and payment of

back wages and other benefits
Note: 2 complainants eventually dropped their case (Loran Paquitand
LovillaDorlones) because they were able to amicably settle theirclaims.5.December
26, 1996 - NLRC affirmed decision of LA and denied the motion
forreconsideration.6.Petitioner contends that being an unregistered association and
having been formedsolely to serve as an effective medium for dealing collectively
with Stanfilco and notexisting in law, it cannot be considered an employer.
Whether or not an unregistered association may be an employer independent
of therespective members it represents
YES. Petition is DISMISSED. NLRC judgment affirmed but remanded
to LaborArbiter Sancho to specify the amount each respondent is entitled to.


Ratio:The law does not require an employer to be registered before he may

considered asone within the definition of the Labor Code.
Art 212 (e) of the Labor Code defines an employer as any person acting inthe
interest of an employer, directly or indirectly
To determine
the existence
of employer
relationship (FilipinasBroadcasting Network v. NLRC):1.The manner of selection and
wages3.Presence or
absence of
of dismissal4.Presence or absence of the power of control (most important element
Evidence to support existence of employer employee relationship:
During the subsistence of the association, several circulars andmemoranda
were issued concerning, among other
things, absences without formal request, loitering in the work area and disciplinary
measures with which every worker is enjoined to comply.

The employees were issued IDs.

In Domasig v. NLRC, the issuance of ID was held to be not onlyas a security measure
but mainly to identify the holder as abonafide employee of the firm

Labor Standards Management Rights Return of Investments

In 1979, SMC implemented its Complementary Distribution System (CDS) whereby
wholesalers can directly get beer products from any SMC offices. The SMB Union assailed this
program because it violates the CBA particularly the established scheme whereby route
salesmen have been given specific territories to sell beer products. The CDS scheme would
then lower the take home pay of the route salesmen. SMB Union then sued SMC for unfair labor
ISSUE: Whether or not the CDS is a violation of the CBA.
HELD: No. The SC ruled that the CDS is an exercise of management prerogatives whereby the
management can implement schemes to optimize their profit. Further, the CDS provides for a
compensation clause as well for salesmen. San Miguel Corporations offer to compensate the
members of its sales force who will be adversely affected by the implementation of the CDS by
paying them a so-called back adjustment commission to make up for the commissions they
might lose as a result of the CDS proves the companys good faith and lack of intention to bust
their union.