G.R. No. 61594. September 28, 1990
PAKISTAN INTERNATIONAL AIRLINES CORPORATION, PETITIONER, VS. HON. BLAS F. OPLE, IN HIS CAPACITY AS MINISTER OF LABOR; HON. VICENTE LEOGRADO, JR., IN HIS CAPACITY AS DEPUTY MINI…
FELICIANO, J.:
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.[1]
The contracts, which became effective on 9
January 1979, provided in pertinent portion as follows:
“5.
DURATION OF EMPLOYMENT AND PENALTY
This agreement is for a period of three (3) years, but can be
extended by the mutual consent of the parties.
xxx xxx xxx
6. TERMINATION
xxx xxx xxx
Notwithstanding anything to contrary as herein provided, PIA
reserves the right to terminate this agreement at any time by giving the EMPLOYEE notice in writing in advance one month
before the intended termination or in lieu thereof, by paying the EMPLOYEE wages equivalent to one month’s
salary.
xxx xxx xxx
10.
APPLICABLE LAW:
This agreement shall be construed and governed under and by the
laws of Pakistan,
and only the Courts of Karachi, Pakistan shall have the jurisdiction to
consider any matter arising out
of or under this agreement.”
Respondents then commenced training in Pakistan. After their training period, they began
discharging their job functions as flight attendants, with base station in Manila
and flying assignments to different parts of the Middle East
and Europe.
On 2 August 1980, roughly one (1) year and four (4) months prior
to the expiration of the contracts of employment, PIA through Mr. Oscar Benares, counsel for and official of the local branch of
PIA, sent separate letters both dated 1 August 1980 to private respondents Farrales and Mamasig advising
both that their services as flight stewardesses would be terminated
“effective 1 September 1980, conformably to clause 6 (b) of the employment
agreement [they had] executed with [PIA]”.[2]
On 9 September 1980,
private respondents Farrales and Mamasig
jointly instituted a complaint, docketed as
NCR-STF-9-5151-80, for illegal dismissal and non-payment of company
benefits and bonuses, against PIA with the then Ministry of Labor and
Employment (“MOLE”). After several
unfruitful attempts at conciliation, the MOLE hearing officer Atty. Jose M. Pascual ordered the parties to submit their position papers
and evidence supporting their respective positions. The PIA submitted its position paper,[3]
but no evidence, and there claimed that both private respondents were habitual
absentees; that both were in the habit of bringing in from abroad sizeable
quantities of “personal effects”; and that PIA personnel at the
Manila International Airport had been discreetly warned by customs officials to
advise private respondents to discontinue that practice. PIA further claimed that the services of both
private respondents were terminated pursuant to the provisions of the
employment contract.
In his Order dated 22 January 1981, Regional Director Francisco
L. Estrella ordered the reinstatement of private
respondents with full backwages or, in the
alternative, the payment to them of the amounts equivalent to their salaries
for the remainder of the fixed three-year period of their employment contracts;
the payment to private respondent Mamasig of on
amount equivalent to the value of a round trip ticket Manila-USA-Manila; and
payment of a bonus to each of the private respondents equivalent to their
one-month salary.[4]
The Order stated that private respondents had attained the status of regular
employees after they had rendered more than a year of continued service; that
the stipulation limiting the period of the
employment contract to three (3) years was null and void as violative
of the provisions of the Labor
Code and its implementing rules and regulations on regular and casual
employment; and that the dismissal, having been carried out without the
requisite clearance from the MOLE, was illegal and entitled private respondents
to reinstatement with full backwages.
On appeal, in an
Order dated 12 August 1982, Hon. Vicente
Leogardo, Jr.,
Deputy Minister, MOLE, adopted the findings of fact and conclusions of
the Regional Director and affirmed the latter’s award save for the portion
thereof giving PIA the option, in lieu of reinstatement, “to pay each of the
complainants [private respondents] their salaries corresponding to the
unexpired portion of the contract[s] [of employment] x x
x”.[5]
In the instant Petition for Certiorari, petitioner PIA
assails the award of the Regional Director and the Order of the Deputy Minister
as having been rendered without jurisdiction; for having been rendered without
support in the evidence of record since, allegedly, no hearing was conducted by
the hearing officer, Atty. Jose M. Pascual; and for
having been issued in disregard and in violation of petitioner’s rights under
the employment contracts with private respondents.
1. Petitioner’s first
contention is that the Regional Director, MOLE, had no 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”). It appears to
us beyond dispute, however, that both 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.
Article 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:
“Art. 278. Miscellaneous
Provisions — x x x
(b) With or without a collective agreement, no employer may
shut down his establishment or dismiss or terminate the employment of
employees with at least one year of service during the last two (2) years,
whether such service is continuous or broken, without prior written
authority issued in accordance with such rules and regulations as the Secretary
may promulgate x x x”
(Underscoring supplied)
Rule XIV, Book No. 5 of the Rules and
Regulations Implementing the Labor Code, made clear that in case of a
termination without the necessary clearance, the Regional Director was
authorized to order the reinstatement of the employee concerned and the payment
of backwages; necessarily, therefore, the Regional
Director must have been given jurisdiction over such termination cases:
“Section 2. Shutdown
or dismissal without clearance. —
Any shutdown or dismissal without prior clearance shall be conclusively
presumed to be termination of employment without a just cause. The Regional Director shall, in such case,
order the immediate reinstatement of the employee and the payment of his
wages from the time of the shutdown or dismissal until the time of
reinstatement.” (Underscoring supplied)
Policy Instruction No. 14 issued by the
Secretary of Labor, dated 23 April
1976, was similarly very explicit about the jurisdiction of the
Regional Director over termination of employment cases:
“Under PD 850, termination case — with or without CBA
— are now placed under the original jurisdiction of the Regional Director. Preventive suspension cases, now made
cognizable for the first time, are also placed under the Regional
Director. Before PD 850, termination
cases where there was a CBA were under the jurisdiction of the grievance
machinery and voluntary arbitration, while termination cases where there was no
CBA were under the jurisdiction of the Conciliation Section.
In more details, the major innovations introduced by PD 850 and its
implementing rules and regulations with respect to termination and preventive suspension cases are:
1. The Regional Director is now required to rule on every
application for clearance, whether there is opposition or not, within ten days
from receipt thereof.
x x x x x x x x x“
(Underscoring supplied)
2. 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.[6]
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.[7]
There is another reason why petitioner’s claim of denial of due
process must be rejected. At the time
the complaint was filed by private respondents on 21 September 1980 and at the
time the Regional Director issued his questioned order on 22 January 1981,
applicable regulation, as noted above, specified that a “dismissal without
prior clearance shall be conclusively presumed to be termination
of employment without a just cause“, and the Regional Director was
required in such case to “order the immediate reinstatement of the
employee and the payment of his wages from the time of the shutdown or
dismissal until x x x
reinstatement”. In other words,
under the then applicable rule, the Regional Director did not even have to
require submission of position papers by the parties in view of the conclusive
(juris et de jure)
character of the presumption created by such applicable law and
regulation. In Cebu
Institute of Technology v. Minister of Labor and Employment, [8]
the Court pointed out that “under Rule 14, Section 2, of the Implementing
Rules and Regulations, the termination of [an employee] which was without
previous clearance from the Ministry of Labor is conclusively presumed to be
without [just] cause x x x [a
presumption which] cannot be overturned by any contrary proof however strong”.
3. In its third contention,
petitioner PIA invokes paragraphs 5 and 6 of its contract of employment with
private respondents Farrales and Mamasig,
arguing that its relationship with them was governed by the provisions of its
contract rather than by the general provisions of the Labor Code.[9]
Paragraph 5 of that contract set a term of three (3) years for
that relationship, extendible by agreement between the parties; while paragraph
6 provided that, notwithstanding any other provision in the contract, PIA had
the right to terminate the employment agreement at any time by giving
one-month’s notice to the employee or, in lieu of such notice, one-month’s
salary.
A contract freely
entered into should, of course, be respected, as PIA argues, since a contract
is the law between the parties.[10]
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.[11]
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.
As noted earlier, both the Labor Arbiter and the Deputy Minister,
MOLE, in effect held that paragraph 5 of that employment contract was
inconsistent with Articles 280 and 281 of the Labor Code as they existed at the
time the contract of employment was entered into, and hence refused to give
effect to said paragraph 5. These
Articles read as follows:
“Art. 280. Security
of Tenure. — In cases of regular
employment, the employer shall not terminate the services of an employee except
for a just cause or when
authorized by this Title. An
employee who is unjustly dismissed from work shall be entitled to reinstatement
without loss of seniority rights and to his backwages
computed from the time his compensation was withheld from him up to the time
his reinstatement.
Article 281. Regular and
Casual Employment. –The provisions
of written agreement to the contrary notwithstanding and regardless of the oral
agreements of the parties, an employment shall be deemed to be regular where
the employee has been engaged to perform activities which are usually necessary
or desirable in the usual business or trade of the employer, except where the
employment has been fixed for a specific project or undertaking the completion
or termination of which has been determined at the time of the engagement of
the employee of where the work or services to be performed is seasonal in
nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by
the proceeding paragraph: provided,
that, any employee who has rendered at least one year of service, whether
such service is continuous or broken, shall be considered as regular employee
with respect to the activity in which he is employed and his employment shall
continue which such actually exists.” (Underscoring supplied)
In Brent School, Inc., et al. v. Ronaldo Zamora, etc., et al.,[12]
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.
x x x x x x x x x
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 confIicting 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.” (Underscoring supplied)
It is apparent from Brent School
that the critical consideration is the presence or absence of a substantial
indication that the period specified in an employment agreement was designed to
circumvent the security of tenure of regular employees which is provided for in
Articles 280 and 281 of the Labor Code.
This indication must ordinarily rest upon some aspect of the agreement
other than the mere specification of a
fixed term of the employment agreement, or upon evidence aliunde of the intent to evade.
Examining the provisions of paragraphs 5 and 6 of the employment
agreement between petitioner PIA and private respondents, we consider that
those provisions must be read together and when so read, the fixed period of
three (3) years specified in paragraph 5 will be seen to have been effectively
neutralized by the provisions of paragraph 6 of that agreement. Paragraph 6 in effect took back from the
employee the fixed three (3)-year period ostensibly granted by paragraph 5 by
rendering such period in effect a facultative one at the option of the employer
PIA. For petitioner PIA claims to be
authorized to shorten that term, at any time and for any cause satisfactory to
itself, to a one-month period, or even less by simply paying the employee a
month’s salary. Because the net effect
of paragraphs 5 and 6 of the agreement here involved is to render the
employment of private respondents Farrales and Mamasig basically employment at the pleasure of petitioner
PIA, the Court considers that paragraphs 5 and 6 were intended to prevent any
security of tenure from accruing in favor of private respondents even during
the limited period of three (3) years,[13]
and thus to escape completely the thrust of Articles 280 and 281 of the Labor
Code.
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
that 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 disputes 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
residents, 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.[14]
We conclude that private respondents Farrales
and Mamasig were illegally dismissed and that public
respondent Deputy Minister, MOLE, had not committed any grave abuse of
discretion nor any act without or in excess of jurisdiction in ordering their
reinstatement with backwages. Private
respondents are entitled
to three (3) years backwages without qualification or
deduction. Should their reinstatement to
their former or other substantially equivalent positions not be feasible in
view of the length of time which has gone by since their services were unlawfully terminated, petitioner should be
required to pay separation pay to private respondents amounting to one (1)
month’s salary for every year of service rendered by them, including the three (3) years service
putatively rendered.
ACCORDINGLY, the Petition for Certiorari is hereby
DISMISSED for lack of merit, and the Order dated 12 August 1982 of public
respondent is hereby AFFIRMED, except that (1) private respondents are entitled
to three (3) years backwages, without deduction or
qualification; and (2) should reinstatement of private respondents to their
former positions or to substantially equivalent positions not be feasible, then
petitioner shall, in lieu thereof,
pay to private respondents separation pay amounting to one (1) – month’s salary for every year of service
actually rendered by them and for the three (3) years putative service by
private respondents. The Temporary
Restraining Order issued on 13
September 1982 is hereby LIFTED.
Costs against petitioner.
SO ORDERED.
Fernan, C.J., (Chairman), Gutierrez,
Jr., Bidin, and
Cortes, JJ., concur.
[1]
Rollo, pp. 12 and 17.
[2]
Id., p. 22.
[3]
Id., pp. 36-41.
[4]
Id., p. 43.
[5]
Id., p. 64.
[6]
Rollo, p. 6.
[7]
See Llora
Motors, Inc., et al. v. Hon. Franklin Drilon,
et al., G.R. No. 82895, 7 November
1989.
[8]
113 SCRA 257 (1982).
[9]
Rollo, p. 8.
[10]
Henson v. Intermediate Appellate Court, 148 SCRA 11 (1987).
[11]
Commissioner of Internal Revenue v. United Lines Co., 5 SCRA 175 (1962).
[12]
G.R. No. L-48494, promulgated 5
February 1990.
[13]
See Biboso v. Victorias
Milling Co., Inc., 76 SCRA 250 (1977).
[14]
Miciano v. Brimo, 50
Phil. 867 (1924); Collector of Internal Revenue v. Fisher, 110 Phil. 686
(1961).