Law penalizes contract substitution for OFWs

Recently, DivinaLaw held its first international free legal aid clinic (Dulog Legal) in Chongqing, China. Co-organized with the Philippine Consulate General in Chongqing, the event gathered 31 participants, both online and on-site, including overseas Filipino workers (OFWs) and consulate personnel.

Notably, one recurring question was raised: May a foreign employer compel an OFW to substitute a DMW-approved employment contract already signed by both parties — the OFW and the foreign employer or employment agency — prior to deployment?

The answer is no.

A case in point is Fil-Expat Placement Agency, Inc. vs. Lee (G.R. 250439, 22 September 2020), where the Supreme Court held that not only contract substitution, but even the mere attempt by a foreign employer to compel it, is illegal and punishable under Philippine law.

In that case, Fil-Expat Placement Agency Inc. (Fil-Expat) hired Maria Antoniette Cudal Lee (Lee) as an orthodontist specialist in the Kingdom of Saudi Arabia (KSA) on behalf of its foreign principal, Thanaya Al-Yaqoot, for a contract period of two years.

Lee alleged that in May 2016, her employer asked her to sign a document written in Arabic and required her to agree that only half of her stipulated salary would be declared to the KSA government for insurance purposes. Although hesitant, Lee eventually signed the document. Thereafter, the employer repeatedly forced her to execute a new employment contract despite the existence of a POEA-approved one. When she refused, she was allegedly harassed and eventually repatriated.

Lee then filed a complaint for breach of contract and constructive dismissal against Fil-Expat before the Labor Arbiter (LA). The LA ruled, among others, that the foreign employer’s attempt to force Lee to sign a second contract constituted illegal contract substitution and, accordingly, awarded monetary claims and damages in her favor.

On appeal, the National Labor Relations Commission (NLRC) reversed and accepted Fil-Expat’s defense, including alleged compliance with foreign law. However, upon further elevation, the Court of Appeals (CA) reinstated the LA’s ruling, finding substantial evidence that the foreign employer attempted to force Lee into signing a new employment contract. The CA stressed that even the attempt to commit contract substitution must be punished in order to prevent repetition.

Ultimately, the Supreme Court upheld the ruling of the CA. It reminded that the substitution or alteration of employment contracts is expressly listed as a prohibited practice under Article 34(i) of the Labor Code. More importantly, the Court emphasized that to substitute or alter, to the prejudice of the worker, employment contracts approved and verified by the Department of Labor and Employment — from the time of actual signing up to the expiration of the contract, without DoLE approval — constitutes illegal recruitment under Section 6(i) of Republic Act 8042.

The Court rejected Fil-Expat’s defense that there was no contract substitution simply because Lee did not sign a second contract. It categorically ruled that the mere attempt to substitute or alter an approved employment contract to the worker’s prejudice — even if not consummated — is illegal and punishable.

In closing, this ruling sends a clear and timely reminder: the protection afforded to OFWs does not end upon deployment. DMW-approved contracts are not mere formalities; they embody minimum standards that safeguard the dignity, security, and economic well-being of Filipino workers abroad. Any attempt to weaken these protections — whether successful or not — will not be tolerated. For OFWs confronted with contract substitution, the law is clear, the remedies are available, and the State stands firmly on their side.