LABREL
LABREL
LABREL
Y.
SONZA, petitioner, vs.
CORPORATION, respondent.
ABS-CBN
BROADCASTING
The Case
Before this Court is a petition for review on certiorari[1] assailing the 26 March
1999 Decision[2] of the Court of Appeals in CA-G.R. SP No. 49190 dismissing the petition filed
by Jose Y. Sonza (SONZA). The Court of Appeals affirmed the findings of the National Labor
Relations Commission (NLRC), which affirmed the Labor Arbiters dismissal of the case for
lack of jurisdiction.
The Facts
In May 1994, respondent ABS-CBN Broadcasting Corporation (ABS-CBN) signed an
Agreement (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 SONZAs
services exclusively to ABS-CBN as talent for radio and television. The Agreement listed the
services SONZA would render to ABS-CBN, as follows:
a. Co-host for Mel & Jay radio program, 8:00 to 10:00 a.m., Mondays to Fridays;
b. Co-host for Mel & Jay television program, 5:30 to 7:00 p.m., Sundays.[3]
ABS-CBN agreed to pay for SONZAs services a monthly talent fee of P310,000 for the
first year and P317,000 for the second and third year of the Agreement. ABS-CBN would pay
the talent fees on the 10th and 25th days of the month.
On 1 April 1996, SONZA wrote a letter to ABS-CBNs President, Eugenio Lopez III, which
reads:
Dear Mr. Lopez,
We would like to call your attention to the Agreement dated May 1994 entered into by your
goodself on behalf of ABS-CBN with our company relative to our talent JOSE Y. SONZA.
As you are well aware, Mr. Sonza irrevocably resigned in view of recent events concerning
his programs and career. We consider these acts of the station violative of the Agreement
and the station as in breach thereof. In this connection, we hereby serve notice of rescission
of said Agreement at our instance effective as of date.
Mr. Sonza informed us 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.
xxx
While Philippine jurisprudence has not yet, with certainty, touched on the true nature of the
contract of a talent, it stands to reason that a talent as above-described cannot be
considered as an employee by reason of the peculiar circumstances surrounding the
engagement of his services.
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. The benefits conferred to complainant under the May
1994 Agreement are certainly very much higher than those generally given to
employees. For one, complainant Sonzas monthly talent fees amount to a
staggering P317,000. Moreover, his engagement as a talent was covered by a specific
contract. Likewise, he was not bound to render eight (8) hours of work per day as he worked
only for such number of hours as may be necessary.
The fact that per the May 1994 Agreement complainant was accorded some benefits
normally given to an employee is inconsequential. Whatever benefits complainant
enjoyed arose from specific agreement by the parties and not by reason of
employer-employee relationship. As correctly put by the respondent, All these benefits
are merely talent fees and other contractual benefits and should not be deemed as salaries,
wages and/or other remuneration accorded to an employee, notwithstanding the
nomenclature appended to these benefits. Apropos to this is the rule that the term or
nomenclature given to a stipulated benefit is not controlling, but the intent of the parties to
the Agreement conferring such benefit.
The fact that complainant was made subject to respondents Rules and
Regulations, likewise, does not detract from the absence of employer-employee
relationship. As held by the Supreme Court, The line should be drawn between rules that
merely serve as guidelines towards the achievement of the mutually desired result without
dictating the means or methods to be employed in attaining it, and those that control or fix
the methodology and bind or restrict the party hired to the use of such means. The first,
which aim only to promote the result, create no employer-employee relationship unlike the
second, which address both the result and the means to achieve it. (Insular Life Assurance
Co., Ltd. vs. NLRC, et al., G.R. No. 84484, November 15, 1989).
x x x (Emphasis supplied)[7]
SONZA appealed to the NLRC. On 24 February 1998, the NLRC rendered a Decision
affirming the Labor Arbiters decision. SONZA filed a motion for reconsideration, which the
NLRC denied in its Resolution dated 3 July 1998.
On 6 October 1998, SONZA filed a special civil action for certiorari before the Court of
Appeals assailing the decision and resolution of the NLRC. On 26 March 1999, the Court of
Appeals rendered a Decision dismissing the case.[8]
Hence, this petition.
The present controversy is one of first impression. Although Philippine labor laws and
jurisprudence define clearly the elements of an employer-employee relationship, this is the
first time that the Court will resolve the nature of the relationship between a television and
radio station and one of its talents. There is no case law stating that a radio and television
program host is an employee of the broadcast station.
The instant case involves big names in the broadcast industry, namely Jose Jay Sonza, a
known television and radio personality, and ABS-CBN, one of the biggest television and radio
networks in the country.
SONZA contends that the Labor Arbiter has jurisdiction over the case because he was an
employee of ABS-CBN. On the other hand, ABS-CBN insists that the Labor Arbiter has no
jurisdiction because SONZA was an independent contractor.
Employee or Independent Contractor?
The existence of an employer-employee relationship is a question of fact. Appellate
courts accord the factual findings of the Labor Arbiter and the NLRC not only respect but also
finality when supported by substantial evidence. [15] Substantial evidence means such
relevant evidence as a reasonable mind might accept as adequate to support a conclusion.
[16]
A party cannot prove the absence of substantial evidence by simply pointing out that
there is contrary evidence on record, direct or circumstantial. The Court does not substitute
its own judgment for that of the tribunal in determining where the weight of evidence lies or
what evidence is credible.[17]
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 employeremployee relationship are: (a) the selection and engagement of the employee; (b) the
payment of wages; (c) the power of dismissal; and (d) the employers power to control the
employee on the means and methods by which the work is accomplished. [18] The last
element, the so-called control test, is the most important element.[19]
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.
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.
In any event, the method of selecting and engaging SONZA does not conclusively
determine his status. We must consider all the circumstances of the relationship, with the
control test being the most important element.
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 13 th month pay[20] which the law
automatically incorporates into every employer-employee contract. [21] Whatever benefits
SONZA enjoyed arose from contract and not because of an employer-employee relationship.
[22]
SONZAs 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. 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. Obviously, SONZA acting alone possessed enough
bargaining power to demand and receive such huge talent fees for his services. The power
to bargain talent fees way above the salary scales of ordinary employees is a circumstance
indicative, but not conclusive, of an independent contractual relationship.
The payment of talent fees directly to SONZA and not to MJMDC does not negate the
status of SONZA as an independent contractor. The parties expressly agreed on such mode
of payment. Under the Agreement, MJMDC is the AGENT of SONZA, to whom MJMDC would
have to turn over any talent fee accruing under the Agreement.
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.[23]
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.[24] 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, ABS-CBN 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 ABSCBN cancelled SONZAs programs through no fault of SONZA.[25]
SONZA assails the Labor Arbiters interpretation of his rescission of the Agreement as an
admission that he is not an employee of ABS-CBN. The Labor Arbiter stated that if it were
true that complainant was really an employee, he would merely resign, instead. SONZA did
actually resign from ABS-CBN but he also, as president of MJMDC, rescinded the
Agreement.SONZAs letter clearly bears this out. [26] However, the manner by which SONZA
terminated his relationship with ABS-CBN is immaterial. Whether SONZA rescinded the
Agreement or resigned from work does not determine his status as employee or
independent contractor.
D. Power of Control IMPORTANT
Since there is no local precedent on whether a radio and television program host is an
employee or an independent contractor, we refer to foreign case law in analyzing the
present case. The United States Court of Appeals, First Circuit, recently held in Alberty-Vlez
v. Corporacin De Puerto Rico Para La Difusin Pblica (WIPR) [27] that a television
program host is an independent contractor. We quote the following findings of the U.S. court:
Several factors favor classifying Alberty as an independent contractor. First, a television
actress is a skilled position requiring talent and training not available on-the-job.
x x x In this regard, Alberty possesses a masters degree in public communications and
journalism; is trained in dance, singing, and modeling; taught with the drama department at
the University of Puerto Rico; and acted in several theater and television productions prior to
her affiliation with Desde Mi Pueblo. Second, Alberty provided the tools and
instrumentalities necessary for her to perform. Specifically, she provided, or obtained
sponsors to provide, the costumes, jewelry, and other image-related supplies and services
necessary for her appearance. Alberty disputes that this factor favors independent
contractor status because WIPR provided the equipment necessary to tape the
show. Albertys argument is misplaced. The equipment necessary for Alberty to conduct her
job as host of Desde Mi Pueblo related to her appearance on the show.Others provided
equipment for filming and producing the show, but these were not the primary tools that
Alberty used to perform her particular function. If we accepted this argument, independent
contractors could never work on collaborative projects because other individuals often
provide the equipment required for different aspects of the collaboration. x x x
Third, WIPR could not assign Alberty work in addition to filming Desde Mi
Pueblo. Albertys contracts with WIPR specifically provided that WIPR hired her professional
services as Hostess for the Program Desde Mi Pueblo. There is no evidence that WIPR
assigned Alberty tasks in addition to work related to these tapings. x x x[28] (Emphasis
supplied)
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. [29] 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.[30]
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 cohost 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.
[31]
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. [32] 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.
We find that ABS-CBN was not involved in the actual performance that produced the
finished product of SONZAs work.[33] 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.[34] 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.
SONZA claims that ABS-CBNs power not to broadcast his shows proves ABS-CBNs power
over the means and methods of the performance of his work. Although ABS-CBN did have
the option not to broadcast SONZAs show, ABS-CBN was still obligated to pay SONZAs talent
fees. Thus, even if ABS-CBN was completely dissatisfied with the means and methods of
SONZAs 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
SONZAs show but ABS-CBN must still pay his talent fees in full. [35]
Clearly, ABS-CBNs right not to broadcast SONZAs show, burdened as it was by the
obligation to continue paying in full SONZAs talent fees, did not amount to control over the
means and methods of the performance of SONZAs work. ABS-CBN could not terminate or
discipline SONZA even if the means and methods of performance of his work - how he
delivered his lines and appeared on television - did not meet ABS-CBNs approval. This proves
that ABS-CBNs control was limited only to the result of SONZAs work, whether to broadcast
the final product or not. In either case, ABS-CBN must still pay SONZAs talent fees in full
until the expiry of the Agreement.
In Vaughan, et al. v. Warner, et al.,[36] the United States Circuit Court of Appeals ruled
that vaudeville performers were independent contractors although the management
reserved the right to delete objectionable features in their shows. Since the management
did not have control over the manner of performance of the skills of the artists, it could only
control the result of the work by deleting objectionable features. [37]
SONZA further contends that ABS-CBN exercised control over his work by supplying all
equipment and crew. No doubt, ABS-CBN supplied the equipment, crew and airtime needed
to broadcast the Mel & Jay programs. However, the equipment, crew and airtime are not the
tools and instrumentalities SONZA needed to perform his job. What SONZA principally
needed were his talent or skills and the costumes necessary for his appearance. [38] Even
though ABS-CBN provided SONZA with the place of work and the necessary equipment,
SONZA was still an independent contractor since ABS-CBN did not supervise and control
his work. ABS-CBNs sole concern was for SONZA to display his talent during the airing of the
programs.[39]
A radio broadcast specialist who works under minimal supervision is an independent
contractor.[40] SONZAs work as television and radio program host required special skills and
talent, which SONZA admittedly possesses. The records do not show that ABS-CBN exercised
any supervision and control over how SONZA utilized his skills and talent in his shows.
Second, SONZA urges us to rule that he was ABS-CBNs employee because ABS-CBN
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[41] of ABS-CBN. The Agreement does not require SONZA to
comply with the rules and standards of performance prescribed for employees of ABSCBN. 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. [42] 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.[43] 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. We have ruled that:
Further, not every form of control that a party reserves to himself over the conduct of the
other party in relation to the services being rendered may be accorded the effect of
establishing an employer-employee relationship. The facts of this case fall squarely with the
case of Insular Life Assurance Co., Ltd. vs. NLRC. In said case, we held that:
Logically, the line should be drawn between rules that merely serve as guidelines towards
the achievement of the mutually desired result without dictating the means or methods to
be employed in attaining it, and those that control or fix the methodology and bind or
restrict the party hired to the use of such means. The first, which aim only to promote the
result, create no employer-employee relationship unlike the second, which address both the
result and the means used to achieve it.[44]
The Vaughan case also held that one could still be an independent contractor although
the hirer reserved certain supervision to insure the attainment of the desired result. The
hirer, however, must not deprive the one hired from performing his services according to his
own initiative.[45]
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.[46] 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. [47] 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.
MJMDC as Agent of SONZA
SONZA protests the Labor Arbiters finding that he is a talent of MJMDC, which contracted
out his services to ABS-CBN. The Labor Arbiter ruled that as a talent of MJMDC, SONZA is not
an employee of ABS-CBN. SONZA insists that MJMDC is a labor-only contractor and ABS-CBN
is his employer.
In a labor-only contract, there are three parties involved: (1) the labor-only contractor;
(2) the employee who is ostensibly under the employ of the labor-only contractor; and (3)
the principal who is deemed the real employer. Under this scheme, the labor-only
contractor is the agent of the principal. The law makes the principal responsible to the
employees of the labor-only contractor as if the principal itself directly hired or employed the
employees.[48] These circumstances are not present in this case.
There are essentially only two parties involved under the Agreement, namely, SONZA
and ABS-CBN. MJMDC merely acted as SONZAs agent. The Agreement expressly states that
MJMDC acted as the AGENT of SONZA. The records do not show that MJMDC acted as ABSCBNs agent. MJMDC, which stands for Mel and Jay Management and Development
Corporation, is a corporation organized and owned by SONZA and TIANGCO. The President
and General Manager of MJMDC is SONZA himself. It is absurd to hold that MJMDC, which is
owned, controlled, headed and managed by SONZA, acted as agent of ABS-CBN in entering
into the Agreement with SONZA, who himself is represented by MJMDC. That would make
MJMDC the agent of both ABS-CBN and SONZA.
The Labor Arbiter can decide a case based solely on the position papers and the
supporting documents without a formal trial.[51] The holding of a formal hearing or trial is
something that the parties cannot demand as a matter of right. [52] If the Labor Arbiter is
confident that he can rely on the documents before him, he cannot be faulted for not
conducting a formal trial, unless under the particular circumstances of the case, the
documents alone are insufficient. The proceedings before a Labor Arbiter are non-litigious in
nature. Subject to the requirements of due process, the technicalities of law and the rules
obtaining in the courts of law do not strictly apply in proceedings before a Labor Arbiter.
Talents as Independent Contractors
ABS-CBN claims that there exists a prevailing practice in the broadcast and
entertainment industries to treat talents like SONZA as independent contractors. SONZA
argues that if such practice exists, it is void for violating the right of labor to security of
tenure.
The right of labor to security of tenure as guaranteed in the Constitution [53] arises only if
there is an employer-employee relationship under labor laws. Not every performance of
services for a fee creates an employer-employee relationship. To hold that every person who
renders services to another for a fee is an employee - to give meaning to the security of
tenure clause - will lead to absurd results.
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. An individual like an artist or talent has a
right to render his services without any one controlling the means and methods by which he
performs his art or craft. This Court will not interpret the right of labor to security of tenure
to compel artists and talents to render their services only as employees. If radio and
television program hosts can render their services only as employees, the station owners
and managers can dictate to the radio and television hosts what they say in their
shows. This is not conducive to freedom of the press.
Different Tax Treatment of Talents and Broadcasters
The National Internal Revenue Code (NIRC)[54] in relation to Republic Act No. 7716,[55] as
amended by Republic Act No. 8241, [56] treats talents, television and radio broadcasters
differently. Under the NIRC, these professionals are subject to the 10% value-added tax (VAT)
on services they render. Exempted from the VAT are those under an employer-employee
relationship.[57] This different tax treatment accorded to talents and broadcasters bolters our
conclusion that they are independent contractors, provided all the basic elements of a
contractual relationship are present as in this case.
Nature of SONZAs Claims
SONZA seeks the recovery of allegedly unpaid talent fees, 13 th month pay, separation
pay, service incentive leave, signing bonus, travel allowance, and amounts due under the
Employee Stock Option Plan. We agree with the findings of the Labor Arbiter and the Court
of Appeals that SONZAs claims are all based on the May 1994 Agreement and stock
option plan, and not on the Labor Code. Clearly, 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, SONZAs cause of action is for breach of contract which is
intrinsically a civil dispute cognizable by the regular courts. [58]
WHEREFORE, we DENY the petition. The assailed Decision of the Court of Appeals
dated 26 March 1999 in CA-G.R. SP No. 49190 is AFFIRMED. Costs against petitioner.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Panganiban, Ynares-Santiago, and Azcuna, JJ., concur.
service incentive leave pay, Emergency Cost of Living Allowance, and moral and exemplary
damages against PLDT.
The Labor Arbiter rendered a Decision finding PLDT liable for illegal dismissal. It was
explained in the Decision that petitioners were found to be employees of PLDT and not of
SSCP. Such conclusion was arrived at with the factual finding that petitioners continued to
serve as guards of PLDTs offices. As such employees, petitioners were entitled to substantive
and procedural due process before termination of employment. The Labor Arbiter held that
respondent failed to observe such due process requirements. The dispositive portion of the
Labor Arbiters Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered ordering
respondent Philippine Long Distance and Telephone Company (PLDT) to pay
complainants Raul E. Locsin and Eddie Tomaquin their separation pay and
back wages computed as follows:
1.
2.
substantial capital to operate and conduct its own business. The CA further bolstered its
decision by citing the Agreement whereby it was stipulated that there shall be no employeremployee relationship between the security guards and PLDT.
Anent the pay slips that were presented by petitioners, the CA noted that those were
issued by SSCP and not PLDT; hence, SSCP continued to pay the salaries of petitioners after
the Agreement. This fact allegedly proved that petitioners continued to be employees of
SSCP albeit performing their work at PLDTs premises.
From such assailed decision, petitioners filed a motion for reconsideration which was
denied in the assailed resolution.
Hence, we have this petition.
The Issues
1.
2.
3.
4.
5.
An Employer-Employee
Relationship Existed Between the Parties
It is beyond cavil that there was no employer-employee relationship between the
parties from the time of petitioners first assignment to respondent by SSCP in 1988 until the
alleged termination of the Agreement between respondent and SSCP. In fact, this was the
conclusion that was reached by this Court in Abella v. Philippine Long Distance Telephone
Company,[7] where we ruled that petitioners therein, including herein petitioners, cannot be
considered as employees of PLDT. It bears pointing out that petitioners were among those
declared to be employees of their respective security agencies and not of PLDT.
The only issue in this case is whether petitioners became employees of respondent
after the Agreement between SSCP and respondent was terminated.
This must be answered in the affirmative.
Notably, respondent does not deny the fact that petitioners remained in the premises
of their offices even after the Agreement was terminated. And it is this fact that must be
explained.
To recapitulate, the CA, in rendering a decision in favor of respondent, found that: (1)
petitioners failed to prove that SSCP was a labor-only contractor; and (2) petitioners are
employees of SSCP and not of PLDT.
In arriving at such conclusions, the CA relied on the provisions of the Agreement,
wherein SSCP undertook to supply PLDT with the required security guards, while furnishing
PLDT with a performance bond in the amount of PhP 707,000. Moreover, the CA gave weight
to the provision in the Agreement that SSCP warranted that it carry on an independent
business and has substantial capital or investment in the form of equipment, work premises,
and other materials which are necessary in the conduct of its business.
Further, in determining that no employer-employee relationship existed between the
parties, the CA quoted the express provision of the Agreement, stating that no employeremployee relationship existed between the parties herein. The CA disregarded the pay slips
of Locsin considering that they were in fact issued by SSCP and not by PLDT.
From the foregoing explanation of the CA, the fact remains that petitioners remained
at their post after the termination of the Agreement. Notably, in its Comment datedMarch
10, 2009,[8] respondent never denied that petitioners remained at their post until September
30, 2002. While respondent denies the alleged circumstances stated by petitioners, that
they were told to remain at their post by respondents Security Department and that they
were informed by SSCP Operations Officer Eduardo Juliano that their salaries would be
coursed through SSCP as per arrangement with PLDT, it does not state why they were not
made to vacate their posts. Respondent said that it did not know why petitioners remained
at their posts.
Rule 131, Section 3(y) of the Rules of Court provides:
SEC. 3. Disputable presumptions.The following presumptions are
satisfactory if uncontradicted, but may be contradicted and overcome by
other evidence:
xxxx
(y) That things have happened according to the ordinary course of
nature and the ordinary habits of life.
In the ordinary course of things, responsible business owners or managers would not
allow security guards of an agency with whom the owners or managers have severed ties
with to continue to stay within the business premises. This is because upon the termination
of the owners or managers agreement with the security agency, the agencys undertaking of
liability for any damage that the security guard would cause has already been terminated.
Thus, in the event of an accident or otherwise damage caused by such security guards, it
would be the business owners and/or managers who would be liable and not the agency. The
business owners or managers would, therefore, be opening themselves up to liability for acts
of security guards over whom the owners or managers allegedly have no control.
At the very least, responsible business owners or managers would inquire or learn
why such security guards were remaining at their posts, and would have a clear
understanding of the circumstances of the guards stay. It is but logical that responsible
business owners or managers would be aware of the situation in their premises.
We point out that with respondents hypothesis, it would seem that SSCP was paying
petitioners salaries while securing respondents premises despite the termination of their
Agreement. Obviously, it would only be respondent that would benefit from such a situation.
And it is seriously doubtful that a security agency that was established for profit would allow
its security guards to secure respondents premises when the Agreement was already
terminated.
From the foregoing circumstances, reason dictates that we conclude that petitioners
remained at their post under the instructions of respondent. We can further conclude that
respondent dictated upon petitioners that the latter perform their regular duties to secure
the premises during operating hours. This, to our mind and under the circumstances, is
sufficient to establish the existence of an employer-employee relationship. Certainly, the
facts as narrated by petitioners are more believable than the irrational denials made by
respondent. Thus, we ruled in Lee Eng Hong v. Court of Appeals:[9]
Evidence, to be believed, must not only proceed from the mouth of a credible
witness, but it must be credible in itself such as the common experience and
observation of mankind can approve as probable under the circumstances. We
have no test of the truth of human testimony, except its conformity to our
knowledge, observation and experience. Whatever is repugnant to these
belongs to the miraculous and is outside judicial cognizance (Castaares v.
Court of Appeals, 92 SCRA 568 [1979]).
To reiterate, while respondent and SSCP no longer had any legal relationship with the
termination of the Agreement, petitioners remained at their post securing the premises of
respondent while receiving their salaries, allegedly from SSCP. Clearly, such a situation
makes no sense, and the denials proffered by respondent do not shed any light to the
situation. It is but reasonable to conclude that, with the behest and, presumably, directive of
respondent, petitioners continued with their services. Evidently, such are indiciaof control
that respondent exercised over petitioners.
Such power of control has been explained as the right to control not only the end to
be achieved but also the means to be used in reaching such end. [10] With the conclusion that
respondent directed petitioners to remain at their posts and continue with their duties, it is
clear that respondent exercised the power of control over them; thus, the existence of an
employer-employee relationship.
In Tongko v. The Manufacturers Life Insurance Co. (Phils.) Inc.,[11] we reiterated the oft
repeated rule that control is the most important element in the determination of the
existence of an employer-employee relationship:
In the determination of whether an employer-employee relationship
exists between two parties, this Court applies the four-fold test to determine
the existence of the elements of such relationship. In Pacific Consultants
International Asia, Inc. v. Schonfeld, the Court set out the elements of an
employer-employee relationship, thus:
Jurisprudence is firmly settled that whenever the existence of
an employment relationship is in dispute, four elements constitute the
reliable yardstick: (a) the selection and engagement of the employee;
(b) the payment of wages; (c) the power of dismissal; and (d) the
employers power to control the employees conduct. It is the so-called
control test which constitutes the most important index of the
existence of the employer-employee relationship that is, whether the
WHEREFORE, we SET ASIDE the CAs May 6, 2008 Decision and November 4,
2008 Resolution in CA-G.R. SP No. 97398. We hereby REINSTATE the Labor Arbiters Decision
dated February 13, 2004 and the NLRCs Resolutions dated October 28, 2005 and August 28,
2006.
No costs.
SO ORDERED.
A. We will use as reference the latest edition of Atty. Azucenas Labor Code with Comments and Cases, Volume II.
B. Read the following:
1. First 100 pages of the book particularly: Jurisdiction of Labor Arbiters and the National Labor Relations Commission; and
Powers of the Commission
2. RA 9347 (June 2006)
3. 2011 NLRC Rules of Procedure
4. NLRC En Banc Resolution No. 05-14 (Series of 2014)
5. Cases:
a. Sonza vs. ABS CBN, June 10, 2004
b. Locsin vs. PLDT, Oct. 2, 2009
c. Begino vs. ABS CBN, April 20, 2015
d. Professional Services vs. CA, Feb. 11, 2008
e. South East International Rattan vs. Coming, March 12, 2014
f. NASECO vs. NLRC, Nov. 29, 1988
g. Juco vs. NLRC, Aug. 18, 1997
h. Universal Robina vs. Acibo, January 15, 2014
i. David vs. Macasio, July 2, 2014