Dagasdas vs. Grand Placement and General Services Corporation

An employment contract executed abroad by a foreign employer with an OFW, without POEA approval, which reserves the employer's right to terminate the employee without cause or notice during a probationary period, is void for violating the employee's constitutional right to security of tenure and procedural due process, and cannot serve as a valid basis for dismissal.

Grand Placement and General Services Corp. (GPGS) is a licensed recruitment agency in the Philippines, while Industrial & Management Technology Methods Co. Ltd. (ITM) is its foreign principal in Saudi Arabia, and Saudi Aramco (Aramco) is ITM's counterpart. In November 2007, GPGS, for and on behalf of ITM, employed Dagasdas for deployment to Saudi Arabia under a one-year POEA-approved contract. Dagasdas is a Civil Engineering graduate whose work experience was in that field, but his contract designated him as Network Technician — a position he accepted because ITM could not support visa applications for Civil Engineers. The dispute arose from a mismatch between his qualifications and the work assigned to him abroad, and from a subsequent new employment contract executed in Saudi Arabia that was used as the basis for his termination.

In November 2007, GPGS, for and on behalf of its foreign principal ITM, employed Dagasdas as a Network Technician for deployment to Saudi Arabia under a one-year contract with a monthly salary of SR5,112.00. Before leaving the Philippines, Dagasdas underwent skill training and pre-departure orientation as a Network Technician. His Job Offer, however, indicated that he was accepted by Aramco and ITM for the position of "Supt." Dagasdas contended that the Network Technician designation was solely for the purpose of securing a Saudi Arabian visa, because ITM could not support visa applications for Civil Engineers. He maintained that he actually applied for and was engaged as a Civil Engineer, as evidenced by his transcript of records, diploma, and curriculum vitae, all reflecting a degree in Civil Engineering and related work experience.

Dagasdas arrived in Saudi Arabia on February 8, 2008. Thereafter, ITM made him sign a new employment contract stipulating that he was contracted as Superintendent or in any capacity within the scope of his abilities, with a salary of SR5,112.00 and an allowance of SR2,045.00 per month. The new contract placed him under a three-month probationary period and stated that it cancelled all prior contracts from any source. On February 11, 2008, Dagasdas reported at ITM's worksite in Khurais, where he was allegedly given tasks suited for a Mechanical Engineer — work foreign to both the job he applied for and his experience. He raised this concern with his Supervisor in the Mechanical Engineering Department and was transferred to the Civil Engineering Department, temporarily given a position as Civil Construction Engineer, and issued an identification card valid for one month.

On March 9, 2008, Dagasdas was directed to exit the worksite, but Site Coordinator Manager Siddiqui advised him to remain and promised to secure him the position he applied for. Before Dagasdas' case could be investigated, however, Siddiqui severed his own employment with ITM. In April 2008, Dagasdas returned to Al-Khobar and stayed at the ITM Office. ITM subsequently issued him a termination notice indicating that his last day of work was April 30, 2008, and that he was dismissed pursuant to clause 17.4.3 of the new contract, which reserved ITM's right to terminate any employee within the three-month probationary period without notice. Before his repatriation, Dagasdas signed a Statement of Quitclaim with Final Settlement stating that ITM paid him all salaries and benefits for services rendered from February 11 to April 30, 2008, totaling SR7,156.80, and that ITM was relieved from all financial obligations.

Dagasdas returned to the Philippines on June 24, 2008 and filed an illegal dismissal case against GPGS, ITM, and Aramco. The LA found the dismissal legal, crediting the new contract as more advantageous and Dagasdas' poor performance as justifying management prerogative. The NLRC reversed, finding that the job mismatch was not Dagasdas' fault and that GPGS erroneously recruited him. The CA reversed the NLRC, holding that Dagasdas voluntarily withdrew from his assigned work and validly executed a quitclaim.

• Conflicting Factual Findings: Petitioner argued that the CA committed reversible error in reversing the NLRC's factual findings, which had correctly determined that the real agreement was to employ him as Superintendent in the field of Civil Engineering, and that his dismissal was illegal because the discipline mismatch was no fault of his.
• Invalidity of the New Contract: Petitioner maintained that the new contract signed in Saudi Arabia was not more advantageous, as the salary and allowance were the same as his Job Offer, and it was disadvantageous because it inserted a three-month probationary status. He also argued the contract was void for lack of POEA approval.
• Invalidity of the Quitclaim: Petitioner contended that the CA erred in upholding the quitclaim, which he signed only to secure his repatriation plane ticket, and that the quitclaim lacked reasonable consideration as it merely covered actual payment due for services already rendered.

• Awareness of Position: Respondent maintained that Dagasdas was fully aware that he applied for and was accepted as Network Technician, and that he could not perform his work in accordance with the employer's standards.
• Voluntary Acceptance of New Contract: Respondent argued that it was Dagasdas himself who decided to accept ITM's new job offer upon arrival in Saudi Arabia, and that the new contract was between Dagasdas and ITM without GPGS's participation.
• Validity of Quitclaim: Respondent stressed that Dagasdas' quitclaim was valid, there being no showing that he was compelled to sign it, and that by voluntarily accepting money from his employer, he accepted his termination and released the employer from future financial obligations.

• Validity of Dismissal: Whether Dagasdas was validly dismissed from work, considering the new employment contract executed in Saudi Arabia, the lack of POEA approval, the absence of procedural due process, and the execution of a quitclaim.

• Validity of Dismissal: No. Dagasdas was illegally dismissed because the new employment contract was void for violating security of tenure, lacking POEA approval, and denying procedural due process, and the quitclaim executed was invalid for lack of voluntary execution and reasonable consideration.

• Validity of Dismissal: The Court re-examined the factual findings of the CA and NLRC because they were conflicting, an exception to the rule that only questions of law may be raised under Rule 45. The new employment contract executed in Saudi Arabia was void on four grounds. First, it violated Dagasdas' right to security of tenure: clause 17.4.3 reserved ITM's right to terminate without cause during the probationary period, which is contrary to law and the constitutional guarantee of security of tenure afforded to all employees, local or overseas. Even assuming Dagasdas was a probationary employee, his dismissal required a valid cause or failure to qualify under reasonable standards made known at the time of engagement; ITM failed to prove it informed Dagasdas of any predetermined standards, and no job description for either the Network Technician or Superintendent position was adduced in evidence. Second, the new contract was not processed through the POEA, and absent such review, the State has no means of determining the suitability of foreign laws to overseas workers; the contract also breached the original POEA-approved contract by being entered into before the latter's expiration, and therefore could not supersede it. Third, Dagasdas was denied procedural due process: no prior notice of the purported infraction or opportunity to be heard was given, and the new contract expressly reserved the right to terminate without notice, evidencing ITM's intent not to comply with the twin notice requirement. Fourth, the quitclaim did not preclude the illegal dismissal suit: quitclaims are looked upon with disfavor as contrary to public policy, and the employer bears the burden of proving voluntary execution with full understanding and reasonable consideration; GPGS and ITM failed to discharge this burden, and the quitclaim's consideration merely covered actual payment for services already rendered, which is not reasonable consideration for waiving claims. Accordingly, the NLRC properly ruled the dismissal illegal, and the CA erred in annulling the NLRC's ruling.

• Security of Tenure for OFWs — The constitutional guarantee of security of tenure extends to overseas Filipino workers. Because OFW employment contracts are perfected in the Philippines, the principle of lex loci contractus subjects them to Philippine law, primarily the Labor Code and its implementing rules. The State's constitutional mandate to afford full protection to labor, whether local or overseas, ensures that OFWs retain substantive and procedural due process rights even when working in a foreign jurisdiction.
• Void Stipulations in Employment Contracts — Under Article 1306 of the Civil Code, parties may stipulate terms and conditions as they deem convenient, provided these are not contrary to law, morals, good customs, public order, or public policy. A contractual clause reserving the employer's right to terminate an employee without cause during a probationary period is contrary to law and void for violating security of tenure.
• Probationary Employee Dismissal Standards — A probationary employee may be dismissed only for just cause or for failure to qualify as a regular employee pursuant to reasonable standards made known to the employee at the time of engagement. The employer bears the burden of proving that such standards were set and communicated.
• POEA Approval of OFW Contracts — An employment contract of an OFW that is not processed through the POEA does not bind the OFW, because without POEA review the State cannot determine the suitability of foreign laws to overseas workers. A new contract executed abroad that breaches an existing POEA-approved contract cannot supersede the original.
• Invalidity of Quitclaims — Waivers and quitclaims are looked upon with disfavor as contrary to public policy. To be valid and binding, the employer must prove that the employee voluntarily executed the waiver with full understanding of its contents and for reasonable and credible consideration. A quitclaim that merely covers payment for services already rendered does not constitute reasonable consideration for waiving claims arising from illegal dismissal.

• "To allow employers to reserve a right to terminate employees without cause is violative of this guarantee of security of tenure." — This passage articulates the ratio decidendi that contractual clauses permitting termination without cause during a probationary period are void for violating the constitutional right to security of tenure.
• "Unless the employment contract of an OFW is processed through the POEA, the same does not bind the concerned OFW because if the contract is not reviewed by the POEA, certainly the State has no means of determining the suitability of foreign laws to our overseas workers." — This defines the doctrinal requirement of POEA approval for OFW employment contracts and explains the State's protective rationale.
• "Unless it can be established that the person executing the waiver voluntarily did so, with full understanding of its contents, and with reasonable and credible consideration, the same is not a valid and binding undertaking." — This states the canonical formulation of the test for validity of quitclaims in labor cases, placing the burden of proof on the employer.

• Sameer Overseas Placement Agency, Inc. vs. Cabiles, G.R. No. 170139, August 5, 2014 — Followed for the propositions that employers have the prerogative to impose work standards but this is tempered by security of tenure, that OFW contracts are governed by Philippine law under lex loci contractus, and that probationary employees may be dismissed only for just cause or failure to meet reasonable standards made known at the time of engagement.
• Industrial Personnel & Management Services, Inc. vs. De Vera, G.R. No. 205703, March 7, 2016 — Followed for the rule that Philippine laws generally apply to OFW employment contracts pursuant to the constitutional mandate to afford full protection to labor, and that OFWs are entitled to security of tenure even if employed abroad.
• Universal Staffing Services, Inc. vs. National Labor Relations Commission, 581 Phil. 199 (2008) — Followed for the doctrine that quitclaims are frowned upon as contrary to public policy, and that the burden to prove voluntary execution rests on the employer.
• Datuman vs. First Cosmopolitan Manpower and Promotion Services, Inc., 591 Phil. 662 (2008) — Followed for the rule that a new contract executed abroad cannot supersede the original POEA-approved contract when it breaches the latter before its expiration.
• EDI-Staffbuilders International, Inc. vs. National Labor Relations Commission, 563 Phil. 1 (2007) — Followed for the twin notice requirement in procedural due process: the employer must inform the employee of the cause for termination and thereafter the decision to dismiss, and must accord the employee an opportunity to be heard.
• Unicol Management Services, Inc. vs. Malipot, G.R. No. 206562, January 21, 2015 — Cited for the exception to the Rule 45 bar on questions of fact, specifically where the findings of fact of the courts or tribunals below are conflicting.

• Article XIII, Section 3, 1987 Constitution — Provides that the State shall afford full protection to labor, local and overseas, organized and unorganized. Applied to establish that OFWs are entitled to security of tenure and other constitutional rights even when employed abroad.
• Article 297 [282], Labor Code of the Philippines — Enumerates the just causes for termination by employer: serious misconduct or willful disobedience, gross and habitual neglect, fraud or willful breach of trust, commission of a crime or offense, and analogous causes. Applied to show that none of these just causes was invoked in Dagasdas' termination.
• Article 18, Labor Code of the Philippines (Ban on Direct-Hiring) — Provides that no employer may hire a Filipino worker for overseas employment except through boards and entities authorized by the Secretary of Labor. Applied to support the requirement of POEA processing for OFW employment contracts.
• Article 1306, Civil Code of the Philippines — Allows parties to establish stipulations, clauses, terms, and conditions as they deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy. Applied to hold that the contractual clause permitting termination without cause during probation was void as contrary to law.

Chief Justice Maria Lourdes P.A. Sereno (Chairperson), Associate Justice Teresita J. Leonardo-De Castro, Associate Justice Estela M. Perlas-Bernabe, and Associate Justice Alfredo Benjamin S. Caguioa concurred. No separate concurring opinions were noted.