IPAMS vs De Vera GR No. 205703 (March 7, 2016)

 IPAMS vs De Vera  GR No. 205703 (07 March 2016)

Facts: Petitioner IPAMS is a placement agency in the Philippines and SNC Lavalin Engineers & Contractors, Inc. (SNC-Lavalin) is the principal of IPAMS, a Canadian company. On the other hand, respondent Alberto Arriola (Arriola) is a licensed general surgeon in the Philippines.

Respondent Arriola was offered by SNC-Lavalin a position in Madagascar as a Safety Officer for a period of 19 months starting from June 9, 2008 to December 31, 2009. Subsequently, Arriola was hired by SNC-Lavalin, through IPAMS, and his overseas employment contract was processed with POEA. He started working on June 9, 2008 but just 3 months after, he received a notice of pre-termination of employment and was repatriated. 

He then 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. The petitioner insist that Arriola was not illegally dismissed as his dismissal was allowed by the Canadian Laws. They argued that all his employment documents were processed in Canada and that SNC-Lavalin’s office is located in Canada. Therefore, Canadian Laws should govern their contract. That 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.

Issue: Whether or not Arriola was illegaly dismissed. 

Held: Yes, Arriola was illegally dismissed. As a general rule, 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 to this, the parties may agree that a foreign law shall govern the employment contract 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.

In this case, petitioners were able to observe only the second and fourth requisites. They were able to present the ESA (foreign law) duly authenticated by the Canadian Authorities and certified by the Philippine Embassy. Arriola’s contract was also processed though the POEA. However, they failed to adhere to the other two. 

The foreign law was not expressly specified in the employment contract. In its pleadings, the petitioners did not directly cite any specific provision or stipulation in the said labor contract which indicated the applicability of the Canadian labor laws or the ESA. They failed to show on the face of the contract that a foreign law was agreed upon by the parties. Considering that no foreign law was specified in the contract and the same was executed in the Philippines, the doctrine of lex loci celebrationis applies and the Philippine laws shall govern the overseas employment of Arriola.

The foreign law invoked is contrary to the Constitution and the Labor Code. First, the ESA does not require any ground for the early termination of employment. Second, the ESA allows the employer to dispense with the prior notice of termination to an employee. Not only do these provisions collide with the right to security of tenure, but they also deprive the employee of his constitutional right to due process by denying him of any notice of termination and the opportunity to be heard. Thus, the Court concurs with the CA that the ESA is not applicable in this case as it is against our fundamental and statutory laws. In fine, as the petitioners failed to meet all the four (4) requisites on the applicability of a foreign law, then the Philippine labor laws must govern the overseas employment contract of Arriola.

Applying Philippine laws, the court ruled that Arriola was illegally dismissed. 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 that must be proven by the employer with substantial evidence before a dismissal may be considered valid.

Here, the petitioners simply argued that they were suffering from financial losses and Arriola had to be dismissed. 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.