Republic of the
SUPREME COURT
SECOND DIVISION
EDI-STAFFBUILDERS G.R. No. 145587
INTERNATIONAL, INC.,
Petitioner,
Present:
QUISUMBING,
J., Chairperson,
- versus - CARPIO,
TINGA,
VELASCO,
JR., and
NACHURA,*
JJ.
NATIONAL LABOR RELATIONS
COMMISSION and Promulgated:
ELEAZAR S. GRAN,
Respondents. October
26, 2007
x-----------------------------------------------------------------------------------------x
D E C I S I
O N
VELASCO, JR., J.:
The Case
This Petition for Review on Certiorari[1]
seeks to set aside the October 18, 2000 Decision[2]
of the Court of Appeals (CA) in CA-G.R. SP No. 56120 which affirmed the January
15, 1999 Decision[3]
and September 30, 1999 Resolution[4]
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.
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
Private respondent Gran was an OFW
recruited by EDI, and deployed by ESI to work for OAB, in
It appears that OAB asked EDI through
its
After accepting OAB’s offer of
employment, Gran signed an employment contract[9]
that granted him a monthly salary of USD 850.00 for a period of two years. Gran was then deployed to
Upon arrival in
After Gran had been working for about
five months for OAB, his employment was terminated through OAB’s
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 Declaration[13]
releasing OAB from any financial obligation or otherwise, towards him.
After his arrival in the
The Ruling of the Labor Arbiter
In his
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
Dissatisfied, Gran filed an Appeal[15]
on
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.
SO ORDERED.[16]
Gran
then filed a Motion for Execution of Judgment[17]
on
To prevent the execution, petitioner
filed an Opposition[19]
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
The NLRC then issued a Resolution[21]
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 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
Hence, this instant petition is before the Court.
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
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
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
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 Code[38]
states that:
Art. 277. MISCELLANEOUS PROVISIONS[39]
(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
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
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
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
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
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. 8042[58] (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
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
b. On
c. On
d. On
e. On
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
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
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.
PRESBITERO
J. VELASCO, JR.
Associate Justice
WE CONCUR:
LEONARDO A. QUISUMBING
Associate Justice
Chairperson
ANTONIO T. CARPIO DANTE
O. TINGA
Associate Justice Associate Justice
ANTONIO
EDUARDO B. NACHURA
Associate Justice
A T T E S T A T I O N
I attest that the conclusions in the
above Decision had been reached in consultation before the case was assigned to
the writer of the opinion of the Court’s Division.
LEONARDO A. QUISUMBING
Associate
Justice
Chairperson
C E R T I F
I C A T I O N
Pursuant to Section 13, Article VIII of the
Constitution, and the Division Chairperson’s Attestation, I certify that the
conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Court’s Division.
REYNATO S. PUNO
Chief Justice
[2]
[3]
[4]
[5]
[6]
[7]
[8]
[9]
Signed by Eleazar S. Gran (second party) and Mrs. Andrea Nicolaus (first party)
representing Omar Ahmed Ali Bin Bechr Est., dated
[10]
[12] Supra note 7.
[13] Rollo, p. 73.
[15] CA rollo, pp. 108-113.
[16] Supra note 3, at 98.
[17] Rollo, p. 80.
[18]
[20]
[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,
[23] Rollo, p. 220.
[31]
[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,
[34] Civil Code, Art. 1306.
[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
[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]
[47]
G.R. No. 155279,
[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]
[51] Rollo, p. 235.
[54]
G.R. No. 158693,
[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.
[58]
Took effect on
[59] Land
and Housing Development Corporation v. Esquillo, G.R. No. 152012,
[60] Supra note 58, Sec. 10.
[61] Rollo, p. 45.
[62]
[63] Supra note 59.
[64] G.R. No. 91298,
[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
Department of Labor and
Employment
NATIONAL LABOR RELATIONS
COMMISSION
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
_________________________________
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
_____________________
Labor Arbiter