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LVN PICTURES, INC. vs. PHILIPPINE MUSICIANS Guild
(FFW) & COURT OFINDUSTRIAL RELATIONS
FACTS:
Respondent Philippine Musicians Guild (FFW) is a duly
registered legitimate labor organization. LVN Pictures, Inc.,
Sampaguita Pictures, Inc., and Premiere Productions, Inc. are
corporations, duly organized under the Philippine laws, engaged
in the making of motion pictures and in the processing and
distribution thereof. Petitioner companies employ musicians for
the purpose of making music recordings for title music,
background music, musical numbers, finale music and other
incidental music, without which a motion picture is incomplete.
Ninety-five (95%) percent of all the musicians playing for the
musical recordings of said companies are members of the Guild.
The Guild has no knowledge of the existence of any other
legitimate labor organization representing musicians in said
companies. Premised upon these allegations, the Guild prayed
that it be certified as the sole and exclusive bargaining agency
for all musicians working in the aforementioned companies. In
their respective answers, the latter denied that they have any
musicians as employees, and alleged that the musical numbers
in the filing of the companies are furnished by independent
contractors. The lower court sustained the Guild’s theory. A
reconsideration of the order complained of having been denied
by the Court en banc,LVN Pictures, inc., and Sampaguita
Pictures, Inc., filed these petitions for review for certiorari.
ISSUE:
Whether the musicians in question(Guild members) are
“employees “of the petitioner film companies.
RULING: YES
The Court agreed with the lower court’s decision, to wit:
Lower court resorted to apply R.A. 875 and US Laws and
jurisprudence from which said Act was patterned after. (Since
statutes are to be construed in the light of purposes achieved
and the evils sought to be remedied). It ruled that the work of the
musical director and musicians is a functional and integral part
of the enterprise performed at the same studio substantially
under the direction and control of the company.
In other words, to determine whether a person who performs
work for another is the latter's employee or an independent
contractor, the National Labor Relations relies on 'the right to
control' test . Under this test an employer-employee relationship
exist where the person for whom the services are performed
reserves the right to control not only the end to be achieved, but
also the manner and means to be used in reaching the end.
(United InsuranceCompany, 108, NLRB No. 115.).
Notwithstanding that the employees are called independent
contractors', the Board will hold them to be employees under the
Act where the extent of the employer's control over them
indicates that the relationship is in reality one of
social legislation//case digests//employee-employer relationship
employment.(John Hancock Insurance Co., 2375-D, 1940,
Teller, Labor Dispute Collective Bargaining, Vol.).
The right of control of the film company over the musicians is
shown (1) by calling the musicians through 'call slips' in 'the
name of the company; (2) by arranging schedules in its studio
for recording sessions; (3) by furnishing transportation and
meals to musicians; and(4) by supervising and directing in detail,
through the motion picture director, the performance of the
musicians before the camera, in order to suit the music they are
playing to the picture which is being flashed on the screen.
The “musical directors” have no such control over the musicians
involved in the present case. Said musical directors control
neither the music to be played, nor the musicians playing it. The
Premier Production did not appeal the decision of the Court en
banc (that’s why it’s not one of the petitioners in the case) film
companies summon the musicians to work, through the musical
directors. The film companies, through the musical directors, fix
the date, the time and the place of work. The film companies,
not the musical directors, provide the transportation to and from
the studio. The film companies furnish meal at dinner time. It is
well settled that "an employer-employee relationship exists . .
.where the person for whom the services are performed
reserves a right to control not only the end to be achieved but
also the means to be used in reaching such end . . . ."
The decisive nature of said control over the "means to be used",
is illustrated in the case of Gilchrist Timber Co., et al., in which,
by reason of said control, the employer-employee relationship
was held to exist between the management and the workers,
notwithstanding the intervention of an alleged independent
contractor, who had, and exercise, the power to hire and fire said
workers
. The aforementioned control over the means to be used" in
reading the desired end is possessed andexercised by the film
companies over the musicians in the cases before us.
WHEREFORE, the order appealed from is hereby affirmed, with
costs against petitioners herein. It is so ordered
Dy Keh Beng -vs- International Labor and Maritime Union of
the Philippines, et al.
FACTS
A charge for ULP was filed against Dy Keh beng for
discriminatory acts within the meaning of RA 875, Section 4(a.1)
and 4(a.2) by dismissing Carlos N. Solano and Ricardo Tudla
for their union activities. A case was filed in court and Dy Keh
Beng contended that he did not know Tudla and that Solano was
not his employee because the latter came to the establishment
only when there was work which he did on pakiaw basis, each
piece of work being done under a separate contract. The CIR
held that an Er-Ee relationship existed between Dy Keh Beng
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and complainants Tudla and Solano, although Solano was
admitted to have worked on piece basis. Petitioner anchors his
contention of the non-existence of employee-employer
relationship on the control test., arguing that there was no
evidence to show that petitioner had the right to direct the
manner and method of respondent’s work.
ISSUE
Whether or not there existed an employee-employee relation
between petitioner Dy Keh Beng and respondents Solano and
Tudla.
HELD:
Yes. Evidence showed that the work of Solano and Tudla was
continuous except in the event of illness, although their services
were compensated on piece basis. The control test calls for the
existence of the right to control the manner of doing the work,
not the actual exercise of the right considering that Dy Keh Beng
is engaged in the manufacture of baskets known as “kaing”,
those working under Dy would be subject to Dy’s specifications
such as the size and quality of the “kaing”. And since the
laborers are done at Dy’s establishments, it could be inferred
that Dy could easily exercise control upon them. As to the
contention that Solano was not an employee because he worked
on piece basis, the court ruled that it should be determined that
if indeed payment by piece is just a method of compensation
and does not define the essence of the relation. Payment cannot
be construed by piece where work is done in such establishment
so put the worker completely at liberty to turn him out and take
it another at pleasure. Justice Perfecto also contended that
pakyaw system is a labor contract between employers and
employees between capitalists and laborers. Wherefore, the
award of backwages is modified to an award of backwages for
3 years at the rated of compensation the employees were
receiving at the time of dismissal.
Maraguinot v. NLRC
Facts:
Petitioner maintains that he was employed by
respondents as part of the filming crew. He was later promoted
as an electrician. Petitioners’ tasks contained of loading movie
equipment in the shoothing area. Petitioners sought the
assistance of their supervisor, Cesario, to facilitate their request
that respondents adjust their salary in accordance with the
minimum wage law. Mrs. Cesario informed petitioners that del
Rosario would agree to increase their salary only if they signed
a blank employment contract. As petitioner refused to sign,
respondents forced Enero (the other petitioner who worked as a
crew member) to go on leave. However, when he reported to
work, respondent refused to take him back. Maraguinot was
dropped from the company payroll but when he returned, he was
again asked to sign a blank employment contract, and when he
still refused, respondent’s terminated his services. Petitioners
thus sued for illegal dismissal.
social legislation//case digests//employee-employer relationship
Private respondents assert that they contract persons
called producers to produce or make movies for private
respondents and contend that petitioners are project employees
of the associate producers, who act as independent contractors.
Thus, there is no ER-EE relationship.
However, petitioners cited that their performance of
activities is necessary in the usual trade or business of
respondents and their work in continuous.
ISSUE: W/N ER-EE relationship exists
HELD: Yes.
With regards to VIVA’s contention that it does not make
movies but merely distributes motion pictures, there is no
sufficient proof to prove this contention.
In respect to respondents’ allegation that petitioners
are project employees, it is a settled rule that the contracting out
of labor is allowed only in case of job contracting. However,
assuming that the associate producers are job contactors, they
must then be engaged in the business of making motion
pictures. Associate producers must have tools necessary to
make motion pictures. However, the associate producers in this
case have none of these. The movie-making equipment are
supplied to the producers and owned by VIVA. Thus, it is clear
that the associate producer merely leases the equipment from
VIVA.
In addition, the associate producers of VIVA cannot be
considered labor-only contractors as they did not supply, recruit
nor hire the workers. It was Cesario, the Shooting Supervisor of
VIVA, who recruited crew members. Thus, the relationship
between VIVA and its producers or associate producers seems
to be that of agency.
With regards to the issue of illegal dismissal, petitioners
assert that they were regular employees who were illegally
dismissed. Petitioners in this case had already attained the
status of regular employees in view of VIVA’s conduct. Thus,
petitioners are entitled to back wages.
A project employee or a member of a work pool may
acquire the status of a regular employee when:
a. there is a continuous rehiring of project employe
es even after a cessation of project
b. the tasks performed by the alleged project emplo
yee are vital and necessary to the business of e
mployer
The tasks of petitioners in loading movie equipment
and returning it to VIVA’s warehouse and fixing the lighting
system were vital, necessary and indispensable to the usual
business or trade of the employer.
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Wherefore, petition is granted.
JOSE SONZA vs. ABS-CBN
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 Sonza’s 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 Sonza’s 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
NLRC.
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 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.
Sonza’s 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
social legislation//case digests//employee-employer relationship
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-CBN’s 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-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. A radio broadcast
specialist who works under minimal supervision is an
independent contractor. Sonza’s 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.
ABS-CBN BROADCASTING CORPORATION vs. MARLYN
NAZARENO et al.
September 26, 2006
Facts: Petitioner ABS-CBN Broadcasting Corporation (ABS-
CBN) is engaged in the broadcasting business and owns a
network of television and radio stations, whose operations
revolve around the broadcast, transmission, and relay of
telecommunication signals. It sells and deals in or otherwise
utilizes the airtime it generates from its radio and television
operations. It has a franchise as a broadcasting company, and
was likewise issued a license and authority to operate by the
National Telecommunications Commission.
Petitioner employed respondents Nazareno, Gerzon, Deiparine,
and Lerasan as production assistants (PAs) on different dates.
They were assigned at the news and public affairs, for various
radio programs in the Cebu Broadcasting Station. On December
19, 1996, petitioner and the ABS-CBN Rank-and-File
Employees executed a Collective Bargaining Agreement (CBA)
to be effective during the period from December 11, 1996 to
December 11, 1999. However, since petitioner refused to
recognize PAs as part of the bargaining unit, respondents were
not included to the CBA.
On October 12, 2000, respondents filed a Complaint for
Recognition of Regular Employment Status, Underpayment of
Overtime Pay, Holiday Pay, Premium Pay, Service Incentive
Pay, Sick Leave Pay, and 13th Month Pay with Damages
against the petitioner before the NLRC. The Labor Arbiter
rendered judgment in favor of the respondents, and declared
that they were regular employees of petitioner as such, they
were awarded monetary benefits. NLRC affirmed the decision of
the Labor Arbiter. Petitioner filed a motion for reconsideration
but CA dismissed it.
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Issue: Whether or not the respondents were considered regular
employees of ABS-CBN.
Ruling: The respondents are regular employees of ABS-CBN.
It was held that where a person has rendered at least one year
of service, regardless of the nature of the activity performed, or
where the work is continuous or intermittent, the employment is
considered regular as long as the activity exists, the reason
being that a customary appointment is not indispensable before
one may be formally declared as having attained regular status.
In Universal Robina Corporation v. Catapang, the Court states
that the primary standard, therefore, of determining regular
employment is the reasonable connection between the
particular activity performed by the employee in relation to the
usual trade or business of the employer. The test is whether the
former is usually necessary or desirable in the usual business or
trade of the employer. The connection can be determined by
considering the nature of work performed and its relation to the
scheme of the particular business or trade in its entirety. Also, if
the employee has been performing the job for at least a year,
even if the performance is not continuous and merely
intermittent, the law deems repeated and continuing need for its
performance as sufficient evidence of the necessity if not
indispensability of that activity to the business. Hence, the
employment is considered regular, but only with respect to such
activity and while such activity exists.
Additionally, respondents cannot be considered as project or
program employees because no evidence was presented to
show that the duration and scope of the project were determined
or specified at the time of their engagement. In the case at bar,
however, the employer-employee relationship between
petitioner and respondents has been proven. In the selection
and engagement of respondents, no peculiar or unique skill,
talent or celebrity status was required from them because they
were merely hired through petitioner’s personnel department
just like any ordinary employee. Respondents did not have the
power to bargain for huge talent fees, a circumstance negating
independent contractual relationship. Respondents are highly
dependent on the petitioner for continued work. The degree of
control and supervision exercised by petitioner over
respondents through its supervisors negates the allegation that
respondents are independent contractors.
The presumption is that when the work done is an integral part
of the regular business of the employer and when the worker,
relative to the employer, does not furnish an independent
business or professional service, such work is a regular
employment of such employee and not an independent
contractor. As regular employees, respondents are entitled to
the benefits granted to all other regular employees of petitioner
under the CBA . Besides, only talent-artists were excluded from
the CBA and not production assistants who are regular
employees of the respondents. Moreover, under Article 1702 of
the New Civil Code: “In case of doubt, all labor legislation and
all labor contracts shall be construed in favor of the safety and
decent living of the laborer.”
Jocelyn M. Galera vs. WPP Marketing Communications,
Inc., et al.
Facts:
social legislation//case digests//employee-employer relationship
Petitioner Jocelyn M. Galera is an American citizen, who was
hired by respondent John Steedman, Chairman of WPP
Worldwide and Chief Executive Officer of Mindshare, Co., a
corporation based in Hong Kong, China, to work in the
Philippines for private respondent WPP Marketing
Communications, Inc. (WPP), a corporation registered and
operating under the laws of Philippines. Under the employment
contract, Galera would commence employment on September
1, 1999, with the position of Managing Director of Mindshare
Philippines. Thus, without obtaining an alien employment
permit, Galera commenced her employment with WPP
Philippines on the said date. It was only after four months from
the time she commenced employment that private respondent
WPP filed before the Bureau of Immigration an application for
petitioner Galera to receive a working visa. In the application,
she was designated as Vice-President of WPP. Petitioner
alleged that she was constrained to sign the application in order
that she could remain in the Philippines and retain her
employment.
On December 14, 2000, private respondent Galera was verbally
informed by Steedman that her employment had been
terminated. She received her termination letter the following
day. Her termination prompted Galera to commence a
complaint for illegal dismissal before the labor arbiter. The labor
arbiter found WPP, Steedman, Webster, and Lansang liable for
illegal dismissal and damages. Furthermore the labor arbiter
stated that Galera was not only illegally dismissed but was also
not accorded due process, saying that Galera was not given an
opportunity by WPP to defend herself and explain her side.
Thus, WPP did not observe both substantive and procedural due
process in terminating Galera’s employment. The labor arbiter
ordered WPP to reinstate Galera and to pay her backwages,
transportation and housing benefits, and moral and exemplary
damages, among others.
On appeal, the NLRC reversed the labor arbiter’s ruling. The
NLRC ruled that Galera was WPP’s Vice-President, and
therefore, a corporate officer at the time she was removed by
the Board of Directors on 14 December 2000. The NLRC ruled
that the labor arbiter had no jurisdiction over the case because
being a corporate officer, a case arising from her termination is
considered as an intra-corporate dispute, which was cognizable
by the Securities and Exchange Commission under P.D. 902-A
(but now by the Regional Trial Courts designated as Commercial
Courts by the Supreme Court pursuant to Section 5.2 of RA
No.8799).
The Court of Appeals reversed the NLRC. It ruled that Galera’s
appointment by the Board of Directors of the WPP as Vice
President for Media had no legal effect as WPP’s by-laws
provided for only one Vice-President, which at that time was
occupied. Furthermore, WPP’s by-laws did not include a
managing director as among its corporate officers. The Court of
Appeals ordered WPP to pay Galera backwages and separation
pay, as well as housing benefits, moral and exemplary
damages, and attorney’s fees, among others.
The case was subsequently elevated to the Supreme Court.
Issues:
1. Is Galera an employee or a corporate officer of WPP?
Ruling(First Issue):
Page 5 of 5 social legislation//case digests//employee-employer relationship
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ISSUE: Whether or not there is an employee-employer

Galera is an employee of WPP. She is not a corporate officer of
WPP. An examination of WPP’s by-laws resulted in a finding that
Galera’s appointment as a corporate officer (Vice-President with
the operational title of Managing Director of Mindshare) during a
special meeting of WPP’s Board of Directors is an appointment
to a non-existent corporate office. WPP’s by-laws provided for
only one Vice-President. At the time of Galera’s appointment on
December 31, 1999, WPP already had one Vice-President in the
person of Webster. Galera cannot be said to be a director of
WPP also because all five directorship positions provided in the
by-laws are already occupied.
The appellate court further justified that Galera was an
employee and not a corporate officer by subjecting WPP and
Galera’s relationship to the four-fold test: (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 with respect to the means and methods by which the
work is to be accomplished. The appellate court found that
Sections 1 and 4 of the employment contract mandate where
and how often she is to perform her work; Sections 3, 5, 6 and
7 show that wages she receives are completely controlled by
WPP; and Sections 10 and 11 clearly state that she is subject to
the regular disciplinary procedures of WPP.
relationship existing between TAPE and Servaña.
HELD: Yes. Servaña is a regular employee.
In determining Servaña’s nature of employment, the Supreme
Court employed the Four Fold Test:
1. Whether or not employer conducted the selection and
engagement of the employee.
Servaña was selected and engaged by TAPE when he was
absorbed as a “talent” in 1995. He is not really a talent, as
termed by TAPE, because he performs an activity which is
necessary and desirable to TAPE’s business and that is being a
security guard. Further, the primary evidence of him being
engaged as an employee is his employee identification card. An
identification card is usually provided not just as a security
measure but to mainly identify the holder thereof as a bona fide
employee of the firm who issues it.
2. Whether or not there is payment of wages to the
employee by the employer.

Servaña is definitely receiving a fixed amount as monthly

compensation. He’s receiving P6,000.00 a month.
TAPE v. Servaña

3. Whether or not employer has the power to dismiss

Servaña started out as a security for the Agro-Commercial
employee.
Security Agency (ACSA) since 1987. The agency had a contract
with TV network RPN 9.
The Memorandum of Discontinuance issued to Servaña to notify
him that he is a redundant employee evidenced TAPE’s power
On the other hand, Television and Production Exponents, Inc
to dismiss Servaña.
(TAPE). is a company in charge of TV programming and was
handling shows like Eat Bulaga! Eat Bulaga! was then with RPN
9. 4. Whether or not the employer has the power of control
over the employee.
In 1995, RPN 9 severed its relations with ACSA. TAPE retained
the services of Servaña as a security guard and absorbed him. The bundy cards which showed that Servaña was required to
report to work at fixed hours of the day manifested the fact that
TAPE does have control over him. Otherwise, Servaña could
In 2000, TAPE contracted the services of Sun Shield Security
have reported at any time during the day as he may wish.
Agency. It then notified Servaña that he is being terminated
because he is now a redundant employee.
Therefore, Servaña is entitled to receive a separation pay.
Servaña then filed a case for illegal Dismissal. The Labor Arbiter
ruled that Servaña’s dismissal is valid on the ground of On the other hand, the Supreme Court ruled that Tuviera, as
redundancy but though he was not illegally dismissed he is still president of TAPE, should not be held liable for nominal
entitled to be paid a separation pay which is amounting to one damages as there was no showing he acted in bad faith in
month pay for every year of service which totals to P78,000.00. terminating Servaña.

TAPE appealed and argued that Servaña is not entitled to Regular Employee Defined:
receive separation pay for he is considered as a talent and not
as a regular employee; that as such, there is no employee- One having been engaged to perform an activity that is
employer relationship between TAPE and Servaña. The necessary and desirable to a company’s business.
National Labor Relations Commission ruled in favor of TAPE. It
ruled that Servaña is a program employee. Servaña appealed
before the Court of Appeals.

The Court of Appeals reversed the NLRC and affirmed the LA.
The CA further ruled that TAPE and its president Tuviera should
pay for nominal damages amounting to P10,000.00.