Philippines: Decision on upholding Philippine laws for foreign companies

On 14 February 2024, The Supreme Court of the Philippines ruled that discrimination based on HIV status is prohibited under Philippine law, and foreign laws contrary to these principles cannot be enforced.
The Supreme Court stated that Philippine laws apply to overseas employment contracts unless specific conditions for foreign laws are met.
It ruled that the Kingdom of Saudi Arabia's (KSA) law deeming individuals with HIV as unfit to work contradicts Philippine law and that the dismissal based on HIV status was unlawful.

The case concerns a Filipino worker employed in the KSA under a two-year contract, who was terminated after 15 months when a routine medical examination revealed he was HIV positive. Upon his return to the Philippines, he filed a complaint against Bison Management Corporation and his foreign employer for illegal dismissal, discrimination, and various unpaid benefits.

The Labour Arbiter dismissed his complaint, referencing KSA's policy against employing HIV-positive individuals. However, upon appeal, the National Labour Relations Commission (NLRC) reversed this decision, ruling that he was illegally dismissed. The NLRC ordered Bison and the other respondents to compensate him for the unexpired portion of his contract, unpaid salaries, vacation leave, moral and exemplary damages, and attorney's fees.

The Court of Appeals upheld the NLRC's decision, emphasising that Philippine law governs the employment contract based on the principle of lex loci contractus. The Court cited Section 35 of Republic Act No. 8504, which prohibits discrimination based on HIV status from pre-employment to post-employment. The Court affirmed that the dismissal based solely on HIV status was unlawful.

The Supreme Court stated that Philippine laws apply to overseas employment contracts unless specific conditions for foreign laws are met (explicit stipulation, proof of the foreign law, compliance with Philippine public policy, and processing through the Philippine Overseas Employment Administration (POEA).

In the case, the company failed to prove the foreign law and its consistency with Philippine public policy, and the Supreme Court found the termination based on HIV status unlawful.

This ruling emphasises that employment contracts involving Filipino workers must comply with Philippine laws, regardless of foreign policies. Employers, including recruitment agencies, must ensure non-discriminatory practices and contractual agreements cannot override the protections provided under Philippine law, especially in matters affecting public interest and policy.