GR 166920; (February, 2007) (Digest)
G.R. No. 166920 . February 19, 2007.
PACIFIC CONSULTANTS INTERNATIONAL ASIA, INC. and JENS PETER HENRICHSEN, Petitioners, vs. KLAUS K. SCHONFELD, Respondent.
FACTS
Respondent Klaus Schonfeld, a Canadian citizen, was hired in 1997 by Pacific Consultants International (PCI) of Japan through its president, Jens Peter Henrichsen. The contract stated he was to be “seconded” to the Philippine subsidiary, Pacicon Philippines, Inc. (PPI), as Sector Manager for Water and Sanitation. His salary was to be paid partly by PCI and partly by PPI. The contract contained a clause submitting any dispute to arbitration in London. Upon arrival, PPI secured an Alien Employment Permit (AEP) from the Philippine Department of Labor and Employment for Schonfeld, designating PPI as his employer. He worked in Manila, received salaries and reimbursements from PPI, and reported to Henrichsen. In 1999, Henrichsen terminated Schonfeld’s employment. Schonfeld filed a complaint for illegal dismissal against PCI, Henrichsen, and PPI before the National Labor Relations Commission (NLRC).
ISSUE
Whether the Labor Arbiter and the NLRC have jurisdiction over Schonfeld’s complaint for illegal dismissal, considering the contract’s arbitration clause in London.
RULING
Yes, the Labor Arbiter and NLRC have jurisdiction. The Supreme Court affirmed the Court of Appeals’ ruling that Schonfeld’s employment was principally situated in the Philippines, making Philippine labor laws applicable. The arbitration clause in the contract is void as applied to this dispute. The legal logic is twofold. First, the issuance of an AEP by the DOLE is a positive act bringing the alien employee within the coverage of Philippine labor laws and conferring jurisdiction on local labor tribunals. The AEP specifically identified PPI as the local employer. Second, the principle of effective access to justice and protection of labor under the Constitution mandates that an employee cannot be compelled to litigate in a foreign forum, as this would deprive him of the protection of Philippine statutes and make redress prohibitively expensive. The contract’s selection of a foreign arbitral forum contravenes public policy designed to protect local and alien employees working in the Philippines. Therefore, the NLRC properly assumed jurisdiction over the illegal dismissal case.