G.R. No. L-104776, G.R. Nos. 104911-14, G.R. Nos. 105029-32. December 5, 1994.
Bienvenido M. Cadalin, et al., petitioners, vs. Philippine Overseas Employment Administration’s Administrator, National Labor Relations Commission, Brown & Root International, Inc. and/or Asia International Builders Corporation, respondents.

FACTS

The case involves consolidated petitions concerning the money claims of 1,767 overseas contract workers employed by Brown & Root International, Inc. and its local agent, Asia International Builders Corporation, for construction projects in the Middle East. The workers filed complaints for underpayment of wages, non-payment of overtime pay, holiday pay, vacation pay, and other benefits as stipulated in their contracts and mandated by Philippine law. The Philippine Overseas Employment Administration (POEA) initially awarded claims to a large number of complainants.
The National Labor Relations Commission (NLRC), on appeal, reversed the POEA’s decision. The NLRC applied the principle of lex loci contractus (the law of the place of the contract), holding that the claims had prescribed under the laws of Saudi Arabia and Bahrain, where the employment contracts were performed. The NLRC ruled that the three-year prescriptive period under Article 291 of the Labor Code of the Philippines was inapplicable, thereby dismissing the claims.

ISSUE

Whether the prescriptive period for filing the money claims of overseas contract workers is governed by Philippine law or by the law of the host country.

RULING

The Supreme Court ruled in favor of the workers, reinstating the POEA’s award with modifications. The Court held that the prescriptive period for filing the claims is governed by Philippine law. The Court applied Article 291 of the Labor Code, which provides a three-year prescriptive period from the time the cause of action accrued.
The legal logic is anchored on the principle that Philippine labor laws and regulations, specifically those administered by the POEA, have extraterritorial application in matters involving the employment of Filipino workers overseas. The Standard Employment Contract for overseas workers is designed by the Philippine government to protect its citizens, and its provisions, including those on prescription, are deemed written into every contract. The Court emphasized that to apply foreign prescriptive periods would be prejudicial to Filipino workers, create instability, and contravene the state’s policy of affording protection to labor. Therefore, the claims had not prescribed under Philippine law, and the NLRC committed grave abuse of discretion in dismissing them on that ground.