G.R. No.

61594

September 28, 1990

PAKISTAN INTERNATIONAL AIRLINES CORPORATION v. HON. BLAS F. OPLE (as Minister of

Labor), HON. VICENTE LEOGARDO, JR. (as Deputy Minister), ETHELYNNE B. FARRALES and
MARIA MOONYEEN MAMASIG

Facts: PIA illegally dismissed Farrales and Mamasig because their termination was without clearance from MOLE.
Despite the contractual agreement that reserved the right of termination to PIA, labor is a matter of public policy and
interests and hence, the Labor Code applies. The Labor Code prohibits the limitation of employment for the purpose
of circumventing security of tenure and requires MOLE clearance for termination. Hence, the termination was
illegal because the provision in the contract is facultative, dependent solely upon the will of PIA and thus preventing
security of tenure of F,M, and because the termination was made without clearance, thus presumed to be without
cause.

> Two Contracts of Employment (signed December 2, 1978, effective January 9, 1979) between PIA, a foreign
corporation with license in the Ph, and Ethelynne Farrales and Maria Mamasig as flight stewardesses for a 3y period
> Conditions: Right of PIA to terminate employment given a 1m notice in writing or payment of 1ms worth of
salary; Applicability of Pakistan laws and sole jurisdiction of the Courts of Karachi in any matter arising from the
agreement > Employment of Farrales and Mamasig until Notices of Termination (dated August 1, 1980, effective
September 1, 1990) was served to them on August 2, 1980, 1y4m prior to the expiration of their contracts > JOINT
SUIT by Farrales and Mamasig against PIA in Ministry of Labor and Employment for illegal dismissal and nonpayment of benefits and bonuses > Contention of PIA: that F,M were habitual absentees, that they bring in sizeable
quantities of personal effects from abroad, that customs officials warned Manila International Airport to advise F,M
to stop the habit > MOLE, thru the Regional Director, ruled in favor of F,M (January 22, 1981), ordering their
reinstatement because (1) their dismissal was (conclusively presumed to be) without just cause because it was
without MOLEs clearance (as required by Sec. 278, (Labor Code concerning regular employees), and hence, illegal;
(2) the 3y period of employment violated the Labor Code (Art. 280-281) on regular and casual employment where
F,M have become regular employees for having rendered continued services for more than 1y > Contention of PIA:
(1) MOLE has no jurisdiction; (2) No due process due to no oral hearing; (3) order of reinstatement is a violation of
their rights in the employment contracts

> SC HELD: Illegal Dismissal

> Ph Laws apply despite agreement that Pakistan laws should govern BECAUSE Labor is a matter of public policy
> Party Autonomy is not absolute > Contract is the law between the parties but Art. 1306 requires that they not be
contrary to law, morals, good customs, public order or public policy > Laws relating to public policy are thus
deemed written into the contract > Laws on labor and employment cannot thus be excluded from contracts
especially where (1) the contracts were executed and performed in the Ph; (2) F,M are Ph citizens and are based in
the Ph; (3) PIA is a resident of the Ph; (4) No proof of the relevant Pakistani laws and hence, they are presumed to
be the same as the Ph

> Par. 5&6 of the Contract, providing for the 3y period and right of PIA to termination, is void for circumventing the
security of tenure of the employees > Condition is facultative ~ authority to shorten the term is solely dependent
upon the will of PIA at any time and for any cause satisfactory to itself > Although a contract providing for
employment with a fixed period is not necessarily unlawful, it must have no intent to circumvent the law(ie where
the employee insists upon a period; where the nature of the engagement is such that a definite date of termination is
a sine qua non ~ Otherwise, the law would restrict without reasonable distinctions the right of an employee to freely
stipulate with his employer the duration of his engagement) > Evil sought to be avoided: agreements entered into
precisely to circumvent security of tenure > Must have been mutually and voluntarily made by the parties

> MOLE with jurisdiction > Regional Director given authority under Labor Code to reinstate employees who were
illegally dismissed by reason of lack of clearance from MOLE

> Due process present > Opportunity to be heard in position papers > PIA did not choose to present evidence