FUJI TELEVISION NETWORK, INC. VS. ARLENE S. ESPIRITU G.R. NO.

204944-45 DECEMBER 3,
2014

FACTS:

In 2005, Arlene S. Espiritu was engaged by Fuji Television Network, Inc. as a news
correspondent/producer tasked to report Philippine news to Fuji through its Manila Bureau
field office. The employment contract was initially for one year, but was successively renewed
on a yearly basis with salary adjustments upon every renewal.

In January 2009, Arlene was diagnosed with lung cancer. She informed Fuji about her condition,
and the Chief of News Agency of Fuji, Yoshiki Aoki, informed the former that the company had a
problem with renewing her contract considering her condition. Arlene insisted she was still fit
to work as certified by her attending physician.

After a series of verbal and written communications, Arlene and Fuji signed a non-renewal
contract. In consideration thereof, Arlene acknowledged the receipt of the total amount of her
salary from March-May 2009, year-end bonus, mid-year bonus and separation pay. However,
Arlene affixed her signature on the nonrenewal contract with the initials "U.P." for "under
protest."

On May 6, 2009, Arlene filed a complaint for illegal dismissal with the NCR Arbitration Branch of
the NLRC, alleging that she was forced to sign the non-renewal contract after Fuji came to know
of her illness. She also alleged that Fuji withheld her salaries and other benefits when she
refused to sign, and that she was left with no other recourse but to sign the non-renewal
contract to get her salaries.

On September 10, 2009, Labor Arbiter dismissed the complaint and held that Arlene was not a
regular employee but an independent contractor.

On March 5, 2010, The NLRC reversed the Labor Arbiter’s decision and ruled that Arlene was a
regular employee since she continuously rendered services that were necessary and desirable
to Fuji’s business.

The Court of Appeals affirmed that NLRC ruling with modification that Fuji immediately
reinstate Arlene to her position without loss of seniority rights and that she be paid her
backwages and other emoluments withheld from her. The Court of Appeals agreed with the
NLRC that Arlene was a regular employee, engaged to perform work that was necessary or
desirable in the business of Fuji, and the successive renewals of her fixed-term contract
resulted in regular employment. The case of Sonza does not apply in the case because Arlene
was not contracted on account of a special talent or skill. Arlene was illegally dismissed because
Fuji failed to comply with the requirements of substantive and procedural due process. Arlene,
in fact, signed the non-renewal contract under protest as she was left without a choice.
Fuji filed a petition for review on certiorari under Rule 45 before the Supreme Court, alleging
that Arlene was hired as an independent contractor; that Fuji had no control over her work;
that the employment contracts were renewed upon Arlene’s insistence; that there was no
illegal dismissal because she freely agreed not to renew her fixed-term contract as evidenced by
her email correspondences.

Arlene filed a manifestation stating that the SC could not take jurisdiction over the case since
Fuji failed to authorize Corazon Acerden, the assigned attorney-in-fact for Fuji, to sign the
verification.

ISSUE:

1. Whether or not Arlene was an independent contractor?

2. Whether or not Arlene was a regular employee?
3. Whether or not Arlene was illegally dismissed?
4. Whether or not the Court of Appeals correctly awarded reinstatement, damages and
attorney’s fees?
HELD:

1. Arlene was not an independent contractor.

Fuji alleged that Arlene was an independent contractor citing the Sonza case. She was
hired because of her skills. Her salary was higher than the normal rate. She had the
power to bargain with her employer. Her contract was for a fixed term. It also stated
that Arlene was not forced to sign the non-renewal agreement, considering that she
sent an email with another version of her non-renewal agreement.

Arlene argued (1) that she was a regular employee because Fuji had control and
supervision over her work; (2) that she based her work on instructions from Fuji; (3) that
the successive renewal of her contracts for four years indicated that her work was
necessary and desirable; (4) that the payment of separation pay indicated that she was
a regular employee; (5) that the Sonza case is not applicable because she was a plain
reporter for Fuji; (6) that her illness was not a ground for her dismissal; (7) that she
signed the non-renewal agreement because she was not in a position to reject the
same.

The level of protection to labor should vary from case to caese. 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.
 The level of protection to labor must be determined on the basis of the nature of the
work, qualifications of the employee, and other relevant circumstances such as but not
limited to educational attainment and other special qualifications.

Fuji’s argument that Arlene was an independent contractor under a fixed-term contract
is contradictory. Employees under fixed-term contracts cannot be independent
contractors because in fixed-term contracts, an employer-employee relationship exists.
The test in this kind of contract is not the necessity and desirability of the employee’s
activities, “but the day certain agreed upon by the parties for the commencement and
termination of the employment relationship.” For regular employees, the necessity and
desirability of their work in the usual course of the employer’s business are the
determining factors. On the other hand, independent contractors do not have
employer-employee relationships with their principals.

To determine the status of employment, the existence of employer-employee

relationship must first be settled with the use of the four-fold test, especially the
qualifications for the power to control.

The distinction is in this guise:

Rules that merely serve as guidelines towards the achievement of a mutually desired
result without dictating the means or methods to be employed creates no employer-
employee relationship; whereas those that control or fix the methodology and bind or
restrict the party hired to the use of such means creates the relationship.

In appliacation, Arlene was hired by Fuji as a news producer, but there was no evidence
that she was hired for her unique skills that would distinguish her from ordinary
employees. Her monthly salary appeared to be a substantial sum. Fuji had the power to
dismiss Arlene, as provided for in her employment contract. The contract also indicated
that Fuji had control over her work as she was rquired to report for 8 hours from
Monday to Friday. Fuji gave her instructions on what to report and even her mode of
transportation in carrying out her functions was controlled.

Therefore, Arlene could not be an independent contractor.

2. Arlene was a regular employee with a fixed-term contract.

In determining whether an employment should be considered regular or non-regular,

the applicable test is the reasonable connection between the particular activity
performed by the employee in relation to the usual business or trade of the employer.
The standard, supplied by the law itself, is whether the work undertaken is necessary or
desirable in the usual business or trade of the employer, a fact that can be assessed by
looking into the nature of the services rendered and its relation to the general scheme
under which the business or trade is pursued in the usual course. It is distinguished from
 a specific undertaking that is divorced from the normal activities required in carrying on
the particular business or trade.

However, there may be a situation where an employee’s work is necessary but is not
always desirable in the usual course of business of the employer. In this situation, there
is no regular employment.

Fuji’s Manila Bureau Office is a small unit213 and has a few employees. Arlene had to do
all activities related to news gathering.

A news producer “plans and supervises newscast [and] works with reporters in the field
planning and gathering information, including monitoring and getting news stories,
rporting interviewing subjects in front of a video camera, submission of news and
current events reports pertaining to the Philippines, and traveling to the regional office
in Thailand.” She also had to report for work in Fuji’s office in Manila from Mondays to
Fridays, eight per day. She had no equipment and had to use the facilities of Fuji to
accomplish her tasks.

The successive renewals of her contract indicated the necessity and desirability of her
work in the usual course of Fuji’s business. Because of this, Arlene had become a regular
employee with the right to security of tenure.

Arlene’s contract indicating a fixed term did not automatically mean that she could
never be a regular employee. 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.

3. Arlene was illegally dismissed.

As a regular employee, Arlene was entitled to security of tenure under Article 279 of the
Labor Code and could be dismissed only for just or authorized causaes and after
observance of due process.

The expiration of the contract does not negate the finding of illegal dismissal. The
manner by which Fuji informed Arlene of non-renewal through email a month after she
informed Fuji of her illness is tantamount to constructive dismissal. Further, Arlene was
asked to sign a letter of resignation prepared by Fuji. The existence of a fixed-term
contract should not mean that there can be no illegal dismissal. Due process must still
be observed.

Moreoever, disease as a ground for termination under Article 284 of the Labor Code and
Book VI, Rule 1, Section 8 of the Omnibus Rules Implementing the Labor Code require
two requirements to be complied with: (1) the employee’s disease cannot be cured
 within six 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 months. The burden of proving compliance with these
requisites is on the employer. Non-compliance leads to illegal dismissal.
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Arlene was not 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.
Neither did it suggest for her to take a leave. It did not present any certificate from a
competent public health authority.

Therefore, Arlene was illegally dismissed.

4. The Court of Appeals correctly awarded reinstatement, damages and attorney’s fees.

The Court of Appeals awarded moral and exemplary damages and attorney’s fees. It also
ordered reinstatement, as the grounds when separation pay was awarded in lieu of
reinstatement were not proven.

The Labor Code provides in Article 279 that illegally dismissed employees are entitled to
reinstatement, backwages including allowances, and all other benefits.

Separation pay in lieu of reinstatement is allowed only (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.

The doctrine of strained relations should be strictly applied to avoid deprivation of the
right to reinstatement. In the case at bar, 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 feasible. Nothing showed that the reinstatement
would cause an atmosphere of antagonism in the workplace.

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.

After Arlene had informed Fuji of her cancer, she was informed that there would be
problems in renewing her contract on account of her condition. This information caused
Arlene mental anguish, serious anxiety, and wounded feelings. 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.” In actions
for recovery of wages or where an employee was forced to litigate and, thus, incur
expenses to protect his rights and interest, the award of attorney’s fees is legally and
morally justifiablen.” Due to her illegal dismissal, Arlene was forced to litigate.

Therefore, the awards for reinstatement, damages and attorney’s fees were proper.