PAKISTAN INTERNATIONAL AIRLINES CORPORATION vs. HON.
terminated effective September 1, 1980 pursuant to the provisions
BLAS F. OPLE, in his capacity as Minister of Labor; HON.
VICENTE LEOGARDO, JR., in his capacity as Deputy Minister;
ETHELYNNE B. FARRALES and MARIA MOONYEEN MAMASIG
G.R. No. 61594 September 28, 1990
FELICIANO, J.
Facts:
On December 2, 1987, 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. They are to be
employed as flight attendants with base station in Manila and flying
assignments to different parts of the Middle East and Europe.
The contracts, which became effective on January 9, 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.
On August 2 1980, roughly 1 year and 4 months prior to the
expiration of their contract of employment PIA through their counsel
informed respondents Farrales and Mamasig that they are
of the employment contract.
The respondents jointly filed a complaint against PIA for
illegal dismissal and non-payment of company benefits and
bonuses, against PIA with the then Ministry of Labor and
Employment (MOLE). MOLE ordered the parties to submit
their position papers and evidence supporting their claims.
PIA claims that the respondents are habitual absentees and both
were in a habit of bringing in from abroad sizeable quantities of
personal effects.
On January 22, 1981, Regional Director Francisco Estrella
ordered reinstatement of respondents with back wages 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. On appeal, the Deputy Minister of MOLE
affirmed the findings of the Regional Director. Hence this appeal for
certiorari was instituted. PIA assails the jurisdiction of Deputy
Minister, violation of PIAs right to due process and, rights of PIA
stated in the employment contracts.
Issue: WON the stipulations of the contract should govern in favour
of PIA
Held: No.
The Court ruled that the contracts of employment
particularly stipulations under paragraph 5 and 6 is void
because it is inconsistent with Articles 280 and 281 of the
Labor Code. Under Article 280 of the Labor Code, 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 provides that 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 or 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 preceding 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 while such actually
exists.
Although the general rule is that a contract is the law
between the parties, the principle is not absolute. Article
1306 of the Civil Code provides that the contracting 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. The 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. A contract providing
for employment with a fixed period is not necessarily
unlawful provided that there was no intent to circumvent
the law against employees right to be secure in his or her
tenure.
The Court examined provisions of paragraph 5 and 6 of the
employment agreement and it concluded that the fixed period of
three (3) years specified in paragraph 5 is seen to have been
effectively neutralized by the provisions of paragraph 6 of the
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, and thus to escape
completely the thrust of Articles 280 and 281 of the Labor
Code.
Moreover, invoking paragraph 10 of the contract which
specifies that the law of Pakistan as the applicable law and the
Karachi Courts as to sole venue of settlement of dispute is
untenable. The employment relationship is affected with public
interest and the contracts was executed and partially performed in
the Philippines. Respondents are Philippine citizens and PIA is also
licensed to do business in the country. 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.