Fil-Expat Placement Agency, Inc. vs. Lee

The mere attempt to commit contract substitution is punishable even if the worker refuses to sign the substituted contract, and an employee who is forced to relinquish her position due to the employer's coercive acts, verbal abuse, and hostile treatment is constructively dismissed.

Fil-Expat Placement Agency, Inc. is a Philippine recruitment agency that hired Maria Antoniette Cudal Lee as an orthodontist specialist in the Kingdom of Saudi Arabia on behalf of its foreign principal, Thanaya Al-Yaqoot Medical Specialist, under a POEA-approved employment contract for a two-year period. The substitution or alteration of employment contracts approved and verified by the Department of Labor and Employment is prohibited under Article 34(i) of the Labor Code and Section 6(i) of Republic Act No. 8042, as amended by Republic Act No. 10022, when done to the prejudice of the worker. Contract substitution is recognized as a form of illegal recruitment, and constructive dismissal occurs when an employer's coercive or oppressive acts compel an employee to leave work to protect her rights.

Maria Antoniette Cudal Lee was hired by Fil-Expat Placement Agency, Inc. as an orthodontist specialist in the Kingdom of Saudi Arabia on behalf of its foreign principal, Thanaya Al-Yaqoot Medical Specialist, under a POEA-approved employment contract for a two-year period. She commenced work at the Thanaya Al-Yaqoot Medical Specialist Clinic on December 8, 2015.

Five months later, on May 22, 2016, the foreign employer asked Maria Antoniette to sign a new employment contract written in Arabic. The employer also wanted her to agree that only half of her stipulated salary would be declared to the KSA government for insurance purposes. Maria Antoniette was hesitant but eventually signed the document using a different signature. Thereafter, the employer repeatedly forced her to execute a new employment contract, which she refused. According to Maria Antoniette, the employer subjected her to varied forms of harassment in retaliation: she was given additional duties, threatened with a deduction of 10,000 Saudi Riyal from her salary, told to move out of her accommodation, subjected to sexual advances, and shown no concern when she suffered a severe allergic reaction to latex surgical gloves causing her hands to swell and develop blisters. She was also threatened by her employer, Dr. Mohammad Al-Qarni, that she "will see hell" if she informed the Philippine embassy. She was humiliated in front of co-workers and the employer's relatives and friends. On June 24, 2016, Maria Antoniette was repatriated.

Fil-Expat disputed Maria Antoniette's account. It claimed that the Philippine Overseas Labor Office Local Hire, together with Fil-Expat's representative, visited Maria Antoniette at her workplace and observed no swollen hands or bleeding blisters, and found no evidence of additional duties or sexual abuse. Fil-Expat explained that Maria Antoniette did not complain of any physical harm or untoward incident except that the employer's representative shouted at her, which Fil-Expat attributed to Arab people being known for loud voices. As for the new contract, Fil-Expat admitted Maria Antoniette was asked to sign one, but claimed this was only because she refused to provide a copy of her contract and diploma for submission to the KSA Ministry of Health, and that the salary deduction was not a threat but merely an explanation that the employer would be fined that amount for failure to submit contracts to the government. Fil-Expat maintained that Maria Antoniette's repatriation was her own decision, and that the employer had even requested her to stay for two more months until her replacement arrived.

The labor arbiter found Fil-Expat and Thanaya Al-Yaqoot guilty of breach of contract and constructive dismissal, crediting Maria Antoniette's account of the oppressive conditions. The NLRC reversed, finding no contract substitution because there was no intent to prejudice and no constructive dismissal because continued employment was not rendered impossible. The Court of Appeals reinstated the labor arbiter's decision, finding substantial evidence of attempted contract substitution and constructive dismissal.

• No Contract Substitution: Petitioner argued that there was no contract substitution because Maria Antoniette did not sign any second contract, and therefore no substitution occurred. Petitioner maintained that the foreign employer merely attempted to have her sign a new contract, and that this attempt was not intended to prejudice her but only to secure a signed contract as required by the KSA's Ministry of Health and to devise a uniform contract for all employees.
• Compliance with Foreign Law: Petitioner contended that the purpose of the new contract was to comply with a foreign law requirement for the protection of both worker and employer from Saudi Labor inspection, and thus there could be no violation.
• Attempt Not Punishable: Petitioner argued that the mere attempt at contract substitution should not be considered illegal if the signing of the second contract was not consummated.
• No Constructive Dismissal: Petitioner maintained that Maria Antoniette's case could not be construed as constructive dismissal because it was her own decision to discontinue her contract, and that the employer had even requested her to stay for two more months until her replacement arrived.

• Contract Substitution: Whether the mere attempt to commit contract substitution, without consummation of the signing of a second contract, constitutes a prohibited practice under the Labor Code and R.A. No. 8042, as amended.
• Constructive Dismissal: Whether respondent was constructively dismissed when the foreign employer subjected her to verbal and psychological abuse, harassment, and threats after she refused to sign a new employment contract.

• Contract Substitution: Yes. The mere attempt to commit contract substitution is punishable even if the worker refused to sign the substituted contract, pursuant to Article 34(i) of the Labor Code and Section 6(i) of R.A. No. 8042, as amended by R.A. No. 10022.
• Constructive Dismissal: Yes. Respondent was constructively dismissed because the foreign employer's coercive acts, verbal abuse, and hostile treatment rendered her continued employment unlikely and unbearable, compelling her to relinquish her position.

• Contract Substitution: The substitution or alteration of employment contracts is a prohibited practice under Article 34(i) of the Labor Code and is considered an act of illegal recruitment under Section 6(i) of R.A. No. 8042, as amended by R.A. No. 10022, when done to the prejudice of the worker. Petitioner's claim that the new contract was for uniformity and not intended to alter the original terms was found implausible, since the POEA-approved employment contract already included an Arabic translation of the agreed terms and conditions, making a second contract redundant. The employer's explanation that it needed a signed copy for the KSA Ministry of Health was belied by the fact that Maria Antoniette had been working for five months before being asked to sign a new contract, and the employer could have simply requested a copy from Fil-Expat. The records were bereft of any evidence showing a specific foreign law requiring another employment contract apart from the POEA-approved Standard Employment Contract. Citing PHSA International Placement & Services Corp. vs. Secretary of Labor & Employment, the Court held that the recruitment agency was found guilty of prohibited contract substitution even though the workers refused to sign the second contract; the OFW's refusal does not absolve the agency from liability, and the mere intention to commit contract substitution should not be left unpunished. The NLRC's ruling that no violation occurred because there was no intent to prejudice constituted grave abuse of discretion, justifying the CA's intervention.

• Constructive Dismissal: The law recognizes situations where an employee must leave work to protect her rights from the employer's coercive acts; the employee is considered illegally terminated when forced to relinquish her job due to unfair or unreasonable treatment. The test is whether a reasonable person in the employee's position would have felt compelled to give up her position. The evidence showed that Maria Antoniette was singled out and verbally intimidated after refusing to sign the second contract. She was threatened that she "will see hell" if she informed the Philippine embassy, threatened with salary reduction, constantly harassed and pressured even during work, humiliated in front of co-workers and the employer's relatives and friends, and shown no concern when she reported her severe allergic reaction. Petitioner's dismissal of these complaints as mere cultural sensitivity was rejected as absurd and insulting. Taken together, these circumstances demonstrated the foreign employer's bad faith, hostility, and disdain. While there was no formal termination, Maria Antoniette's continued employment was rendered unlikely and unbearable, leaving her without any option except to quit, amounting to constructive dismissal.

• Contract Substitution as Prohibited Practice — The substitution or alteration of employment contracts approved and verified by the Department of Labor and Employment, done to the prejudice of the worker and without DOLE approval, is a prohibited practice under Article 34(i) of the Labor Code and constitutes illegal recruitment under Section 6(i) of R.A. No. 8042, as amended by R.A. No. 10022. The Court applied this doctrine by holding that the mere attempt to compel an OFW to sign a new contract is punishable even if the worker refuses, because the intention to commit contract substitution should not be left unpunished.

• Constructive Dismissal — Constructive dismissal occurs when an employer's coercive, oppressive, or hostile acts compel an employee to relinquish her position to protect her rights. The test is whether a reasonable person in the employee's position would have felt compelled to give up her position under the circumstances. The Court applied this test by finding that the verbal abuse, threats, harassment, humiliation, and indifference to the employee's medical condition rendered continued employment unlikely and unbearable, leaving the employee with no option but to quit.

• CA's Authority in Labor Cases via Certiorari — The Court of Appeals is empowered to evaluate the materiality and significance of evidence allegedly disregarded by the NLRC and may grant the prerogative writ of certiorari when the NLRC's factual findings are not supported by evidence, when necessary to prevent substantial wrong or do substantial justice, when the NLRC's findings contradict those of the labor arbiter, or when necessary to arrive at a just decision. The Supreme Court has the same authority to review factual findings when there are conflicting findings by the CA, the NLRC, and the labor arbiter.

• "the records are bereft of any evidence to show the specific foreign law requiring another employment contract for overseas Filipino contract workers apart from the POEA-approved Standard Employment Contract which was designed primarily for the workers' protection and benefit." — This passage, quoted by the Court from the CA's decision, dismantles the employer's justification for requiring a second contract and supports the finding of contract substitution.

• "the OFW's refusal to sign does not absolve the agency from liability and the mere intention to commit contract substitution should not be left unpunished." — This formulation, drawn from PHSA International Placement & Services Corp. vs. Secretary of Labor & Employment, establishes the doctrine that attempted contract substitution is itself punishable, even absent consummation.

• "The test of constructive dismissal is whether a reasonable person in the employee's position would have felt compelled to give up his position under the circumstances." — This is the canonical formulation of the constructive dismissal test applied by the Court to the facts of the case.

• PHSA International Placement & Services Corp. vs. Secretary of Labor & Employment, 408 Phil. 270 (2001) — Controlling precedent on attempted contract substitution. The Court held that a recruitment agency was guilty of two counts of prohibited contract substitution even though the workers refused to sign the second contract, establishing that the mere intention to commit contract substitution is punishable.

• Paredes vs. Feed the Children Phils., Inc., 769 Phil. 418 (2015) — Cited for the proposition that the CA is empowered to evaluate evidence in labor cases via certiorari when the NLRC's findings are not supported by the record or when findings of the NLRC and the labor arbiter conflict.

• Gilles vs. CA, 606 Phil. 286 (2009) — Cited for the test of constructive dismissal: whether a reasonable person in the employee's position would have felt compelled to give up her position under the circumstances.

• Princess Joy Placement & General Services, Inc. vs. Binalla (Resolution), 735 Phil. 270 (2014) — Cited in connection with the Migrant Workers and Overseas Filipino Act of 1995 (R.A. No. 8042), as amended by R.A. No. 10022, regarding contract substitution as illegal recruitment.

• Article 34(i), Labor Code — Prohibits the substitution or alteration of employment contracts approved and verified by the Department of Labor and Employment from the time of actual signing up to the period of expiration, without the approval of the Secretary of Labor. Applied to hold that the foreign employer's attempt to compel Maria Antoniette to sign a new contract constituted a prohibited practice.

• Section 6(i), Republic Act No. 8042 (Migrant Workers and Overseas Filipino Act of 1995), as amended by R.A. No. 10022 — Classifies the substitution or alteration of employment contracts to the prejudice of the worker as an act of illegal recruitment. Applied to establish that contract substitution is not merely a labor violation but constitutes illegal recruitment when done to the worker's prejudice.

Peralta, C.J. (Chairperson), Caguioa, Lazaro-Javier, and Gaerlan, JJ., concurred.