Edi-Staff Builders International VS NLRC

EDI-STAFFBUILDERS VS.
NLRC
G.R. NO. 145587 OCTOBER 26, 2007
FACTS:
Petitioner EDI is a corporation engaged in recruitment and placement of OFWs. ESI

is another recruitment agency which collaborated with EDI to process the
documentation and deployment of private respondent to Saudi Arabia.
Private respondent Gran was an OFW recruited by EDI, and deployed by ESI to work
for OAB, in Riyadh, Kingdom of Saudi Arabia.
It appears that OAB asked EDI through its October 3, 1993 letter for curricula vitae of
qualified applicants for the position of “Computer Specialist.”7 In a facsimile
transmission dated November 29, 1993, OAB informed EDI that, from the
applicants’ curricula vitae submitted to it for evaluation, it selected Gran for the
position of “Computer Specialist.” The faxed letter also stated that if Gran agrees to
the terms and conditions of employment contained in it, one of which was a monthly
salary of SR (Saudi Riyal) 2,250.00 (USD 600.00), EDI may arrange for Gran’s
immediate dispatch.
After accepting OAB’s offer of employment, Gran signed an employment contract

that granted him a monthly salary of USD 850.00 for a period of two years. Gran was
then deployed to Riyadh, Kingdom of Saudi Arabia on February 7, 1994.
Upon arrival in Riyadh, Gran questioned the discrepancy in his monthly salary—his
employment contract stated USD 850.00; while his POEA Information Sheet
indicated USD 600.00 only. However, through the assistance of the EDI office in
Riyadh, OAB agreed to pay Gran USD 850.00 a month.
After Gran had been working for about five months for OAB, his employment was
terminated through OAB’s July 9, 1994 letter, on the following grounds:
1. Non-compliance to contract requirements by the recruitment agency primarily on
your salary and contract duration.
2. Non-compliance to pre-qualification requirements by the recruitment agency[,]
vide OAB letter ref. F-5751-93, dated October 3, 1993.
3. Insubordination or disobedience to Top Management Order and/or instructions
(non-submittal of daily activity reports despite several instructions).
On July 11, 1994, Gran received from OAB the total amount of SR 2,948.00
representing his final pay, and on the same day, he executed a Declaration releasing
OAB from any financial obligation or otherwise, towards him.
After his arrival in the Philippines, Gran instituted a complaint, on July 21, 1994,
against ESI/EDI, OAB, Country Bankers Insurance Corporation, and Western Guaranty
Corporation with the NLRC, National Capital Region, Quezon City, which was
docketed as POEA ADJ (L) 94-06-2194 for underpayment of wages/salaries and illegal
dismissal.
ISSUE:
1. Whether or not Gran’s dismissal is justifiable by reason of incompetence,
insubordination, and disobedience
2. Whether or not Gran was afforded due process prior to termination.
3. Whether or not Gran is entitled to backwages for the unexpired portion of his
contract.
RULING:
1. In cases involving OFWs, the rights and obligations among and between the OFW,
the local recruiter/agent, and the foreign employer/principal are governed by the
employment contract. A contract freely entered into is considered law between the
parties; and hence, should be respected. In formulating the contract, the parties may
establish such stipulations, clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law, morals, good customs, public
order, or public policy.
In the present case, the employment contract signed by Gran specifically states that
Saudi Labor Laws will govern matters not provided for in the contract (e.g. specific
causes for termination, termination procedures, etc.). Being the law intended by the
parties (lex loci intentiones) to apply to the contract, Saudi Labor Laws should govern
all matters relating to the termination of the employment of Gran.
In international law, the party who wants to have a foreign law applied to a dispute
or case has the burden of proving the foreign law. The foreign law is treated as a
question of fact to be properly pleaded and proved as the judge or labor arbiter
cannot take judicial notice of a foreign law. He is presumed to know only domestic or
forum law.
Unfortunately for petitioner, it did not prove the pertinent Saudi laws on the matter;
thus, the International Law doctrine ofpresumed-identity approach or processual
presumption comes into play. Where a foreign law is not pleaded or, even if
pleaded, is not proved, the presumption is that foreign law is the same as ours.
Thus, we apply Philippine labor laws in determining the issues presented before us.
In illegal dismissal cases, it has been established by Philippine law and jurisprudence
that the employer should prove that the dismissal of employees or personnel is legal
and just.
Section 33 of Article 277 of the Labor Code states that:

ART. 277. MISCELLANEOUS PROVISIONS
(b) Subject to the constitutional right of workers to security of tenure and their right
to be protected against dismissal except for a just and authorized cause and without
prejudice to the requirement of notice under Article 283 of this Code, the employer
shall furnish the worker whose employment is sought to be terminated a written
notice containing a statement of the causes for termination and shall afford the
latter ample opportunity to be heard and to defend himself with the assistance of his
representative if he so desires in accordance with company rules and regulations
promulgated pursuant to guidelines set by the Department of Labor and
Employment. Any decision taken by the employer shall be without prejudice to the
right of the workers to contest the validity or legality of his dismissal by filing a
complaint with the regional branch of the National Labor Relations Commission. The
burden of proving that the termination was for a valid or authorized cause shall rest
on the employer.
Petitioner’s imputation of incompetence on private respondent due to his

“insufficient knowledge in programming and zero knowledge of the ACAD system”
based only on the above mentioned letters, without any other evidence, cannot be
given credence.
An allegation of incompetence should have a factual foundation. Incompetence may

be shown by weighing it against a standard, benchmark, or criterion. However, EDI
failed to establish any such bases to show how petitioner found Gran incompetent.
In addition, the elements that must concur for the charge of insubordination or
willful disobedience to prosper were not present.
In Micro Sales Operation Network v. NLRC, we held that:
For willful disobedience to be a valid cause for dismissal, the following twin elements
must concur: (1) the employee’s assailed conduct must have been willful, that is,
characterized by a wrongful and perverse attitude; and (2) the order violated must
have been reasonable, lawful, made known to the employee and must pertain to the
duties which he had been engaged to discharge.
EDI failed to discharge the burden of proving Gran’s insubordination or willful

disobedience. As indicated by the second requirement provided for in Micro Sales
Operation Network, in order to justify willful disobedience, we must determine
whether the order violated by the employee is reasonable, lawful, made known to
the employee, and pertains to the duties which he had been engaged to discharge.
In the case at bar, petitioner failed to show that the order of the company which was
violated—the submission of “Daily Activity Reports”—was part of Gran’s duties as a
Computer Specialist. Before the Labor Arbiter, EDI should have provided a copy of
the company policy, Gran’s job description, or any other document that would show
that the “Daily Activity Reports” were required for submission by the employees,
more particularly by a Computer Specialist.
Even though EDI and/or ESI were merely the local employment or recruitment
agencies and not the foreign employer, they should have adduced additional
evidence to convincingly show that Gran’s employment was validly and legally
terminated. The burden devolves not only upon the foreign-based employer but also
on the employment or recruitment agency for the latter is not only an agent of the
former, but is also solidarily liable with the foreign principal for any claims or
liabilities arising from the dismissal of the worker.
Thus, petitioner failed to prove that Gran was justifiably dismissed due to

incompetence, insubordination, or willful disobedience.
2. Under the twin notice requirement, the employees must be given 2 notices
before their employment could be terminated: (1) a first notice to apprise the
employees of their fault, and (2) a second notice to communicate to the employees
that their employment is being terminated. In between the first and second notice,
the employees should be given a hearing or opportunity to defend themselves
personally or by counsel of their choice.
A careful examination of the records revealed that, indeed, OAB’s manner of

dismissing Gran fell short of the two notice requirement. While it furnished Gran the
written notice informing him of his dismissal, it failed to furnish Gran the written
notice apprising him of the charges against him, as prescribed by the Labor
Code. Consequently, he was denied the opportunity to respond to said notice. In
addition, OAB did not schedule a hearing or conference with Gran to defend himself
and adduce evidence in support of his defenses. Moreover, the July 9, 1994
termination letter was effective on the same day. This shows that OAB had already
condemned Gran to dismissal, even before Gran was furnished the termination
letter. It should also be pointed out that OAB failed to give Gran the chance to be
heard and to defend himself with the assistance of a representative in accordance
with Article 277 of the Labor Code. Clearly, there was no intention to provide Gran
with due process. Summing up, Gran was notified and his employment arbitrarily
terminated on the same day, through the same letter, and for unjustified grounds.
Obviously, Gran was not afforded due process.
Pursuant to the doctrine laid down in Agabon, an employer is liable to pay nominal
damages as indemnity for violating the employee’s right to statutory due process.
Since OAB was in breach of the due process requirements under the Labor Code and
its regulations, OAB, ESI, and EDI, jointly and solidarily, are liable to Gran in the
amount of PhP 30,000.00 as indemnity.
3. We reiterate the rule that with regard to employees hired for a fixed period
of employment, in cases arising before the effectivity of R.A. No. 8042 (Migrant
Workers and Overseas Filipinos Act) on August 25, 1995, that when the contract is
for a fixed term and the employees are dismissed without just cause, they are
entitled to the payment of their salaries corresponding to the unexpired portion of
their contract.59 On the other hand, for cases arising after the effectivity of R.A. No.
8042, when the termination of employment is without just, valid or authorized cause
as defined by law or contract, the worker shall be entitled to the full reimbursement
of his placement fee with interest of 12% per annum, plus his salaries for the
unexpired portion of his employment contract or for 3 months for every year of the
unexpired term whichever is less.
In the present case, the employment contract provides that the employment
contract shall be valid for a period of 2 years from the date the employee starts to
work with the employer. Gran arrived in Riyadh, Saudi Arabia and started to work on
February 7, 1994; hence, his employment contract is until February 7, 1996. Since he
was illegally dismissed on July 9, 1994, before the effectivity of R.A. No. 8042, he is
therefore entitled to backwages corresponding to the unexpired portion of his
contract, which was equivalent to USD 16,150.

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EDI-STAFFBUILDERS VS.

Petitioner EDI is a corporation engaged in recruitment and placement of OFWs. ESI

After accepting OAB’s offer of employment, Gran signed an employment contract

Section 33 of Article 277 of the Labor Code states that:

Petitioner’s imputation of incompetence on private respondent due to his

An allegation of incompetence should have a factual foundation. Incompetence may

In Micro Sales Operation Network v. NLRC, we held that:

EDI failed to discharge the burden of proving Gran’s insubordination or willful

Thus, petitioner failed to prove that Gran was justifiably dismissed due to

A careful examination of the records revealed that, indeed, OAB’s manner of

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