Imagine You’re a Filipino doctor, working abroad with dreams of a better future. Suddenly, you're terminated—without cause, just a notice and a paycheck. Could foreign law override your constitutional rights?

TOPIC: RIGHTS OF OFWS - PART 5 OF 10 

WHEN MAY A FOREIGN LAW BE VALIDLY APPLIED TO AN OVERSEAS EMPLOYMENT CONTRACT INVOLVING A FILIPINO WORKER—AND WHAT HAPPENS WHEN THAT FOREIGN LAW VIOLATES PHILIPPINE PUBLIC POLICY?

 

Title of the Case:
Industrial Personnel & Management Services, Inc. (IPAMS), SNC Lavalin Engineers & Contractors, Inc., and Angelito C. Hernandez vs. Jose G. De Vera and Alberto B. Arriola
G.R. No. 205703, March 07, 2016

 

Facts of the Case

Dr. Alberto Arriola, a licensed Filipino general surgeon, was recruited by Industrial Personnel & Management Services, Inc. (IPAMS), a local recruitment agency, for overseas employment with SNC Lavalin Engineers & Contractors, Inc., a Canadian multinational company. Arriola signed his contract in the Philippines and was deployed to work as a Safety Officer at the Ambatovy Project site in Madagascar starting June 9, 2008, for a contract period of 19 months, with a compensation of CA$32 per hour.

After about 15 months, Arriola received a notice from SNC-Lavalin dated September 9, 2009, informing him that his employment would be pre-terminated effective September 11, 2009, due to "diminishing workload" and the "unavailability of alternative assignments." He was repatriated shortly after, and paid CA$2,636.80 as severance, allegedly in accordance with Ontario’s Employment Standards Act (ESA).

Arriola filed a complaint for illegal dismissal and monetary claims (unpaid salaries, leave pay, and overtime) before the Labor Arbiter (LA), asserting that the foreign law cited could not override Philippine law, especially as the contract was executed in the Philippines and processed by the POEA.

The Labor Arbiter dismissed the complaint, citing the case EDI-Staffbuilders and ruling that the foreign law (ESA), having been authenticated and submitted, governed the employment contract.

On appeal, the NLRC reversed the ruling, holding that Philippine law applied. It declared Arriola’s dismissal illegal, finding no substantial proof of redundancy or retrenchment, and awarded him CA$81,920.00 as salary for the unexpired portion of his contract.

The CA later modified the award, reducing it to CA$19,200.00 based on a 40-hour work week (instead of 70), and ruled that Philippine labor laws, not Canadian law, applied as the ESA was contrary to public policy and constitutional protections.

The employer elevated the matter to the Supreme Court, insisting that Canadian law governed the employment relationship.

 

Primary Legal Issue

Can a foreign labor law (in this case, Ontario’s Employment Standards Act) be validly applied to a Filipino worker’s overseas employment contract, despite its conflict with the Philippine Constitution and labor statutes?

 

Ruling of the Supreme Court

The Supreme Court DENIED the petition. It ruled that while parties may agree to apply a foreign law to an overseas employment contract, this is subject to strict conditions:

1. The foreign law must be expressly stipulated in the contract.
2. The foreign law must be proven before Philippine courts following evidentiary rules.
3. The foreign law must not violate Philippine laws, morals, public policy, or public order.
4. The contract must be processed through the POEA.

In this case, although the foreign law (ESA) was duly authenticated and the contract processed through the POEA, the contract did not explicitly specify Canadian law, and the ESA provisions allowing dismissal without cause or notice violated due process and security of tenure under Philippine law. Thus, the ESA could not govern the contract.

The Court reiterated that Philippine labor laws applied, and found that the employer failed to prove valid grounds for Arriola’s dismissal. Accordingly, it upheld the CA's award of CA$19,200.00 to Arriola, equivalent to his salary for the unexpired portion of his contract.

 

Dispositive Portion

“WHEREFORE, the petition is DENIED. The January 24, 2013 Decision of the Court of Appeals in CA-G.R. SP No. 118869 is AFFIRMED in toto.”

SO ORDERED.

 

Should Filipino workers abroad be bound by foreign employment laws that allow termination without cause—just because they signed a contract overseas? Or should Philippine public policy always prevail, no matter where the contract was made?

 

Doctrines Laid Down in the Case

1. Four-fold Test for Applicability of Foreign Law in Overseas Employment Contracts:

“Before a foreign law may be applied to an overseas employment contract, four requisites must be met: (1) express stipulation in the contract, (2) due proof under Philippine rules on evidence, (3) no conflict with Philippine law or public policy, and (4) POEA processing.”

2. Lex Loci Contractus Doctrine:

“If the employment contract is executed in the Philippines and does not specify a foreign governing law, Philippine labor law applies.”

3. Doctrine of Processual Presumption:

“Where a foreign law is not pleaded or proved, it is presumed to be the same as Philippine law.”

4. Public Policy Override:

“Contractual provisions and foreign laws that violate due process, security of tenure, or other constitutionally protected rights cannot override Philippine labor laws.”

 Classification: Labor Law

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🎓 Hi future lawyers! This short educational content is designed especially for law students and Bar examinees to help reinforce their understanding of key doctrines in Labor Law as pronounced by the Supreme Court in a landmark case.

Today, we discuss the case of:

Industrial Personnel & Management Services, Inc. (IPAMS), SNC Lavalin Engineers & Contractors, Inc., and Angelito C. Hernandez vs. Jose G. De Vera and Alberto B. Arriola,
G.R. No. 205703, promulgated March 7, 2016.

This case revolves around an Overseas Filipino Worker (OFW) who was dismissed before the expiration of his contract. The central legal issue is:

🔍 Can a foreign law (specifically, Canadian labor law) govern the employment of an OFW, even if it contravenes Philippine constitutional rights like security of tenure and due process?

The Supreme Court answered with a resounding NO—laying down strict requirements before a foreign law can be validly applied to an overseas employment contract. It declared the dismissal illegal and emphasized that Philippine labor law governs in the absence of a valid foreign law stipulation.

 

💭 Should OFWs be bound by foreign labor laws even when they are less protective than our own Constitution? Should contractual freedom override fundamental labor protections?

 

📚 10 DOCTRINES EVERY LAW STUDENT MUST REMEMBER FROM THIS CASE
(All references from G.R. No. 205703, March 7, 2016, IPAMS v. Arriola)

1. Foreign Law Is Not Automatically Applicable

Foreign law must be expressly stipulated, proven, consistent with Philippine public policy, and the contract must be POEA-processed.
(See: Supreme Court ruling, p. 53)

2. Philippine Labor Law Is the Default

If no valid foreign law is applicable, Philippine labor laws govern by default based on the doctrine of lex loci contractus.
(See: Sameer Overseas v. Cabiles cited in the decision)

3. Due Process and Security of Tenure Are Inviolable

The Constitution guarantees these rights to all employees, local or overseas. A foreign law allowing dismissal without cause violates public policy.
(See: Constitution and ruling, pp. 54–55)

4. Processual Presumption Doctrine

If foreign law is not pleaded or proven, courts presume it is the same as Philippine law.
(See: EDI-Staffbuilders and ATCI Overseas cited in ruling)

5. Contracts Contrary to Public Policy Are Void

Even if freely entered into, a contract violating laws or morals—such as ESA allowing dismissal without cause—is unenforceable.
(See: Civil Code Art. 1306 and ruling, pp. 50–51)

6. Evidence Must Be Substantial in Termination Cases

Employers must prove just or authorized cause for dismissal with substantial and credible evidence. News clippings do not suffice.
(See: ruling, pp. 56–57)

7. No Foreign Law in Contract? Philippine Law Applies

Absence of clear stipulation of foreign law in the contract triggers automatic application of Philippine law.
(See: ruling, pp. 53–54)

8. POEA Processing Is Mandatory for Foreign Law Applicability

Contracts not processed by POEA cannot invoke foreign law protection under Philippine labor law.
(See: Article 18, Labor Code and ruling)

9. ESA (Ontario Law) Found Contrary to PH Law

The ESA permits dismissal without cause and notice—directly clashing with due process rights under Philippine law.
(See: ruling, p. 55)

10. Illegal Dismissal Entitles Worker to Salary for Unexpired Contract

An illegally dismissed OFW is entitled to compensation for the unexpired portion of his contract.
(See: Serrano v. Gallant cited in ruling)

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📌 DISCLAIMER:
This is an educational video created using premium AI tools to assist students and reviewees. While we strive for accuracy, this content does not substitute for legal advice, nor do we claim infallibility. Always consult your professors, bar reviewers, or legal experts.

 

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