Paulino Ungos III

Lawyer | Law Professor | Author

Tag: lex loci contractus

  • Use of a Person’s HIV-Positive Condition as a Ground for Dismissal

    Triple A alleged that sometime in 2017, he was hired as a Cleaning Laborer by Saraya Al Jazerah Contracting Est. (the foreign employer), through its agent, Bison Management Corporation, under a two-year employment contract with a monthly salary of One Thousand Five Hundred Saudi Riyal. He was deployed to the Kingdom of Saudi Arabia (KSA) on October 18, 2017 and commenced work thereafter.

    Triple A narrated that In January of 2019 — after working for fifteen months, he underwent a routine medical examination and was found positive for Human Immunodeficiency Virus (HIV). On this basis, the foreign employer terminated his employment because under the laws of the KSA, an HIV-positive individual is considered unfit to work.

    After his repatriation to the Philippines on February 8, 2019, Triple A filed a complaint on March 1, 2019 for illegal dismissal, discrimination, money claims, damages, attorney’s fees, and legal interest against the employer.

    The Office of the Labor Arbiter dismissed triple A’s complaint for illegal dismissal but ruled that he was entitled to his unpaid salary, vacation leave pay, and attorney’s fees. In its Decision, the Office of the Labor Arbiter took cognizance of KSA’s policy of disallowing HIV-positive persons for employment. The Office of the Labor Arbiter added that Republic Act No. 8504 or the “Philippine AIDS Prevention and Control Act of 1998” is a local law that should apply only within the Philippines and not to KSA.

    Triple A filed a Memorandum of Partial Appeal before the National Labor Relations Commission, asserting that he was illegally dismissed from employment.

    The Commission resolved the partial appeal in triple A’s favor and declared that he was illegally dismissed.

    The motion for reconsideration filed by the employer was denied by the Commission.

    Thus, the employer filed a petition for certiorari before the Court of Appeals.

    The Court of Appeals denied the employer’s petition since it did not find any abuse of discretion on the part of the Commission. The Court of Appeals agreed with the Commission in that Philippine law governs the terms of the employment contract as well as the rights of the employee under the principle of lex loci contractus. The Court of Appeals also cited Section 35 of Republic Act No. 8504, which provides that discrimination in any form from pre-employment to post-employment, including hiring, promotion or assignment, based on the actual, perceived or suspected HIV status of an individual is prohibited. Termination from work on the sole basis of actual, perceived or suspected HIV status is deemed unlawful. The Court of Appeals reasoned that since the law categorically prohibits the use of a person’s HIV-positive condition as a ground for dismissal, no valid cause attended triple A’s termination from employment.

    The Court of Appeals denied the employer’s motion for reconsideration.

    Thus, the employer filed a petition for review with the Supreme Court assailing the Decision and Resolution of the Court of Appeals.

    Was triple A illegally dismissed from employment?

    The Supreme Court ruled in the affirmative.

    The Supreme Court began by highlighting the State’s promise to protect Filipino workers, whether here or abroad, under Section 3 of Article XIII of the Constitution. The Court stated that the constitutional guarantee of security of tenure extends to Filipino overseas contract workers. Employees are not stripped of their security of tenure when they move to work in a different jurisdiction.

    The Supreme Court noted the employer’s invocation of the principle of pacta sunt servanda based on the “Agreement on Labor Cooperation for General Workers Recruitment and Employment Between the Department of Labor and Employment of the Republic of the Philippines and the Ministry of Labor and Social Development of the Kingdom of Saudi Arabia” (Agreement on Labor Cooperation), which provides that the Department of Labor and Employment of the Republic of the Philippines shall ensure that the recruited general workers satisfy health requirements and are free of all communicable diseases by virtue of thorough medical examinations through reliable medical facilities accredited by both governments.

    However, the Supreme Court found the employer’s argument untenable. According to the Court, such argument was belied by the employer’s own representation that prior to his deployment and as part of the requirements, triple A underwent a medical examination and received a clean bill of health and that he acquired HIV after working in the KSA for more than one year.

    The Court remarked that it will not engage in an academic discussion on the principle of pacta sunt servanda where the case is essentially one for illegal dismissal of an OFW.

    The Court rather stressed that the principle of lex loci contractus applies in that Philippine laws generally govern overseas employment contracts. The Court also stated that as a narrow exception, the parties may agree that a foreign law shall govern, but subject to the concurrence of the following requisites:

    • That it is expressly stipulated in the overseas employment contract that a specific foreign law shall govern;
    • That the foreign law invoked must be proven before the courts pursuant to the Philippine rules on evidence;
    • 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
    • That the overseas employment contract must be processed through the POEA.

    The Supreme Court acknowledged that the first and fourth requisites were present. However, it discovered that the more important second and third requisites were absent.

    Although the employer was able to present the Agreement on Labor Cooperation, certain documents, and a news article about a KSA envoy seeking stricter HIV/AIDS testing for OFWs, the Court underscored that a copy of the purported foreign law was not presented.

    The Court added that even if the KSA policy which disallows HIV-positive persons from employment were truly undeniable and all over the internet, prevailing jurisprudence dictates that if the foreign law stipulated is contrary to law, morals, good customs, public order, or public policy, then Philippine laws shall govern.

    The Court continued that contractual stipulation is not a bar to applicability of Philippine law. The labor relationship between an OFW and his or her foreign employer as 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.

    The Supreme Court reminded that Republic Act No. 8504 had already been repealed by Republic Act No. 11166 at the time of triple A’s repatriation. Section 49 (a) of Republic Act No. 11166 makes it unlawful for employees to be terminated from work on the sole basis of their HIV status.

    The Court stated that since Philippine law categorically prohibits the use of a person’s HIV-positive condition as a ground for dismissal, the inescapable conclusion is that there was no valid cause to terminate triple A, and that doing so amounted to illegal dismissal.

    The Court observed that while it is true that disease may be a ground for termination under Article 299 of the Labor Code of the Philippines, the employer in this case conceded that an HIV-positive condition is not yet an illness/disease.

    The Court concluded that since there was no other reason proffered for triple A’s dismissal apart from his HIV status, the Court upheld the Court of Appeals ruling that the Commission did not commit grave abuse of discretion in finding that triple A was illegally dismissed.

    Further reading:

    • Bison Management Corp. v. AAA, G.R. No. 256540, February 14, 2024.

  • But the OFW Directly Communicated with the Principal and without the Knowledge of Its Agent

    SRL International Manpower Agency (SRL) posted a job opening for its principal, Akkila Co. Ltd. UAE/Al Salmeen Trading Est. (Akkila), for a certain project in Qatar.

    Pedro sent an application to Akkila, through SRL. In July 2010, SRL received word from Akkila that the latter was interested in hiring Pedro as Project Manager. Afterwards, SRL forwarded Pedro’s documents to Akkila for the processing of his employment visa.

    Akkila soon furnished Pedro an “Offer of Employment” for a two (2) year engagement without the approval of the Philippine Overseas Employment Administration (POEA). Akkila and Pedro directly contacted each other and the latter was able to depart for the United Arab Emirates (UAE) on October 14, 2010 using a visit visa instead of an employment visa.

    On March 24, 2011, Akkila asked Pedro to return to the Philippines with an instruction to apply for deployment anew under an employment visa and with the condition that he should return 10 days after its processing.

    In April 2011, Pedro returned to the Philippines and started processing his next deployment under new “Contract of Employment,” with the assistance of SRL

    Pedro underwent a medical examination with SRL’s accredited clinic, Seamed Medical Clinic (Seamed), to assess his fitness for work. However, Seamed found that Pedro had Uncontrolled Diabetes Mellitus Type II and declared him unfit for work. This finding was reflected in a Medical Certificate dated May 10, 2011.

    SRL disclosed such finding to Akkila and informed the latter that if it was still interested, it should send a waiver indicating its willingness to hire Pedro notwithstanding his unfitness for work.

    Akkila replied that it had a strict qualification not to hire an applicant who is not fit for work. Subsequently, in a letter dated May 22, 2011, Akkila informed Pedro that he cannot be hired due to medical reasons.

    In the case of SRL International Manpower Agency v. Yarza, the Supreme Court resolved three issues:

    First: Was the “Offer of Employment” furnished by Akkila to Pedro valid?

    The Supreme Court stated that since employment contracts of Overseas Filipino Workers are perfected in the Philippines, and following the principle of lex loci contractus (the law of the place where the contract is made), such contracts are governed primarily by the Labor Code of the Philippines and its implementing rules and regulations.

    The Court added that the laws generally apply even to employment contracts of Overseas Filipino Workers since the Constitution explicitly provides that the State shall afford full protection to labor, whether local or overseas. Thus, even if a Filipino is employed abroad, he or she is entitled to security of tenure, among other constitutional rights. Security of tenure remains even if employees, particularly the Overseas Filipino Workers, work in a different jurisdiction.

    Furthermore, the Court also stated that under the Labor Code of the Philippines, employers hiring Overseas Filipino Workers may only do so through entities authorized by the Secretary of the Department of Labor and Employment. The Court continued that unless the employment contract of an Overseas Filipino Worker is processed through the POEA, the same does not bind the concerned Overseas Filipino Worker because if the contract is not reviewed by the POEA, certainly the State has no means of determining the suitability of foreign laws to our overseas workers.

    In the present case, the Court found that the “Offer of Employment” was perfected when Pedro agreed to the same while he was still in the Philippines.

    However, the Court found that the “Offer of Employment” ran contrary to the Constitution and the law and was not approved by the POEA. Specifically, the Court found that the “Offer of Employment”, although stating that the rules and regulations found in UAE’s labor laws should apply, contained stipulations contrary to the policies of the Philippines concerning labor contracts and security of tenure.

    With these findings, the Court declared the “Offer of Employment” invalid.

    Second: Did an employer-employee relationship exist between Akkila and Pedro.

    The Court ruled in the affirmative. Notwithstanding the invalidity of the “Offer of Employment,” the Court ruled that an employer-employee relationship existed between Akkila and Pedro.

    According to the Court, absent a valid employment contract, the following elements of the four fold test should be considered:

    • selection and engagement of the employee;
    • payment of wages;
    • power of dismissal; and
    • the employer’s power to control the employee’s conduct.

    The Court reiterated that the most important element is the employer’s control of the employee’s conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish it. However, the power of control refers merely to the existence of the power, and not to the actual exercise thereof. No particular form of evidence is required to prove the existence of an employer-employee relationship. Any competent and relevant evidence to prove the relationship may be admitted. However, a finding that such relationship exists must still rest on some substantial evidence.

    In the present case, the Court found:

    • For the first element, Akkila, through the participation of SRL, selected and engaged the services of Pedro, precisely because he was deployed through a visit visa under Akkila’s instruction and endorsement.
    • For the second element, Akkila did not deny that it paid Pedro’s wages with the “Offer of Employment” as reference.
    • Regarding the third element, Akkila had the power to dismiss Pedro. In fact, it did so when it issued the termination letter dated May 22, 2011.
    • Lastly, on the fourth element, Akkila had control over Pedro’s work conduct, which included the means and methods he would employ to produce the results required by the company.

    In addition, the Court took into consideration the fact that Akkila did not show proof that it took no part in directing Pedro’s job output. In particular, Akkila did not appeal the finding of employer-employee relationship before the Court of Appeals. Hence, the Court bound Akkila by such conclusion.

    Third: Was Pedro illegally dismissed from employment?

    With the existence of the employer-employee relationship, the Court ruled that Akkila should accord Pedro due process, both substantial and procedural, before terminating his employment.

    The Court stated that to comply with substantive due process, Pedro can only be dismissed for a just or authorized cause, the absence of which renders his dismissal illegal.

    In the present case, it was found that Akkila dismissed the services of Pedro on the ground of disease, under Article 299 [284] of the Labor Code of the Philippines. The said provision essentially provides that “an employer would be authorized to terminate the services of an employee found to be suffering from any disease if the employee’s continued employment is prohibited by law or is prejudicial to his health or to the health of his fellow employees.”

    The Court further stated that to be considered valid, the dismissal on the ground of disease must satisfy two requisites:

    • the employee suffers from a disease which cannot be cured within six months and his/her continued employment is prohibited by law or prejudicial to his/her health or to the health of his/her co-employees, and
    • a certification to that effect must be issued by a competent public health authority.

    In the present case, record showed Akkila’s decision to inform Pedro that he could not be hired due to medical reasons. However, the Court found that Akkila failed to present any certification from a competent public health authority citing that Pedro’s disease not could be cured within six months, or that his employment was prejudicial to his health or that of his co-employees. Said the Court, absent this certification, Akkila failed to comply with Article 299 [284] of the Labor Code of the Philippines as well as applicable regulations. For the Court, Pedro’s dismissal was not based on a valid cause.

    Furthermore, the Court found that Akkila did not accord Pedro procedural due process. Record showed that Akkila unilaterally dismissed him by simply issuing a letter dated May 22, 2011. Additionally, Akkila sent this termination letter after it already issued a “new” Contract of Employment dated April 15, 2011 to him. Clearly, Akkila, after discovering that Pedro was deemed unfit for work due to diabetes, sought to immediately sever ties with him.

    The Court accordingly ruled that Pedro was illegally dismissed from employment.

    On the relief granted, the Court stated that even with the invalid “Offer of Employment”, the existence of an employer-employee relationship between Akkila and Pedro, as well as the illegality of his dismissal, entitled him to claim for the payment of his salaries for the unexpired portion of his contract.

    In this regard, the Court also found it proper to award moral and exemplary damages under prevailing jurisprudence which allows the migrant worker to claim such damages in connection with the employment contract or as provided by law. Moreover, the Court awarded Pedro attorney’s fees at the rate of ten percent (10%) under Article 2208 of the Civil Code of the Philippines.

    The Court stressed that the liability of Akkila and SRL was solidary, under Section 10 of the Migrant Workers and Overseas Filipinos Act of 1995, as amended.

    Further reading:

    • SRL International Manpower Agency v. Yarza, Jr., G.R. No. 207828, February 14, 2022.