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terminated effective September 1, 1980 pursuant to the provisions

BLAS F. OPLE, in his capacity as Minister of Labor; HON. of the employment contract.
VICENTE LEOGARDO, JR., in his capacity as Deputy Minister;
ETHELYNNE B. FARRALES and MARIA MOONYEEN MAMASIG The respondents jointly filed a complaint against PIA for
G.R. No. 61594 September 28, 1990 illegal dismissal and non-payment of company benefits and
FELICIANO, J. bonuses, against PIA with the then Ministry of Labor and
Employment (MOLE). MOLE ordered the parties to submit
Facts: their position papers and evidence supporting their claims.
On December 2, 1987, Pakistan International Airlines PIA claims that the respondents are habitual absentees and both
Corporation (PIA) a foreign corporation licensed to do business in were in a habit of bringing in from abroad sizeable quantities of
the Philippines, executed in Manila two (2) separate contracts of personal effects.
employment, one with private respondent Ethelynne B. Farrales and
the other with private respondent Ma. M.C. Mamasig. They are to be On January 22, 1981, Regional Director Francisco Estrella
employed as flight attendants with base station in Manila and flying ordered reinstatement of respondents with back wages or, in the
assignments to different parts of the Middle East and Europe. alternative, the payment to them of the amounts equivalent to their
salaries for the remainder of the fixed three-year period of their
The contracts, which became effective on January 9, 1979, provided employment contracts. On appeal, the Deputy Minister of MOLE
in pertinent portion as follows: affirmed the findings of the Regional Director. Hence this appeal for
certiorari was instituted. PIA assails the jurisdiction of Deputy
5. DURATION OF EMPLOYMENT AND PENALTY Minister, violation of PIAs right to due process and, rights of PIA
This agreement is for a period of three (3) years, but can be stated in the employment contracts.
extended by the mutual consent of the parties.
xxx xxx xxx Issue: WON the stipulations of the contract should govern in favour
xxx xxx xxx
Notwithstanding anything to contrary as herein provided, PIA Held: No.
reserves the right to terminate this agreement at any time by giving
the EMPLOYEE notice in writing in advance one month before the The Court ruled that the contracts of employment
intended termination or in lieu thereof, by paying the EMPLOYEE particularly stipulations under paragraph 5 and 6 is void
wages equivalent to one month's salary. because it is inconsistent with Articles 280 and 281 of the
xxx xxx xxx Labor Code. Under Article 280 of the Labor Code, the employer
10. APPLICABLE LAW: shall not terminate the services of an employee except for a just
This agreement shall be construed and governed under and by the cause or when authorized by this Title An employee who is unjustly
laws of Pakistan, and only the Courts of Karachi, Pakistan shall have dismissed from work shall be entitled to reinstatement without loss
the jurisdiction to consider any matter arising out of or under this of seniority rights and to his backwages computed from the time his
agreement. compensation was withheld from him up to the time his
reinstatement. Article 281 provides that the provisions of written
On August 2 1980, roughly 1 year and 4 months prior to the agreement to the contrary notwithstanding and regardless of the
expiration of their contract of employment PIA through their counsel oral agreements of the parties, an employment shall be deemed to
informed respondents Farrales and Mamasig that they are 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 agreement. Paragraph 6 in effect took back from the employee the
has been fixed for a specific project or undertaking the completion fixed three (3)-year period ostensibly granted by paragraph 5 by
or termination of which has been determined at the time of the rendering such period in effect a facultative one at the option of the
engagement of the employee or where the work or services to be employer PIA. For petitioner PIA claims to be authorized to
performed is seasonal in nature and the employment is for the shorten that term, at any time and for any cause
duration of the season. An employment shall be deemed to be satisfactory to itself, to a one-month period, or even less by
casual if it is not covered by the preceding paragraph: provided, simply paying the employee a month's salary. Because the
that, any employee who has rendered at least one year of service, net effect of paragraphs 5 and 6 of the agreement here
whether such service is continuous or broken, shall be considered as involved is to render the employment of private respondents
regular employee with respect to the activity in which he is Farrales and Mamasig basically employment at the pleasure
employed and his employment shall continue while such actually of petitioner PIA, the Court considers that paragraphs 5 and
exists. 6 were intended to prevent any security of tenure from
accruing in favor of private respondents even during the
Although the general rule is that a contract is the law limited period of three (3) years, and thus to escape
between the parties, the principle is not absolute. Article completely the thrust of Articles 280 and 281 of the Labor
1306 of the Civil Code provides that the contracting parties Code.
may establish such stipulations, clauses, terms and
conditions as they may deem convenient, provided they are Moreover, invoking paragraph 10 of the contract which
not contrary to law, morals, good customs, public order, or specifies that the law of Pakistan as the applicable law and the
public policy. The parties may not contract away applicable Karachi Courts as to sole venue of settlement of dispute is
provisions of law especially peremptory provisions dealing with untenable. The employment relationship is affected with public
matters heavily impressed with public interest. The law relating to interest and the contracts was executed and partially performed in
labor and employment is clearly such an area and parties are not at the Philippines. Respondents are Philippine citizens and PIA is also
liberty to insulate themselves and their relationships from the licensed to do business in the country. All the above contacts point
impact of labor laws and regulations by simply contracting with each to the Philippine courts and administrative agencies as a proper
other. It is thus necessary to appraise the contractual provisions forum for the resolution of contractual disputes between the parties.
invoked by petitioner PIA in terms of their consistency with Under these circumstances, paragraph 10 of the employment
applicable Philippine law and regulations. A contract providing agreement cannot be given effect so as to oust Philippine agencies
for employment with a fixed period is not necessarily and courts of the jurisdiction vested upon them by Philippine law.
unlawful provided that there was no intent to circumvent Finally, and in any event, the petitioner PIA did not undertake to
the law against employees right to be secure in his or her plead and prove the contents of Pakistan law on the matter; it must
tenure. therefore be presumed that the applicable provisions of the law of
Pakistan are the same as the applicable provisions of Philippine law.
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