VELASCO, JR., J.:
The Case
This Petition for Review on Certiorari1 seeks to set aside the October 18, 2000 Decision2 of the Court of Appeals (CA) in CA-G.R. SP No. 56120 which affirmed the January 15, 1999 Decision3 and September 30, 1999 Resolution4
rendered by the National Labor Relations Commission (NLRC) (Third
Division) in POEA ADJ (L) 94-06-2194, ordering Expertise Search
International (ESI), EDI-Staffbuilders International, Inc. (EDI), and
Omar Ahmed Ali Bin Bechr Est. (OAB) jointly and severally to pay Eleazar
S. Gran (Gran) the amount of USD 16,150.00 as unpaid salaries.
The Facts
Petitioner EDI is a corporation engaged in recruitment and placement of Overseas Filipino Workers (OFWs).5
ESI is another recruitment agency which collaborated with EDI to
process the documentation and deployment of private respondent to Saudi
Arabia.
Private respondent Gran was an OFW recruited by EDI, and deployed by ESI to work for OAB, in Riyadh, Kingdom of Saudi Arabia.6
It appears that OAB asked EDI through its October 3, 1993 letter for curricula vitae of qualified applicants for the position of "Computer Specialist."7 In a facsimile transmission dated November 29, 1993, OAB informed EDI that, from the applicants' curricula vitae
submitted to it for evaluation, it selected Gran for the position of
"Computer Specialist." The faxed letter also stated that if Gran agrees
to the terms and conditions of employment contained in it, one of which
was a monthly salary of SR (Saudi Riyal) 2,250.00 (USD 600.00), EDI may
arrange for Gran's immediate dispatch.8
After accepting OAB's offer of employment, Gran signed an employment contract9
that granted him a monthly salary of USD 850.00 for a period of two
years. Gran was then deployed to Riyadh, Kingdom of Saudi Arabia on
February 7, 1994.
Upon arrival in Riyadh, Gran questioned the
discrepancy in his monthly salary—his employment contract stated USD
850.00; while his Philippine Overseas Employment Agency (POEA)
Information Sheet indicated USD 600.00 only. However, through the
assistance of the EDI office in Riyadh, OAB agreed to pay Gran USD
850.00 a month.10
After Gran had been working for about five months for OAB, his employment was terminated through OAB's July 9, 1994 letter,11 on the following grounds:
1. Non-compliance to contract requirements by the recruitment agency primarily on your salary and contract duration.
2. Non-compliance to pre-qualification requirements
by the recruitment agency[,] vide OAB letter ref. F-5751-93, dated
October 3, 1993.12
3. Insubordination or disobedience to Top Management
Order and/or instructions (non-submittal of daily activity reports
despite several instructions).
On July 11, 1994, Gran received from OAB the total
amount of SR 2,948.00 representing his final pay, and on the same day,
he executed a Declaration13 releasing OAB from any financial obligation or otherwise, towards him.
After his arrival in the Philippines, Gran instituted
a complaint, on July 21, 1994, against ESI/EDI, OAB, Country Bankers
Insurance Corporation, and Western Guaranty Corporation with the NLRC,
National Capital Region, Quezon City, which was docketed as POEA ADJ (L)
94-06-2194 for underpayment of wages/salaries and illegal dismissal.
The Ruling of the Labor Arbiter
In his February 10, 1998 Decision,14
Labor Arbiter Manuel R. Caday, to whom Gran's case was assigned, ruled
that there was neither underpayment nor illegal dismissal.
The Labor Arbiter reasoned that there was no
underpayment of salaries since according to the POEA-Overseas Contract
Worker (OCW) Information Sheet, Gran's monthly salary was USD 600.00,
and in his Confirmation of Appointment as Computer Specialist, his
monthly basic salary was fixed at SR 2,500.00, which was equivalent to
USD 600.00.
Arbiter Caday also cited the Declaration executed by
Gran, to justify that Gran had no claim for unpaid salaries or wages
against OAB.
With regard to the issue of illegal dismissal, the
Labor Arbiter found that Gran failed to refute EDI's allegations;
namely, (1) that Gran did not submit a single activity report of his
daily activity as dictated by company policy; (2) that he was not
qualified for the job as computer specialist due to his insufficient
knowledge in programming and lack of knowledge in ACAD system; (3) that
Gran refused to follow management's instruction for him to gain more
knowledge of the job to prove his worth as computer specialist; (4) that
Gran's employment contract had never been substituted; (5) and that
Gran was paid a monthly salary of USD 850.00, and USD 350.00 monthly as
food allowance.
Accordingly, the Labor Arbiter decided that Gran was
validly dismissed from his work due to insubordination, disobedience,
and his failure to submit daily activity reports.
Thus, on February 10, 1998, Arbiter Caday dismissed Gran's complaint for lack of merit.
Dissatisfied, Gran filed an Appeal15
on April 6, 1998 with the NLRC, Third Division. However, it appears
from the records that Gran failed to furnish EDI with a copy of his
Appeal Memorandum.
The Ruling of the NLRC
The NLRC held that EDI's seemingly harmless transfer
of Gran's contract to ESI is actually "reprocessing," which is a
prohibited transaction under Article 34 (b) of the Labor Code. This
scheme constituted misrepresentation through the conspiracy between EDI
and ESI in misleading Gran and even POEA of the actual terms and
conditions of the OFW's employment. In addition, it was found that Gran
did not commit any act that constituted a legal ground for dismissal.
The alleged non-compliance with contractual stipulations relating to
Gran's salary and contract duration, and the absence of
pre-qualification requirements cannot be attributed to Gran but to EDI,
which dealt directly with OAB. In addition, the charge of
insubordination was not substantiated, and Gran was not even afforded
the required notice and investigation on his alleged offenses.
Thus, the NLRC reversed the Labor Arbiter's Decision and rendered a new one, the dispositive portion of which reads:
WHEREFORE, the assailed decision is SET ASIDE.
Respondents Expertise Search International, Inc., EDI Staffbuilders
Int'l., Inc. and Omar Ahmed Ali Bin Bechr Est. (OAB) are hereby ordered
jointly and severally liable to pay the complainant Eleazar Gran the
Philippine peso equivalent at the time of actual payment of SIXTEEN
THOUSAND ONE HUNDRED FIFTY US DOLLARS (US$16,150.00) representing his
salaries for the unexpired portion of his contract.
Gran then filed a Motion for Execution of Judgment17 on March 29, 1999 with the NLRC and petitioner receiving a copy of this motion on the same date.18
To prevent the execution, petitioner filed an Opposition19
to Gran's motion arguing that the Writ of Execution cannot issue
because it was not notified of the appellate proceedings before the NLRC
and was not given a copy of the memorandum of appeal nor any
opportunity to participate in the appeal.
Seeing that the NLRC did not act on Gran's motion
after EDI had filed its Opposition, petitioner filed, on August 26,
1999, a Motion for Reconsideration of the NLRC Decision after receiving a
copy of the Decision on August 16, 1999.20
The NLRC then issued a Resolution21
denying petitioner's Motion for Reconsideration, ratiocinating that the
issues and arguments raised in the motion "had already been amply
discussed, considered, and ruled upon" in the Decision, and that there
was "no cogent reason or patent or palpable error that warrant any
disturbance thereof."
Unconvinced of the NLRC's reasoning, EDI filed a
Petition for Certiorari before the CA. Petitioner claimed in its
petition that the NLRC committed grave abuse of discretion in giving due
course to the appeal despite Gran's failure to perfect the appeal.
The Ruling of the Court of Appeals
The CA subsequently ruled on the procedural and substantive issues of EDI's petition.
On the procedural issue, the appellate court held
that "Gran's failure to furnish a copy of his appeal memorandum [to EDI
was] a mere formal lapse, an excusable neglect and not a jurisdictional
defect which would justify the dismissal of his appeal."22
The court also held that petitioner EDI failed to prove that private
respondent was terminated for a valid cause and in accordance with due
process; and that Gran's Declaration releasing OAB from any monetary
obligation had no force and effect. The appellate court ratiocinated
that EDI had the burden of proving Gran's incompetence; however, other
than the termination letter, no evidence was presented to show how and
why Gran was considered to be incompetent. The court held that since the
law requires the recruitment agencies to subject OFWs to trade tests
before deployment, Gran must have been competent and qualified;
otherwise, he would not have been hired and deployed abroad.
As for the charge of insubordination and disobedience
due to Gran's failure to submit a "Daily Activity Report," the
appellate court found that EDI failed to show that the submission of the
"Daily Activity Report" was a part of Gran's duty or the company's
policy. The court also held that even if Gran was guilty of
insubordination, he should have just been suspended or reprimanded, but
not dismissed.
The CA also held that Gran was not afforded due
process, given that OAB did not abide by the twin notice requirement.
The court found that Gran was terminated on the same day he received the
termination letter, without having been apprised of the bases of his
dismissal or afforded an opportunity to explain his side.
Finally, the CA held that the Declaration signed by
Gran did not bar him from demanding benefits to which he was entitled.
The appellate court found that the Declaration was in the form of a
quitclaim, and as such is frowned upon as contrary to public policy
especially where the monetary consideration given in the Declaration was
very much less than what he was legally entitled to—his backwages
amounting to USD 16,150.00.
As a result of these findings, on October 18, 2000, the appellate court denied the petition to set aside the NLRC Decision.
Hence, this instant petition is before the Court.
The Issues
Petitioner raises the following issues for our consideration:
I. WHETHER THE FAILURE OF GRAN TO FURNISH A COPY OF
HIS APPEAL MEMORANDUM TO PETITIONER EDI WOULD CONSTITUTE A
JURISDICTIONAL DEFECT AND A DEPRIVATION OF PETITIONER EDI'S RIGHT TO DUE
PROCESS AS WOULD JUSTIFY THE DISMISSAL OF GRAN'S APPEAL.
II. WHETHER PETITIONER EDI HAS ESTABLISHED BY WAY OF
SUBSTANTIAL EVIDENCE THAT GRAN'S TERMINATION WAS JUSTIFIABLE BY REASON
OF INCOMPETENCE. COROLLARY HERETO, WHETHER THE PRIETO VS. NLRC RULING,
AS APPLIED BY THE COURT OF APPEALS, IS APPLICABLE IN THE INSTANT CASE.
III. WHETHER PETITIONER HAS ESTABLISHED BY WAY OF
SUBSTANTIAL EVIDENCE THAT GRAN'S TERMINATION WAS JUSTIFIABLE BY REASON
OF INSUBORDINATION AND DISOBEDIENCE.
IV. WHETHER GRAN WAS AFFORDED DUE PROCESS PRIOR TO TERMINATION.
V. WHETHER GRAN IS ENTITLED TO BACKWAGES FOR THE UNEXPIRED PORTION OF HIS CONTRACT.23
The Court's Ruling
The petition lacks merit except with respect to Gran's failure to furnish EDI with his Appeal Memorandum filed with the NLRC.
First Issue: NLRC's Duty is to Require Respondent to Provide Petitioner a Copy of the Appeal
Petitioner EDI claims that Gran's failure to furnish
it a copy of the Appeal Memorandum constitutes a jurisdictional defect
and a deprivation of due process that would warrant a rejection of the
appeal.
This position is devoid of merit.
In a catena of cases, it was ruled that failure of appellant to furnish a copy of the appeal to the adverse party is not fatal to the appeal.
In Estrada v. National Labor Relations Commission,24
this Court set aside the order of the NLRC which dismissed an appeal on
the sole ground that the appellant did not furnish the appellee a
memorandum of appeal contrary to the requirements of Article 223 of the
New Labor Code and Section 9, Rule XIII of its Implementing Rules and
Regulations.
Also, in J.D. Magpayo Customs Brokerage Corp. v. NLRC, the order of dismissal of an appeal to the NLRC based on the ground that "there is no showing whatsoever that a copy of the appeal was served by the appellant on the appellee"25 was annulled. The Court ratiocinated as follows:
The failure to give a copy of the appeal to the
adverse party was a mere formal lapse, an excusable neglect. Time and
again We have acted on petitions to review decisions of the Court of
Appeals even in the absence of proof of service of a copy thereof to the
Court of Appeals as required by Section 1 of Rule 45, Rules of Court. We act on the petitions and simply require the petitioners to comply with the rule.26 (Emphasis supplied.)
The J.D. Magpayo ruling was reiterated in Carnation Philippines Employees Labor Union-FFW v. National Labor Relations Commission,27 Pagdonsalan v. NLRC,28 and in Sunrise Manning Agency, Inc. v. NLRC.29
Thus, the doctrine that evolved from these cases is
that failure to furnish the adverse party with a copy of the appeal is
treated only as a formal lapse, an excusable neglect, and hence, not a
jurisdictional defect. Accordingly, in such a situation, the appeal
should not be dismissed; however, it should not be given due course
either. As enunciated in J.D. Magpayo, the duty that is
imposed on the NLRC, in such a case, is to require the appellant to
comply with the rule that the opposing party should be provided with a
copy of the appeal memorandum.
While Gran's failure to furnish EDI with a copy of
the Appeal Memorandum is excusable, the abject failure of the NLRC to
order Gran to furnish EDI with the Appeal Memorandum constitutes grave abuse of discretion.
The records reveal that the NLRC discovered that Gran
failed to furnish EDI a copy of the Appeal Memorandum. The NLRC then
ordered Gran to present proof of service. In compliance with the order,
Gran submitted a copy of Camp Crame Post Office's list of mail/parcels
sent on April 7, 1998.30
The post office's list shows that private respondent Gran sent two
pieces of mail on the same date: one addressed to a certain Dan O. de
Guzman of Legaspi Village, Makati; and the other appears to be addressed
to Neil B. Garcia (or Gran),31 of Ermita, Manila—both of whom are not connected with petitioner.
This mailing list, however, is not a conclusive proof that EDI indeed received a copy of the Appeal Memorandum.
Sec. 5 of the NLRC Rules of Procedure (1990) provides for the proof and completeness of service in proceedings before the NLRC:
Section 5.32 Proof and completeness of service.—The return is prima facie proof of the facts indicated therein. Service by registered mail is complete upon receipt by the addressee or his agent;
but if the addressee fails to claim his mail from the post office
within five (5) days from the date of first notice of the postmaster,
service shall take effect after such time. (Emphasis supplied.)
Hence, if the service is done through registered
mail, it is only deemed complete when the addressee or his agent
received the mail or after five (5) days from the date of first notice
of the postmaster. However, the NLRC Rules do not state what would
constitute proper proof of service.
Sec. 13, Rule 13 of the Rules of Court, provides for proofs of service:
Section 13. Proof of service.—Proof of
personal service shall consist of a written admission of the party
served or the official return of the server, or the affidavit of the
party serving, containing a full statement of the date, place and manner
of service. If the service is by ordinary mail, proof thereof shall
consist of an affidavit of the person mailing of facts showing
compliance with section 7 of this Rule. If service is made by registered mail, proof shall be made by such affidavit and registry receipt issued by the mailing office. The
registry return card shall be filed immediately upon its receipt by the
sender, or in lieu thereof the unclaimed letter together with the
certified or sworn copy of the notice given by the postmaster to the
addressee (emphasis supplied).
Based on the foregoing provision, it is obvious that
the list submitted by Gran is not conclusive proof that he had served a
copy of his appeal memorandum to EDI, nor is it conclusive proof that
EDI received its copy of the Appeal Memorandum. He should have submitted
an affidavit proving that he mailed the Appeal Memorandum together with
the registry receipt issued by the post office; afterwards, Gran should
have immediately filed the registry return card.
Hence, after seeing that Gran failed to attach the
proof of service, the NLRC should not have simply accepted the post
office's list of mail and parcels sent; but it should have required Gran to properly furnish the opposing parties with copies of his Appeal Memorandum as prescribed in J.D. Magpayo and the other cases. The NLRC should not have proceeded with the adjudication of the case, as this constitutes grave abuse of discretion.
The glaring failure of NLRC to ensure that Gran
should have furnished petitioner EDI a copy of the Appeal Memorandum
before rendering judgment reversing the dismissal of Gran's complaint
constitutes an evasion of the pertinent NLRC Rules and established
jurisprudence. Worse, this failure deprived EDI of procedural due
process guaranteed by the Constitution which can serve as basis for the
nullification of proceedings in the appeal before the NLRC. One can only
surmise the shock and dismay that OAB, EDI, and ESI experienced when
they thought that the dismissal of Gran's complaint became final, only
to receive a copy of Gran's Motion for Execution of Judgment which also
informed them that Gran had obtained a favorable NLRC Decision. This is
not level playing field and absolutely unfair and discriminatory against
the employer and the job recruiters. The rights of the employers to
procedural due process cannot be cavalierly disregarded for they too
have rights assured under the Constitution.
However, instead of annulling the dispositions of the
NLRC and remanding the case for further proceedings we will resolve the
petition based on the records before us to avoid a protracted
litigation.33
The second and third issues have a common
matter—whether there was just cause for Gran's dismissal—hence, they
will be discussed jointly.
Second and Third Issues: Whether Gran's dismissal is justifiable by reason of incompetence, insubordination, and disobedience
In cases involving OFWs, the rights and obligations
among and between the OFW, the local recruiter/agent, and the foreign
employer/principal are governed by the employment contract. A contract
freely entered into is considered law between the parties; and hence,
should be respected. In formulating the contract, the parties may
establish such stipulations, clauses, terms and conditions as they may
deem convenient, provided they are not contrary to law, morals, good
customs, public order, or public policy.34
In the present case, the employment contract signed
by Gran specifically states that Saudi Labor Laws will govern matters
not provided for in the contract (e.g. specific causes for termination,
termination procedures, etc.). Being the law intended by the parties (lex loci intentiones) to apply to the contract, Saudi Labor Laws should govern all matters relating to the termination of the employment of Gran.
In international law, the party who wants to have a
foreign law applied to a dispute or case has the burden of proving the
foreign law. The foreign law is treated as a question of fact to be
properly pleaded and proved as the judge or labor arbiter cannot take
judicial notice of a foreign law. He is presumed to know only domestic
or forum law.35
Unfortunately for petitioner, it did not prove the pertinent Saudi laws on the matter; thus, the International Law doctrine of presumed-identity approach or processual presumption comes into play.36 Where a foreign law is not pleaded or, even if pleaded, is not proved, the presumption is that foreign law is the same as ours.37 Thus, we apply Philippine labor laws in determining the issues presented before us.
Petitioner EDI claims that it had proven that Gran
was legally dismissed due to incompetence and insubordination or
disobedience.
This claim has no merit.
In illegal dismissal cases, it has been established
by Philippine law and jurisprudence that the employer should prove that
the dismissal of employees or personnel is legal and just.
Section 33 of Article 277 of the Labor Code38 states that:
ART. 277. MISCELLANEOUS PROVISIONS39
(b) Subject to the constitutional right of workers to
security of tenure and their right to be protected against dismissal
except for a just and authorized cause and without prejudice to the
requirement of notice under Article 283 of this Code, the employer shall
furnish the worker whose employment is sought to be terminated a
written notice containing a statement of the causes for termination and
shall afford the latter ample opportunity to be heard and to defend
himself with the assistance of his representative if he so desires in
accordance with company rules and regulations promulgated pursuant to
guidelines set by the Department of Labor and Employment. Any decision
taken by the employer shall be without prejudice to the right of the
workers to contest the validity or legality of his dismissal by filing a
complaint with the regional branch of the National Labor Relations
Commission. The burden of proving that the termination was for a valid or authorized cause shall rest on the employer. x x x
In many cases, it has been held that in termination
disputes or illegal dismissal cases, the employer has the burden of
proving that the dismissal is for just and valid causes; and failure to
do so would necessarily mean that the dismissal was not justified and
therefore illegal.40
Taking into account the character of the charges and the penalty meted
to an employee, the employer is bound to adduce clear, accurate,
consistent, and convincing evidence to prove that the dismissal is valid
and legal.41 This is consistent with the principle of security of tenure as guaranteed by the Constitution and reinforced by Article 277 (b) of the Labor Code of the Philippines.42
In the instant case, petitioner claims that private
respondent Gran was validly dismissed for just cause, due to
incompetence and insubordination or disobedience. To prove its
allegations, EDI submitted two letters as evidence. The first is the
July 9, 1994 termination letter,43 addressed to Gran, from Andrea E. Nicolaou, Managing Director of OAB. The second is an unsigned April 11, 1995 letter44 from OAB addressed to EDI and ESI, which outlined the reasons why OAB had terminated Gran's employment.
Petitioner claims that Gran was incompetent for the
Computer Specialist position because he had "insufficient knowledge in
programming and zero knowledge of [the] ACAD system."45
Petitioner also claims that Gran was justifiably dismissed due to
insubordination or disobedience because he continually failed to submit
the required "Daily Activity Reports."46
However, other than the abovementioned letters, no other evidence was
presented to show how and why Gran was considered incompetent,
insubordinate, or disobedient. Petitioner EDI had clearly failed to
overcome the burden of proving that Gran was validly dismissed.
Petitioner's imputation of incompetence on private
respondent due to his "insufficient knowledge in programming and zero
knowledge of the ACAD system" based only on the above mentioned letters,
without any other evidence, cannot be given credence.
An allegation of incompetence should have a factual
foundation. Incompetence may be shown by weighing it against a standard,
benchmark, or criterion. However, EDI failed to establish any such
bases to show how petitioner found Gran incompetent.
In addition, the elements that must concur for the
charge of insubordination or willful disobedience to prosper were not
present.
In Micro Sales Operation Network v. NLRC, we held that:
For willful disobedience to be a valid cause for
dismissal, the following twin elements must concur: (1) the employee's
assailed conduct must have been willful, that is, characterized by a
wrongful and perverse attitude; and (2) the order violated must have
been reasonable, lawful, made known to the employee and must pertain to
the duties which he had been engaged to discharge.47
EDI failed to discharge the burden of proving Gran's
insubordination or willful disobedience. As indicated by the second
requirement provided for in Micro Sales Operation Network, in
order to justify willful disobedience, we must determine whether the
order violated by the employee is reasonable, lawful, made known to the
employee, and pertains to the duties which he had been engaged to
discharge. In the case at bar, petitioner failed to show that the order
of the company which was violated—the submission of "Daily Activity
Reports"—was part of Gran's duties as a Computer Specialist. Before the
Labor Arbiter, EDI should have provided a copy of the company policy,
Gran's job description, or any other document that would show that the
"Daily Activity Reports" were required for submission by the employees,
more particularly by a Computer Specialist.
Even though EDI and/or ESI were merely the local
employment or recruitment agencies and not the foreign employer, they
should have adduced additional evidence to convincingly show that Gran's
employment was validly and legally terminated. The burden devolves not
only upon the foreign-based employer but also on the employment or
recruitment agency for the latter is not only an agent of the former,
but is also solidarily liable with the foreign principal for any claims
or liabilities arising from the dismissal of the worker.48
Thus, petitioner failed to prove that Gran was justifiably dismissed due to incompetence, insubordination, or willful disobedience.
Petitioner also raised the issue that Prieto v. NLRC,49 as used by the CA in its Decision, is not applicable to the present case.
In Prieto, this Court ruled that "[i]t is
presumed that before their deployment, the petitioners were subjected to
trade tests required by law to be conducted by the recruiting agency to
insure employment of only technically qualified workers for the foreign
principal."50
The CA, using the ruling in the said case, ruled that Gran must have
passed the test; otherwise, he would not have been hired. Therefore, EDI
was at fault when it deployed Gran who was allegedly "incompetent" for
the job.
According to petitioner, the Prieto ruling is not applicable because in the case at hand, Gran misrepresented himself in his curriculum vitae as a Computer Specialist; thus, he was not qualified for the job for which he was hired.
We disagree.
The CA is correct in applying Prieto. The
purpose of the required trade test is to weed out incompetent applicants
from the pool of available workers. It is supposed to reveal applicants
with false educational backgrounds, and expose bogus qualifications.
Since EDI deployed Gran to Riyadh, it can be presumed that Gran had
passed the required trade test and that Gran is qualified for the job.
Even if there was no objective trade test done by EDI, it was still
EDI's responsibility to subject Gran to a trade test; and its failure to
do so only weakened its position but should not in any way prejudice
Gran. In any case, the issue is rendered moot and academic because
Gran's incompetency is unproved.
Fourth Issue: Gran was not Afforded Due Process
As discussed earlier, in the absence of proof of
Saudi laws, Philippine Labor laws and regulations shall govern the
relationship between Gran and EDI. Thus, our laws and rules on the
requisites of due process relating to termination of employment shall
apply.
Petitioner EDI claims that private respondent Gran
was afforded due process, since he was allowed to work and improve his
capabilities for five months prior to his termination.51 EDI also claims that the requirements of due process, as enunciated in Santos, Jr. v. NLRC,52 and Malaya Shipping Services, Inc. v. NLRC,53 cited by the CA in its Decision, were properly observed in the present case.
This position is untenable.
In Agabon v. NLRC,54 this Court held that:
Procedurally, (1) if the dismissal is based on a just
cause under Article 282, the employer must give the employee two
written notices and a hearing or opportunity to be heard if requested by
the employee before terminating the employment: a notice specifying the
grounds for which dismissal is sought a hearing or an opportunity to be
heard and after hearing or opportunity to be heard, a notice of the
decision to dismiss; and (2) if the dismissal is based on authorized
causes under Articles 283 and 284, the employer must give the employee
and the Department of Labor and Employment written notices 30 days prior
to the effectivity of his separation.
Under the twin notice requirement, the employees must
be given two (2) notices before their employment could be terminated:
(1) a first notice to apprise the employees of their fault, and (2) a
second notice to communicate to the employees that their employment is
being terminated. In between the first and second notice, the employees
should be given a hearing or opportunity to defend themselves personally
or by counsel of their choice.55
A careful examination of the records revealed that,
indeed, OAB's manner of dismissing Gran fell short of the two notice
requirement. While it furnished Gran the written notice informing him of
his dismissal, it failed to furnish Gran the written notice apprising
him of the charges against him, as prescribed by the Labor Code.56
Consequently, he was denied the opportunity to respond to said notice.
In addition, OAB did not schedule a hearing or conference with Gran to
defend himself and adduce evidence in support of his defenses. Moreover,
the July 9, 1994 termination letter was effective on the same day. This
shows that OAB had already condemned Gran to dismissal, even before
Gran was furnished the termination letter. It should also be pointed out
that OAB failed to give Gran the chance to be heard and to defend
himself with the assistance of a representative in accordance with
Article 277 of the Labor Code. Clearly, there was no intention to
provide Gran with due process. Summing up, Gran was notified and his
employment arbitrarily terminated on the same day, through the same
letter, and for unjustified grounds. Obviously, Gran was not afforded due process.
Pursuant to the doctrine laid down in Agabon,57
an employer is liable to pay nominal damages as indemnity for violating
the employee's right to statutory due process. Since OAB was in breach
of the due process requirements under the Labor Code and its
regulations, OAB, ESI, and EDI, jointly and solidarily, are liable to
Gran in the amount of PhP 30,000.00 as indemnity.
Fifth and Last Issue: Gran is Entitled to Backwages
We reiterate the rule that with regard to employees
hired for a fixed period of employment, in cases arising before the
effectivity of R.A. No. 804258
(Migrant Workers and Overseas Filipinos Act) on August 25, 1995, that
when the contract is for a fixed term and the employees are dismissed
without just cause, they are entitled to the payment of their salaries
corresponding to the unexpired portion of their contract.59
On the other hand, for cases arising after the effectivity of R.A. No.
8042, when the termination of employment is without just, valid or
authorized cause as defined by law or contract, the worker shall be
entitled to the full reimbursement of his placement fee with interest of
twelve percent (12%) per annum, plus his salaries for the unexpired
portion of his employment contract or for three (3) months for every
year of the unexpired term whichever is less.60
In the present case, the employment contract provides
that the employment contract shall be valid for a period of two (2)
years from the date the employee starts to work with the employer.61 Gran arrived in Riyadh, Saudi Arabia and started to work on February 7, 1994;62
hence, his employment contract is until February 7, 1996. Since he was
illegally dismissed on July 9, 1994, before the effectivity of R.A. No.
8042, he is therefore entitled to backwages corresponding to the
unexpired portion of his contract, which was equivalent to USD 16,150.
Petitioner EDI questions the legality of the award of
backwages and mainly relies on the Declaration which is claimed to have
been freely and voluntarily executed by Gran. The relevant portions of
the Declaration are as follows:
I, ELEAZAR GRAN (COMPUTER SPECIALIST) AFTER RECEIVING MY FINAL SETTLEMENT ON THIS DATE THE AMOUNT OF:
S.R. 2,948.00 (SAUDI RIYALS TWO THOUSAND NINE
HUNDRED FORTY EIGHT ONLY)
REPRESENTING COMPLETE PAYMENT (COMPENSATION) FOR THE SERVICES I RENDERED TO OAB ESTABLISHMENT.
I HEREBY DECLARE THAT OAB EST. HAS NO FINANCIAL OBLIGATION IN MY FAVOUR AFTER RECEIVING THE ABOVE MENTIONED AMOUNT IN CASH.
I STATE FURTHER THAT OAB EST. HAS NO OBLIGATION TOWARDS ME IN WHATEVER FORM.
I ATTEST TO THE TRUTHFULNESS OF THIS STATEMENT BY AFFIXING MY SIGNATURE VOLUNTARILY.
SIGNED.
ELEAZAR GRAN
Courts must undertake a meticulous and rigorous
review of quitclaims or waivers, more particularly those executed by
employees. This requirement was clearly articulated by Chief Justice
Artemio V. Panganiban in Land and Housing Development Corporation v. Esquillo:
Quitclaims, releases and other waivers of benefits
granted by laws or contracts in favor of workers should be strictly
scrutinized to protect the weak and the disadvantaged. The waivers
should be carefully examined, in regard not only to the words and terms
used, but also the factual circumstances under which they have been
executed.63 (Emphasis supplied.)
This Court had also outlined in Land and Housing Development Corporation, citing Periquet v. NLRC,64 the parameters for valid compromise agreements, waivers, and quitclaims:
Not all waivers and quitclaims are invalid as against
public policy. If the agreement was voluntarily entered into and
represents a reasonable settlement, it is binding on the parties and may
not later be disowned simply because of a change of mind. It is only
where there is clear proof that the waiver was wangled from an
unsuspecting or gullible person, or the terms of settlement are
unconscionable on its face, that the law will step in to annul the
questionable transaction. But where it is shown that the person
making the waiver did so voluntarily, with full understanding of what he
was doing, and the consideration for the quitclaim is credible and
reasonable, the transaction must be recognized as a valid and binding undertaking. (Emphasis supplied.)
Is the waiver and quitclaim labeled a Declaration valid? It is not.
The Court finds the waiver and quitclaim null and void for the following reasons:
1. The salary paid to Gran upon his termination, in
the amount of SR 2,948.00, is unreasonably low. As correctly pointed out
by the court a quo, the payment of SR 2,948.00 is even lower
than his monthly salary of SR 3,190.00 (USD 850.00). In addition, it is
also very much less than the USD 16,150.00 which is the amount Gran is
legally entitled to get from petitioner EDI as backwages.
2. The Declaration reveals that the payment of SR
2,948.00 is actually the payment for Gran's salary for the services he
rendered to OAB as Computer Specialist. If the Declaration is a
quitclaim, then the consideration should be much much more than the
monthly salary of SR 3,190.00 (USD 850.00)—although possibly less than
the estimated Gran's salaries for the remaining duration of his contract
and other benefits as employee of OAB. A quitclaim will understandably
be lower than the sum total of the amounts and benefits that can
possibly be awarded to employees or to be earned for the remainder of
the contract period since it is a compromise where the employees will
have to forfeit a certain portion of the amounts they are claiming in
exchange for the early payment of a compromise amount. The court may
however step in when such amount is unconscionably low or unreasonable
although the employee voluntarily agreed to it. In the case of the
Declaration, the amount is unreasonably small compared to the future
wages of Gran.
3. The factual circumstances surrounding the
execution of the Declaration would show that Gran did not voluntarily
and freely execute the document. Consider the following chronology of
events:
a. On July 9, 1994, Gran received a copy of his letter of termination;
b. On July 10, 1994, Gran was instructed to depart Saudi Arabia and required to pay his plane ticket;65
c. On July 11, 1994, he signed the Declaration;
d. On July 12, 1994, Gran departed from Riyadh, Saudi Arabia; and
e. On July 21, 1994, Gran filed the Complaint before the NLRC.
The foregoing events readily reveal that Gran was
"forced" to sign the Declaration and constrained to receive the amount
of SR 2,948.00 even if it was against his will—since he was told on July
10, 1994 to leave Riyadh on July 12, 1994. He had no other choice but
to sign the Declaration as he needed the amount of SR 2,948.00 for the
payment of his ticket. He could have entertained some apprehensions as
to the status of his stay or safety in Saudi Arabia if he would not sign
the quitclaim.
4. The court a quo is correct in its finding
that the Declaration is a contract of adhesion which should be construed
against the employer, OAB. An adhesion contract is contrary to public
policy as it leaves the weaker party—the employee—in a
"take-it-or-leave-it" situation. Certainly, the employer is being unjust
to the employee as there is no meaningful choice on the part of the
employee while the terms are unreasonably favorable to the employer.66
Thus, the Declaration purporting to be a quitclaim
and waiver is unenforceable under Philippine laws in the absence of
proof of the applicable law of Saudi Arabia.
In order to prevent disputes on the validity and
enforceability of quitclaims and waivers of employees under Philippine
laws, said agreements should contain the following:
1. A fixed amount as full and final compromise settlement;
2. The benefits of the employees if possible with the
corresponding amounts, which the employees are giving up in
consideration of the fixed compromise amount;
3. A statement that the employer has clearly
explained to the employee in English, Filipino, or in the dialect known
to the employees—that by signing the waiver or quitclaim, they are
forfeiting or relinquishing their right to receive the benefits which
are due them under the law; and
4. A statement that the employees signed and executed
the document voluntarily, and had fully understood the contents of the
document and that their consent was freely given without any threat,
violence, duress, intimidation, or undue influence exerted on their
person.
It is advisable that the stipulations be made in English and Tagalog or in the dialect known to the employee.
There should be two (2) witnesses to the execution of the quitclaim who
must also sign the quitclaim. The document should be subscribed and
sworn to under oath preferably before any administering official of the
Department of Labor and Employment or its regional office, the Bureau of
Labor Relations, the NLRC or a labor attaché in a foreign country. Such
official shall assist the parties regarding the execution of the
quitclaim and waiver.67 This compromise settlement becomes final and binding under Article 227 of the Labor Code which provides that:
[A]ny compromise settlement voluntarily agreed upon with the assistance
of the Bureau of Labor Relations or the regional office of the DOLE,
shall be final and binding upon the parties and the NLRC or any court
"shall not assume jurisdiction over issues involved therein except in
case of non-compliance thereof or if there is prima facie evidence that the settlement was obtained through fraud, misrepresentation, or coercion.
It is made clear that the foregoing rules on
quitclaim or waiver shall apply only to labor contracts of OFWs in the
absence of proof of the laws of the foreign country agreed upon to
govern said contracts. Otherwise, the foreign laws shall apply.
WHEREFORE, the petition is DENIED. The
October 18, 2000 Decision in CA-G.R. SP No. 56120 of the Court of
Appeals affirming the January 15, 1999 Decision and September 30, 1999
Resolution of the NLRC
is AFFIRMED with the MODIFICATION that
petitioner EDI-Staffbuilders International, Inc. shall pay the amount of
PhP 30,000.00 to respondent Gran as nominal damages for non-compliance
with statutory due process.
No costs.
SO ORDERED.
Quisumbing, Carpio, Tinga, Nachura, JJ., concur.
Footnotes
* As per October 17, 2007 raffle.
1 Rollo, pp. 9-39.
2
Id. at 140-148. The Decision was penned by Associate Justice Conchita
Carpio Morales (now a Member of this Court) and concurred in by
Associate Justices Candido V. Rivera and Elvi John S. Asuncion.
3
Id. at 86-99. The Decision was penned by NLRC Commissioner Ireneo B.
Bernardo and concurred in by Commissioners Lourdes C. Javier and Tito F.
Genilo.
4 Id. at 106-107.
5 Id. at 140.
6 Id. at 140-141.
7 Id. at 40.
8 Id. at 41.
9
Signed by Eleazar S. Gran (second party) and Mrs. Andrea Nicolaus
(first party) representing Omar Ahmed Ali Bin Bechr Est., dated January
20, 1994; id. at 42-50.
10 Id. at 141.
11 Id. at 51.
12 Supra note 7.
13 Rollo, p. 73.
14 Id. at 75.
15 CA rollo, pp. 108-113.
16 Supra note 3, at 98.
17 Rollo, p. 80.
18 Id. at 100 & 224.
19 Id. at 100-105.
20 Id. at 219.
21 Supra note 4, at 106.
22
Supra note 2, at 145; citing Carnation Phil. Employees Labor Union-FFW
v. NLRC, G.R. No. L-64397, October 11, 1983, 125 SCRA 42 and Flexo
Manufacturing Corporation v. NLRC, G.R. No. 164857, April 18, 1997, 135
SCRA 145.
23 Rollo, p. 220.
24 G.R. No. L-57735, March 19, 1982, 112 SCRA 688, 691.
25 G.R. No. L-60950, November 19, 1982, 118 SCRA 645, 646.
26 Id.
27 Supra note 22.
28 G.R. No. L-63701, January 31, 1980, 127 SCRA 463.
29 G.R. No. 146703, November 18, 2004, 443 SCRA 35.
30 Rollo, pp. 84-85.
31 Id. The handwriting is illegible.
32 Now Sec. 7 of New NLRC Rules of Procedure.
33 Marlene Crisostomo v. Florito M. Garcia, Jr., G.R. No. 164787, January 31, 2006, 481 SCRA 402; Bunao v. Social Security Sytem, G.R. No. 156652, December 13, 2005, 477 SCRA 564, citing Vallejo v. Court of Appeals, G.R. No. 156413, April 14, 2004, 427 SCRA 658, 669; and San Luis v. Court of Appeals, G.R. No. 142649, September 13, 2001, 417 Phil. 598, 605; Cadalin v. POEA Administrator, G.R. Nos. 104776, 104911, 105029-32, December 5, 1994, 238 SCRA 721; Pagdonsalan v. National Labor Relations Commission, G.R. No. L-63701, January 31, 1984, 127 SCRA 463.
34 Civil Code, Art. 1306.
35 Id. Loquia and Pangalanan, p. 144.
36
J.R. Coquia & E.A. Pangalangan, Conflict of Laws 157 (1995); citing
Cramton, Currie, Kay, Conflict of Laws Cases and Commentaries 56.
37 Philippine Export and Loan Guarantee Corporation v. V.P. Eusebio Construction Inc., et al., G.R. No. 140047, July 14, 2004, 434 SCRA 202, 215.
38
See Presidential Decree No. 442, "A Decree Instituting a Labor Code,
Thereby Revising and Consolidating Labor and Social Laws to Afford
Protection to Labor, Promote Employment and Human Resources Development
and Ensure Industrial Peace Based on Social Justice."
39
As amended by Sec. 33, R.A. 6715, "An Act to Extend Protection to
Labor, Strengthen the Constitutional Rights of Workers to
Self-Organization, Collective Bargaining and Peaceful Concerted
Activities, Foster Industrial Peace and Harmony, Promote the
Preferential Use of Voluntary Modes of Settling Labor Disputes, and
Reorganize the National Labor Relations Commission, Amending for these
Purposes Certain Provisions of Presidential Decree No. 442, as amended,
Otherwise Known as The Labor Code of the Philippines, Appropriating
Funds Therefore and for Other Purposes," approved on March 2, 1989.
40 Ting v. Court of Appeals, G.R. No. 146174, July 12, 2006, 494 SCRA 610.
41 Bank of the Philippine Islands v. Uy, G.R. No. 156994, August 31, 2005, 468 SCRA 633.
42 I Alcantara, Philippine Labor and Social Legislation 1052 (1999).
43 Supra note 11.
44 Rollo, pp. 155-156.
45 Supra note 1, at 25.
46 Id. at 29.
47 G.R. No. 155279, October 11, 2005, 472 SCRA 328, 335-336.
48 Royal Crown Internationale v. NLRC, G.R. No. 78085, October 16, 1989, 178 SCRA 569; see also G & M (Phil.), Inc. v. Willie Batomalaque, G.R. No. 151849, June 23, 2005, 461 SCRA 111.
49 G.R. No. 93699, September 10, 1993, 266 SCRA 232.
50 Id. at 237.
51 Rollo, p. 235.
52 G.R. No. 115795, March 6, 1998, 287 SCRA 117.
53 G.R. No. 121698, March 26, 1998, 228 SCRA 181.
54 G.R. No. 158693, November 17, 2004, 442 SCRA 573, 608.
55 King of Kings Transport Inc. v. Mamac, G.R. No. 166208, June 29, 2007.
56
See Article 277 (b) of the Labor Code; Sec. 2 (I) (a) Rule XXIII Rules
Implementing Book V of the Labor Code; and Sec. 2 (d) (i) Rule I, Rules
Implementing Book VI of the Labor Code.
57 Supra note 54.
58
Took effect on July 15, 1995, R.A. No. 8042 is "An Act to Institute the
Policies of Overseas Employment and Establish a Higher Standard of
Protection and Promotion of the Welfare of Migrant Workers their
Families and Overseas Filipinos in Distress, and for Other Purposes."
59 Land and Housing Development Corporation v. Esquillo, G.R. No. 152012, September 30, 2005, 471 SCRA 488, 490.
60 Supra note 58, Sec. 10.
61 Rollo, p. 45.
62 Id. at 70, OAB's Final Account of Gran's salaries receivable.
63 Supra note 59.
64 G.R. No. 91298, June 22 1990, 186 SCRA 724, 730.
65 Supra note 14, at 76.
66 Chretian v. Donald L. Bren Co. (1984) 151 [185 Cal. App. 3d 450].
67 A form copy of the Quitclaim and Release used by the NLRC is reproduced below for the guidance of management and labor:
Republic of the Philippines
Department of Labor and Employment
NATIONAL LABOR RELATIONS COMMISSION
Quezon City
CONCILIATION AND MEDIATION
QUITCLAIM AND RELEASE
PAGTALIKOD AT PAGPAPAWALANG-SAYSAY
I (Ako), _______________________________ of legal age (may sapat na
gulang) residing at (nakatira sa) ____________________________ for and
in consideration of the amount of (bilang konsiderasyon sa halagang)
_________________ pesos (piso) given to me by (na ibinigay sa akin ng)
_________________________________, do hereby release and discharge (ay
aking pinawawalang-saysay at tinatalikuran) aforesaid
company/corporation and its officers, person/s (ang nabanggit na
kompanya/korporasyon at ang mga tauhan nito) from any money claims (mula
sa anumang paghahabol na nauukol sa pananalapi) by way of unpaid wages
(sa pamamagitan ng di nabayarang sahod), separation pay, overtime pay
otherwise (o anupaman), as may be due to me (na karapat-dapat para sa
akin) in officers/person/s (na may kaugnayan sa aking huling
pinapasukang kompanya o korporasyon at sa mga opisyales o tauhan nito).
I am executing this quitclaim and release (Isinasagawa ko ang
pagtalikod o pagpapawalang-saysay na ito), freely and voluntary (ng may
kalayaan at kusang-loob) before this Honorable Office (sa harapan ng
marangal na tanggapang ito) without any force or duress (ng walang
pamimilit o pamumuwersa) and as part of the compromise agreement reached
during the preventive conciliation and mediation process conducted in
the NLRC (at bilang bahagi ng napagkasunduan buhat sa proseso ng
"preventive conciliation at mediation" dito sa NLRC).
IN VIEW WHEREOF (DAHIL DITO), I hereunto set my hand this (ako'y
lumagda ngayong) ______ day of (araw ng) _________________, 200__, in
Quezon City (sa Lungsod ng Quezon).
_____________________
Signature of the Requesting Party
(Lagda ng Partidong Humiling ng Com-Med Conference) |
Signed in presence of (Nilagdaan sa harapan ni):
____________________________________
Name in Print below Signature
(Limbagin ang pangalan sa ilalim ng lagda)
______________________________________________________________________________________
SUBSCRIBED AND SWORN TO before me this ____ day of ____________ 200__ in Quezon City, Philippines.
_____________________
Labor Arbiter |
|
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