In cases involving labor contracts, the Supreme Court emphasizes that any doubts must be resolved in favor of the employee. This principle stems from the Labor Code and Civil Code, both of which prioritize social justice considerations. In this case, the Court of Appeals sided with Aguinaldo Naluis, an overseas Filipino worker (OFW) who claimed illegal dismissal. The court found that his employer, Centro Project Manpower Services Corporation, had prematurely terminated his contract without sufficient justification. This ruling underscores the importance of clear, unambiguous terms in employment contracts and the protection afforded to workers against arbitrary termination.

Authorization vs. Limitation: Did an Entry Permit Justify Contract Termination?

Aguinaldo Naluis was hired by Centro Project to work as a plumber in Saipan for Pacific Micronesia Corporation under a 12-month employment contract. He began working on September 13, 1997, but was repatriated on June 3, 1998, allegedly due to the expiration of his employment contract. Believing he had not completed his contracted term, Naluis filed a complaint for illegal dismissal. The Labor Arbiter and the National Labor Relations Commission (NLRC) initially dismissed his complaint, siding with Centro Project. They argued that Naluis’ repatriation was justified by the laws and regulations of the Commonwealth of the Northern Mariana Islands (CNMI), as stipulated in his Authorization for Entry (AE).

However, the Court of Appeals (CA) reversed these decisions, finding that the AE did not limit Naluis’ stay in Northern Marianas and, therefore, his termination was a breach of contract. The central issue was whether the expiration date on the AE could override the 12-month term specified in Naluis’s employment contract. Centro Project argued that the AE fixed Naluis’ period of stay, justifying his repatriation. Naluis countered that the expiration date was added to his contract after he signed it.

The Supreme Court sided with Naluis, affirming the CA’s decision. The Court emphasized that the burden of proof to show valid termination lies with the employer. Citing Article 277, par. (b) of the Labor Code, it reiterated that employers must provide substantial evidence justifying the termination. The Court found Centro Project’s reliance on the AE to be unwarranted. The AE stated:

This letter allows authorized entry into the Commonwealth of the Northern Mariana Islands for Aguinaldo S. Naluis.

You must enter the CNMI within 90 days of issuance of this “Authorization for Entry” letter if you are entering for the purpose of employment.

The Court interpreted the expiration date on the AE as referring to the validity of the entry authorization itself, not a limitation on Naluis’ period of employment. Furthermore, item number 3 of the AE even recognized any employment period if the AE was issued for the purpose of employment. This meant that there was no clear and categorical entry in the AE to the effect that the AE limited his stay in Northern Marianas.

The Supreme Court also invoked the principle of interpreting employment contracts in favor of the worker, referencing Article 1702 of the Civil Code, which states: “In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer.” This principle reinforces the idea that any ambiguity in an employment contract must be resolved to benefit the employee. Therefore, Centro Project should have clarified any potential conflict between the AE and the employment contract with Naluis before his deployment.

Centro Project argued that they feared Naluis would become an illegal alien if he stayed beyond the AE’s expiration date. However, the Court found this argument unsubstantiated. The Court noted the company failed to provide concrete evidence that Northern Marianas authorities intended to declare Naluis an illegal alien, or that it had informed him of the potential issue. The court highlights the importance of factual evidence as the basis for legal claims, citing the rule that mere allegation is not evidence and is not equivalent to proof, based on ECE Realty and Development, Inc. v. Rachel G. Mandap.

Moreover, the Court noted that Centro Project approved an addendum to the employment contract that stated “the term of this contract shall be for a period of Twelve Months,” even after the AE had been issued, as emphasized in Supra note 6. This underscored the company’s awareness of the agreed-upon contract term and its failure to address any perceived conflicts with the AE. Despite this, the company did not amend the employment contract despite being fully aware that the term of 12 months was clearly indicated as the period of Naluis’ work.

Because Naluis’s repatriation was a breach of contract, the CA awarded him several monetary claims. The Supreme Court affirmed these awards, with some modifications. It upheld the awards for unpaid salary, placement fees, vacation leave pay, sick leave pay, and attorney’s fees. However, it removed the awards for guaranteed overtime pay and legal holiday pay, as these were not explicitly provided for in the employment contract. The Court affirmed the applicability of Section 10 of Republic Act No. 8042:

In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the worker shall be entitled to the full reimbursement of his placement fee with interest at twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less.

By upholding the CA’s decision, the Supreme Court reaffirmed the importance of protecting the rights of OFWs and ensuring that employment contracts are interpreted fairly and in their favor. This case serves as a reminder to employers to ensure that contract terms are clear and unambiguous, and that terminations are based on valid and justifiable reasons. Also, the employer should show factual basis for making its claims.

FAQs

What was the central legal question in this case?	The central question was whether an Authorization for Entry (AE) issued by the Department of Labor and Immigration of Northern Mariana Islands, which contained an expiration date, could override the 12-month term stipulated in an employment contract.
What did the Supreme Court decide?	The Supreme Court ruled that the AE did not limit the worker’s stay and therefore could not justify the pre-termination of his employment contract.
Why did the Court side with the employee?	The Court emphasized that employment contracts should be interpreted in favor of the worker, especially when there are doubts or ambiguities.
What is the significance of the “Authorization for Entry” (AE) in this case?	The AE was meant to authorize entry into the country and didn’t limit the worker’s stay if he was employed. The expiration date referred to the entry authorization itself, not the employment duration.
What is the employer’s responsibility in contract terminations?	The employer has the burden of proving that the termination was for a just, valid, or authorized cause.
What were the monetary awards granted to the employee?	The employee was awarded unpaid salary, placement fees, vacation leave pay, sick leave pay, and attorney’s fees, but not overtime pay or holiday pay, because these were not in his contract.
How does this case affect overseas Filipino workers (OFWs)?	This case reinforces the protection afforded to OFWs, ensuring their contracts are respected and that terminations are not arbitrary.
What should employers do to avoid similar issues?	Employers should ensure that contract terms are clear, unambiguous, and compliant with labor laws, as well as providing factual basis for claims. Any potential conflicts between different documents should be resolved before deployment.

This case highlights the judiciary’s commitment to protecting labor rights and ensuring fair treatment for overseas workers. By prioritizing the welfare of employees and demanding clear contractual terms, the Supreme Court reinforces the principles of social justice within employment relationships.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: CENTRO PROJECT MANPOWER SERVICES CORPORATION vs. AGUINALDO NALUIS, G.R. No. 160123, June 17, 2015