G.R. No. 204944-45 - Fuji Television Network, Inc. vs. Espiritu

Case Summary (G.R. No. 204944-45)

Key Dates and Procedural Posture

Initial engagement: 2005, employment contract with successive one-year renewals.
Diagnosis of lung cancer: January 2009; subsequent communications with Fuji.
Non-renewal agreement executed: May 5, 2009; employment contract expired May 31, 2009.
Labor Arbiter decision dismissing complaint: September 10, 2009.
NLRC reversal ordering backwages: March 5, 2010; resolution denying reconsideration: April 26, 2010.
Court of Appeals decision affirming with modifications (including reinstatement and damages): June 25, 2012; motion for reconsideration denied December 7, 2012.
Petition for review to the Supreme Court (Rule 45) filed February 8, 2013; final Supreme Court decision denying the petition and affirming CA decision with modifications: December 3, 2014.

Legal Framework and Authorities Applied

Primary legal texts and doctrines employed by the courts: the 1987 Constitution (full protection to labor), Labor Code provisions: Articles 277, 279, 280, 284; Omnibus Rules implementing the Labor Code (disease as ground for dismissal, certification by competent public health authority); four-fold test for employer-employee relationship; Brent School doctrine on fixed-term contracts; jurisprudence distinguishing independent contractors (including Sonza and Dumpit‑Murillo); Rules of Court requirements on verification and certification against forum shopping (Rule 7, Sections 4–5; Rule 45, Sections 4–5); precedents on verification/certification substantial compliance (Uy, Shipside, Loyola, LDP Marketing, Havtor, Altres).

Issues Presented to the Supreme Court

Whether the petition should be dismissed for defective verification/certification against forum shopping (authority of signatory).
Whether the NLRC and Court of Appeals correctly found that an employer-employee relationship existed and that Arlene was a regular employee (not an independent contractor).
Whether the non-renewal constituted illegal dismissal and whether remedies awarded by the Court of Appeals (reinstatement, backwages, benefits, moral and exemplary damages, attorney’s fees, and interest) were proper.

Validity of Verification and Certification Against Forum Shopping

Facts: Fuji attached a secretary’s certificate authorizing certain officers to act, a special power of attorney executed by an authorized officer (Shuji Yano) delegating to Ma. Corazon E. Acerden, and the verification/certification was signed by Corazon. Legal standard: certification against forum shopping must be signed by an authorized corporate officer or party-pleader; lack of proof of authority generally grounds dismissal, but substantial compliance may cure defects when special circumstances exist and proof of authority is supplied belatedly. Court’s analysis and conclusion: the board resolution authorized filing of a petition for certiorari and participation in subsequent proceedings, and empowered the designated officers to verify and certify; Article 1892 (Civil Code) permits delegation of authority unless prohibited; Corazon’s affidavit established she was Manila Bureau office manager with 23 years’ experience and thus capable of verifying allegations. Result: Fuji substantially complied with verification and certification requirements; petition was not dismissed on this ground.

Procedural Parameters for Rule 45 Review in Labor Cases

The Court restated the proper judicial path: NLRC decisions are final but subject to review for grave abuse of discretion by certiorari (Rule 65) before the Court of Appeals; from the CA decision a Rule 45 petition to the Supreme Court is the proper recourse, limited to questions of law and to assessing whether the CA correctly determined the presence or absence of grave abuse in the NLRC ruling. The Supreme Court’s review under Rule 45 is generally confined to legal issues and to whether factual findings are so devoid of support as to constitute grave abuse of discretion.

Burden of Proof and Test for Employment Status

The Court reaffirmed that once the existence of services is established, the party asserting independent contractor status (the employer/principal) bears the burden to prove the absence of an employer-employee relationship. The four-fold test (selection and engagement, payment of wages, power of dismissal, and power of control—the last being most important) is the primary tool for determining whether an employer-employee relationship exists. Where a regular employee is claimed, Article 280’s test (whether the activity is usually necessary or desirable to the employer’s business) determines regularity; fixed-term contracts are exceptions under Brent when freely and knowingly agreed by parties on more equal footing.

Application of the Four-Fold Test to the Facts

Key findings on the four-fold test: Fuji paid wages, had contractual provisions granting it power to dismiss, required Arlene to work eight hours a day Monday–Friday (albeit flexibly), provided equipment and office facilities (laptop, mini-camera), and directed assignments (what to report and certain travel/transportation methods). These facts indicated the right of control and other elements of an employer-employee relationship. The Court found no showing that Arlene had unique celebrity status or that she had been hired because of a special, market-based bargaining position sufficient to place her on equal footing with Fuji (Sonza-type independent contractor). Consequently, the CA and NLRC did not gravely abuse their discretion in concluding the existence of an employer-employee relationship.

Fixed-Term Contract, Successive Renewals, and Regular Employment

Although Arlene’s engagements were on successive one-year contracts, the Court emphasized that fixed-term designation does not automatically defeat regular employment. Under Article 280 and Brent, successive renewals, continuity of service in the same position and duties, and Fuji’s retention of control and supervision supported the presumption that Arlene’s work was necessary and desirable to Fuji’s usual business (broadcasting/news gathering). The repeated renewals and Fuji’s exercise of control indicated that the fixed-term form was used to evade regularization; therefore Arlene attained regular employee status despite fixed-term labels.

Disease as a Ground for Termination and Due Process Requirements

Legal standard: Article 284 and implementing rules allow termination on health grounds only when (1) the disease is such that continued employment is prohibited by law or prejudicial to the employee’s or co‑employees’ health and (2) a competent public health authority certifies that the disease cannot be cured within six months even with treatment. Procedural due process for regular employees must also be observed. Application: Fuji relied on Arlene’s chemotherapy and asserted non-renewal because she could not perform duties, but it presented no certification from a competent public health authority and did not inquire into her medical certificates or propose leave accommodations. Fuji withheld salaries and used a non-renewal agreement that Arlene signed with initials “U.P.” (under protest) only after receiving withheld pay. The Court concluded Fuji failed to satisfy statutory requisites and procedural due process, so the non-renewal amounted to illegal dismissal.

Constructive Nature of the Non‑Renewal and Quitclaim

The Court accepted the NLRC and CA findings that the non-renewal agreement was a subterfuge and was not executed voluntarily in circumstances of equal bargaining power: Arlene alleged salary and benefits were withheld until she signed, and she signed under protest because she needed money for sustenance and treatment. Labor law doctrine disfavors employer‑obtained quitclaims and settlements where the employer is in a dominant position; therefore receipt of separation pay and other amounts did not bar Arlene’s illegal dismissal claim.

Remedies: Reinstatement, Backwages,

Case Syllabus (G.R. No. 204944-45)

Case Caption and Citation

Supreme Court Second Division, G.R. Nos. 204944–45, December 03, 2014, reported at 749 Phil. 388.
Petition for review on certiorari under Rule 45 by Fuji Television Network, Inc. (Fuji) seeking reversal of Court of Appeals decision dated June 25, 2012, which affirmed with modification the NLRC decision finding illegal dismissal and ordering monetary relief and reinstatement.
Decision penned by Justice Leonen; concurrence by Carpio (Chairperson), Del Castillo, Mendoza, and Villarama, Jr., JJ.; Acting Member designated per Special Order No. 1888.

Parties and Basic Facts

Petitioner: Fuji Television Network, Inc.; Respondent/complainant: Arlene S. Espiritu (Arlene).
Arlene was engaged by Fuji in 2005 as a news correspondent/producer (variously described in the records as “news correspondent,” “journalist/news producer,” “news producer,” and “news correspondent/producer”).
Initial employment contract: one-year fixed-term; renewed successively on a yearly basis with salary adjustments upon each renewal.
Duties: news gathering and reporting for Fuji’s Manila Bureau; tasks included monitoring and getting news stories, reporting and interviewing subjects on camera, timely submission of news/current events reports pertaining to the Philippines, and travel to Fuji regional offices (e.g., Thailand). Required to report for work Mondays to Fridays, eight hours per day (flexible time). Fuji owned the laptop and mini-camera used in her work.
Salary and benefits: monthly salary noted at US$1,900.00; Fuji paid separation pay and bonuses on certain occasions; documentation includes a “Certification of Employment and Compensation” and photocopied IDs indicating “news producer.”
January 2009: Arlene diagnosed with lung cancer and informed Fuji; she presented attending physician certification that she was fit to work.
Fuji’s Chief of News Agency (Yoshiki Aoki) informed Arlene that the company would have difficulty renewing her contract because of her illness and chemotherapy’s effect on job performance.
May 5, 2009: Arlene and Fuji executed a “non-renewal contract” stipulating that her contract would not be renewed beyond May 31, 2009; the agreement included mutual releases from liabilities and responsibilities and acknowledged Arlene’s receipt of US$18,050.00 covering March–May 2009 salary, year‑end and mid‑year bonuses, and separation pay. Arlene signed the non‑renewal with initials “U.P.” indicating “under protest.”
May 6, 2009: Arlene filed a complaint for illegal dismissal and attorney’s fees with the National Capital Region Arbitration Branch of the NLRC, alleging she was forced to sign the non‑renewal and that Fuji had withheld her salaries and benefits for March and April 2009 until she signed.

Procedural History — Labor Tribunals and Appellate Courts

Labor Arbiter (Decision dated September 10, 2009): Dismissed Arlene’s complaint, applying the four‑fold test and Sonza v. ABS‑CBN to conclude Arlene was an independent contractor (stringer), not an employee.
NLRC (Decision dated March 5, 2010): Reversed the Labor Arbiter, finding Arlene a regular employee because her services were necessary and desirable to Fuji’s business; ordered payment of backwages computed from date of illegal dismissal. Motions for reconsideration by both parties denied (April 26, 2010 resolution).
Court of Appeals (Decision dated June 25, 2012): Consolidated petitions by both parties; affirmed NLRC with modifications:
- Ordered Fuji to immediately reinstate Arlene as News Producer without loss of seniority.
- Ordered payment of specified monetary items (detailed backwages at $1,900.00/month from May 5, 2009 until reinstatement; 13th month pay; mid‑year and year‑end bonuses; sick and vacation leaves; moral damages P100,000.00; exemplary damages P50,000.00; attorney’s fees equal to 10% of total monetary awards; legal interest 12% per annum on total monetary awards).
- Directed the Labor Arbiter to recompute monetary awards consistent with the directives.
Fuji’s motion for reconsideration to the Court of Appeals denied (resolution dated December 7, 2012).
Fuji filed petition for review on certiorari under Rule 45 to the Supreme Court (filed February 8, 2013).

Issues Presented to the Supreme Court

Procedural: Whether the petition for review should be dismissed because the verification and certification against forum shopping were signed by Corazon E. Acerden without authority to sign for Fuji.
Substantive (as framed by the Court of Appeals and NLRC): (1) Whether Arlene was a regular employee or a fixed‑term contractual employee (or independent contractor); (2) Whether Arlene was illegally dismissed; (3) Whether Arlene was entitled to damages and attorney’s fees; and, in the Supreme Court review, whether the Court of Appeals correctly modified the NLRC decision by awarding reinstatement, damages, and attorney’s fees.

Verification and Certification Against Forum Shopping — Facts and Documentary Record

Fuji attached to its Rule 45 petition:
- Hideaki Ota’s secretary’s certificate authorizing Shuji Yano and Jin Eto to represent and sign for Fuji in proceedings arising from the CA petition for certiorari and subsequent proceedings; authenticated by Sulpicio Confiado, Consul‑General of the Philippines in Japan.
- A special power of attorney executed by Shuji Yano appointing Ma. Corazon E. Acerden and Moises A. Rollera as his attorneys‑in‑fact with express authority to sign the verification and certification against forum shopping and other papers for the Supreme Court proceedings.
- The verification and certification against forum shopping was signed by Corazon E. Acerden.
Arlene filed a manifestation (Feb. 27, 2013) asserting Corazon lacked authority to sign the verification and certification for Fuji; Fuji responded by asserting delegations in the secretary’s certificate and the special power of attorney allowed Corazon to sign.

Legal Framework on Verification and Certification Against Forum Shopping (Rules and Jurisprudence)

Rules of Court (Rule 7, Secs. 4 & 5): verification requirements and mandatory certification against forum shopping; failure to comply with certification against forum shopping is generally noncurable and may lead to dismissal without prejudice, and false certification may constitute contempt.
Rule 45, Sec. 4(e) & Sec. 5: petitions for review must contain a sworn certification against forum shopping; failure to comply provides ground for dismissal.
Uy v. Landbank: verification is formal, not jurisdictional; court may allow correction or act on unverified pleading in appropriate circumstances.
Shipside, Loyola, LDP Marketing, Havtor Management, General Milling: jurisprudence distinguishing verification defects (sometimes curable/substantial compliance) from certification against forum shopping defects (generally noncurable but may allow substantial compliance in special circumstances).
Altres v. Empleo: capsule summary of rules — verification may be substantially complied with; certification against forum shopping is generally not curable except for substantial compliance or compelling reasons; certification must be executed by party‑pleader or by counsel via Special Power of Attorney under justifiable circumstances; signature by corporate representative must be supported by authority.

Supreme Court’s Ruling on Verification and Certification Issue

The Court found Fuji’s submissions constituted substantial compliance with verification and certification requirements for the Rule 45 petition:
- Board/secretary’s certificate expressly authorized Shuji Yano and Jin Eto to represent the corporation in the Court of Appeals petition for certiorari and “any other subsequent proceeding that may necessarily arise therefrom, including but not limited to the filing of appeals in the appropriate venue,” and authorized them to verify and execute the certification against forum shopping.
- The secretary’s certificate empowered Shuji Yano to act “in the Corporation’s name, place and stead” and to perform “such other matters as may aid in the prompt disposition of the action,” which reasonably covered filing a petition for review before the Supreme Court as a subsequent proceeding.
- Shuji Yano’s special power of attorney expressly authorized Corazon to sign verification and certification and to sign documents necessary in furtherance of powers granted.
- Corazon’s affidavit established she was office manager and resident interpreter of Fuji’s Manila Bureau for 23 years, placing her in a position to verify the truthfulness and correctness of the petition’s allegations.
The Court applied Article 1892 Civil Code (agent’s power to appoint substitutes where not prohibited) and found no prohibition on delegation in the secretary’s certificate; Shuji Yano was not precluded from appointing a substitute.
Citing authorities that corporate officers or employees with adequate knowledge may sign verification/certification, the Court found substantial compliance and declined to dismiss the petition for lack of authority of the signatory.

Procedural Parameters of Judicial Review in Labor Cases (Rule 65 / Rule 45 Distinction)

Article 223 Labor Code: NLRC decisions are final and executory after 10 days but are subject to judicial review.
St. Martin Funeral Home: a Rule 65 petition for certiorari to the Court of Appeals is the proper vehicle to challenge NLRC for grave abuse of discretion; Rule 65 is original action limited to jurisdictional/gravely abusive acts.
Rule 45 petition for review on certiorari to the Supreme Court is a mode of appeal from Court of Appeals decisions; under Rule 45 the Supreme Court’s review is limited to questions of law and legal correctness of the Court of Appeals’ determination of the presence or absence of grave abuse of discretion by the NLRC.
Meralco Industrial and related authority: Supreme Court is not a trier of facts; Rule 45 generally does not permit reexamination of factual findings unless findings ar