GBMLT Manpower Services, Inc. vs. Malinao

An overseas employment contract containing a provision allowing either party to terminate at any time without cause, provided a three-month advance notice is given, may be validly invoked by the employer, and the employee so terminated is not illegally dismissed and therefore not entitled to salaries for the unexpired portion of the contract under Section 10 of R.A. No. 8042. A quitclaim executed by a learned professional who voluntarily signs with full understanding of its terms, absent proof of fraud or deceit, is valid and binding even if the consideration is less than what the employee might have claimed.

Petitioner GBMLT Manpower Services, Inc. is a local recruitment agency that deployed overseas Filipino workers to foreign principals. Respondent Ma. Victoria H. Malinao is a certified public accountant and law graduate who applied to petitioner for deployment as a teacher in Ethiopia. The deployment was governed by a POEA-approved Contract of Employment for Foreign Academic Personnel covering two academic years, which contained a termination clause allowing either party to terminate the contract at any time without cause upon giving three months' notice. The dispute arose under Republic Act No. 8042 (Migrant Workers and Overseas Filipinos Act of 1995), particularly Section 10 thereof, which provides money claims for illegally terminated overseas contract workers.

Sometime in May 2005, respondent Ma. Victoria H. Malinao applied to petitioner GBMLT Manpower Services, Inc. for a teaching position abroad. After the usual application process, she was interviewed by the president of an Ethiopian university, who endorsed her for the post of accounting lecturer. Petitioner issued her a wage response slip providing for a monthly salary of USD 900. Respondent paid processing and placement fees equivalent to one month's salary and signed a POEA-approved Contract of Employment for Foreign Academic Personnel covering two academic years. On 12 December 2005, she departed for Ethiopia.

Upon arrival, respondent was informed by the Vice Minister of the Ministry of Education that her credentials would have to be re-evaluated because she appeared not to have a master's degree. She was given a new contract for signing, which she initially refused but later signed upon finding it was a duplicate of the original. She was assigned to teach at Alemaya University. On 10 January 2006, she unilaterally discontinued teaching the cooperative accounting course assigned to her, stating that auditing, not accounting, was her specialization. Another lecturer took over, and respondent spent the rest of the semester without a teaching load.

On 1 March 2006, Vice President Tena Alamirew circulated a memorandum stating that the Ministry of Education required evaluation of the Filipino teaching staff's credentials. On 15 March 2006, another memorandum lowered the ranks of most Filipino teaching staff and asked them to sign new contracts reflecting changes in rank and salary. Respondent's designation was lowered from lecturer to assistant lecturer with a monthly salary of USD 600. She refused to sign and, with colleagues, protested before the Ministry of Education on 17 March 2006. During a meeting with Vice President Alamirew on 27 March 2006, respondent raised her hand to speak but was told she was terminated. Vice President Alamirew later apologized, saying she thought respondent led the protest. Respondent then requested a formal notice of termination.

On 6 April 2006, Vice President Alamirew issued a notice of termination citing respondent's failure to handle teaching assignments effectively and her tendency to insult students and staff. The notice invoked Article X, Sub-article 2 of the contract, providing three months' advance notice. While waiting for the three-month period to expire, respondent was offered a post at the Internal Audit Department by University President Belay Kassa. She accepted through a letter dated 19 April 2006, even requesting a separate housing unit inside the campus. However, on 27 April 2006, respondent wrote to President Kassa changing her mind, citing dissatisfaction with the working conditions, and declared that the advance notice of termination was still in force. She was repatriated on 27 June 2006 and signed a Quitclaim and Release on 5 July 2006 for USD 900, waiving all claims against petitioner. On 18 July 2006, she filed a complaint for illegal dismissal before the labor arbiter.

• No Illegal Dismissal: Petitioner argued that respondent was not illegally dismissed because Alemaya University validly exercised its contractual right under Article X of the Contract of Employment to terminate without cause upon giving three months' advance notice, which it complied with.
• Validity of Quitclaim: Petitioner maintained that the Quitclaim and Release was valid, respondent having voluntarily signed it with full understanding of its terms and conditions, and that no fraud or deceit was employed to procure her signature.
• Timely Perfection of Appeal: Petitioner argued that its appeal before the NLRC was perfected on time because the appeal bond check was accepted by the NLRC and deposited within the reglementary period, and the bond remained in effect throughout the proceedings.

• Illegal Dismissal: Respondent contended that she was constructively dismissed due to demotion in rank, diminution in pay, discrimination, and verbal abuse, rendering continued employment unbearable.
• Invalidity of Quitclaim: Respondent argued that the Quitclaim and Release was invalid because the consideration of USD 900 was unconscionably low compared to the USD 5,400 in salaries for the unexpired portion of her contract, and that she signed it under dire necessity.
• Untimely Appeal: Respondent maintained that petitioner's appeal was not perfected on time because the check for the appeal bond was encashed only after the ten-day reglementary period, checks producing the effect of payment only when cashed.

• Illegal Dismissal: Whether respondent was illegally dismissed from her overseas employment.
• Validity of Quitclaim: Whether the Quitclaim and Release executed by respondent in favor of petitioner is valid and binding.
• Perfection of Appeal: Whether petitioner's appeal before the NLRC was perfected on time.

• Illegal Dismissal: No. Respondent was not illegally dismissed; Alemaya University validly exercised its contractual right to terminate the employment without cause by giving the required three-month advance notice under Article X of the Contract of Employment.
• Validity of Quitclaim: Yes. The Quitclaim and Release is valid and binding, respondent having voluntarily executed it with full understanding of its terms, absent any proof of fraud, deceit, or unconscionable consideration.
• Perfection of Appeal: Yes. Petitioner's appeal was perfected on time, the NLRC having accepted the appeal bond posted through a current-dated check that was deposited within the reglementary period, with the bond remaining in effect throughout.

• Illegal Dismissal: Section 10 of R.A. No. 8042 entitles an illegally terminated overseas contract worker to salaries for the unexpired portion of the employment contract or three months for every year of the unexpired term, whichever is less. However, this provision applies only to workers dismissed without just, valid, or authorized cause. Article X of the POEA-approved Contract of Employment expressly allowed either party to terminate the contract at any time and for no cause, provided a three-month advance notice was given. The contract, being the law between the parties, was not contrary to law, morals, public order, or public policy. Stipulations allowing termination without cause are legitimate if exercised in good faith. Alemaya University complied with the three-month notice requirement. The alleged statements of Vice President Alamirew during the 27 March 2006 meeting were treated as an isolated personal incident, followed by an apology, and not the basis for termination. The actual notice of termination cited respondent's failure to handle teaching assignments effectively, but the university opted for the "no cause" route. Moreover, when respondent accepted the post at the Internal Audit Department, the parties effectively reverted to a harmonious employment relationship, as evidenced by her letter requesting a separate housing unit. When she later changed her mind for personal reasons, it was she who exercised the right to terminate the contract. Her belated unilateral declaration that the notice of termination was still in force could not transfer responsibility for the termination to the university. The misunderstanding regarding her master's degree was not attributable to bad faith on either party, and the demotion never materialized.

• Validity of Quitclaim: A quitclaim is valid where the person executing it did so voluntarily with full understanding of its terms and conditions, coupled with payment of credible and reasonable consideration. Respondent admitted she had full understanding of the terms and voluntarily signed the document. Her contentions of dire necessity and unconscionable consideration failed because the entitlement to salaries for the unexpired contract portion obtains only for illegally dismissed employees, a condition not met here. "Dire necessity" nullifies quitclaims only if the consideration is unconscionably low and the employee was tricked into accepting it. Respondent, being a certified public accountant and law graduate, could not easily be duped, and no proof of fraud or deceit was presented.

• Perfection of Appeal: Article 228 of the Labor Code requires the posting of a cash or surety bond for an employer's appeal from a labor arbiter's decision involving a monetary award. The purpose is to assure workers that they will receive the money judgment if they prevail, and to discourage employers from using appeals to delay or evade their obligations. This purpose was fulfilled when petitioner deposited with the NLRC an amount equivalent to the monetary award that subsisted until final resolution. The NLRC accepted the appeal bond through a current-dated check, as evidenced by Official Receipt No. 0701550 dated 20 April 2007, and the check was deposited on 23 April 2007 without incident. Respondent never disputed the sufficiency of the bond, and petitioner confirmed the bond remained in effect. The Court has relaxed the appeal bond requirement in meritorious cases to balance the constitutional obligation to protect labor with the employer's opportunity to appeal, particularly where, as here, the employee's allegations of illegal dismissal and money claims are unfounded.

• Termination of Overseas Employment Contracts Without Cause — Where a POEA-approved employment contract provides that either party may terminate at any time and for no cause upon giving the required notice, the employer's exercise of that right does not constitute illegal dismissal. The employee is therefore not entitled to salaries for the unexpired portion of the contract under Section 10 of R.A. No. 8042, which applies only to illegally dismissed overseas workers. The Court applied this by finding that Alemaya University complied with the three-month notice requirement under Article X of the Contract of Employment, and that respondent herself later exercised the same right when she rejected the Internal Audit Department post.

• Validity of Quitclaims and Releases — A quitclaim or waiver is valid and binding where the executing party signed voluntarily with full understanding of its terms and conditions, and the consideration is credible and reasonable. "Dire necessity" vitiates a quitclaim only if the consideration is unconscionably low and the employee was tricked into accepting it. The Court applied this doctrine by upholding the Quitclaim and Release, noting respondent's educational and professional attainments, her admission of voluntary execution, and the absence of any proof of fraud or deceit.

• Perfection of Appeal via Appeal Bond; Liberal Construction — The posting of a cash or surety bond is the exclusive means by which an employer's appeal from a labor arbiter's monetary award may be perfected, the purpose being to assure workers of the money judgment and to discourage dilatory appeals. However, the requirement may be relaxed in meritorious cases to balance labor protection with the employer's right to appeal, especially where the bond's purpose is fulfilled and the employee's claims are ultimately unfounded.

• "A plain reading of the provision reveals that it applies only to an illegally dismissed overseas contract worker or a worker dismissed from overseas employment without just, valid or authorized cause as defined by law or contract. The monetary award provided in Section 10 of R.A. 8042 finds no application to cases in which the overseas Filipino worker was not illegally dismissed." — This passage defines the scope of Section 10 of R.A. No. 8042 and establishes the threshold requirement of illegal dismissal for entitlement to salaries for the unexpired contract portion.

• "Where a person executing a waiver or quitclaim has done so voluntarily with a full understanding of its terms and conditions, coupled with the other person's payment of credible and reasonable consideration, we have no choice on the matter but to uphold the transaction as valid and binding." — This states the controlling doctrine on the validity of quitclaims, articulating the twin requirements of voluntary execution with full understanding and reasonable consideration.

• "Ultimately, it was she who terminated the Contract of Employment, and she cannot now claim that she was illegally dismissed." — This captures the Court's conclusion on the illegal dismissal issue, attributing the termination to respondent's own exercise of the contractual right to terminate without cause after she rejected the reassignment.

• Montoya vs. Transmed Manila Corp., 613 Phil. 696 (2009) — Cited as the framework for the mode of review, establishing that in a Rule 45 petition reviewing a CA decision rendered under Rule 65, the Court examines whether the CA correctly determined whether the NLRC committed grave abuse of discretion.

• Avon Cosmetics, Inc. vs. Luna, 540 Phil. 389 (2006) — Followed for the proposition that stipulations allowing either party to terminate a contract even without cause are legitimate if exercised in good faith.

• Viron Garments Manufacturing, Co., Inc. vs. NLRC, 207 SCRA 339 (1992) — Cited for the rationale behind the appeal bond requirement: to assure workers they will receive the money judgment if they prevail and to discourage employers from using appeals to delay or evade obligations.

• People's Broadcasting vs. Secretary of the DOLE, 605 Phil. 801 (2009) — Followed for the principle that a Deed of Assignment of savings validly served the purpose of an appeal bond, supporting the Court's liberal approach to the form of the bond.

• Balite vs. SS Ventures International, Inc., G.R. No. 195109, 4 February 2015 — Cited for the need to strike a balance between the State's constitutional obligation to protect labor and the employer's opportunity to appeal, supporting the relaxation of the appeal bond requirement in meritorious cases.

• Aujero vs. Philippine Communications Satellite Corporation, 663 SCRA 467 (2012) — Cited for the rule that "dire necessity" nullifies a quitclaim only if the consideration is unconscionably low and the employee was tricked into accepting it.

• Section 10, Republic Act No. 8042 (Migrant Workers and Overseas Filipinos Act of 1995) — Provides that in case of termination of overseas employment without just, valid, or authorized cause, the worker is entitled to full reimbursement of placement fee with 12% interest per annum, plus salaries for the unexpired portion of the employment contract or three months for every year of the unexpired term, whichever is less. The Court held this provision inapplicable because respondent was not illegally dismissed.

• Article 228, Labor Code (as amended by R.A. No. 6715 and renumbered by R.A. No. 10151) — Requires the posting of a cash or surety bond equivalent to the monetary award for an employer's appeal from a labor arbiter's decision. The Court found petitioner's compliance sufficient, the bond having been accepted and deposited by the NLRC within the reglementary period.

• Section 6, Rule VI, 2011 NLRC Rules of Procedure — Clarifies that damages and attorney's fees awarded by the labor arbiter shall not be included in the computation of the appeal bond. Applied to confirm the scope of the bond requirement.

• Article X, Contract of Employment for Foreign Academic Personnel — The contractual termination clause providing that either party may terminate the contract at any time and for no cause by giving three months' notice. The Court upheld the employer's exercise of this provision as valid and in good faith.

Teresita J. Leonardo-De Castro, Lucas P. Bersamin, Jose Portugal Perez, and Estela M. Perlas-Bernabe concurred with the decision. No separate concurring opinions were noted.