2S LABSTAN Case Digests

TPIC RECRUITMENT OF LOCAL AND MIGRANT WORKERS AUTHOR #11_Yumul

CASE TITLE Industrial Personnel and Management Services v. De Vera GR NO G.R. No.
205703
TICKLER DATE March 7, 2016

DOCTRINE

FACTS Petitioner Industrial Personnel & Management Services, Inc. (IPAMS) is a local placement agency duly
organized and existing under Philippine laws, with petitioner Angelito C. Hernandez as its president and
managing director. Petitioner SNC Lavalin Engineers & Contractors, Inc. (SNC-Lavalin) is the principal of
IPAMS, a Canadian company with business interests in several countries. On the other hand, respondent
Alberto Arriola (Arriola) is a licensed general surgeon in the Philippines.

Employee’s Position

Arriola was offered by SNC-Lavalin, through its letter, dated May 1, 2008, the position of Safety Officer in its
Ambatovy Project site in Madagascar. The position offered had a rate of CA$32.00 per hour for forty (40)
hours a week with overtime pay in excess of forty (40) hours. It was for a period of nineteen (19) months
starting from June 9, 2008 to December 31, 2009.

Arriola was then hired by SNC-Lavalin, through its local manning agency, IPAMS, and his overseas employment
contract was processed with the Philippine Overseas Employment Agency (POEA) In a letter of understanding,
dated June 5, 2008, SNC-Lavalin confirmed Arriola's assignment in the Ambatovy Project. According to Arriola,
he signed the contract of employment in the Philippines. On June 9, 2008, Arriola started working in
Madagascar.

After three months, Arriola received a notice of pre-termination of employment, dated September 9, 2009,
from SNC-Lavalin. It stated that his employment would be pre-terminated effective September 11, 2009 due
to diminishing workload in the area of his expertise and the unavailability of alternative assignments.
Consequently, on September 15, 2009, Arriola was repatriated. SNC-Lavalin deposited in Arriola's bank
account his pay amounting to Two Thousand Six Hundred Thirty Six Dollars and Eight Centavos (CA$2,636.80),
based on Canadian labor law.

Aggrieved, Arriola filed a complaint against the petitioners for illegal dismissal and non-payment of overtime
pay, vacation leave and sick leave pay before the Labor Arbiter (LA). He claimed that SNC Lavalin still owed
him unpaid salaries equivalent to the three-month unexpired portion of his contract, amounting to, more or
less, One Million Sixty-Two Thousand Nine Hundred Thirty-Six Pesos (P1,062,936.00). He asserted that SNC-
Lavalin never offered any valid reason for his early termination and that he was not given sufficient notice
regarding the same. Arriola also insisted that the petitioners must prove the applicability of Canadian law
before the same could be applied to his employment contract.

Employer’s Position

The petitioners denied the charge of illegal dismissal against them. They claimed that SNC-Lavalin was greatly
affected by the global financial crises during the latter part of 2008. The economy of Madagascar, where SNC-
Lavalin had business sites, also slowed down. As proof of its looming financial standing, SNC-Lavalin presented
a copy of a news item in the Financial Post, dated March 5, 2009, showing the decline of the value of its

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stocks. Thus, it had no choice but to minimize its expenditures and operational expenses. It re-organized its
Health and Safety Department at the Ambatovy Project site and Arriola was one of those affected.

The petitioners also invoked EDI-Staffbuilders International, Inc. v. NLRC (EDI-Staffbuilders), pointing out that
particular labor laws of a foreign country incorporated in a contract freely entered into between an OFW and
a foreign employer through the latter's agent was valid. In the present case, as all of Arriola's employment
documents were processed in Canada, not to mention that SNC Lavalin's office was in Ontario, the principle
of lex loci celebrationis was applicable. Thus, the petitioners insisted that Canadian laws governed the
contract.

The petitioners continued that the pre-termination of Arriola's contract was valid for being consistent with
the provisions of both the Expatriate Policy and laws of Canada. The said foreign law did not require any
ground for early termination of employment, and the only requirement was the written notice of termination.
Even assuming that Philippine laws should apply, Arriola would still be validly dismissed because domestic law
recognized retrenchment and redundancy as legal grounds for termination.

In their Rejoinder, the petitioners presented a copy of the Employment Standards Act (ESA) of Ontario, which
was duly authenticated by the Canadian authorities and certified by the Philippine Embassy.

ISSUE/S (1) Whether the Philippine laws apply even to overseas employment contracts.
(2) Whether authorized cause for dismissal was proven.
RULING/S (1) YES.

The general rule is that Philippine laws apply even to overseas employment contracts. This rule is rooted in
the constitutional provision of Section 3, Article XIII that the State shall afford full protection to labor,
whether local or overseas. Hence, even if the OFW has his employment abroad, it does not strip him of his
rights to security of tenure, humane conditions of work and a living wage under our Constitution.

As an exception, the parties may agree that a foreign law shall govern the employment contract. A synthesis
of the existing laws and jurisprudence reveals that this exception is subject to the following requisites:
1. That it is expressly stipulated in the overseas employment contract that a specific foreign law shall govern;
2. That the foreign law invoked must be proven before the courts pursuant to the Philippine rules on
evidence;
3. That the foreign law stipulated in the overseas employment contract must not be contrary to law, morals,
good customs, public order, or public policy of the Philippines; and
4. That the overseas employment contract must be processed through the POEA.

(2) NO.

Article 279 of our Labor Code has construed security of tenure to mean that the employer shall not
terminate the services of an employee except for a just cause or when authorized by law. Concomitant to
the employer's right to freely select and engage an employee is the employer's right to discharge the
employee for just and/or authorized causes. To validly effect terminations of employment, the discharge
must be for a valid cause in the manner required by law. The purpose of these two-pronged qualifications is
to protect the working class from the employer's arbitrary and unreasonable exercise of its right to dismiss.

Some of the authorized causes to terminate employment under the Labor Code would be installation of
labor-saving devices, redundancy, retrenchment to prevent losses and the closing or cessation of operation
of the establishment or undertaking. Each authorized cause has specific requisites that must be proven by
the employer with substantial evidence before a dismissal may be considered valid.

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Here, the petitioners assert that the economy of Madagascar weakened due to the global financial crisis.
Consequently, SNC-Lavalin's business also slowed down. To prove its sagging financial standing, SNC Lavalin
presented a copy of a news item in the Financial Post, dated March 5, 2009. They insist that SNC-Lavalin had
no choice but to minimize its expenditures and operational expenses.In addition, the petitioners argued that
the government of Madagascar prioritized the employment of its citizens, and not foreigners. Thus, Arriola
was terminated because there was no more job available for him.

The Court finds that Arriola was not validly dismissed. The petitioners simply argued that they were suffering
from financial losses and Arriola had to be dismissed. It was not even clear what specific authorized cause,
whether retrenchment or redundancy, was used to justify Arriola's dismissal. Worse, the petitioners did not
even present a single credible evidence to support their claim of financial loss. They simply offered an
unreliable news article which deserves scant consideration as it is undoubtedly hearsay. Time and again the
Court has ruled that in illegal dismissal cases like the present one, the onus of proving that the employee was
dismissed and that the dismissal was not illegal rests on the employer, and failure to discharge the same
would mean that the dismissal is not justified and, therefore, illegal.

As to the amount of backpay awarded, the Court finds that the computation of the CA was valid and proper
based on the employment contract of Arriola. Also, the issue of whether the petitioners had made partial
payments on the backpay is a matter best addressed during the execution process.

NOTES

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