90 

SUPREME COURT REPORTS

ANNOTATED 
Pakistan International Airlines
Corporation us. Ople
G.R. No. 61594. September 28, 1990.*
PAKISTAN INTERNATIONAL AIRLINES CORPORATION, petitioner, vs. HON. BLAS F. OPLE,

in his capacity as Minister of Labor; HON. VICENTE LEOGARDO, JR., in his capacity as

Deputy Minister; ETHELYNNE B. FARRALES and MARIA MOONYEEN MAMASIG,

respondents.

Labor Relations;  Due Process;  Petitioner's right to procedural due process was not

violated even if no formal or oral hearing was conducted, considering that it had ample

opportunity to explain its side.—The second contention of petitioner PIA is that, even if

the Regional Director had jurisdiction, still his order was null and void because it had

been issued in violation of petitioner's right to procedural due process. This claim,

however, cannot be given serious consideration. Petitioner was ordered by the

Regional Director to submit not only its position paper but also such evidence in its

favor as it might have. Petitioner opted to rely solely upon its position paper; we must

assume it had no evidence to sustain its assertions. Thus, even if no formal or oral

hearing was conducted, petitioner had ample oppor-

_______________

* THIRD DIVISION.

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Pakistan International Airlines
Corporation vs. Ople
tunity to explain its side. Moreover, petitioner PIA was able to appeal his case to the

Ministry of Labor and Employment.

Contracts;  Parties may not contract away applicable provisions of law especially

peremptory provisions dealing with matters heavily impressed with public interest. The

principle of party autonomy in contracts is not absolute.—A contract freely entered

into should, of course, be respected, as PIA argues, since a contract is the law between

the parties. The principle of party autonomy in contracts is not, however, an absolute

principle. The rule in Article 1306, of our Civil Code is that the contracting parties may

establish such stipulations as they may deem convenient, "provided they

are not contrary to law, morals, good customs, public order or public policy." Thus,

counterbalancing the principle of autonomy of contracting parties is the equally

general rule that provisions of applicable law, especially provisions relating to matters

affected with public policy, are deemed written into the contract. Put a little

differently, the governing principle is that parties may not contract away applicable

provisions of law especially peremptory provisions dealing with matters heavily

impressed with public interest. The law relating to labor and employment is clearly

such an area and parties are not at liberty to insulate themselves and their

relationships from the impact of labor laws and regulations by simply contracting with

each other. It is thus necessary to appraise the contractual provisions invoked by

petitioner PIA in terms of their consistency with applicable Philippine law and

regulations.

Labor Law;  A contract providing for employment with a fixed period was not

necessarily unlawful.—In Brent School, Inc., et al. v. Ronaldo Zamora, etc., et al., the

Court had occasion to examine in detail the question of whether employment for a

fixed term has been outlawed under the above quoted provisions of the Labor Code.

After an extensive examination of the history and development of Articles 280 and

281, the Court reached the conclusion that a contract providing for employment with a

fixed period was not necessarily unlawful: "There can of course be no quarrel with the

proposition that where from the circumstances it is apparent that periods have been

imposed to preclude acquisition of tenurial security by the employee, they should be

struck down or disregarded as contrary to public policy, morals, etc.But where no such
intent to circumvent the law is shown, or stated otherwise, where the reason for the

law does not exist, e.g., where it is indeed the employee himself who insists upon a

period or where the nature of the engagement is such that, without being seasonal or

for a specific project, a definite date of termination is a sine qua non, would 

92

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ANNOTATED 
Pakistan International Airlines
Corporation vs. Ople
an agreement fixing a period be essentially evil or illicit, therefore anathema? Would

such an agreement come within the scope of Article 280 which admittedly was enacted

'to prevent the circumvention of the right of the employee to be secured in x x (his)

employment?' As it is evident from even only the three examples already given

that Article 280 of the Labor Code, under a narrow and literal interpretation, not only

fails to exhaust the gamut of employment contracts to which the lack of a fixed period

would be an anomaly, but would also appear to restrict, without reasonable

distinctions, the right of an employee to freely stipulate with his employer the duration

of his engagement, it logically follows that such a literal interpretation should be

eschewed or avoided. The law must be given reasonable interpretation, to preclude

absurdity in its application. Outlawing the whole concept of term employment and

subverting to boot the principle of freedom of contract to remedy the evil of

employers' using it as a means to prevent their employees from obtaining security of

tenure is like cutting off the nose to spite the face or, more relevantly, curing a

headache by lopping off the head. xxx xxx xxxAccordingly, and since the entire purpose

behind the development of legislation culminating in the present Article 280 of the

Labor Code clearly appears to have been, as already observed, to prevent

circumvention of the employee's right to be secure in his tenure, the clause in said

article indiscriminately and completely ruling out all written or oral agreements

conflicting with the concept of regular employment as defined therein should be

construed to refer to the substantive evil that the Code itself has singled out:

agreements entered into precisely to circumvent security of tenure.It should have no

application to instances where a fixed period of employment was agreed upon

knowingly and voluntarily by the parties, without any force, duress or improper

pressure being brought to bear upon the employee and absent any other

circumstances vitiating his consent, or where it satisfactorily appears that the

employer and employee dealt with each other on more or less equal terms with no

moral dominance whatever being exercised by the former over the latter. Unless thus

limited in its purview, the law would be made to apply to purposes other than those

explicitly stated by its framers; it thus becomes pointless and arbitrary, unjust in its

effects and apt to lead to absurd and unintended consequences." (Italics supplied)

Same;  Contracts;  Conflicts of Law;  When the relationship between the parties is much

affected by public interest, the otherwise applicable Philippine laws and regulations

cannot be rendered illusory by the parties agreeing upon some other law to govern

their relationship.—Petitioner PIA cannot take refuge in paragraph 10 of 

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Pakistan International Airlines
Corporation vs. Ople
its employment agreement which specifies, firstly, the law of Pakistan as the applicable

law of the agreement and, secondly, lays the venue for settlement of any dispute

arising out of or in connection with the agreement "only [in] courts of Karachi,

Pakistan". The first clause of paragraph 10 cannot be invoked to prevent the

application of Philippine labor laws and regulations to the subject matter of this case,

i.e., the employer-employee relationship between petitioner PIA and private

respondents. We have already pointed out that that relationship is much affected with

public interest and that the otherwise applicable Philippine laws and regulations

cannot be rendered illusory by the parties agreeing upon some other law to govern
their relationship. Neither may petitioner invoke the second clause of paragraph 10,

specifying the Karachi courts as the sole venue for the settlement of disputes between

the contracting parties. Even a cursory scrutiny of the relevant circumstances of this

case will show the multiple and substantive contacts between Philippine law and

Philippine courts, on the one hand, and the relationship between the parties, upon the

other: the contract was not only executed in the Philippines, it was also performed

here, at least partially; private respondents are Philippine citizens and residents, while

petitioner, although a foreign corporation, is licensed to do business (and actually

doing business) and hence resident in the Philippines; lastly, private respondents were

based in the Philippines in between their assigned flights to the Middle East and

Europe. All the above contacts point to the Philippine courts and administrative

agencies as a proper forum for the resolution of contractual disputes between the

parties. Under these circumstances, paragraph 10 of the employment agreement

cannot be given effect so as to oust Philippine agencies and courts of the jurisdiction

vested upon them by Philippine law. Finally, and in any event, the petitioner PIA did

not undertake to plead and prove the contents of Pakistan law on the matter; it must

therefore be presumed that the applicable provisions of the law of Pakistan are the

same as the applicable provisions of Philippine law.

PETITION for certiorari to review the order of the Minister of Labor.

The facts are stated in the opinion of the Court.

     Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles for petitioner.

     Ledesma, Saludo & Associates for private respondents. 

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ANNOTATED 
Pakistan International Airlines
Corporation vs. Ople
FELICIANO, J.:
On 2 December 1978, petitioner Pakistan International Airlines Corporation ("PIA"), a

foreign corporation licensed to do business in the Philippines, executed in Manila two

(2) separate contracts of employment, one with private respondent Ethelynne B.

Farrales and the other with private respondent Ma. M.C. Mamasig.1 The contracts,

which became effective on 9 January 1979, provided in pertinent portion as follows:

"5. DURATION OF EMPLOYMENT AND PENALTY

This agreement is for a period of three (3) years, but can be extended by the mutual

consent of the parties.

xxx      xxx      xxx

6. TERMINATION

xxx      xxx      xxx

Notwithstanding anything to contrary as herein provided, PIA reserves the right to

terminate this agreement at any time by giving the EMPLOYEE notice in writing in

advance one month before the intended termination or in lieu thereof, by paying the

EMPLOYEE wages equivalent to one month's salary.

xxx      xxx      xxx

10. APPLICABLE LAW:

This agreement shall be construed and governed under and by the laws of Pakistan,

and only the Courts of Karachi, Pakistan shall have the jurisdiction to consider any

matter arising out of or under this agreement."

Respondents then commenced training in Pakistan. After their training period, they

began discharging their job functions as flight attendants, with base station in Manila

and flying assignments to different parts of the Middle East and Europe.

On 2 August 1980, roughly one (1) year and four (4) months prior to the expiration of

the contracts of employment, PIA through Mr. Oscar Benares, counsel for and official

of the local branch of PIA, sent separate letters both dated 1 August 1980 to private

respondents Farrales and Mamasig advising both that 

________________

1 Rollo, pp.12 and 17.

95

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Pakistan International Airlines
Corporation vs. Ople
their services as flight stewardesses would be terminated "effective 1 September 1980,

conformably to clause 6 (b) of the employment agreement [they had] executed with

[PIA]."2

On 9 September 1980, private respondents Farrales and Mamasig jointly instituted a

complaint, docketed as NCR-STF-95151-80, for illegal dismissal and non-payment of

company benefits and bonuses, against PIA with the then Ministry of Labor and

Employment ("MOLE"). After several unfruitful attempts at conciliation, the MOLE

hearing officer Atty. Jose M. Pascual ordered the parties to submit their position

papers and evidence supporting their respective positions. The PIA submitted its

position paper,3 but no evidence, and there claimed that both private respondents

were habitual absentees; that both were in the habit of bringing in from abroad

sizeable quantities of "personal effects"; and that PIA personnel at the Manila

International Airport had been discreetly warned by customs officials to advise private

respondents to discontinue that practice. PIA further claimed that the services of both

private respondents were terminated pursuant to the provisions of the employment

contract.

In his Order dated 22 January 1981, Regional Director Francisco L. Estrella ordered the

reinstatement of private respondents with full backwages or, in the alternative, the

payment to them of the amounts equivalent to their salaries for the remain-der of the

fixed three-year period of their employment contracts; the payment to private

respondent Mamasig of an amount equivalent to the value of a round trip ticket

Manila-USAManila; and payment of a bonus to each of the private respondents

equivalent to their one-month salary.4 The Order stated that private respondents had

attained the status of regular employees after they had rendered more than a year of
continued service; that the stipulation limiting the period of the employment contract

to three (3) years was null and void as violative of the provisions of the Labor Code and

its implementing rules and regulations on regular and casual employment; 

______________

2 Id., p. 22.

3 Id., pp. 36-41.

4 Id., p. 43.

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ANNOTATED 
Pakistan International Airlines
Corporation vs. Ople
and that the dismissal, having been carried out without the requisite clearance from

the MOLE, was illegal and entitled private respondents to reinstatement with full

backwages.

On appeal, in an Order dated 12 August 1982, Hon. Vicente Leogardo, Jr., Deputy

Minister, MOLE, adopted the findings of fact and conclusions of the Regional Director

and affirmed the latter's award save for the portion thereof giving PIA the option, in

lieu of reinstatement, 'to pay each of the complainants [private respondents] their

salaries corresponding to the unexpired portion of the contract[s] [of employment] x x

x".5

In the instant Petition for Certiorari, petitioner PIA assails the award of the Regional

Director and the Order of the Deputy Minister as having been rendered without

jurisdiction; for having been rendered without support in the evidence .of record since,

allegedly, no hearing was conducted by the hearing officer, Atty. Jose M. Pascual; and

for having been issued in disregard and in violation of petitioner's rights under the

employment contracts with private respondents.

1. Petitioner's first contention is that the Regional Director, MOLE, had no jurisdiction

over the subject matter of the complaint initiated by private respondents for illegal
dismissal, jurisdiction over the same being lodged in the Arbitration Branch of the

National Labor Relations Commission ("NLRC"). It appears to us beyond dispute,

however, that both at the time the complaint was initiated in September 1980 and at

the time the Orders assailed were rendered on January 1981 (by Regional Director

Francisco L. Estrella) and August 1982 (by Deputy Minister Vicente Leogardo, Jr.), the

Regional Director had jurisdiction over termination cases.

Article 278 of the Labor Code, as it then existed, forbade the termination of the

services of employees with at least one (1) year of service without prior clearance from

the Department of Labor and Employment:

"Art. 278. Miscellaneous Provisions—xxx

(b) With or without a collective agreement, no employer may shut down his

establishment or dismiss or terminate the employment of employees with at least one

year of service during the last two (2) 

_________________

5 Id., p. 64. 

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Pakistan International Airlines
Corporation vs. Ople
years, whether such service is continuous or broken, without prior written authority

issued in accordance with such rules and regulations as the Secretary may

promulgate x x x" (Italics supplied)

Rule XIV, Book No. 5 of the Rules and Regulations Implementing the Labor Code, made

clear that in case of a termination without the necessary clearance, the Regional

Director was authorized to order the reinstatement of the employee concerned and

the payment of backwages; necessarily, therefore, the Regional Director must have

been given jurisdiction over such termination cases:

"Section 2. Shutdown or dismissal without clearance.—Any shutdown or dismissal

without prior clearance shall be conclusively presumed to be termination of

employment without a just cause. The Regional Director shall, in such case order the

immediate reinstatement of the employee and the payment of his wages from the

time of the shutdown or dismissal until the time of reinstatement." (Italics supplied)

Policy Instruction No. 14 issued by the Secretary of Labor, dated 23 April 1976, was

similarly very explicit about the jurisdiction of the Regional Director over termination

of employment cases:

"Under PD 850, termination cases—with or without CBA—are now placed under the

original jurisdiction of the Regional Director. Preventive suspension cases, now made

cognizable for the first time, are also placed under the Regional Director. Before PD

850, termination cases where there was a CBA were under the jurisdiction of the

grievance machinery and voluntary arbitration, while termination cases where there

was no CBA were under the jurisdiction of the Conciliation Section.

In more details, the major innovations introduced by PD 850 and its implementing

rules and regulations with respect to termination and preventive suspension cases are:

1. The Regional Director is now required to rule on every application for

clearance, whether there is opposition or not, within ten days from receipt thereof.

xxx      xxx      xx x"

(Italics supplied)

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ANNOTATED 
Pakistan International Airlines
Corporation vs. Ople
2. The second contention of petitioner PIA is that, even if the Regional Director had

jurisdiction, still his order was null and void because it had been issued in violation of

petitioner's right to procedural due process.6This claim, however, cannot be given

serious consideration. Petitioner was ordered by the Regional Director to submit not
only its position paper but also such evidence in its favor as it might have. Petitioner

opted to rely solely upon its position paper; we must assume it had no evidence to

sustain its assertions. Thus, even if no formal or oral hearing was conducted, petitioner

had ample opportunity to explain its side. Moreover, petitioner PIA was able to appeal

his case to the Ministry of Labor and Employment.7

There is another reason why petitioner's claim of denial of due process must be

rejected. At the time the complaint was filed by private respondents on 21 September

1980 and at the time the Regional Director issued his questioned order on 22 January

1981, applicable regulation, as noted above, specified that a "dismissal without prior

clearance shall be conclusively presumed to be termination of employment without a

just cause", and the Regional Director was required in such case to "order the

immediate reinstatement of the employee and the payment of his wages from the

time of the shutdown or dismissal until xxx reinstatement." In other words, under the

then applicable rule, the Regional Director did not even have to require submission of

position papers by the parties in view of the conclusive (juris et de jure) character of

the presumption created by such applicable law and regulation. In Cebu Institute of

Technology v. Minister of Labor and Employment,8 the Court pointed out that "under

Rule 14, Section 2, of the Implementing Rules and Regulations, the termination of [an

employee] which was without previous clearance from the Ministry of Labor is

conclusively presumed to be without [just] cause x x x [a presumption which] cannot

be overturned by any contrary proof however strong."

______________

6 Rollo, p. 6.

7 See Llora Motors, Inc., et al. v. Hon. Franklin Drilon, et al., G.R. No. 82895, 7

November 1989.

8 113 SCRA 257 (1982).

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Pakistan International Airlines
Corporation vs. Ople
3. In its third contention, petitioner PIA invokes paragraphs 5 and 6 of its contract of

employment with private respondents Farrales and Mamasig, arguing that its

relationship with them was governed by the provisions of its contract rather than by

the general provisions of the Labor Code.9

Paragraph 5 of that contract set a term of three (3) years for that relationship,

extendible by agreement between the parties; while paragraph 6 provided that,

notwithstanding any other provision in the contract, PIA had the right to terminate the

employment agreement at any time by giving one-month's notice to the employee or,

in lieu of such notice, one-month's salary.

A contract freely entered into should, of course, be respected, as PIA argues, since a

contract is the law between the parties.10 The principle of party autonomy in

contracts is not, however, an absolute principle. The rule in Article 1306, of our Civil

Code is that the contracting parties may establish such stipulations as they may deem

convenient, "provided they are not contrary to law, morals, good customs, public order

or public policy." Thus, counter-balancing the principle of autonomy of contracting

parties is the equally general rule that provisions of applicable law, especially

provisions relating to matters affected with public policy, are deemed written into the

contract.11 Put a little differently, the governing principle is that parties may not

contract away applicable provisions of law especially peremptory provisions dealing

with matters heavily impressed with public interest. The law relating to labor and

employment is clearly such an area and parties are not at liberty to insulate

themselves and their relationships from the impact of labor laws and regulations by

simply contracting with each other. It is thus necessary to appraise the contractual

provisions invoked by petitioner PIA in terms of their consistency with applicable

Philippine law and regulations.

As noted earlier, both the Labor Arbiter and the Deputy Min-

______________
9 Rollo, p. 8.

10 Henson v. Intermediate Appellate Court, 148 SCRA 11 (1987).

11 Commissioner of Internal Revenue v. United Lines Co., 5 SCRA 175 (1962).

100

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ANNOTATED 
Pakistan International Airlines
Corporation vs. Ople
ister, MOLE, in effect held that paragraph 5 of that employment contract was

inconsistent with Articles 280 and 281 of the Labor Code as they existed at the time

the contract of employment was entered into, and hence refused to give effect to said

paragraph 5. These Articles read as follows:

"Art. 280. Security of Tenure.—In cases of regular employment, the employer shall not

terminate the services of an employee. except for a just cause or when authorized by

this Title. An employee who is unjustly dismissed from work shall be entitled to

reinstatement without loss of seniority rights and to his backwages computed from the

time his compensation was withheld from him up to the time his reinstatement.

Article 281. Regular and Casual Employment.—The provisions of written agreement to

the contrary notwithstanding and regardless of the oral agreements of the parties, an

employment shall be deemed to 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 has been fixed for a specific

project or undertaking the completion or termination of which has been determined at

the time of the engagement of the employee or where the work or services to be

performed is seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding

paragraph: provided, that, any employee who has rendered at least one year of

service, whether such service is continuous or broken, shall be considered as regular

employee with respect to the activity in which be is employed and his employment

shall continue while such actually exists." (Italics supplied)

In Brent School, Inc., et al. v. Ronaldo Zamora, etc., et al.,12 the Court had occasion to

examine in detail the question of whether employment for a fixed term has been

outlawed under the above quoted provisions of the Labor Code. After an extensive

examination of the history and development of Articles 280 and 281, the Court

reached the conclusion that a contract providing for employment with a fixed period

was not necessarily unlawful: 

______________

12 G.R. No. L-48494, promulgated 5 February 1990.

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Pakistan International Airlines
Corporation vs. Ople
"There can of course be no quarrel with the proposition that where from the

circumstances it is apparent that periods have been imposed to preclude acquisition of

tenurial security by the employee, they should be struck down or disregarded as

contrary to public policy, morals, etc. But where no such intent to circumvent the law is

shown, or stated otherwise, where the reason for the law does not exist, e.g. where it

is indeed the employee himself who insists upon a period or where the nature of the

engagement is such that, without being seasonal or for a specific project, a definite

date of termination is a sine qua non, would an agreement fixing a period be

essentially evil or illicit, therefore anathema? Would such an agreement come within

the scope of Article 280 which admittedly was enacted to prevent the circumvention of

the right of the employee to be secured in x x (his) employment?'

As it is evident from even only the three examples already given that Article 280 of the

Labor Code, under a narrow and literal interpretation, not only fails to exhaust the

gamut of employment contracts to which the lack of a fixed period would be an

anomaly, but would also appear to restrict, without reasonable distinctions, the right

of an employee to freely stipulate with his employer the duration of his engagement, it

logically follows that such a literal interpretation should be eschewed or avoided. The

law must be given reasonable interpretation, to preclude absurdity in its application.

Outlawing the whole concept of term employment and subverting to boot the

principle of freedom of contract to remedy the evil of employers' using it as a means to

prevent their employees from obtaining security of tenure is like cutting off the nose to

spite the face or, more relevantly, curing a headache by lopping off the head.

xxx      xxx      xxx

Accordingly, and since the entire purpose behind the development of legislation

culminating in the present Article 280 of the Labor Code clearly appears to have

been, as already observed, to prevent circumvention of the employee's right to be

secure in his tenure, the clause in said article indiscriminately and completely ruling out

all written or oral agreements conflicting with the concept of regular employment as

defined therein should be construed to refer to the substantive evil that the Code itself

has singled out: agreements entered into precisely to circumvent security of tenure. It

should have no application to instances where a fixed period of employment was

agreed upon knowingly and voluntarily by the parties, without any force, duress or

improper pressure being brought to bear upon the employee and absent any other

circumstances vitiating his consent, or where it satisfactorily appears that the

employer and employee dealt with each other on more or less equal terms with no

moral dominance whatever

102

102  SUPREME COURT REPORTS

ANNOTATED 
Pakistan International Airlines
Corporation vs. Ople
being exercised by the former over the latter. Unless thus limited in its purview, the

law would be made to apply to purposes other than those explicitly stated by its
framers; it thus becomes pointless and arbitrary, unjust in its effects and apt to lead to

absurd and unintended consequences."

(Italics supplied)

It is apparent from Brent School that the critical consideration is the presence or

absence of a substantial indication that the period specified in an employment

agreement was designed to circumvent the security of tenure of regular employees

which is provided for in Articles 280 and 281 of the Labor Code. This indication must

ordinarily rest upon some aspect of the agreement other than the mere specification

of a fixed term of the employment agreement, or upon evidence aliunde of the intent

to evade.

Examining the provisions of paragraphs 5 and 6 of the employment agreement

between petitioner PIA and private respondents, we consider that those provisions

must be read together and when so read, the fixed period of three (3) years specified

in paragraph 5 will be seen to have been effectively neutralized by the provisions of

paragraph 6 of that agreement. Paragraph 6 in effect took back from the employee the

fixed three (3)-year period ostensibly granted by paragraph 5 by rendering such period

in effect a facultative one at the option of the employer PIA. For petitioner PIA claims

to be authorized to shorten that term, at any time and for any cause satisfactory to

itself, to a one-month period, or even less by simply paying the employee a month's

salary. Because the net effect of paragraphs 5 and 6 of the agreement here involved is

to render the employment of private respondents Farrales and Mamasig basically

employment at the pleasure of petitioner PIA, the Court considers that paragraphs 5

and 6 were intended to prevent any security of tenure from accruing in favor of private

respondents even during the limited period of three (3) years,13 and thus to escape

completely the thrust of Articles 280 and 281 of the Labor Code. 

________________

13 See Biboso v. Victorias Milling Co., Inc., 76 SCRA 250 (1977).

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Pakistan International Airlines
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Petitioner PIA cannot take refuge in paragraph 10 of its employment agreement which

specifies, firstly, the law of Pakistan as the applicable law of the agreement and,

secondly, lays the venue for settlement of any dispute arising out of or in connection

with the agreement "only [in] courts of Karachi, Pakistan". The first clause of paragraph

10 cannot be invoked to prevent the application of Philippine labor laws and

regulations to the subject matter of this case, i.e., the employer-employee relationship

between petitioner PIA and private respondents. We have already pointed out that

that relationship is much affected with public interest and that the otherwise

applicable Philippine laws and regulations cannot be rendered illusory by the parties

agreeing upon some other law to govern their relationship. Neither may petitioner

invoke the second clause of paragraph 10, specifying the Karachi courts as the sole

venue for the settlement of disputes between the contracting parties. Even a cursory

scrutiny of the relevant circumstances of this case will show the multiple and

substantive contacts between Philippine law and Philippine courts, on the one hand,

and the relationship between the parties, upon the other: the contract was not only

executed in the Philippines, it was also performed here, at least partially; private

respondents are Philippine citizens and residents, while petitioner, although a foreign

corporation, is licensed to do business (and actually doing business) and hence

resident in the Philippines; lastly, private respondents were based in the Philippines in

between their assigned flights to the Middle East and Europe. All the above contacts

point to the Philippine courts and administrative agencies as a proper forum for the

resolution of contractual disputes between the parties. Under these circumstances,

paragraph 10 of the employment agreement cannot be given effect so as to oust

Philippine agencies and courts of the jurisdiction vested upon them by Philippine law.

Finally, and in any event, the petitioner PIA did not undertake to plead and prove the

contents of Pakistan law on the matter; it must therefore be presumed that the
applicable provisions of the law of Pakistan are the same as the applicable provisions

of Philippine law.14

______________

14 Miciano v. Brimo, 50 Phil. 867 (1924); Collector of Internal Revenue v. Fisher, 110

Phil. 686 (1961).

104

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ANNOTATED 
Pakistan International Airlines
Corporation vs. Ople
We conclude that private respondents Farrales and Mamasig were illegally dismissed

and that public respondent Deputy Minister, MOLE, had not committed any grave

abuse of discretion nor any act without or in excess of jurisdiction in ordering their

reinstatement with backwages. Private respondents are entitled to three (3) years

backwages without qualification or deduction. Should their reinstatement to their

former or other substantially equivalent positions not be feasible in view of the length

of time which has gone by since their services were unlawfully terminated, petitioner

should be required to pay separation pay to private respondents amounting to one (1)

month's salary for every year of service rendered by them, including the three (3) years

service putatively rendered.

ACCORDINGLY, the Petition for Certiorari is hereby DISMISSED for lack of merit, and

the Order dated 12 August 1982 of public respondent is hereby AFFIRMED, except that

(1) private respondents are entitled to three (3) years backwages, without deduction

or qualification; and (2) should reinstatement of private respondents to their former

positions or to substantially equivalent positions not be feasible, then petitioner shall,

in lieu thereof, pay to private respondents separation pay amounting to one (1)-

month's salary for every year of service actually rendered by them and for the three (3)

years putative service by private respondents. The Temporary Restraining Order issued

on 13 September 1982 is hereby LIFTED. Costs against petitioner.

SO ORDERED.

     Fernan  (C.J., Chairman),  Gutierrez, Jr.,  Bidin and Cortés, JJ., concur.

Petition dismissed. Order affirmed.

Note.—No violation by Labor Arbiter of rules of administrative due process where

company was duly represented by counsel and given sufficient opportunity to be heard

and present evidence. (Pantranco North Express, Inc. vs. National Labor Relations

Commission,126 SCRA 526.)

——o0o——

105

© Copyright 2021 Central Book Supply, Inc. All rights reserved.

90
SUPREME COURT REPORTS ANNOTATED
Pakistan International Airlines Corporation us.
Ople
G.R. No. 61594. September 28, 1990.*
PAKISTAN INTERNATIONAL AIRLINES
CORPORATION, petitioner, vs. HON. BLAS F. OPLE,
in his capacity as Minister of Labor; HON. VICENTE
LEOGARDO, JR., in his capacity as Deputy
Minister; ETHELYNNE B. FARRALES and MARIA
MOONYEEN MAMASIG, respondents.
Labor Relations; Due Process; Petitioner's right to
procedural due process was not violated even if
no formal or oral hearing was conducted,
considering that it had ample opportunity to
explain its side.—The second contention of
petitioner PIA is that, even if the Regional Director
had jurisdiction, still his order was null and void
because it had been issued in violation of
petitioner's right to procedural due process. This
claim, however, cannot be given serious
consideration. Petitioner was ordered by the
Regional Director to submit not only its position
paper but also such evidence in its favor as it
might have. Petitioner opted to rely solely upon
its position paper; we must assume it had no
evidence to sustain its assertions. Thus, even if no
formal or oral hearing was conducted, petitioner
had ample oppor-
_______________

* THIRD DIVISION.
91

VOL. 190, SEPTEMBER 28, 1990

91
Pakistan International Airlines Corporation vs.
Ople
tunity to explain its side. Moreover, petitioner PIA
was able to appeal his case to the Ministry of
Labor and Employment.
Contracts; Parties may not contract away
applicable provisions of law especially
peremptory provisions dealing with matters
heavily impressed with public interest. The
principle of party autonomy in contracts is not
absolute.—A contract freely entered into should,
of course, be respected, as PIA argues, since a
contract is the law between the parties. The
principle of party autonomy in contracts is not,
however, an absolute principle. The rule in Article
1306, of our Civil Code is that the contracting
parties may establish such stipulations as they
may deem convenient, "provided they are not
contrary to law, morals, good customs, public
order or public policy." Thus, counterbalancing
the principle of autonomy of contracting parties is
the equally general rule that provisions of
applicable law, especially provisions relating to
matters affected with public policy, are deemed
written into the contract. Put a little differently,
the governing principle is that parties may not
contract away applicable provisions of law
especially peremptory provisions dealing with
matters heavily impressed with public interest.
The law relating to labor and employment is
clearly such an area and parties are not at liberty
to insulate themselves and their relationships
from the impact of labor laws and regulations by
simply contracting with each other. It is thus
necessary to appraise the contractual provisions
invoked by petitioner PIA in terms of their
consistency with applicable Philippine law and
regulations.
Labor Law; A contract providing for employment
with a fixed period was not necessarily unlawful.
—In Brent School, Inc., et al. v. Ronaldo Zamora,
etc., et al., the Court had occasion to examine in
detail the question of whether employment for a
fixed term has been outlawed under the above
quoted provisions of the Labor Code. After an
extensive examination of the history and
development of Articles 280 and 281, the Court
reached the conclusion that a contract providing
for employment with a fixed period was not
necessarily unlawful: "There can of course be no
quarrel with the proposition that where from the
circumstances it is apparent that periods have
been imposed to preclude acquisition of tenurial
security by the employee, they should be struck
down or disregarded as contrary to public policy,
morals, etc. But where no such intent to
circumvent the law is shown, or stated otherwise,
where the reason for the law does not exist, e.g.,
where it is indeed the employee himself who
insists upon a period or where the nature of the
engagement is such that, without being seasonal
or for a specific project, a definite date of
termination is a sine qua non, would
92

92
SUPREME COURT REPORTS ANNOTATED
Pakistan International Airlines Corporation vs.
Ople
an agreement fixing a period be essentially evil or
illicit, therefore anathema? Would such an
agreement come within the scope of Article 280
which admittedly was enacted 'to prevent the
circumvention of the right of the employee to be
secured in x x (his) employment?' As it is evident
from even only the three examples already given
that Article 280 of the Labor Code, under a
narrow and literal interpretation, not only fails to
exhaust the gamut of employment contracts to
which the lack of a fixed period would be an
anomaly, but would also appear to restrict,
without reasonable distinctions, the right of an
employee to freely stipulate with his employer
the duration of his engagement, it logically
follows that such a literal interpretation should be
eschewed or avoided. The law must be given
reasonable interpretation, to preclude absurdity
in its application. Outlawing the whole concept of
term employment and subverting to boot the
principle of freedom of contract to remedy the
evil of employers' using it as a means to prevent
their employees from obtaining security of tenure
is like cutting off the nose to spite the face or,
more relevantly, curing a headache by lopping off
the head. xxx xxx xxx Accordingly, and since the
entire purpose behind the development of
legislation culminating in the present Article 280
of the Labor Code clearly appears to have been,
as already observed, to prevent circumvention of
the employee's right to be secure in his tenure,
the clause in said article indiscriminately and
completely ruling out all written or oral
agreements conflicting with the concept of
regular employment as defined therein should be
construed to refer to the substantive evil that the
Code itself has singled out: agreements entered
into precisely to circumvent security of tenure. It
should have no application to instances where a
fixed period of employment was agreed upon
knowingly and voluntarily by the parties, without
any force, duress or improper pressure being
brought to bear upon the employee and absent
any other circumstances vitiating his consent, or
where it satisfactorily appears that the employer
and employee dealt with each other on more or
less equal terms with no moral dominance
whatever being exercised by the former over the
latter. Unless thus limited in its purview, the law
would be made to apply to purposes other than
those explicitly stated by its framers; it thus
becomes pointless and arbitrary, unjust in its
effects and apt to lead to absurd and unintended
consequences." (Italics supplied)
Same; Contracts; Conflicts of Law; When the
relationship between the parties is much affected
by public interest, the otherwise applicable
Philippine laws and regulations cannot be
rendered illusory by the parties agreeing upon
some other law to govern their relationship.—
Petitioner PIA cannot take refuge in paragraph 10
of
93

VOL. 190, SEPTEMBER 28, 1990

93
Pakistan International Airlines Corporation vs.
Ople
its employment agreement which specifies, firstly,
the law of Pakistan as the applicable law of the
agreement and, secondly, lays the venue for
settlement of any dispute arising out of or in
connection with the agreement "only [in] courts
of Karachi, Pakistan". The first clause of paragraph
10 cannot be invoked to prevent the application
of Philippine labor laws and regulations to the
subject matter of this case, i.e., the employer-
employee relationship between petitioner PIA
and private respondents. We have already
pointed out that that relationship is much
affected with public interest and that the
otherwise applicable Philippine laws and
regulations cannot be rendered illusory by the
parties agreeing upon some other law to govern
their relationship. Neither may petitioner invoke
the second clause of paragraph 10, specifying the
Karachi courts as the sole venue for the
settlement of disputes between the contracting
parties. Even a cursory scrutiny of the relevant
circumstances of this case will show the multiple
and substantive contacts between Philippine law
and Philippine courts, on the one hand, and the
relationship between the parties, upon the other:
the contract was not only executed in the
Philippines, it was also performed here, at least
partially; private respondents are Philippine
citizens and residents, while petitioner, although
a foreign corporation, is licensed to do business
(and actually doing business) and hence resident
in the Philippines; lastly, private respondents
were based in the Philippines in between their
assigned flights to the Middle East and Europe. All
the above contacts point to the Philippine courts
and administrative agencies as a proper forum for
the resolution of contractual disputes between
the parties. Under these circumstances,
paragraph 10 of the employment agreement
cannot be given effect so as to oust Philippine
agencies and courts of the jurisdiction vested
upon them by Philippine law. Finally, and in any
event, the petitioner PIA did not undertake to
plead and prove the contents of Pakistan law on
the matter; it must therefore be presumed that
the applicable provisions of the law of Pakistan
are the same as the applicable provisions of
Philippine law.
PETITION for certiorari to review the order of the
Minister of Labor.
The facts are stated in the opinion of the Court.
Romulo, Mabanta, Buenaventura, Sayoc & De
los Angeles for petitioner.
Ledesma, Saludo & Associates for private
respondents.
94

94
SUPREME COURT REPORTS ANNOTATED
Pakistan International Airlines Corporation vs.
Ople
FELICIANO, J.:

On 2 December 1978, petitioner Pakistan

International Airlines Corporation ("PIA"), a
foreign corporation licensed to do business in the
Philippines, executed in Manila two (2) separate
contracts of employment, one with private
respondent Ethelynne B. Farrales and the other
with private respondent Ma. M.C. Mamasig.1 The
contracts, which became effective on 9 January
1979, provided in pertinent portion as follows:
"5. DURATION OF EMPLOYMENT AND PENALTY
This agreement is for a period of three (3) years,
but can be extended by the mutual consent of the
parties.
xxx xxx xxx
6. TERMINATION
xxx xxx xxx
Notwithstanding anything to contrary as herein
provided, PIA reserves the right to terminate this
agreement at any time by giving the EMPLOYEE
notice in writing in advance one month before the
intended termination or in lieu thereof, by paying
the EMPLOYEE wages equivalent to one month's
salary.
xxx xxx xxx
10. APPLICABLE LAW:
This agreement shall be construed and governed
under and by the laws of Pakistan, and only the
Courts of Karachi, Pakistan shall have the
jurisdiction to consider any matter arising out of
or under this agreement."
Respondents then commenced training in
Pakistan. After their training period, they began
discharging their job functions as flight
attendants, with base station in Manila and flying
assignments to different parts of the Middle East
and Europe.
On 2 August 1980, roughly one (1) year and four
(4) months prior to the expiration of the contracts
of employment, PIA through Mr. Oscar Benares,
counsel for and official of the local branch of PIA,
sent separate letters both dated 1 August 1980 to
private respondents Farrales and Mamasig
advising both that
________________

1 Rollo, pp.12 and 17.

95

VOL. 190, SEPTEMBER 28, 1990

95
Pakistan International Airlines Corporation vs.
Ople
their services as flight stewardesses would be
terminated "effective 1 September 1980,
conformably to clause 6 (b) of the employment
agreement [they had] executed with [PIA]."2
On 9 September 1980, private respondents
Farrales and Mamasig jointly instituted a
complaint, docketed as NCR-STF-95151-80, for
illegal dismissal and non-payment of company
benefits and bonuses, against PIA with the then
Ministry of Labor and Employment ("MOLE").
After several unfruitful attempts at conciliation,
the MOLE hearing officer Atty. Jose M. Pascual
ordered the parties to submit their position
papers and evidence supporting their respective
positions. The PIA submitted its position paper,3
but no evidence, and there claimed that both
private respondents were habitual absentees;
that both were in the habit of bringing in from
abroad sizeable quantities of "personal effects";
and that PIA personnel at the Manila International
Airport had been discreetly warned by customs
officials to advise private respondents to
discontinue that practice. PIA further claimed that
the services of both private respondents were
terminated pursuant to the provisions of the
employment contract.
In his Order dated 22 January 1981, Regional
Director Francisco L. Estrella ordered the
reinstatement of private respondents with full
backwages or, in the alternative, the payment to
them of the amounts equivalent to their salaries
for the remain-der of the fixed three-year period
of their employment contracts; the payment to
private respondent Mamasig of an amount
equivalent to the value of a round trip ticket
Manila-USAManila; and payment of a bonus to
each of the private respondents equivalent to
their one-month salary.4 The Order stated that
private respondents had attained the status of
regular employees after they had rendered more
than a year of continued service; that the
stipulation limiting the period of the employment
contract to three (3) years was null and void as
violative of the provisions of the Labor Code and
its implementing rules and regulations on regular
and casual employment;
______________

2 Id., p. 22.
3 Id., pp. 36-41.
4 Id., p. 43.
96

96
SUPREME COURT REPORTS ANNOTATED
Pakistan International Airlines Corporation vs.
Ople
and that the dismissal, having been carried out
without the requisite clearance from the MOLE,
was illegal and entitled private respondents to
reinstatement with full backwages.
On appeal, in an Order dated 12 August 1982,
Hon. Vicente Leogardo, Jr., Deputy Minister,
MOLE, adopted the findings of fact and
conclusions of the Regional Director and affirmed
the latter's award save for the portion thereof
giving PIA the option, in lieu of reinstatement, 'to
pay each of the complainants [private
respondents] their salaries corresponding to the
unexpired portion of the contract[s] [of
employment] x x x".5
In the instant Petition for Certiorari, petitioner PIA
assails the award of the Regional Director and the
Order of the Deputy Minister as having been
rendered without jurisdiction; for having been
rendered without support in the evidence .of
record since, allegedly, no hearing was conducted
by the hearing officer, Atty. Jose M. Pascual; and
for having been issued in disregard and in
violation of petitioner's rights under the
employment contracts with private respondents.
1. Petitioner's first contention is that the Regional
Director, MOLE, had no jurisdiction over the
subject matter of the complaint initiated by
private respondents for illegal dismissal,
jurisdiction over the same being lodged in the
Arbitration Branch of the National Labor Relations
Commission ("NLRC"). It appears to us beyond
dispute, however, that both at the time the
complaint was initiated in September 1980 and at
the time the Orders assailed were rendered on
January 1981 (by Regional Director Francisco L.
Estrella) and August 1982 (by Deputy Minister
Vicente Leogardo, Jr.), the Regional Director had
jurisdiction over termination cases.
Article 278 of the Labor Code, as it then existed,
forbade the termination of the services of
employees with at least one (1) year of service
without prior clearance from the Department of
Labor and Employment:
"Art. 278. Miscellaneous Provisions—xxx
(b) With or without a collective agreement, no
employer may shut down his establishment or
dismiss or terminate the employment of
employees with at least one year of service during
the last two (2)
_________________
5 Id., p. 64.
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97
Pakistan International Airlines Corporation vs.
Ople
years, whether such service is continuous or
broken, without prior written authority issued in
accordance with such rules and regulations as the
Secretary may promulgate x x x" (Italics supplied)
Rule XIV, Book No. 5 of the Rules and Regulations
Implementing the Labor Code, made clear that in
case of a termination without the necessary
clearance, the Regional Director was authorized
to order the reinstatement of the employee
concerned and the payment of backwages;
necessarily, therefore, the Regional Director must
have been given jurisdiction over such
termination cases:
"Section 2. Shutdown or dismissal without
clearance.—Any shutdown or dismissal without
prior clearance shall be conclusively presumed to
be termination of employment without a just
cause. The Regional Director shall, in such case
order the immediate reinstatement of the
employee and the payment of his wages from the
time of the shutdown or dismissal until the time
of reinstatement." (Italics supplied)
Policy Instruction No. 14 issued by the Secretary
of Labor, dated 23 April 1976, was similarly very
explicit about the jurisdiction of the Regional
Director over termination of employment cases:
"Under PD 850, termination cases—with or
without CBA—are now placed under the original
jurisdiction of the Regional Director. Preventive
suspension cases, now made cognizable for the
first time, are also placed under the Regional
Director. Before PD 850, termination cases where
there was a CBA were under the jurisdiction of
the grievance machinery and voluntary
arbitration, while termination cases where there
was no CBA were under the jurisdiction of the
Conciliation Section.
In more details, the major innovations introduced
by PD 850 and its implementing rules and
regulations with respect to termination and
preventive suspension cases are:
1. The Regional Director is now required to rule
on every application for clearance, whether there
is opposition or not, within ten days from receipt
thereof.
xxx xxx xx x"
(Italics supplied)
98
98
SUPREME COURT REPORTS ANNOTATED
Pakistan International Airlines Corporation vs.
Ople
2. The second contention of petitioner PIA is that,
even if the Regional Director had jurisdiction, still
his order was null and void because it had been
issued in violation of petitioner's right to
procedural due process.6 This claim, however,
cannot be given serious consideration. Petitioner
was ordered by the Regional Director to submit
not only its position paper but also such evidence
in its favor as it might have. Petitioner opted to
rely solely upon its position paper; we must
assume it had no evidence to sustain its
assertions. Thus, even if no formal or oral hearing
was conducted, petitioner had ample opportunity
to explain its side. Moreover, petitioner PIA was
able to appeal his case to the Ministry of Labor
and Employment.7
There is another reason why petitioner's claim of
denial of due process must be rejected. At the
time the complaint was filed by private
respondents on 21 September 1980 and at the
time the Regional Director issued his questioned
order on 22 January 1981, applicable regulation,
as noted above, specified that a "dismissal
without prior clearance shall be conclusively
presumed to be termination of employment
without a just cause", and the Regional Director
was required in such case to "order the
immediate reinstatement of the employee and
the payment of his wages from the time of the
shutdown or dismissal until xxx reinstatement." In
other words, under the then applicable rule, the
Regional Director did not even have to require
submission of position papers by the parties in
view of the conclusive (juris et de jure) character
of the presumption created by such applicable
law and regulation. In Cebu Institute of
Technology v. Minister of Labor and
Employment,8 the Court pointed out that "under
Rule 14, Section 2, of the Implementing Rules and
Regulations, the termination of [an employee]
which was without previous clearance from the
Ministry of Labor is conclusively presumed to be
without [just] cause x x x [a presumption which]
cannot be overturned by any contrary proof
however strong."
______________

6 Rollo, p. 6.
7 See Llora Motors, Inc., et al. v. Hon. Franklin
Drilon, et al., G.R. No. 82895, 7 November 1989.
8 113 SCRA 257 (1982).
99

VOL. 190, SEPTEMBER 28, 1990

99
Pakistan International Airlines Corporation vs.
Ople
3. In its third contention, petitioner PIA invokes
paragraphs 5 and 6 of its contract of employment
with private respondents Farrales and Mamasig,
arguing that its relationship with them was
governed by the provisions of its contract rather
than by the general provisions of the Labor
Code.9
Paragraph 5 of that contract set a term of three
(3) years for that relationship, extendible by
agreement between the parties; while paragraph
6 provided that, notwithstanding any other
provision in the contract, PIA had the right to
terminate the employment agreement at any
time by giving one-month's notice to the
employee or, in lieu of such notice, one-month's
salary.
A contract freely entered into should, of course,
be respected, as PIA argues, since a contract is the
law between the parties.10 The principle of party
autonomy in contracts is not, however, an
absolute principle. The rule in Article 1306, of our
Civil Code is that the contracting parties may
establish such stipulations as they may deem
convenient, "provided they are not contrary to
law, morals, good customs, public order or public
policy." Thus, counter-balancing the principle of
autonomy of contracting parties is the equally
general rule that provisions of applicable law,
especially provisions relating to matters affected
with public policy, are deemed written into the
contract.11 Put a little differently, the governing
principle is that parties may not contract away
applicable provisions of law especially
peremptory provisions dealing with matters
heavily impressed with public interest. The law
relating to labor and employment is clearly such
an area and parties are not at liberty to insulate
themselves and their relationships from the
impact of labor laws and regulations by simply
contracting with each other. It is thus necessary
to appraise the contractual provisions invoked by
petitioner PIA in terms of their consistency with
applicable Philippine law and regulations.
As noted earlier, both the Labor Arbiter and the
Deputy Min-
______________

9 Rollo, p. 8.
10 Henson v. Intermediate Appellate Court, 148
SCRA 11 (1987).
11 Commissioner of Internal Revenue v. United
Lines Co., 5 SCRA 175 (1962).
100

100
SUPREME COURT REPORTS ANNOTATED
Pakistan International Airlines Corporation vs.
Ople
ister, MOLE, in effect held that paragraph 5 of
that employment contract was inconsistent with
Articles 280 and 281 of the Labor Code as they
existed at the time the contract of employment
was entered into, and hence refused to give effect
to said paragraph 5. These Articles read as
follows:
"Art. 280. Security of Tenure.—In cases of regular
employment, the employer shall not terminate
the services of an employee. except for a just
cause or when authorized by this Title. An
employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of
seniority rights and to his backwages computed
from the time his compensation was withheld
from him up to the time his reinstatement.
Article 281. Regular and Casual Employment.—
The provisions of written agreement to the
contrary notwithstanding and regardless of the
oral agreements of the parties, an employment
shall be deemed to 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 has been fixed for a
specific project or undertaking the completion or
termination of which has been determined at the
time of the engagement of the employee or
where the work or services to be performed is
seasonal in nature and the employment is for the
duration of the season.
An employment shall be deemed to be casual if it
is not covered by the preceding paragraph:
provided, that, any employee who has rendered
at least one year of service, whether such service
is continuous or broken, shall be considered as
regular employee with respect to the activity in
which be is employed and his employment shall
continue while such actually exists." (Italics
supplied)
In Brent School, Inc., et al. v. Ronaldo Zamora,
etc., et al.,12 the Court had occasion to examine
in detail the question of whether employment for
a fixed term has been outlawed under the above
quoted provisions of the Labor Code. After an
extensive examination of the history and
development of Articles 280 and 281, the Court
reached the conclusion that a contract providing
for employment with a fixed period was not
necessarily unlawful:
______________

12 G.R. No. L-48494, promulgated 5 February

1990.
101
VOL. 190, SEPTEMBER 28, 1990
101
Pakistan International Airlines Corporation vs.
Ople
"There can of course be no quarrel with the
proposition that where from the circumstances it
is apparent that periods have been imposed to
preclude acquisition of tenurial security by the
employee, they should be struck down or
disregarded as contrary to public policy, morals,
etc. But where no such intent to circumvent the
law is shown, or stated otherwise, where the
reason for the law does not exist, e.g. where it is
indeed the employee himself who insists upon a
period or where the nature of the engagement is
such that, without being seasonal or for a specific
project, a definite date of termination is a sine
qua non, would an agreement fixing a period be
essentially evil or illicit, therefore anathema?
Would such an agreement come within the scope
of Article 280 which admittedly was enacted to
prevent the circumvention of the right of the
employee to be secured in x x (his) employment?'
As it is evident from even only the three examples
already given that Article 280 of the Labor Code,
under a narrow and literal interpretation, not only
fails to exhaust the gamut of employment
contracts to which the lack of a fixed period
would be an anomaly, but would also appear to
restrict, without reasonable distinctions, the right
of an employee to freely stipulate with his
employer the duration of his engagement, it
logically follows that such a literal interpretation
should be eschewed or avoided. The law must be
given reasonable interpretation, to preclude
absurdity in its application. Outlawing the whole
concept of term employment and subverting to
boot the principle of freedom of contract to
remedy the evil of employers' using it as a means
to prevent their employees from obtaining
security of tenure is like cutting off the nose to
spite the face or, more relevantly, curing a
headache by lopping off the head.
xxx xxx xxx
Accordingly, and since the entire purpose behind
the development of legislation culminating in the
present Article 280 of the Labor Code clearly
appears to have been, as already observed, to
prevent circumvention of the employee's right to
be secure in his tenure, the clause in said article
indiscriminately and completely ruling out all
written or oral agreements conflicting with the
concept of regular employment as defined therein
should be construed to refer to the substantive
evil that the Code itself has singled out:
agreements entered into precisely to circumvent
security of tenure. It should have no application
to instances where a fixed period of employment
was agreed upon knowingly and voluntarily by the
parties, without any force, duress or improper
pressure being brought to bear upon the
employee and absent any other circumstances
vitiating his consent, or where it satisfactorily
appears that the employer and employee dealt
with each other on more or less equal terms with
no moral dominance whatever
102

102
SUPREME COURT REPORTS ANNOTATED
Pakistan International Airlines Corporation vs.
Ople
being exercised by the former over the latter.
Unless thus limited in its purview, the law would
be made to apply to purposes other than those
explicitly stated by its framers; it thus becomes
pointless and arbitrary, unjust in its effects and
apt to lead to absurd and unintended
consequences."
(Italics supplied)
It is apparent from Brent School that the critical
consideration is the presence or absence of a
substantial indication that the period specified in
an employment agreement was designed to
circumvent the security of tenure of regular
employees which is provided for in Articles 280
and 281 of the Labor Code. This indication must
ordinarily rest upon some aspect of the
agreement other than the mere specification of a
fixed term of the employment agreement, or
upon evidence aliunde of the intent to evade.
Examining the provisions of paragraphs 5 and 6 of
the employment agreement between petitioner
PIA and private respondents, we consider that
those provisions must be read together and when
so read, the fixed period of three (3) years
specified in paragraph 5 will be seen to have been
effectively neutralized by the provisions of
paragraph 6 of that agreement. Paragraph 6 in
effect took back from the employee the fixed
three (3)-year period ostensibly granted by
paragraph 5 by rendering such period in effect a
facultative one at the option of the employer PIA.
For petitioner PIA claims to be authorized to
shorten that term, at any time and for any cause
satisfactory to itself, to a one-month period, or
even less by simply paying the employee a
month's salary. Because the net effect of
paragraphs 5 and 6 of the agreement here
involved is to render the employment of private
respondents Farrales and Mamasig basically
employment at the pleasure of petitioner PIA, the
Court considers that paragraphs 5 and 6 were
intended to prevent any security of tenure from
accruing in favor of private respondents even
during the limited period of three (3) years,13 and
thus to escape completely the thrust of Articles
280 and 281 of the Labor Code.
________________

13 See Biboso v. Victorias Milling Co., Inc., 76

SCRA 250 (1977).
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VOL. 190, SEPTEMBER 28, 1990

103
Pakistan International Airlines Corporation vs.
Ople
Petitioner PIA cannot take refuge in paragraph 10
of its employment agreement which specifies,
firstly, the law of Pakistan as the applicable law of
the agreement and, secondly, lays the venue for
settlement of any dispute arising out of or in
connection with the agreement "only [in] courts
of Karachi, Pakistan". The first clause of paragraph
10 cannot be invoked to prevent the application
of Philippine labor laws and regulations to the
subject matter of this case, i.e., the employer-
employee relationship between petitioner PIA
and private respondents. We have already
pointed out that that relationship is much
affected with public interest and that the
otherwise applicable Philippine laws and
regulations cannot be rendered illusory by the
parties agreeing upon some other law to govern
their relationship. Neither may petitioner invoke
the second clause of paragraph 10, specifying the
Karachi courts as the sole venue for the
settlement of disputes between the contracting
parties. Even a cursory scrutiny of the relevant
circumstances of this case will show the multiple
and substantive contacts between Philippine law
and Philippine courts, on the one hand, and the
relationship between the parties, upon the other:
the contract was not only executed in the
Philippines, it was also performed here, at least
partially; private respondents are Philippine
citizens and residents, while petitioner, although
a foreign corporation, is licensed to do business
(and actually doing business) and hence resident
in the Philippines; lastly, private respondents
were based in the Philippines in between their
assigned flights to the Middle East and Europe. All
the above contacts point to the Philippine courts
and administrative agencies as a proper forum for
the resolution of contractual disputes between
the parties. Under these circumstances,
paragraph 10 of the employment agreement
cannot be given effect so as to oust Philippine
agencies and courts of the jurisdiction vested
upon them by Philippine law. Finally, and in any
event, the petitioner PIA did not undertake to
plead and prove the contents of Pakistan law on
the matter; it must therefore be presumed that
the applicable provisions of the law of Pakistan
are the same as the applicable provisions of
Philippine law.14
______________

14 Miciano v. Brimo, 50 Phil. 867 (1924); Collector

of Internal Revenue v. Fisher, 110 Phil. 686 (1961).
104

104
SUPREME COURT REPORTS ANNOTATED
Pakistan International Airlines Corporation vs.
Ople
We conclude that private respondents Farrales
and Mamasig were illegally dismissed and that
public respondent Deputy Minister, MOLE, had
not committed any grave abuse of discretion nor
any act without or in excess of jurisdiction in
ordering their reinstatement with backwages.
Private respondents are entitled to three (3) years
backwages without qualification or deduction.
Should their reinstatement to their former or
other substantially equivalent positions not be
feasible in view of the length of time which has
gone by since their services were unlawfully
terminated, petitioner should be required to pay
separation pay to private respondents amounting
to one (1) month's salary for every year of service
rendered by them, including the three (3) years
service putatively rendered.
ACCORDINGLY, the Petition for Certiorari is
hereby DISMISSED for lack of merit, and the Order
dated 12 August 1982 of public respondent is
hereby AFFIRMED, except that (1) private
respondents are entitled to three (3) years
backwages, without deduction or qualification;
and (2) should reinstatement of private
respondents to their former positions or to
substantially equivalent positions not be feasible,
then petitioner shall, in lieu thereof, pay to
private respondents separation pay amounting to
one (1)-month's salary for every year of service
actually rendered by them and for the three (3)
years putative service by private respondents. The
Temporary Restraining Order issued on 13
September 1982 is hereby LIFTED. Costs against
petitioner.
SO ORDERED.
Fernan (C.J., Chairman), Gutierrez, Jr., Bidin
and Cortés, JJ., concur.
Petition dismissed. Order affirmed.
Note.—No violation by Labor Arbiter of rules of
administrative due process where company was
duly represented by counsel and given sufficient
opportunity to be heard and present evidence.
(Pantranco North Express, Inc. vs. National Labor
Relations Commission, 126 SCRA 526.)
——o0o——

105

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