G.R. No.

204944-45               December 3, 2014

FUJI TELEVISION NETWORK, INC., Petitioner,

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 agreed to sign a non-renewal contract, and in exchange for 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 with U.P. Initials (Under Protest). Eventually Arlene filed a
complaint.

Labor Arbiter: Dismissed the complaint applying the four-fold test and citing the Sonza v. ABS-CBN and
held that Arlene was not Fuji’s employee but an independent contractor.20

NLRC: Held that Arlene was a regular employee with respect to the activities for which she was
employed since she continuously rendered services that were deemed necessary and desirable to Fuji’s
business.The National Labor Relations Commission ordered Fuji to pay Arlene back wages, computed
from the date of her illegal dismissal.

CA: Affirmed the National Labor Relations Commission with the modification that Fuji immediately
reinstate Arlene to her position as News Producer without loss of seniority rights, and pay her back
wages, 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

ISSUES:

I. Whether the petition for review should be dismissed as Corazon E. Acerden, the signatory of the
verification and certification of non-forum shopping of the petition, had no authority to sign the
verification and certification on behalf of Fuji;

There was substantial compliance by Fuji Television Network, Inc.

Being a corporation, Fuji exercises its power to sue and be sued through its board of directors or duly
authorized officers and agents. Thus, the physical act of signing the verification and certification against
forum shopping can only be done by natural persons duly authorized either by the corporate by-laws or
a board resolution.
On the issue of whether Shuji Yano validly delegated his authority to Corazon, Article 1892 of the Civil
Code of the Philippines states:

ART. 1892. The agent may appoint a substitute if the principal has not prohibited him from doing so; but
he shall be responsible for the acts of the substitute:

(1) When he was not given the power to appoint one;

(2) When he was given such power, but without designating the person, and the person appointed was
notoriously incompetent or insolvent. All acts of the substitute appointed against the prohibition of the
principal shall be void.

The secretary’s certificate does not state that Shuji Yano is prohibited from appointing a substitute. In
fact, he is empowered to do acts that will aid in the resolution of this case.

For the guidance of the bench and bar, the Court restates in capsule form the jurisprudential
pronouncements . . . respecting non-compliance with the requirement on, or submission of defective,
verification and certification against forum shopping:

1) A distinction must be made between non-compliance with the requirement on or submission of

2) As to verification, non-compliance therewith or a defect therein does not necessarily render the
pleading fatally defective. The court may order its submission or correction or act on the pleading if the
attending circumstances are such that strict compliance with the Rule may be dispensed with in order
that the ends of justice may be served thereby.

3) Verification is deemed substantially complied with when one who has ample knowledge to swear to
the truth of the allegations in the complaint or petition signs the verification, and when matters alleged
in the petition have been made in good faith or are true and correct.

4) As to certification against forum shopping, non-compliance therewith or a defect therein, unlike in

5) The certification against forum shopping must be signed by all the plaintiffs or petitioners in a case;
otherwise, those who did not sign will be dropped as parties to the case. Under reasonable or justifiable
circumstances, however, as when all the plaintiffs or petitioners share a common interest and invoke a
common cause of action or defense, the signature of only one of them inthe certification against forum
shopping substantially complies with the Rule.

6) Finally, the certification against forum shopping must be executed by the party-pleader, not by his
counsel. If, however, for reasonable or justifiable reasons, the party-pleader is unable to sign, he must
execute a Special Power of Attorney designating his counsel of record to sign on his behalf.92
II. Whether the Court of Appeals correctly determined that no grave abuse of discretion was
committed by the National Labor Relations Commission when it ruled that Arlene was a regular
employee, not an independent contractor, and that she was illegally dismissed; and Procedural
parameters of petitions for review in labor cases

Article 223 of the Labor Code115 does not provide any mode of appeal for decisions of the National
Labor Relations Commission. It 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." Being final, it is no longer
appealable. However, the finality of the National Labor Relations Commission’s decisions does not mean
that there is no more recourse for the parties.

This court then clarified that judicial review of National Labor Relations Commission decisions shall be by
way of a petition for certiorari under Rule 65. Citing the doctrine of hierarchy of courts, it further ruled
that 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.

A petition for certiorari under Rule 65 is an original action where the issue is limited to grave abuse of
discretion. As an original action, it cannot be considered as a continuation of the proceedings of the
labor tribunals.

On the other hand, a petition for review on certiorari under Rule 45 is a mode of appeal where the issue
is limited to questions of law. In labor cases, a Rule 45 petition is limited to reviewing whether the Court
of Appeals correctly determined the presence or absence of grave abuse of discretion and deciding other
jurisdictional errors of the National Labor Relations Commission.

This Court is not a trier of facts. Well-settled is the rule that the jurisdiction of this Court in a petition for
review on certiorari under Rule 45 of the Revised Rules of Court is limited to reviewing only errors of
law, not of fact, unless the factual findings complained of are completely devoid of support from the
evidence on record, or the assailed judgment is based on a gross misapprehension of facts. Besides,
factual findings of quasi-judicial agencies like the NLRC, when affirmed by the Court of Appeals, are
conclusive upon the parties and binding on this Court.

___________

In this case, there is no question that Arlene rendered services to Fuji. However, Fuji alleges that Arlene
was an independent contractor, while Arlene alleges that she was a regular employee. To resolve this
issue, we ascertain whether an employer-employee relationship existed between Fuji and Arlene.

This court has often used the four-fold test to determine the existence of an employer-employee
relationship. Under the four-fold test, the "control test" is the most important.134 As to how the
elements in the four-fold test are proven, this court has discussed that:

[t]here is no hard and fast rule designed to establish the aforesaid elements. Any competent and
relevant evidence to prove the relationship may be admitted. Identification cards, cash vouchers, social
security registration, appointment letters or employment contracts, payrolls, organization charts, and
personnel lists, serve as evidence of employee status.
If the facts of this case vis-à-vis the four-fold test show that an employer-employee relationship existed,
we then determine the status of Arlene’s employment, i.e., whether she was a regular employee.
Relative to this, we shall analyze Arlene’s fixed-term contract and determine whether it supports her
argument that she was a regular employee, or the argument of Fuji that she was an independent
contractor. We shall scrutinize whether the nature of Arlene’s work was necessary and desirable to
Fuji’s business or whether Fuji only needed the output of her work. If the circumstances show that
Arlene’s work was necessary and desirable to Fuji, then she is presumed to be a regular employee.
The burden of proving that she was an independent contractor lies with Fuji.

If Arlene was a regular employee, we then determine whether she was illegally dismissed. In complaints
for illegal dismissal, the burden of proof is on the employee to prove the fact of dismissal. Once the
employee establishes the fact of dismissal, supported by substantial evidence, the burden of proof
shifts to the employer to show that there was a just or authorized cause for the dismissal and that due
process was observed.

In labor cases, the quantum of proof required is substantial evidence. "Substantial evidence" has been
defined as "such amount of relevant evidence which a reasonable mind might accept as adequate to
justify a conclusion."

Whether the Court of Appeals correctly affirmed the National Labor Relations Commission’s finding
that Arlene was a regular employee

Article 280 of the Labor Code provides that:

Regular and casual employment. The provisions of written agreement to the contrary notwithstanding
and regardless of the oral agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are usually necessary or desirable in
the usual business or trade of the employer, except where the 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 or where the work or services to be performed is seasonal in nature and
the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph; Provided,
That, any employee who has rendered at least one year of service, whether such service is continuous or
broken, shall be considered a regular employee with respect to the activity in which he is employed, and
his employment shall continue while such activity exists.

This provision 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 where this court discussed that:

Logically, 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."

This court further discussed that there are employment contracts where "a fixed term is an essential and
natural appurtenance “such as overseas employment contracts and officers in educational institutions.

Distinctions among fixed-term employees, independent contractors, and regular employees

GMA Network, Inc. v. Pabriga expounded the doctrine on fixed term contracts laid down in Brentin the
following manner:

Cognizant of the possibility of abuse in the utilization of fixed term employment contracts, we
emphasized in Brentthat where from the circumstances it is apparent that the periods have been
imposed to preclude acquisition of tenurial security by the employee, they should be struck down as
contrary to public policy or morals. We thus laid down indications or criteria under which "term
employment" cannot be said to be in circumvention of the law on security of tenure, namely:

1) 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

2) 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.

These indications, which must be read together, make the Brent doctrine applicable only in a few
special cases wherein the employer and employee are on more or less in equal footing in entering into
the contract. 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.

On the other hand, an independent contractor is defined as: . . . 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.

In view of the "distinct and independent business" of independent contractors, no employer-employee

Contractor or subcontractor. Whenever an employer enters into a contract with another person for the
performance of the former’s work, the employees of the contractor and of the latter’s subcontractor, if
any, shall be paid in accordance with the provisions of this Code.

In Department Order No. 18-A, Seriesof 2011, of the Department of Labor and Employment, a contractor
is defined as having:

Section 3. . . . (c) . . . 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.

This department order also states that there is a trilateral relationship in legitimate job contracting and
subcontracting arrangements among the principal, contractor, and employees of the contractor. There is
no employer-employee relationship between the contractor and principal who engages the contractor’s
services, but there is an employer-employee relationship between the contractor and workers hired to
accomplish the work for the principal.

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.

In other words, there are different kinds of independent contractors: those engaged in legitimate job
contracting and those who have unique skills and talents that set them apart from ordinary employees.

Since no employer-employee relationship exists between independent contractors and their principals,
their contracts are governed by the Civil Code provisions on contracts and other applicable laws.

A contract is defined as "a meeting of minds between two persons whereby one binds himself, with
respect to the other, to give something or to render some service." Parties are free to stipulate on terms
and conditions in contracts as long as these "are not contrary to law, morals, good customs, public
order, or public policy."This presupposes that the parties to a contract are on equal footing. They can
bargain on terms and conditions until they are able to reach an agreement.

__________

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. Hence, before the status of employment can be determined, the existence of an employer-
employee relationship must be established.

The four-fold test can be used in determining whether an employer-employee relationship exists. 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 explained by this court in Corporal, Sr. v. National Labor Relations
Commission:

The power to control refers to the existence of the power and not necessarily to the actual exercise
thereof, nor is it essential for the employer to actually supervise the performance of duties of the
employee. It is enough that the employer has the right to wield that power.

Comparison of the Sonza and Dumpit-Murillo cases using the four-fold test

Sonza was engaged by ABS-CBN in view of his "unique skills, talent and celebrity status not possessed by
ordinary employees." His work was for radio and television programs.

On the other hand, Dumpit-Murillo was hired by ABC as a newscaster and co-anchor. Sonza’s talent fee
amounted to ₱317,000.00 per month, which this court found to be a substantial amount that indicated
he was an independent contractor rather than a regular employee.

Meanwhile, Dumpit-Murillo’s monthly salary was ₱28,000.00, a very low amount compared to what
Sonza received.

Sonza was unable to prove that ABS-CBN could terminate his services apart from breach of contract.
There was no indication that he could be terminated based on just or authorized causes under the Labor
Code. In addition, ABS-CBN continued to pay his talent fee under their agreement, even though his
programs were no longer broadcasted.

Dumpit-Murillo was found to have been illegally dismissed by her employer when they did not renew
her contract on her fourth year with ABC.

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. All that Sonza needed was his talent. 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."

In Dumpit-Murillo, the duties and responsibilities enumerated in her contract was a clear indication that
ABC had control over her work.

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 National Labor Relations Commission 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, especially if compared to her salary when she was still connected with GMA. Indeed, wages may
indicate whether one is an independent contractor. Wages may also indicate that an employee is able
to bargain with the employer for better pay. 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 paragraph 5 of her professional employment
contract.Her contract also indicated that Fuji had control over her work because she was required to
work for eight (8) hours from Monday to Friday, although on flexible time.

Sonza was not required to work for eight (8) hours, while Dumpit-Murillo had to be in ABC to do both
on-air and off-air tasks.

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. Paragraph 6 of her contract states:

6. During the travel to carry out work, if there is change of place or change of place of work, the train,
bus, or public transport shall be used for the trip. If the Employee uses the private car during the work
and there is an accident the Employer shall not be responsible for the damage, which may be caused to
the Employee.

Thus, the Court of Appeals did not err when it upheld the findings of the National Labor Relations
Commission that Arlene was not an independent contractor.

Did the Court of Appeals correctly affirm the National Labor Relations Commission that Arlene had
become a regular employee?

Was the nature of Arlene’s work necessary and desirable for Fuji’s usual course of business?

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. As stated in ABS-CBN Broadcasting Corporation v. Nazareno:204

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.

Here, Espiritu was engaged by Fuji as a stinger [sic] 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. Parenthetically, ifit were true that Espiritu is an
independent contractor, as claimed by Fuji, the factthat everything that she uses to perform her job is
owned by the company including the laptop computer and mini camera discounts the idea of job
contracting.

Arlene’s contract indicating a fixed term did not automatically mean that she could never be a regular
employee. This is precisely what Article 280 seeks to avoid. The ruling in Brent remains as the exception
rather than the general rule.

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.

__________

Whether the Court of Appeals correctly affirmed the National Labor Relations Commission’s finding of
illegal dismissal

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 contract would no longer be renewed, and when she did not
agree, her salary was withheld. Thus, the Court of Appeals correctly upheld the finding of the National
Labor Relations Commission that for failure of Fuji to comply with due process, Arlene was illegally
dismissed.

Whether the Court of Appeals properly modified the National Labor Relations Commission’s decision
by awarding reinstatement, damages, and attorney’s fees.

On this matter, Quijano v. Mercury Drug Corp.244 is instructive:

Well-entrenched is the rule that an illegally dismissed employee is entitled to reinstatement as a

To protect labor’s security of tenure, we emphasize that the doctrine of "strained relations" should be
strictly applied so as not to deprive an illegally dismissed employee of his right to reinstatement. Every
labor dispute almost always results in "strained relations" and the phrase cannot be given an
overarching interpretation, otherwise, an unjustly dismissed employee can never be reinstated.

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.

On the award of damages, Fuji argues that Arlene is not entitled to the award of damages and attorney’s
fees because the non-renewal agreement contained a quitclaim, which Arlene signed. Quitclaims in
labor cases do not bar illegally dismissed employees from filing labor complaints and money claim. As
explained by Arlene, she signed the non-renewal agreement out of necessity. In Land and Housing
Development Corporation v. Esquillo,248 this court explained: We have heretofore explained that the
reason why quitclaims are commonly frowned upon as contrary to public policy, and why they are held
to be ineffective to bar claims for the full measure of the workers’ legal rights, is the fact that the
employer and the employee obviously do not stand on the same footing. The employer drove the
employee to the wall. The latter must have to get hold of money. Because, out of a job, he had to face
the harsh necessities of life. He thus found himself in no position to resist money proffered. His, then, is
a case of adherence, not of choice.
However, Arlene received her salary for May 2009.253 Considering that the date of her illegal dismissal
was May 5, 2009,254 this amount may be subtracted from the total monetary award. 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." Likewise, this court has recognized that "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 legallyand morally justifiable."255 Due to her illegal dismissal, Arlene was forced to
litigate.