Fuji Television Network Inc. vs. Espiritu, GR No. 204944-45 - December 3, 2014 | Labor Case | Case Digest

FUJI TELEVISION NETWORK, INC., Petitioner, vs. ARLENE S. ESPIRITU, Respondent.

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

CONCEPT: It is the burden of the employer to prove that a person whose services it pays for is an independent contractor rather than a regular employee with or without a fixed term. That a person has a disease does not per se entitle the employer to terminate his or her services.

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 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."



After several verbal and written communications, 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. The contract also provided that the parties release each other from liabilities and responsibilities under the employment contract. 

In consideration of the non-renewal contract, Arlene "acknowledged receipt of the total amount of US$18,050.00 representing her monthly salary from March 2009 to May 2009, year-end bonus, mid-year bonus, and separation pay." However, Arlene affixed her signature on the non-renewal contract with the initials "U.P." for "under protest."

The day after Arlene signed the non-renewal contract, she filed a complaint for illegal dismissal with the NCR Arbitration Branch of NLRC. Arlene claimed that she was left with no other recourse but to sign the non-renewal contract. 

Labor Arbiter Corazon C. Borbolla dismissed Arlene's complaint saying that she was an independent contractor. The National Labor Relations Commission reversed the Labor Arbiter's decision. It held that Arlene was a regular employee.

In the assailed decision, the CA affirmed the NLRC with the modification that Fuji immediately reinstate Arlene to her position as News Producer without loss of seniority rights, and pay her backwages, 13th-month pay, mid-year and year-end bonuses, sick leave and vacation leave with pay until reinstated, moral damages, exemplary damages, attorney's fees, and legal interest of 12% per annum of the total monetary awards. 

ISSUE: Whether Arlene was a regular employee and whether she was illegally dismissed or not.

RULING: Arlene is a regular employee and was illegally dismissed by Fuji.

Fuji alleges that Arlene was an independent contractor, citing Sonza v. ABS-CBN and relying on the following facts: (1) she was hired because of her skills; (2) her salary was US$1,900.00, which is higher than the normal rate; (3) she had the power to bargain with her employer; and (4) her contract was for a fixed term.

Arlene also argues that Sonza is not applicable because she was a plain reporter for Fuji, unlike Jay Sonza who was a news anchor, talk show host, and who enjoyed a celebrity status.

Art 280 of Labor Code classifies employees into regular, project, seasonal, and casual. It further classifies regular employees into two kinds: (1) those "engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer"; and (2) casual employees who have "rendered at least one year of service, whether such service is continuous or broken."  Another classification of employees, i.e., employees with fixed-term contracts, was recognized in Brent School, Inc. v. Zamora.

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 grid desirability of the employee's activities, "but the day certain agreed upon by the parties for the commencement and termination of the employment relationship." 

Application of the four-fold test

The Court of Appeals did not err when it relied on the ruling in Dumpit-Murillo and affirmed the ruling of the NLRC finding that Arlene was a regular employee. Arlene was hired by Fuji as a news producer, but there was no showing that she was hired because of unique skills that would distinguish her from ordinary employees. Neither was there any showing that she had a celebrity status. Her monthly salary amounting to US$1,900.00 appears to be a substantial sum. However, wages should not be the conclusive factor in determining whether one is an employee or an independent contractor.

Fuji had the power to dismiss Arlene, as provided for in her contract. Her contract also indicated that Fuji had control over her work because she was required to work for 8 hours from Monday to Friday, although on flexible time. 

On the power to control, Arlene alleged that Fuji gave her instructions on what to report. Even the mode of transportation in carrying out her functions was controlled by Fuji. Thus, Arlene was not an independent contractor.

Arlene was a regular employee with a fixed-term contract

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.

Arlene's tasks included monitoring and getting news stories, reporting interviewing subjects in front of a video camera," "the timely submission of news and current events reports pertaining to the Philippines, and traveling to Fuji's regional office in Thailand." She also had to report for work in Fuji's office in Manila from Mondays to Fridays, 8 hours per day. She had no equipment and had to use the facilities of Fuji to accomplish her tasks.

That the successive renewals of Arlene's 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

Fuji also argues that Arlene's contract merely expired; hence, she was not illegally dismissed. 

As a regular employee, Arlene was entitled to security of tenure. Thus, on 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. The manner by which Fuji informed Arlene that her contract would no longer be renewed is tantamount to constructive dismissal. To make matters worse, Arlene was asked to sign a letter of resignation prepared by Fuji. Due process must still be observed in the pre-termination of fixed-term contracts of employment.

In addition, the CA and the NLRC found that Arlene was dismissed because of her health condition.

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. Non-compliance 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. It did not ask her how her condition would affect her work. 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. For failure of Fuji to comply with due process, Arlene was illegally dismissed

The Court of Appeals' modification of the National Labor Relations Commission's decision was proper because the law itself provides that illegally dismissed employees are entitled to reinstatement, backwages including allowances, and all other benefits.

On reinstatement, the 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. 

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