Tag: Overseas Employment Contract

Constructive Dismissal: Employer’s Burden to Prove Fair Treatment and Contractual Obligations

The Supreme Court held that an employee was constructively and illegally dismissed when her working conditions became unbearable due to the employer’s actions. This decision reinforces the principle that employers must adhere to the agreed terms of employment and ensure that employees are not subjected to working conditions that undermine their dignity or health. Employers must honor their contractual obligations and treat their employees fairly, or they risk being found liable for illegal dismissal.

Unfulfilled Promises: When a Chef’s Dream Job Turns Into a Legal Battle

This case revolves around Agnes Coeli Bugaoisan’s complaint against OWI Group Manila and Morris Corporation for constructive illegal dismissal. Bugaoisan alleged that she was lured into an oppressive work environment in Australia, which led to her resignation and subsequent filing of a labor complaint. The central legal question is whether the circumstances surrounding Bugaoisan’s resignation constituted constructive dismissal, thereby entitling her to compensation for the unexpired portion of her employment contract.

The facts reveal that Bugaoisan responded to a job advertisement by OWI, the Philippine agent of Morris, for a chef position in Australia. After a series of interviews, she was offered a full-time position with an annual salary of AUS$60,000. Upon arriving in Australia, she was presented with a different offer, increasing her salary to AUS$75,000 but also significantly increasing her workload. Deployed to a mining site, she was tasked with preparing breakfast buffet for a large number of employees single-handedly. Overwhelmed and concerned for her safety, she raised these issues with Morris, but her concerns were not adequately addressed.

Adding to her distress, Bugaoisan developed Carpal Tunnel Syndrome (CTS) due to the physically demanding nature of her work. Despite medical advice to undergo surgery, she continued working until the pain became unbearable. With her paid leave exhausted and unable to receive further compensation until declared fit to work, she resigned and returned to the Philippines. The Labor Arbiter (LA) initially ruled in her favor, declaring her dismissal unjust and illegal, and awarding her AUS$137,500 for the remaining period of her two-year employment contract, as well as moral and exemplary damages.

The National Labor Relations Commission (NLRC) upheld the LA’s decision. However, the Court of Appeals (CA) modified the ruling, stating that Bugaoisan’s employment contract was only for one year, limiting her compensation to AUS$56,250. The CA based its decision on the Master Employment Contract submitted to the Philippine Overseas Employment Agency (POEA), which indicated a one-year term. The Supreme Court (SC) then stepped in to clarify the scope of review in such cases, emphasizing the limits of a certiorari petition.

The Supreme Court emphasized that a petition for certiorari under Rule 65 of the Rules of Court is limited to correcting errors of jurisdiction or grave abuse of discretion. According to the Court, it cannot be used to review the intrinsic correctness of a judgment if the lower court had jurisdiction. A writ of certiorari may be issued only for the correction of errors of jurisdiction or grave abuse of discretion amounting to lack or excess of jurisdiction. It cannot be used for any other purpose, as its function is limited to keeping the inferior court within the bounds of its jurisdiction. In this case, the CA overstepped its bounds by modifying the award based on a factual issue (the duration of the contract) that was not raised as an error of jurisdiction by the respondents.

The SC cited Montoya v. Transmed Manila Corporation to underscore the approach in reviewing CA decisions in labor cases. The Court’s role is to assess whether the CA correctly determined the presence or absence of grave abuse of discretion in the NLRC’s decision, not to re-evaluate the merits of the case. The Court noted that the CA affirmed the NLRC’s findings of illegal dismissal and entitlement to unpaid salaries, but then improperly modified the award based on a factual matter not raised by the parties.

The Court differentiated between questions of law and questions of fact, clarifying the scope of its review under Rule 45. The Court said that the CA is only tasked to determine whether or not the NLRC committed grave abuse of discretion in its appreciation of factual issues presented before it by any parties. The CA is not given unbridled discretion to modify factual findings of the NLRC and LA, especially when such matters have not been assigned as errors nor raised in the pleadings.

The Supreme Court ultimately sided with Bugaoisan, reinstating the NLRC’s decision to award her unpaid salaries for the unexpired portion of her two-year contract. The Court deferred to the factual findings of the labor tribunals, which had determined that the employment contract was for two years, absent any showing of grave abuse of discretion. The SC’s ruling reinforces the principle that appellate courts should not disturb factual findings of labor tribunals unless there is a clear showing of grave abuse of discretion. This reaffirms the importance of respecting the expertise and authority of labor tribunals in resolving labor disputes.

FAQs

What was the key issue in this case?	The central issue was whether the Court of Appeals erred in modifying the NLRC’s decision regarding the duration of the employment contract and the corresponding award for unpaid salaries.
What is constructive dismissal?	Constructive dismissal occurs when an employer’s actions create working conditions so unbearable that a reasonable person would feel compelled to resign. It is considered an involuntary termination initiated by the employer.
*What is a petition for certiorari?*	A petition for certiorari is a special civil action used to correct errors of jurisdiction or grave abuse of discretion by a lower court or tribunal. It is not a substitute for an appeal on the merits of the case.
What is grave abuse of discretion?	Grave abuse of discretion implies a capricious and whimsical exercise of judgment, equivalent to lack of jurisdiction. It requires a showing that the lower court or tribunal acted arbitrarily or despotically.
What was the Supreme Court’s ruling on the employment contract’s duration?	The Supreme Court ruled that the Court of Appeals erred in modifying the NLRC’s decision regarding the two-year duration of the employment contract. The Court deferred to the factual findings of the labor tribunals, which had not been shown to have acted with grave abuse of discretion.
*What is the significance of the Montoya v. Transmed Manila Corporation* case?**	Montoya v. Transmed Manila Corporation clarifies the scope of review in Rule 45 petitions involving labor cases decided by the Court of Appeals under Rule 65. It emphasizes that the Supreme Court should focus on whether the CA correctly determined the presence or absence of grave abuse of discretion, not on re-evaluating the merits of the case.
What does POEA stand for?	POEA stands for Philippine Overseas Employment Administration.
Why did the Court defer to the labor tribunals’ factual findings?	The Court deferred to the labor tribunals’ factual findings because the Court of Appeals did not find that the NLRC acted with grave abuse of discretion in its appreciation of the facts. Absent such a finding, the factual findings of the NLRC are deemed conclusive and binding.
What are the implications for employers in overseas employment contracts?	The ruling emphasizes the importance of employers adhering to the terms of overseas employment contracts and ensuring that working conditions are fair and reasonable. Employers should address employee concerns and avoid creating environments that lead to constructive dismissal.

This case serves as a reminder to employers to uphold their contractual obligations and treat their employees fairly, especially in overseas employment contexts. Courts will scrutinize working conditions to ensure that employees are not subjected to undue hardship or oppressive environments that force them to resign. Ignoring this can lead to legal repercussions and financial liabilities.

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

February 7, 2018

Overseas Employment Contracts: Philippine Law Prevails Unless Foreign Law is Expressly Stipulated and Consistent with Public Policy

In a case concerning the illegal dismissal of an Overseas Filipino Worker (OFW), the Supreme Court clarified that Philippine labor laws generally govern overseas employment contracts unless a specific foreign law is expressly stipulated in the contract and proven to be not contrary to Philippine law, morals, good customs, public order, or public policy. This ruling ensures that OFWs are afforded full protection under Philippine law while working abroad, unless specific conditions for the application of foreign law are met.

When Can Foreign Law Govern an OFW Contract?

The central issue in Industrial Personnel & Management Services, Inc. (IPAMS) v. De Vera revolved around determining which law—Philippine or Canadian—should govern the overseas employment contract of Alberto Arriola, an OFW who was terminated before the end of his contract. The petitioners, IPAMS and SNC-Lavalin, argued that Canadian law should apply, as Arriola’s employment documents were processed in Canada and SNC-Lavalin’s office was located in Ontario. The Supreme Court ultimately ruled that Philippine law should govern Arriola’s employment contract because the contract did not expressly stipulate that Canadian law would apply and because the invoked Canadian law conflicted with Philippine public policy on security of tenure and due process.

The Supreme Court’s decision rested on the constitutional mandate to protect labor, whether local or overseas. The Court emphasized that even when Filipinos work abroad, they are not stripped of their rights to security of tenure, humane working conditions, and a living wage as guaranteed by the Philippine Constitution. As such, Philippine laws apply to overseas employment contracts, ensuring OFWs enjoy these fundamental rights.

Building on this foundation, the Court articulated specific requisites for a foreign law to govern an overseas employment contract. First, the overseas employment contract must expressly stipulate that a specific foreign law governs. Second, the foreign law invoked must be proven before Philippine courts in accordance with Philippine rules on evidence. Third, the foreign law must not be contrary to Philippine law, morals, good customs, public order, or public policy. Finally, the overseas employment contract must be processed through the Philippine Overseas Employment Administration (POEA). These requisites aim to safeguard the rights and well-being of OFWs while allowing foreign employers to apply their laws under specific, controlled conditions.

In the case at hand, while the petitioners presented the Employment Standards Act (ESA) of Ontario, authenticated by Canadian authorities, they failed to expressly stipulate in Arriola’s employment contract that Canadian law would govern. The petitioners argued that the Expatriate Policy, Ambatovy Project – Site, Long Term, embodied the terms and conditions of Arriola’s employment, thereby incorporating Canadian law. The Court, however, rejected this argument, asserting that the contract must explicitly state the applicability of foreign law to ensure the OFW is fully informed before signing the contract.

Furthermore, the Supreme Court found that the ESA’s provisions conflicted with the Philippine Constitution and the Labor Code. Specifically, the ESA did not require any ground for the early termination of employment and allowed employers to dispense with prior notice by simply paying severance pay. These provisions were deemed inconsistent with the right to security of tenure and due process, rights guaranteed to employees under Philippine law. The Court stated that these provisions would endow foreign employers with absolute power to terminate employment, even on whimsical grounds, depriving employees of the opportunity to explain and defend themselves.

The Court contrasted this situation with previous cases where the principle of lex loci contractus (the law of the place where the contract is made) was applied. As Arriola’s employment contract was executed in the Philippines and processed through the POEA, Philippine laws should govern, especially since no foreign law was explicitly specified in the contract. Consequently, the Court applied Philippine labor laws to determine whether Arriola’s dismissal was valid.

Under Philippine law, an employer cannot terminate an employee’s services except for a just cause or when authorized by law. The authorized causes for termination include installation of labor-saving devices, redundancy, retrenchment to prevent losses, and the closing or cessation of operation. Each authorized cause has specific requisites that the employer must prove with substantial evidence to validate the dismissal. The petitioners argued that the economy of Madagascar weakened due to the global financial crisis, leading to SNC-Lavalin’s business slowdown and subsequent decision to minimize expenditures. However, the Court found that the petitioners failed to present credible evidence to support their claim of financial loss, offering only an unreliable news article as proof. This lack of substantial evidence rendered Arriola’s dismissal invalid.

Building on this point, the Court stated that the onus of proving that the employee was dismissed for a valid reason rests on the employer. Since the petitioners failed to discharge this burden, Arriola’s dismissal was deemed unjustified and illegal. The Supreme Court affirmed the Court of Appeals’ decision, which held that Arriola was illegally dismissed and entitled to unpaid salaries for the unexpired portion of his contract.

FAQs

What was the key issue in this case?	The central issue was determining whether Philippine or Canadian law should govern the overseas employment contract of an OFW who was terminated early. The court needed to decide if the termination was legal under the applicable law.
Under what conditions can a foreign law govern an overseas employment contract?	A foreign law can govern an overseas employment contract only if it is expressly stipulated in the contract, proven in court, not contrary to Philippine law and public policy, and the contract is processed through the POEA. All four conditions must be met.
*What is the principle of lex loci contractus?*	Lex loci contractus means the law of the place where the contract is made. If an overseas employment contract is executed in the Philippines and does not specify a foreign law, Philippine law will generally govern the contract.
Why did the Court reject the applicability of the Canadian Employment Standards Act (ESA) in this case?	The Court rejected the ESA because the employment contract did not expressly stipulate that Canadian law would apply. Additionally, the ESA’s provisions on termination were found to be inconsistent with the Philippine Constitution and Labor Code regarding security of tenure and due process.
What must an employer prove to validly terminate an employee under Philippine law?	Under Philippine law, an employer must prove that the termination was for a just cause or an authorized cause, such as redundancy or retrenchment. The employer must provide substantial evidence to support the reason for termination.
What evidence did the employer present to justify the termination, and why was it insufficient?	The employer presented a news article to support their claim of financial losses due to the global financial crisis. The Court found this evidence insufficient and unreliable, as it was considered hearsay and did not adequately prove the financial difficulties claimed.
What is the significance of processing an overseas employment contract through the POEA?	Processing a contract through the POEA ensures that the State can assess the suitability of foreign laws to protect migrant workers. It is a requirement to ensure the rights of OFWs are protected under Philippine law.
What rights does an OFW retain even when working abroad?	An OFW retains the rights to security of tenure, humane conditions of work, and a living wage, as guaranteed by the Philippine Constitution. These rights cannot be taken away simply because the worker is employed overseas.

In conclusion, the Supreme Court’s decision in IPAMS v. De Vera reinforces the Philippines’ commitment to protecting its overseas workers by ensuring that Philippine labor laws prevail unless specific, stringent conditions for the application of foreign law are met. This ruling underscores the importance of explicitly stipulating the governing law in overseas employment contracts and ensuring that such laws align with Philippine public policy.

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: INDUSTRIAL PERSONNEL & MANAGEMENT SERVICES, INC. (IPAMS), SNC LAVALIN ENGINEERS & CONTRACTORS, INC. AND ANGELITO C. HERNANDEZ, VS. JOSE G. DE VERA AND ALBERTO B. ARRIOLA, G.R. No. 205703, March 07, 2016

January 16, 2017

Termination at Will vs. Illegal Dismissal: Understanding Overseas Employment Contracts

The Supreme Court ruled that an overseas Filipino worker (OFW) was not illegally dismissed when her employment contract was terminated following the stipulations outlined in the agreement, which allowed for termination with a three-month notice. This decision underscores the importance of adhering to contractual terms and the conditions under which an employment may be terminated, impacting the rights and remedies available to OFWs.

When ‘No Cause’ Termination Causes Confusion: Examining Contractual Rights in Overseas Work

This case revolves around Ma. Victoria H. Malinao’s complaint against GBMLT Manpower Services, Inc., her local agency, and Alemaya University, her foreign employer in Ethiopia, for illegal dismissal. The core legal question is whether Malinao was indeed illegally dismissed or if her termination was a valid exercise of contractual provisions allowing termination by either party with a three-month notice.

The facts reveal that Malinao, after being hired as an accounting lecturer, faced issues regarding her qualifications and teaching performance, leading to a notice of termination. Subsequently, she was offered another position within the university, which she initially accepted but later declined, requesting repatriation. Upon returning to the Philippines, she signed a Quitclaim and Release in favor of GBMLT Manpower Services, Inc., receiving USD 900. Dissatisfied, she then filed a complaint, arguing illegal dismissal and seeking compensation for the unexpired portion of her contract, damages, and attorney’s fees.

The Labor Arbiter initially sided with Malinao, finding that she had been unduly repatriated in breach of her employment contract. The arbiter highlighted that her lack of a master’s degree “in the strict sense of the word” was not a valid reason for termination, considering her law degree. The Labor Arbiter also found that the Quitclaim and Release could not bar her claims, deeming the USD 900 compensation unreasonable.

However, the NLRC reversed this decision, stating that Malinao’s claims were subject to a valid release, waiver, and quitclaim. The NLRC pointed out that after accepting a new position within the university, she could no longer question the termination of her original contract. According to the NLRC, Malinao voluntarily terminated the contract when she declined the new post and requested repatriation. The Court of Appeals (CA) then sided with the Labor Arbiter, leading to the current appeal before the Supreme Court.

The Supreme Court, in its analysis, focused on whether the CA correctly determined if the NLRC committed grave abuse of discretion. The Court referenced Section 10 of Republic Act No. 8042, the Migrant Workers and Overseas Filipinos Act of 1995, which entitles illegally terminated overseas workers to specific monetary awards. However, the Court emphasized that this provision only applies to those dismissed without just, valid, or authorized cause. Therefore, a critical point of contention was whether Malinao’s termination qualified as an illegal dismissal.

The Court examined the Contract of Employment, noting that it allowed termination by either party for cause or “at any time for no cause” with a three-month notice. This stipulation, if exercised in good faith, is a legitimate contractual provision. The court found that Alemaya University acted within its rights under the contract by providing the required notice, despite citing reasons for termination. The court also considered Malinao’s decision to decline the offered position at the Internal Audit Department as an exercise of her right to terminate the contract.

The Supreme Court dismissed the claim that the attempted demotion based on her lack of a master’s degree was a sign of bad faith. The court determined that the requirement that a worker has a master’s degree was a genuine misunderstanding that arose because Malinao’s law degree did not satisfy the Ethiopian Ministry of Education. The Court highlighted that the issue was clarified when the representative of the Ministry of Education of Ethiopia evaluated her qualifications prior to her deployment. The Court emphasized that their acts regarding the matter should not be taken against either one of them. In any case, the demotion did not materialize, and respondent maintained her salary and benefits until she was repatriated.

Building on this, the Court validated the Quitclaim and Release, noting that Malinao understood its terms and conditions and voluntarily signed it. Given that she was not illegally dismissed, she was not entitled to the salaries for the unexpired portion of her contract. Her argument of “dire necessity” to sign the document was insufficient to nullify the agreement. The Supreme Court highlighted that Malinao is a learned professional and that no proof was presented to show that petitioner had defrauded or deceived her into signing the document. Absent that proof, the Court was bound to uphold the Quitclaim and Release as valid and binding.

Addressing the procedural issue of the appeal bond, the Court found that GBMLT Manpower Services, Inc. had complied with the legal requirements. The NLRC accepted the appeal bond posted by the agency through a current-dated check, and the check was successfully deposited into the NLRC’s bank account. The Court emphasized the importance of resolving controversies on their merits and ensuring that employees receive any money owed to them if the final decision favors them.

Furthermore, the Court noted that even if there were doubts regarding the timeliness of the appeal bond, the circumstances of this case justified a more liberal interpretation of the rules. Citing Balite v. SS Ventures International, Inc., the Court reiterated the need to balance the state’s obligation to protect labor rights with the employer’s right to appeal. The Court emphasized that it is justified in giving employers the amplest opportunity to pursue their cause while ensuring that employees will receive the money judgment should the case be ultimately decided in their favor.

FAQs

What was the key issue in this case?	The key issue was whether the respondent, Ma. Victoria H. Malinao, was illegally dismissed from her overseas employment, and the validity of the quitclaim she signed upon repatriation.
What is Section 10 of R.A. 8042?	Section 10 of R.A. 8042, the Migrant Workers Act, outlines the monetary claims an illegally dismissed overseas worker is entitled to, including reimbursement of placement fees, deductions, and salaries for the unexpired portion of the contract.
What does it mean to terminate a contract “at will”?	Terminating a contract “at will” means either party can end the agreement at any time, provided they adhere to any notice requirements specified in the contract.
What is a Quitclaim and Release?	A Quitclaim and Release is a legal document where one party relinquishes their rights or claims against another, typically in exchange for a sum of money or other consideration.
What is the significance of the appeal bond?	The appeal bond ensures that if the employer loses the appeal, there are funds available to pay the employee the monetary award originally adjudged by the labor arbiter.
What was the main reason the Supreme Court sided with the employer?	The Supreme Court sided with the employer because it found that Malinao was not illegally dismissed but rather her contract was terminated in accordance with the terms agreed upon by both parties.
Can a contract be terminated for “no cause”?	Yes, according to the contract, either party could terminate the agreement for no cause as long as a three-month notice was given to the other party.
What is the impact of the respondent’s subsequent job offer on the case?	The respondent’s acceptance of a subsequent job offer at the Internal Audit Department was taken into consideration by the NLRC that the parties have decided to revert to the status quo ante of harmonious employment relationship and to do away with the previous termination of her employment.

This case highlights the importance of clearly defined terms in employment contracts and the need for both employers and employees to understand their rights and obligations. The Supreme Court’s decision serves as a reminder that contractual agreements, when entered into in good faith and with a full understanding of their implications, are binding and enforceable.

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: GBMLT Manpower Services, Inc. vs. Ma. Victoria H. Malinao, G.R. No. 189262, July 06, 2015

July 6, 2015