G.R. No. 61594, 28 September 1990


Pakistan International Airlines Corporation (“PIA”), a foreign corporation licensed to do business in the Philippines, executed in Manila two (2) separate contracts of employment, one with private respondent Ethelynne B. Farrales and the other with private respondent Ma. M.C. Mamasig.

The contracts provided that (1) the Duration of Employment is for a period of 3 years, (2) PIA reserves the right to terminate this agreement at any time by giving the EMPLOYEE notice in writing in advance one month before the intended termination or in lieu thereof, by paying the EMPLOYEE wages equivalent to one month’s salary; and (3) the agreement shall be construed and governed under and by the laws of Pakistan, and only the Courts of Karachi, Pakistan shall have the jurisdiction to consider any matter arising out of or under this agreement.

Farrales and Mamasig then commenced training in Pakistan and after such, they began discharging their job functions as flight attendants with the base station in Manila and flying assignments to different parts of the Middle East and Europe.

Roughly one (1) year and four (4) months prior to the expiration of the contracts of employment, PIA sent separate letters to private respondents advising both that their services as flight stewardesses would be terminated. PIA claimed that both were habitual absentees, were in the habit of bringing in from abroad sizeable quantities of “personal effects”.

Prior Proceedings:  Regional Director of MOLE ordered the reinstatement of private respondents with full back wages or, in the alternative, the payment to them of the amounts equivalent to their salaries for the remainder of the fixed three-year period of their employment contracts having attained the status of regular employees.

On appeal, the Deputy Minister of MOLE adopted the findings of fact and conclusions of the Regional Director and affirmed the latter’s award save for the portion thereof giving PIA the option, in lieu of reinstatement, “to pay each of the complainants [private respondents] their salaries corresponding to the unexpired portion of the contract[s] [of employment] . . .”

Hence, this instant Petition for Certiorari by PIA.


Whether or not the provisions of the contract superseded the general provisions of the Labor Code


No. The principle of freedom to contract is not absolute. Art. 1306 provides that stipulations by the parties may be allowed provided they are not contrary to law, morals, good customs, public order & policy. Thus, the principle of autonomy of contracting parties must be counterbalanced with the general rule that provisions of the applicable law are deemed written into the contract.

In this case, the law relating to labor and employment is an area in which the parties are not at liberty to insulate themselves and their relationship by simply contracting with each other.

 * Case digest by Kristine Camille, Gahuman LLB-1, Andres Bonifacio Law School, SY 2017-2018