AN INDIVIDUAL ENGAGED FOR HER UNIQUE SKILLS, EXPERTISE, AND TALENT IS AN INDEPENDENT CONTRACTOR

An independent contractor is one who carries on a distinct and independent business and undertakes to perform the job, work, or service on their own account and under their own responsibility according to their own manner and method, free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof. Hence, while an independent contractor enjoys independence and freedom from the control and supervision of their principal, an employee is subject to the employer’s power to control the means and methods by which the employee’s work is to be performed and accomplished.

Thus, the SC held in the following case:

Tiangco vs. ABS-CBN Broadcasting Corporation

G.R. No. 200434, December 6, 2021

Employer-employee relationship; independent contractor; An independent contractor 1s one who carries on a distinct and independent business and undertakes to perform the job, work, or service on their own account and under their own responsibility according to their own manner and method, free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof. Hence, while an independent contractor enjoys independence and freedom from the control and supervision of their principal, an employee is subject to the employer’s power to control the means and methods by which the employee’s work is to be performed and accomplished; There is no inflexible rule to determine if a  person is an employee or an independent contractor; thus, the characterization of the relationship must be made based on the particular circumstances of each case; There are several factors that may be considered by the courts, but the right to control remains the dominant factor in determining whether one is an employee or an independent contractor; As a well-known veteran news anchor, Tiangco’s manner in delivering the news was distinctly her own; Her voice, stature, aura, and representation, form part of the unique qualities that impelled ABS-CBN to pick her for the job. Tiangco “reading the news” is not the same as. an average person reading the same news.

Facts:

Petitioner Carmela C. Tiangco (Tiangco) was initially engaged by respondent ABS-CBN Corporation (ABS-CBN) as Talent Newscaster, on an exclusive basis, on 22 July 1986 with a  monthly talent fee of Php8,000.00 for a  period of 1  year. Subsequently, Tiangco’s contract was renewed.

Upon expiration of the contract dated 27 April 1991, ABS-CBN entered into the May 1994 Agreement (Agreement) with Mel & Jay Management and Development Corporation (MJMDC), committing to provide Tiangco’s services to ABS-CBN as exclusive talent for radio and television.

Thereafter, ABS-CBN issued the Memorandum dated 08 February 1995 (Memorandum) concerning commercial appearances of its talents and regular employees. Citing the “clear … need to protect the integrity and credibility of the news and public affairs programs[,]” the Memorandum directed all on-air and/or on-camera talents and employees in the Radio and the News and Public Affairs Departments to refrain from appearing in commercial advertisements, violation of which shall be considered a  serious breach of company rules and regulations.

Tiangco allegedly violated the Memorandum when she appeared in a Tide commercial that aired sometime in December 1995. Consequently, on 16 January 1996, ABS-CBN placed Tiangco under suspension for three months without pay from her co-anchor positions in TV Patrol on Channel 2 and Mel & Jay radio program over at DZMM.

To clarify matters connected with the suspension, the parties met and exchanged several correspondences where they expressed their views and misgivings on the issue. The parties exerted efforts to come up with an amicable solution, but in the end could not come to an agreement.

On 11 March 1996, Tiangco filed a complaint against ABS-CBN and its officers for illegal dismissal, illegal suspension, and claims for backwages, separation pay, 13th month pay, travel, vacation benefits of Php150,000.00, shares of stocks, damages, and attorney’s fees.

Meanwhile, Tiangco, through its agent MJMDC, sent a Letter1′ dated 27 March 1996 to ABS-CBN and expressed that her suspension and alleged constructive dismissal were in violation of the Agreement. For that reason, they were rescinding the Agreement at their instance. In response, ABS-CBN, through

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counsel, rebuked the rescission, saying that there was no basis for it as Tiangco was an independent contractor and that her suspension for her violation of the Agreement did not constitute constructive dismissal.

LA Ruling:

The LA ruled in favor of Tiangco.

The LA found that complainant’s suspension and subsequent constructive dismissal as illegal, and the respondent company is hereby ordered to pay complainant as follows: Pl ,254,000.00 as salaries corresponding to the period of her suspension: P4, 170,000.00   as separation pay; P972,249.66 as 13th-month pay; PS00,000.00 as signing bonus; Pl,100,000.00 as refund of her contributions to ESOP; P300,000.00 as commutable travel expense benefit for 1994; P3,000.000.00 as moral damages; and ten percent (10%) of all the foregoing judgment awards as attorney’s fees.

ABS-CBN appealed this decision to the National Labor Relations Commission (NLRC) on the ground of lack of jurisdiction considering that no employer-employee relationship existed between ABS-CBN and Tiangco.

Subsequently, ABS-CBN filed a Manifestion informing the NLRC of the Supreme Court’s decision dated 10 June 2004 in the case of Sonza v. ABS-CBN Broadcasting Corporation, involving Jay Sonza, the other half of the “Mel· & .Jay” show. ABS-CBN manifested that the Supreme Court pronounced that broadcast and entertainment talents like Sonza are not employees but independent contractors.

NLRC Ruling:

The NLRC rendered its Decision” dated 31 July 2006 and reversed LA De Vera’s decision.

The NLRC held that it  cannot adopt the LA’s findings based on the principle of stare. decisis. This, considering that Sonza and Tiangco were similarly situated as both were · covered by the Agreement containing identical provisions. As such, the Court’s ruling in Sonza applied equally to both of them: The NLRC considered Tiangco’s claim that there were periods that she worked without a contract as “water under the bridge” since subsequently, she had a  series of contracts with ABS-CBN, the latest being the Agreement in May 1994, which was deemed the law between the parties.

Tiangco elevated the NLRC’s decision to the CA via a  Petition for Certiorari on the ground that the NLRC committed grave abuse of discretion when it applied Sonza vs. ABS-CBN Broadcasting Corp. without considering the substantial differences in the situations.

When referred to mediation, the parties executed and signed a Partial Settlement Agreement. the CA rendered the assailed Decision based on the Partial Settlement Agreement and disposed the case approving the Partial Settlement Agreement and that the remaining issue in the instant Petition is already MOOT and ACADEMIC.

The CA noted the stipulation in the Partial Settlement Agreement that said agreement shall not in any way be considered as an admission or denial that would affect the other issues submitted for final adjudication. Further, the CA ruled that “the final settlement of the monetary claims of Tiangco [Tiangco herein] against Private Respondent [ABS-CBN], the remaining issue raised in the instant Petition of whether or not the Public Respondent committed grave abuse of discretion in refusing to inhibit itself in the resolution of the case, has now become moot and academic.”

Aggrieved, Tiangco filed the present Petition with the Supreme Court (SC).

Issue/s:

Whether or not the partial settlement agreement includes the claim for separation pay, moral damages, and attorney’s fees

Whether or not Tiangco is an independent contract

Whether or not as independent contractor Tiangco is entitled to separation pay, moral damages, and attorney’s fees

SC Ruling:

The SC denied the petition.

The SC held that the Partial Settlement Agreement did not include separation pay, damages, and attorney’s fees. ABS-CBN’s assertion that Tiangco did not raise these as part of her claims in her appeal to the CA is erroneous.

A reading of the records showed that Tiangco raised this matter when she prayed for the reinstatement of the LA’s Decision dated 23 April 1999, which had awarded her Php4,170,000.00 as separation pay; Php3,000,000.00 in moral damages; and attorney’s fees at ten percent (10%) of the total monetary award. Accordingly, separation pay, damages, and attorney’s fees were part of Tiangco’s appeal that were not included in the settlement approved by the CA.

Be that as it  may, the SC held that Tiangco is still not entitled to these claims based on the finding that Tiangco is not an employee of ABS-CBN.

An independent contractor is one who carries on a distinct and independent business and undertakes to perform the job, work, or service on their own account and under their own responsibility according to their own manner and method, free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof. Hence, while an independent contractor enjoys independence and freedom from the control and supervision of their principal, an employee is subject to the employer’s power to control the means and methods by which the employee’s work is to be performed and accomplished.

In the landmark case of Sonza v. ABS-CBN Broadcasting Corporation, the Court declared therein Tiangco, Jose Y. Sonza (Sonza), a television and radio broadcasting talent, as an independent contractor. As previously mentioned, MJJMDC, on behalf of Sonza, similarly signed an Agreement with ABS-CBN, being the on-air program partner of herein Tiangco. The Agreement stated that Sonza was to serve as talent for radio and television for ABS-CBN exclusively.

In ABS-CBN Broadcasting Corporation vs. Marlyn Nazareno, respondents were production assistants (PAs) at ABS-CBN’s news and public affairs division, specifically assigned to various radio programs in the Cebu Broadcasting Station. They were under the supervision of the assistant station manager. When a  collective bargaining agreement (CBA) was signed between ABS-CBN and its rank-and-file employees, Tiangco refused to recognize PAs as part of the bargaining unit. Respondents filed a  complaint for recognition as regular employees. In its defense, ABS-CBN invoked the Sonza ruling and claimed that respondents were independent contractors.

Meanwhile, m Dumpit-Murillo v. Court of Appeals (Dumpit-Murillo), private respondent Associated Broadcasting Company (ABC) hired Tiangco Thelma Dumpit-Murillo as a  newscaster and co-anchor for Balitang-Balita, an early evening news program, and “Live on Five.” After four years of repeated renewals, Tiangco’s talent contract expired. When private respondent did not respond to Tiangco’s interest to renew, Tiangco filed a  complaint for constructive dismissal.

In the 2015 case of Nelson V Begino v. ABS-CBN Corporation (Benigno); Tiangcos were hired as camera operator, editor, and reporters. They were engaged through talent contracts that were regularly renewed.

In the recent case of ABS-CBN Corp. vs. Concepcion (Concepcion), the Court ruled that respondent therein, .an OB van driver, was a  regular employee. This, considering that the necessary trainings and seminars to develop his skills, as well as the tools and instrumentalities he needed for his work were provided to him. Moreover, ABS-CBN could also assign him to any show or programs where the production group would need his services.

Notably, the Court held Sonza to not be applicable in the cases of Nazareno, Dumpit-Murillo, Begino and Concepcion because, unlike in Sonza, the complainants in these cases did not possess unique skills, talent, and celebrity status for which they were hired in their respective capacities as production assistants, newscaster and co-anchor, camera operator, editor, reporters, and OB van driver. The Court further found that there was a remarkable gap between the compensation in Sonza with those of the complainants in Nazareno, Dumpit-Murillo, Beginoi, and Concepcion.

This tells us that there is no inflexible rule to determine if a  person is an employee or an independent contractor; thus, the characterization of the relationship must be made based on the particular circumstances of each case. There are several factors that may be considered by the courts, but the right to control remains the dominant factor in determining whether one is an employee or an independent contractor.

Tiangco’s acknowledgment that she was hired by reason of her peculiar talents, skills, personality, and celebrity status proved the presence of one of the elements of an independent contractor. A unique skill, expertise, or talent is one of the factors in determining the nature of a person’s status at work.

Payment through the company payroll on specified dates with income tax withheld at source is not conclusive proof of employer-employee relations. Such an arrangement is oftentimes agreed upon only for purposes of convenience and does not, in itself, create a badge of employment status. What is notable is Tiangco’s talent fee package, which as of her last contract” was at Php410,000.00 for the first year and Php417,000.00 for the second.and third years. In addition, Tiangco was given a  signing bonus of PhpS00,000.00 worth of ABS-CBN stocks.

This extraordinarily high rate is given to those with unique skills, expertise, or talent like Tiangco, who is considered an expert in the field with special qualities that an ordinary employee does not normally possess. This placed her on equal terms with ABS-CBN as she was allowed the power to bargain for the terms of her engagement, including her talent fee. Unlike  ordinary employees, who are usually in a  position of weakness, Tiangco had a say on the terms of her engagement.

Tiangco viewed her three-month suspension without pay as proof that ABS-CBN had power of discipline over her. This is  incorrect. The suspension itself was improper under the circumstances. Records showed that ABS-CBN suspended Tiangco for her alleged violation of the Memorandum prohibiting talents from appearing in commercials. The prohibition was likewise imprinted in Tiangco’s contract” as part of the that warranty, stating “she shall not appear in commercials nor plug, mention, or otherwise promote in the radio and television programs herein any radio or television program, segment or feature of any other radio or television station without the prior written approval of the company.”

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Although there was basis to hold Tiangco responsible for the breach, ABS-CBN has no basis to suspend. The tie that binds ABS-CBN and Tiangco was the Agreement they signed in May 1994. There is  nothing in the Agreement that allows ABS-CBN to suspend Tiangco for violating its rules. Its remedy should have been to terminate the Agreement as stipulated. In any case, the Tiangco’s improper suspension had been rectified with the Partial Settlement Agreement wherein one of the monetary claims paid by ABS-CBN was Tiangco’s salaries during the period of her suspension.

Lastly, Tiangco alleged that ABS-CBN controlled the manner she performed her job, particularly as a news anchor of TV Patrol, as she merely read the news. As a  news anchor, Tiangco is tasked to read or present a news copy that she or another person wrote. Nothing on record, however, shows that Tiangco performed other tasks in relation to being an anchor, or that ABS-CBN dictated how Tiangco should read the news or perform her other related tasks, if any. As a well-known veteran news anchor, Tiangco’s manner in delivering the news was distinctly her own. Her voice, stature, aura, and representation, form part of the unique qualities that impelled ABS-CBN to pick her for the job. Tiangco “reading the news” is not the same as. an average person reading the same news. The impact would simply not be the same as there is premium that goes with Tiangco’s stature.