G.R. No. 61594, September 28, 1990
190 SCRA 90
Petition for certiorari to review the order of the Minister of Labor.
FACTS:
On 2 December 1978, petitioner Pakistan International Airlines Corporation (PIA), a foreign corporation licensed to do business in the Philippines, executed in Manila two (2) separate contracts of employment, one with private respondent Ethelynne B. Farrales and the other with private respondent Ma. M.C. Mamasig. The contracts became effective on 9 January 1979 and provided for the duration of employment and penalty, termination and the applicable law which is of Pakistan’s. They were trained in Pakistan and worked as flight attendants with base station in Manila and flying assignments to different parts of the Middle East and Europe.
A year and four (4) months prior to the expiration of the contracts of employment, they received separate letters informing them that their services would be terminated.
Private respondents Farrales and Mamasig jointly instituted a complaint for illegal dismissal and non-payment of company benefits and bonuses, against PIA with the then Ministry of Labor and Employment. Several attempts at conciliation were not fruitful.
ISSUES:
- Whether or not the Regional Director, MOLE, had jurisdiction over the subject matter of the complaint initiated by private respondents for illegal dismissal, jurisdiction over the same being lodged in the Arbitration Branch of the National Labor Relations Commission (“NLRC”).
- Whether or not the order of the Regional Director had been issued in violation of petitioner’s right to procedural due process.
- Whether or not the employment contract is the governing law between the parties and not the provisions of the Labor Code.
- ADR ISSUE: WON the provision in the contract that the venue for settlement of any dispute arising out of or in connection with the agreement is to be resolved only in courts of Karachi Pakistan is valid.
RULING:
1. At the time the complaint was initiated in September 1980 and at the time the Orders assailed were rendered on January 1981 (by Regional Director Francisco L. Estrella) and August 1982 (by Deputy Minister Vicente Leogardo, Jr.), the Regional Director had jurisdiction over termination cases. Art. 278 of the Labor Code, as it then existed, forbade the termination of the services of employees with at least one (1) year of service without prior clearance from the Department of Labor and Employment.
2. No. Petitioner was given an opportunity to submit its position paper and evidence they had.
3. The principle of party autonomy in contracts is not an absolute principle. The rule in Article 1306 of the Civil Code is that the contracting parties may establish such stipulations as they may deem convenient, “provided they are not contrary to law, morals, good customs, public order or public policy.” Thus, counter-balancing the principle of autonomy of contracting parties is the equally general rule that provisions of applicable law, especially provisions relating to matters affected with public policy, are deemed written into the contract. The law relating to labor and employment are impressed with public interest. Paragraph 5 of that employment contract was inconsistent with Articles 280 and 281 of the Labor Code and thus, cannot be given effect.
4. These circumstances – the employer-employee relationship between the parties; the contract being not only executed in the Philippines, but also performed here, at least partially; private respondents are Philippine citizens and petitioner, although a foreign corporation, is licensed to do business and actually doing business and hence resident in the Philippines; lastly, private respondents were based in the Philippines in between their assigned flights to the Middle East and Europe – show that the Philippine courts and administrative agencies are the proper fora for the resolution of contractual disputes between the parties. The employment agreement cannot be given effect so as to bar Philippine agencies and courts vested with jurisdiction by Philippine law. Moreover, PIA failed to plead and proved the contents of Pakistan law on the matter, it is therefore presumed that the applicable provisions of the law of Pakistan are the same as the applicable provisions of Philippine law. Hence, the provision in the contract that the venue for settlement of any dispute arising out of or in connection with the agreement is to be resolved only in courts of Karachi Pakistan is not valid.
NOTES:
Labor Relations; Due Process; Petitioner’s right to procedural due process was not violated even if no formal or oral hearing was conducted, considering that it had ample opportunity to explain its side. – The second contention of petitioner PIA is that, even if the Regional Director had jurisdiction, still his order was null and void because it had been issued in violation of petitioner’s right to procedural due process . This claim, however, cannot be given serious consideration. Petitioner was ordered by the Regional Director to submit not only its position paper but also such evidence in its favor as it might have. Petitioner opted to rely solely upon its position paper; we must assume it had no evidence to sustain its assertions. Thus, even if no formal or oral hearing was conducted, petitioner had ample opportunity to explain its side. Moreover, petitioner PIA was able to appeal his case to the Ministry of Labor and Employment.
Contracts; Parties may not contract away applicable provisions of law especially peremptory provisions dealing with matters heavily impressed with public interest. The principle of party autonomy in contracts is not absolute. – A contract freely entered into should, of course, be respected, as PIA argues, since a contract is the law between the parties. The principle of party autonomy in contracts is not, however, an absolute principle. The rule in Article 1306, of our Civil Code is that the contracting parties may establish such stipulations as they may deem convenient, “provided they are not contrary to law, morals, good customs, public order or public policy.” Thus, counter-balancing the principle of autonomy of contracting parties is the equally general rule that provisions of applicable law, especially provisions relating to matters affected with public policy, are deemed written into the contract. Put a little differently, the governing principle is that parties may not contract away applicable provisions of law especially peremptory provisions dealing with matters heavily impressed with public interest. The law relating to labor and employment is clearly such an area and parties are not at liberty to insulate themselves and their relationships from the impact of labor laws and regulations by simply contracting with each other. It is thus necessary to appraise the contractual provisions invoked by petitioner PIA in terms of their consistency with applicable Philippine law and regulations.
Labor Law; A contract providing for employment with a fixed period was not necessary unlawful. – In Brent School, Inc., et.al. v. Ronaldo Zamora, etc., et.al. the Court had occasion to examine in detail the question of whether employment for a fixed term has been outlawed under the above quoted provisions of the Labor Code. After an extensive examination of the history and development of Articles 280 and 281, the Court reached the conclusion that a contract providing for employment with a fixed period was not necessarily unlawful: “There can of course be no quarrel with the proposition that where from the circumstances it is apparent that periods have been imposed to preclude acquisition of tenurial security by the employee, they should be struck down or disregarded as contrary to public policy, morals, etc. But where no such intent to circumvent the law is shown, or stated otherwise, where the reason for the law does not exist e.g. where it is indeed the employee himself who insists upon a period or where the nature of the engagement is such that, without being seasonal or for a specific project, a definite date of termination is a sine qua non would an agreement fixing a period be essentially evil or illicit, therefore anathema Would such an agreement come within the scope of Article 280 which admittedly was enacted “to prevent the circumvention of the right of the employee to be secured in . . . (his) employment?” As it is evident from even only the three examples already given that Article 280 of the Labor Code, under a narrow and literal interpretation, not only fails to exhaust the gamut of employment contracts to which the lack of a fixed period would be an anomaly, but would also appear to restrict, without reasonable distinctions, the right of an employee to freely stipulate with his employer the duration of his engagement, it logically follows that such a literal interpretation should be eschewed or avoided. The law must be given reasonable interpretation, to preclude absurdity in its application. Outlawing the whole concept of term employment and subverting to boot the principle of freedom of contract to remedy the evil of employers” using it as a means to prevent their employees from obtaining security of tenure is like cutting off the nose to spite the face or, more relevantly, curing a headache by lopping off the head. xxx xxx xxx Accordingly, and since the entire purpose behind the development of legislation culminating in the present Article 280 of the Labor Code clearly appears to have been, as already observed, to prevent circumvention of the employee’s right to be secure in his tenure, the clause in said article indiscriminately and completely ruling out all written or oral agreements conflicting with the concept of regular employment as defined therein should be construed to refer to the substantive evil that the Code itself has singled out: agreements entered into precisely to circumvent security of tenure. It should have no application to instances where a fixed period of employment was agreed upon knowingly and voluntarily 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 where it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over the latter. Unless thus limited in its purview, the law would be made to apply to purposes other than those explicitly stated by its framers; it thus becomes pointless and arbitrary, unjust in its effects and apt to lead to absurd and unintended consequences. (emphasis supplied)
Contracts; Conflicts of Law; When the relationship between the parties is much affected by public interest, the otherwise applicable Philippine laws and regulations cannot be rendered illusory by the parties agreeing upon some other law to govern their relationship. – Petitioner PIA cannot take refuge in paragraph 10 of its employment agreement which specifies, firstly, the law of Pakistan as the applicable law of the agreement and, secondly, lays the venue for settlement of any dispute arising out of or in connection with the agreement “only [in] courts of Karachi Pakistan”. The first clause of paragraph 10 cannot be invoked to prevent the application of Philippine labor laws and regulations to the subject matter of this case, i.e., the employer-employee relationship between petitioner PIA and private respondents. We have already pointed out that the relationship is much affected with public interest and that the otherwise applicable Philippine laws and regulations cannot be rendered illusory by the parties agreeing upon some other law to govern their relationship. Neither may petitioner invoke the second clause of paragraph 10, specifying the Karachi courts as the sole venue for the settlement of dispute; between the contracting parties. Even a cursory scrutiny of the relevant circumstances of this case will show the multiple and substantive contacts between Philippine law and Philippine courts, on the one hand, and the relationship between the parties, upon the other: the contract was not only executed in the Philippines, it was also performed here, at least partially; private respondents are Philippine citizens and respondents, while petitioner, although a foreign corporation, is licensed to do business (and actually doing business) and hence resident in the Philippines; lastly, private respondents were based in the Philippines in between their assigned flights to the Middle East and Europe. All the above contacts point to the Philippine courts and administrative agencies as a proper forum for the resolution of contractual disputes between the parties. Under these circumstances, paragraph 10 of the employment agreement cannot be given effect so as to oust Philippine agencies and courts of the jurisdiction vested upon them by Philippine law. Finally, and in any event, the petitioner PIA did not undertake to plead and prove the contents of Pakistan law on the matter; it must therefore be presumed that the applicable provisions of the law of Pakistan are the same as the applicable provisions of Philippine law.
Myline Cordial 