EMPLOYMENT CONTRACTS THAT ARE AMENDED REDUCING THE BENEFITS MANDATED BY LAW ARE NOT BINDING ON EMPLOYEES

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Employment contracts, just like the general rule on contracts under the Civil Code, cannot be amended so as to contradict the law, morals, public order and public policy.

Thus, the SC held as follows:

Prime Stars International Promotion Corporation vs. Baybayan
G.R. No. 213961, January 22, 2020

Illegal dismissal; Pre-termination of OFW contract; Burden of proving pre-termination of contract falls upon the employer; Salary differentials; Refund of transportation expenses; Employer’s addendum to the POEA approved contract; The provisions of the employment contracts of OFWs cannot be altered or modified without the prior approval of the POEA; Freedom to stipulate; Parties to overseas employment contracts are allowed to stipulate other terms and conditions and other benefits not provided under the minimum requirements of the law, provided the whole package should be more beneficial to the worker than the minimum; Provided that the same shall not be contrary to law, public policy and morals

Facts:

Petitioner Prime Stars International Promotion Corporation (Prime Stars) is a local recruitment agency with Taiwan Wacoal Co., Ltd., (Wacoal) and Avermedia Technologies Inc. (Avermedia) as foreign principals. Petitioner Richard U. Peralta (Peralta) is one of the officers of Prime Stars. Prime Stars and Peralta are collectively referred to herein as (Prime Stars, et al.)

Respondent Norly M. Baybayan (Baybayan) was deployed by Prime Stars to Wacoal on June 12, 2007 for a contract period of 24 months or two years, with a monthly salary of NT$15,840.00 per month. However, he was only paid NT$9,000.00 a month and upon inquiry, was informed that the amount of NT$4,000.00 was being deducted from his salary for expenses for his board and lodging.

Since Baybayan still had debts to pay back home, he finished the contract and returned to the Philippineson May 19, 2009. He then instituted a complaint for underpayment of salaries and the reimbursement of his transportation expenses against Prime Stars, et al. He further asserted that Prime Stars, et al. collected from him an exhorbitant placement fee.

On the other hand, respondent Michelle V. Beltran (Beltran) was likewise recruited by Prime Stars and was deployed to Avermedia as an “operator” who assembles TV boxes and USB. Her contract duration was for two years with a monthly salary of NTE$17,280.00. She was deployed on June 22, 2008 and was under the supervision of a Taiwanese employee named “Melody.” After a year, her services were abruptly and unceremoniously terminated by her supervisor and was immediately repatriated to the Philippines on July 3, 2009.

Beltran then instituted a complaint for illegal dismissal and sought for the payment of the unexpired portion of her contract, the refund of her placement fee, repatriation expenses, plus damages and attorney’s fees against Prime Stars, et al. The complaints of Baybayan and Beltran were then consolidated. Baybayan and Beltran are referred herein as Beltran, et al.

Prime Stars, et al. denied that Baybayan was underpaid as his payslips indicated that he received a monthly salary of NT$17,280 during his employment with Wacoal. They explained that Baybayan signed an addendum to the Employment Contract (Addendum), which authorized the deduction of the amount of NT$4,000.00 as payment for his monthly food and accommodation. In the same Addendum, Baybayan was apprised that the transportation expenses for his round trip tickets from the Philippines to Taiwan shall be at his own expense.

Prime Stars, et al. further explained that Baybayan paid PhP26,769.00 as placement fee and PhP22,190.00 as documentation fee, and supported by an official receipt, sworn statement of Baybayan, Written Acknowledgment, Foreign Worker’s Affidavit Regarding Expenses Incurred for Entry Into the Republic of China To Work and the Wage and Salary and Overseas Contract Worker’s Questionnaire which he personally accomplished.

With respect to Beltran, Prime Stars, et al contended that it was Beltran who voluntarily preterminated her contract for personal reasons. According to them, Beltran approached the management and expressed her intent to return to the Philippines as evidenced by her handwritten statement which she duly signed on July 4, 2009. Prime Stars, et al. admitted that they charged Beltran PhP25, 056.00 as placement fee andPhP20,560.00 as documentation fee, and supported by an official receipt, her sworn statement, written acknowledgment, Foreign Worker’s Affidavit, and Overseas Contract Worker’s Questionnaire.

Beltran countered that she signed the pretermination agreement under duress since she was helpless in a foreign country, and was afraid that her refusal might endanger her status, liberty, and limbs. She further averred that her supervisor Melody discriminated her, and that it was Melody who dictated the words she used in the Worker Discontinue Employment Affidavit she executed.

LA Ruling:

The Labor Arbiter (LA) dismissed the consolidated cases for lack of merit.

The LA found substantial documentary evidence to prove that Baybayan was paid all the salaries and benefits pursuant to his employment contract. In the same vein, the LA gave more weight ot the evidence presented by Prime Stars, et al that Beltran preterminated her employment contract for reasons of her own and was thus not entitled to her money claims.

Beltran, et al. appealed the dismissal before the National Labor Relations Commission (NLRC) citing that it was grave error on the part of the LA to deny the award of their money claims despite evidence to the contrary.

NLRC Ruling:

The NLRC reversed and set aside the findings of the LA and ruled in favor of Beltran, et al.

The NLRC struck down as contrary to law the Addendum of Beltran, et al. since it diminished the benefits provided in the original contract approved and submitted to the Philippine Overseas Employment Administration (POEA). The NLRC further gave credence to their assertion that they were forced to sign the Addendum for fear of losing their employment since they were already in a foreign land, aside from their outstanding loans which they obtained to support the expenses for their deployment.

The NLRC was, likewise, convinced that Beltran was illegally dismissed. Aggrieved, Prime Stars, et al. filed a motion for reconsideration which the NLRC denied for lack of merit.

Prime Stars, et al then elevated the case to the Court of Appeals (CA) raising grave abuse of discretion tantamount to lack of jurisdiction of the NLRC’s reversal of the LA’s Decision despite evidence on record.

CA Ruling:

The CA dismissed the petition filed by Prime Stars, et al. in the absence of any justifiable reason to reverse the factual findings and conclusions of law of the NLRC as supported by substantial evidence.

The CA affirmed the findings of the NLRC but modified the refund of Beltran’s placement fee to PhP25,056.00 with interest of 12% per annum.

Issue/s:

Whether or not subsequent contractual stipulations initiated by the employer not in accordance with law is binding on the employee

Whether or not the bare testimony of OFW who filed a complaint for illegal dismissal prevails over that of the employer’s document showing pre-termination of contract

SC Ruling:

The SC did not find merit in the petition.

The SC held that Prime Stars, et al.’s complete reliance on Beltran’s alleged voluntary execution of the Mutual Contract Annulment Agreement and the Worker Discontinue Employment Affidavit to support the claim that Beltran voluntarily preterminated her contract is unavailing considering that the filing of the complaint for illegal dismissal is inconsistent with resignation. The SC found it highly unlikely that Beltran would just quit even before the end of her contract after all the expenses she incurred and still needed to settle and the sacrifices she went through in seeking financial upliftment.

The SC held further that it is incongruous for Beltran to simply give up her work, return home, and be unemployed once again given that so much time, effort, and money have already been invested to secure her employment abroad and enduring the tribulations of being in a foreign country and away form herfamily.

The wordings of Beltran’s relinquishment of her contract of employment were ambiguous and doubtful. The burden of proving that Beltran voluntarily preterminated her contract falls upon Prime Stars, et al. as the employer. They still have the burden of proving that the resignation is voluntary despite the claim that the employee resigned, which they failed to discharge.

The SC did not agree on Prime Stars, et al.’s argument that while the employment contracts of Beltran, et al. were indeed amended, the Addendum, while apparently do not appear to contain any indication of POEA approval, actually contained provisions which have been approved by the POEA as evidenced by Beltran, et al.’s Foreign Worker’s Affidavits.

The SC held that paragraph (i) of Article 34 of the Labor Code prohibits the substitution or alteration of employment contracts approved and verified by the Department of Labor and Employment (DOLE) from the time of the actual signing thereof by the parties up to and including the period of expiration of the same without the approval of the DOLE.

Furthermore, RA 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995, explicitly prohibits the substitution or alteration to the prejudice of the worker of employment contracts already approved and verified by the DOLE from the time of actual signing thereof by the parties up to and including the period of the expiration of the same without the prior approval of the DOLE.

The SC held, in agreement with the CA findings that the numerous documentary evidence presented by Prime Stars, et al. which Beltran, et al entered into with the foreign principals are not valid and binding upon the latter. Specifically, the Addendum to the employment contract whereby they were made to shoulder their food and accommodation, as well as transportation fare, to and from Taiwan, is in contravention of the Employment Contract executed by the parties and duly approved by the POEA. The contract provisions entitling the OFWs to free food and accommodation and economy class air ticket back to the country of origin constitute the minimum requirements for contracts of employment of land-based OFWs pursuant to Section 2, Rule 1, Part V of the POEA Rules and Regulations Government the Recruitment and Employment of Land-Based Overseas Workers.

The explicit provisions of the employment contracts of Beltran, et al. cannot be altered or modified by the Addendum without the prior approval of the POEA. Indeed, while the parties may stipulate on other terms and conditions of employment as well as other benefits, the stipulations should not violate the minimum requirements required by law as these would be disadvantageous to the employee. Section 3, Rule 1, Part V of the POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based Overseas Workers allow the parties to stipulate other terms and conditions and other benefits not provided under the minimum requirements. Provided, the whole employment package should be more beneficial to the worker than the minimum. Provided that the same shall not be contrary to law, public policy and morals, and provided further, that the Philippine agencies shall make the foreign employers aware of the standards of employment adopted by the Administration.

Based on the record of the case, no other conclusion would be made than the Addendum is contrary to law and public policy considering that the minimum provisions for employment of Beltran, et al. were not met, and there was diminution of their benefits which were already guaranteed by law and granted in their favor under their PEOA-approved contracts of employment.

The Addendum, absent the approval of the POEA, is not valid and executory against Beltran, et al. The clear and categorical language of the law likewise imposes upon foreign principals minimum terms and conditions of employment for land-based overseas Filipino workers, which include basic provisions for food, accommodation and transportation.