Protecting OFWs: The Supreme Court’s Stand on Contract Substitution and Constructive Dismissal

Fil-Expat Placement Agency, Inc. v. Maria Antoniette Cudal Lee, G.R. No. 250439, September 22, 2020

Imagine being an overseas Filipino worker (OFW) in a foreign land, far from the comforts of home, only to find yourself in a situation where your employer attempts to change the terms of your contract. This was the reality for Maria Antoniette Cudal Lee, an orthodontist specialist in Saudi Arabia, whose case against her recruitment agency, Fil-Expat Placement Agency, Inc., reached the Supreme Court of the Philippines. The central issue was whether there was substantial evidence of contract substitution and constructive dismissal, two critical concerns for OFWs worldwide.

Maria Antoniette’s journey began with a two-year employment contract as an orthodontist in Saudi Arabia. However, her situation took a turn when her employer asked her to sign a new contract in Arabic, which would declare only half of her salary for insurance purposes. Her refusal to sign led to a series of events that ultimately resulted in her repatriation. This case highlights the importance of understanding and protecting the rights of OFWs against contract substitution and unfair treatment.

Legal Context

Contract substitution and constructive dismissal are significant issues within the realm of labor law, particularly for OFWs. Contract substitution occurs when an employer attempts to alter the terms of an employment contract to the disadvantage of the worker. This practice is prohibited under Article 34(i) of the Philippine Labor Code, which states: “To substitute or alter employment contracts approved and verified by the Department of Labor from the time of actual signing thereof by the parties up to and including the periods of expiration of the same without the approval of the Secretary of Labor.”

Constructive dismissal, on the other hand, happens when an employee is forced to resign due to intolerable working conditions created by the employer. The test for constructive dismissal is whether a reasonable person in the employee’s position would have felt compelled to give up their position under the circumstances.

These legal principles are crucial for protecting OFWs, who often face unique challenges in foreign countries. For instance, consider an OFW who signs a contract promising a certain salary, only to find upon arrival that the employer demands a new contract with reduced pay. This scenario exemplifies contract substitution and highlights the vulnerability of OFWs to such practices.

Case Breakdown

Maria Antoniette’s case unfolded when she was hired by Fil-Expat to work as an orthodontist in Saudi Arabia. In May 2016, her employer asked her to sign a document in Arabic that would declare only half of her stipulated salary for insurance purposes. Despite her initial hesitation, she signed the document using a different signature. However, the employer continued to pressure her to sign a new employment contract, leading to harassment and threats.

She faced additional duties, salary deductions, and even sexual advances. When she suffered a severe allergic reaction to latex gloves, her employer showed no concern. These conditions led Maria Antoniette to seek repatriation on June 24, 2016.

The legal battle began with Maria Antoniette filing a complaint against Fil-Expat and her foreign employer, Thanaya Al-Yaqoot Medical Specialist, for constructive dismissal, contract substitution, and breach of contract. The Labor Arbiter (LA) ruled in her favor, ordering the respondents to pay her various damages and the unexpired portion of her contract.

Fil-Expat appealed to the National Labor Relations Commission (NLRC), which reversed the LA’s decision, stating there was no contract substitution or constructive dismissal. Maria Antoniette then appealed to the Court of Appeals (CA), which reinstated the LA’s decision, finding substantial evidence of the employer’s attempt to force her into signing a new contract and the intolerable working conditions she faced.

Fil-Expat sought review from the Supreme Court, which upheld the CA’s decision. The Court emphasized the illegality of contract substitution and the reality of constructive dismissal in Maria Antoniette’s case. As the Court stated, “The employer’s claim that the new contract was for uniformity and was not intended to alter the terms of the original contract is implausible.” Furthermore, the Court recognized that Maria Antoniette’s continued employment was rendered unlikely and unbearable, amounting to constructive dismissal.

Practical Implications

This ruling has significant implications for OFWs and recruitment agencies. It reaffirms the strict prohibition against contract substitution and underscores the importance of protecting OFWs from unfair treatment. Recruitment agencies must ensure that the contracts they facilitate are honored and that any changes require the approval of the Department of Labor and Employment.

For OFWs, this case serves as a reminder to be vigilant about their rights and to seek legal recourse if faced with contract substitution or constructive dismissal. It is crucial for them to document any attempts by their employers to alter their contracts and to report any unfair treatment to the appropriate authorities.

Key Lessons:

• OFWs should thoroughly review their employment contracts before signing and seek legal advice if necessary.
• Any attempt by an employer to alter a contract without proper approval is illegal and should be reported.
• OFWs facing intolerable working conditions should document their experiences and seek assistance from Philippine labor offices abroad.

Frequently Asked Questions

What is contract substitution?

Contract substitution is when an employer attempts to change the terms of an employment contract to the disadvantage of the worker after it has been signed and approved by the Department of Labor and Employment.

Can an employer legally change my employment contract?

An employer can only change an employment contract if the changes are approved by the Department of Labor and Employment. Any unauthorized changes are illegal.

What constitutes constructive dismissal?

Constructive dismissal occurs when an employee is forced to resign due to intolerable working conditions created by the employer, such as harassment or unfair treatment.

What should I do if my employer attempts to change my contract?

Document the attempt and report it to the Philippine Overseas Employment Administration (POEA) or the nearest Philippine labor office. Seek legal advice to understand your rights and options.

How can I protect myself from unfair treatment as an OFW?

Keep a record of your employment contract and any incidents of unfair treatment. Stay informed about your rights and seek assistance from Philippine labor offices or legal professionals if needed.

ASG Law specializes in labor and employment law. Contact us or email hello@asglawpartners.com to schedule a consultation.