FUJI TELEVISION NETWORK, INC v ESPIRITU

G.R. No. 204944-45 December 3, 2014

LEONEN, J.:

FACTS:
In 2005, Arlene S. Espiritu ("Arlene") was engaged by Fuji Television Network, Inc. ("Fuji") as a news
correspondent/producer "tasked to report Philippine news to Fuji through its Manila Bureau field
office." Arlene’s employment contract initially provided for a term of one (1) year but was successively
renewed on a yearly basis with salary adjustment upon every renewal. Sometime in January 2009,
Arlene was diagnosed with lung cancer. She informed Fuji about her condition. In turn, the Chief of
News Agency of Fuji, Yoshiki Aoki, informed Arlene "that the company will have a problem renewing her
contract" since it would be difficult for her to perform her job. She "insisted that she was still fit to work
as certified by her attending physician.

Arlene and Fuji signed a non-renewal contract on May 5, 2009 where it was stipulated that her contract
would no longer be renewed after its expiration on May 31, 2009. However, Arlene affixed her signature
on the nonrenewal contract with the initials "U.P." for "under protest.

Thereafter, Arlene filed an illegal dismissal case. Arlene claimed that she was left with no other recourse
but to sign the non-renewal contract, and it was only upon signing that she was given her salaries and
bonuses, in addition to separation pay equivalent to four (4) years.

The Labor Arbiter dismissed the illegal dismissal complaint and held that Arlene was not Fuji’s employee
but an independent contractor. On appeal, the NLRC reversed the decision of the Labor Arbiter holding
that Arlene is a regular employee. It ordered Fuji to pay Arlene backwages, computed from the date of
her illegal dismissal.

On the petition on certiorari to the CA, the CA modified the NLRC’s decision by awarding reinstatement
(instead of separation pay), other benefits, damages and attorney’s fees.

On its petition for review to SC, Fuji’s argued that Arlene was an independent contractor under a fixed-
term contract. It further argues that the Court of Appeals erred when it held that Arlene was illegally
dismissed, in view of the non-renewal contract voluntarily executed by the parties. On the other hand,
Arlene alleged that she had no choice but to sign the non-renewal contract because Fuji withheld her
salary and benefits.

Arlene also attacked the authority of Corazon E. Acerden to sign the verification and certification of non
forum shopping of the petition for review on behalf of Fuji. She argues that Shuji Yano and Jin Eto could
not re-delegate the power that was delegated to them. On the other hand, Fuji alleges that Corazon was
authorized to sign the verification and certification of non-forum shopping because Mr. Shuji Yano was
empowered under the secretary’s certificate to delegate his authority to sign the necessary pleadings.
The secretary certificate shows, among others, that Shuji Yano and Jin Eto as representatives of Fuji in
the case were also authorized to "act in the Corporation’s name, place and stead to determine, propose,
agree, decide, do, and perform any and all of the following: . . . 5. Such other matters as may aid in the
prompt disposition of the action.”

ISSUE:
1. Is Corazon properly authorized to sign the verification and certification against forum shopping?
 2. What are the procedural parameters of petitions for review in labor cases?
3. What is the employment status of Arlene?
4. Was Arlene illegally dismissed?
5. Was the CA correct in awarding reinstatement, damages, and attorney’s fees?

HELD:
1. YES. The board resolution quoted in the secretary’s certificate states that Shuji Yano and Jin Eto
as representatives of Fuji in the case were also authorized to "act in the Corporation’s name,
place and stead to determine, propose, agree, decide, do, and perform anyand all of the
following: . . . 5. Such other matters as may aid in the prompt disposition of the action.” Shuji
can validly delegate his authority to Corazon since the secretary’s certificate does not state that
Shuji Yano is prohibited from appointing a substitute (see Article 1892, NCC). In fact, he is
empowered to do acts that will aid in the resolution of this case. Fuji substantially complied with
the procedural requirement.

2. Article 223 of the Labor Code merely states that "[t]he decision of the Commission shall be final
and executory after ten (10) calendar days from receipt thereof by the parties. Judicial review of
National Labor Relations Commission decisions shall be by way of a petition for certiorari under
Rule 65. Pursuant to the doctrine of hierarchy of courts, such petitions shall be filed before the
Court of Appeals. From the Court of Appeals, an aggrieved party may file a petition for review on
certiorari under Rule 45 wherein the proper question to be raised is “Did the CA correctly
determine whether the NLRC committed grave abuse of discretion in ruling on the case?"

3. Applying the fourfold test, Arlene should be considered as a regular employee with a fixed term
contract. The elements of the four-fold test are the following: (1) the selection and engagement
of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power of
control, which is the most important element. The "power of control" was defined as the right
to control not only the end to be achieved but also the means to be used in reaching such end.

The test for determining regular employment is whether there is a reasonable connection
between the employee’s activities and the usual business of the employer. Article 280 provides
that the nature of work must be "necessary or desirable in the usual business or trade of the
employer" as the test for determining regular employment. Here, Fuji is engaged in the business
of broadcasting, including news programming. It is based in Japan and has overseas offices to
cover international news. Arlene was engaged by Fuji as a stinger or news producer for its
Manila Bureau. She was hired for the primary purpose of news gathering and reporting to the
television network’s headquarters. Espiritu was not contracted on account of any peculiar ability
or special talent and skill that she may possess which the network desires to make use of. She
also had to report for work in Fuji’s office in Manila from Mondays to Fridays, eight (8) hours per
day. She had no equipment and had to use the facilities of Fuji to accomplish her tasks.

Further, an employee can be a regular employee with a fixed-term contract. The law does not
preclude the possibility that a regular employee may opt to have a fixed-term contract for valid
reasons. This was recognized in Brent: For as long as it was the employee who requested, or
bargained, that the contract have a "definite date of termination," or that the fixed-term
contract be freely entered into by the employer and the employee, then the validity of the fixed-
term contract will be upheld.
4. YES. Following the right to security of tenure, no employee shall be dismissed, unless there are
just or authorized causes and only after compliance with procedural and substantive due
process is conducted. The expiration of Arlene’s contract does not negate the finding of illegal
dismissal by Fuji.

Disease as a ground for termination is recognized under Article 284 of the Labor Code. For
dismissal under Article 284 to be valid, two requirements must be complied with: (1) the
employee’s disease cannot be cured within six (6) months and his "continued employment is
prohibited by law or prejudicial to his health as well as to the health of his co-employees"; and
(2) certification issued by a competent public health authority that even with proper medical
treatment, the disease cannot be cured within six (6) months. The burden of proving compliance
with these requisites is on the employer. Noncompliance leads to the conclusion that the
dismissal was illegal.

There is no evidence showing that Arlene was accorded due process. After informing her
employer of her lung cancer, she was not given the chance to present medical certificates. Fuji
immediately concluded that Arlene could no longer perform her duties because of
chemotherapy. It did not ask her how her condition would affect her work. Neither did it suggest
for her to take a leave, even though she was entitled to sick leaves. Worse, it did not present
any certificate from a competent public health authority. What Fuji did was to inform her that
her contract would no longer be renewed, and when she did not agree, her salary was withheld.
Fuji failed to comply with due process.

5. YES. Article 279 of the Labor Code provides that an employee who is unjustly dismissed from
work shall be entitled to reinstatement without loss of seniority rights and other privileges and
to his full backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the time of
his actual reinstatement. Thus, the CA is correct in reversing the ruling of NLRC and ordering
reinstatement on the ground that separation pay in lieu of reinstatement is allowed only in
several instances such as (1) when the employer has ceased operations; (2) when the
employee’s position is no longer available; (3) strained relations; and (4) a substantial period has
lapsed from date of filing to date of finality.

Strained relations are a question of fact that must be supported by evidence. No evidence was
presented by Fuji to prove that reinstatement was no longer feasible. Fuji did not allege that it
ceased operations or that Arlene’s position was no longer available. Nothing in the records
shows that Arlene’s reinstatement would cause an atmosphere of antagonism in the workplace.
Arlene filed her complaint in 2009. Five (5) years are not yet a substantial period to bar
reinstatement.

Quitclaims in labor cases do not bar illegally dismissed employees from filing labor complaints
and money claim since the employer and the employee obviously do not stand on the same
footing.

Moral damages are awarded "when the dismissal is attended by bad faith or fraud or constitutes
an act oppressive to labor, or is done in a manner contrary to good morals, good customs or
public policy." On the other hand, exemplary damages may be awarded when the dismissal was
effected "in a wanton, oppressive or malevolent manner.
 Apart from Arlene’s illegal dismissal, the manner of her dismissal was effected in an oppressive
approach with her salary and other benefits being withheld until May 5, 2009, when she had no
other choice but to sign the non-renewal contract.

With regard to the award of attorney’s fees, Article 111 of the Labor Code states that "[i]n cases
of unlawful withholding of wages, the culpable party may be assessed attorney’s fees equivalent
to ten percent of the amount of wages recovered. Due to her illegal dismissal, Arlene was forced
to litigate.

OTHER DOCTRINES:

CLASSIFICATION OF EMPLOYEES:
1. REGULAR
i. those "engaged to perform activities which are usually necessary or desirable in the
usual business or trade of the employer"
ii. casual employees who have "rendered at least one year of service, whether such service
is continuous or broken
2. PROJECT
 employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the
employee
3. SEASONAL
 the work or services to be performed is seasonal in nature and the employment is for
the duration of the season
4. CASUAL
 as a general rule, those performing activities not usually necessary or desirable in the
employer’s usual business or trade are casual employees
5. FIXED TERM CONTRACTS (Brent School, Inc. v. Zamora)
 the decisive determinant in the term employment should not be the activities that the
employee is called upon to perform, but the day certain agreed upon by the parties for
the commencement and termination of their employment relationship, a day certain
being understood to be "that which must necessarily come, although it may not be
known when."
 Criteria under which "term employment" cannot be said to be in circumvention of the
law (GMA Network, Inc. v. Pabriga)
i. The fixed period of employment was knowingly and voluntarily agreed upon by
the parties without any force, duress, or improper pressure being brought to
bear upon the employee and absent any other circumstances vitiating his
consent; or
ii. It satisfactorily appears that the employer and the employee dealt with each
other on more or less equal terms with no moral dominance exercised by the
former or the latter.
 The reason for this is evident: when a prospective employee, on account
of special skills or market forces, is in a position to make demands upon
the prospective employer, such prospective employee needs less
 protection than the ordinary worker. Lesser limitations on the parties’
freedom of contract are thus required for the protection of the
employee.

INDEPENDENT CONTRACTOR
 one who carries on a distinct and independent business and undertakes to perform the
job, work, or service on its own account and under one’s own responsibility according to
one’s 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
 no employer-employee relationship exists between independent contractors and their
principals
 In Department Order No. 18-A, Seriesof 2011, of the Department of Labor and
Employment, a contractor is defined as an arrangement whereby a principal agrees to
put out or farm out with a contractor the performance or completion of a specific job,
work or service within a definite or predetermined period, regardless of whether such
job, work or service is to be performed or completed within or outside the premises of
the principal
i. there is a trilateral relationship in legitimate job contracting and subcontracting
arrangements among the principal, contractor, and employees of the
contractor.
 Jurisprudence has recognized another kind of independent contractor: individuals with
unique skills and talents that set them apart from ordinary employees. There is no
trilateral relationship in this case because the independent contractor himself or herself
performs the work for the principal. In other words, the relationship is bilateral

SONZA CASE v DUMPIT-MURILLO CASE

 Sonza was engaged by ABS-CBN in view of his "unique skills, talent and celebrity status not
possessed by ordinary employees."188 His work was for radio and television programs.189 On
the other hand, Dumpit-Murillo was hired by ABC as a newscaster and co-anchor.
 In Sonza, this court ruled that ABS-CBN did not control how Sonza delivered his lines, how he
appeared on television, or how he sounded on radio.195 All that Sonza needed was his
talent.196 Further, "ABS-CBN could not terminate or discipline SONZA even if the means and
methods of performance of his work . . . did not meet ABS-CBN’s approval."197 In Dumpit-
Murillo, the duties and responsibilities enumerated in her contract was a clear indication that
ABC had control over her work.