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DUMEZ COMPANY OF FRANCE v. NLRC

FACTS:

The case involves a dispute between petitioner Dumez Company of France ("Dumez") and private respondent Florante Jose regarding the termination of the latter's employment. Dumez, a French corporation, hired Filipino workers through Eastern Construction Company, Inc. ("ECCOI"), a Philippine corporation. Dumez needed additional manpower for its Medical City project in Riyadh, Saudi Arabia, and hired four Senior Draftsmen, including Jose, at a proposed wage of US$600 per month. ECCOI summoned the draftsmen and provided them with a Manpower Requisition Slip indicating their name, category, and monthly basic salary. The draftsmen entered into overseas employment agreements with ECCOI and also signed agreements with Dumez. However, Jose's agreement showed a monthly base salary of US$680, while the others' agreements showed US$600. Jose started working in January 1985, but Dumez discovered the salary discrepancy when preparing his first month's salary papers. Dumez claimed it was a typographical error and requested Jose to sign new contract papers showing the correct monthly salary of US$600, but Jose insisted on being paid US$680. Dumez eventually agreed to pay US$680 for the first month but terminated Jose's services on February 9, 1985, citing surplus employee and retrenchment as grounds. Jose filed a complaint for illegal dismissal before the POEA, which dismissed it for lack of merit. The NLRC, on appeal, ordered Dumez to pay Jose's salary for the unexpired portion of his contract term, ruling that the dismissal was due to wage distortion and not valid grounds under the Labor Code.

ISSUES:

  1. Whether there was a breach of contract of employment on the part of Dumez.

  2. Whether the termination of private respondent's services was for a just cause.

  3. Whether there was a wage distortion.

RULING:

  1. The termination of private respondent's services was for a just cause in accordance with Article 284 of the Labor Code.

  2. There was no breach of contract on Dumez' part as private respondent had previous knowledge that the monthly salary was in truth US$600.00 since he was given a copy of the Manpower Requisition Slip.

  3. The dismissal was not due to "surplus employee, excess of manpower and retrenchment" but rather to "wage distortion", which is not a valid ground for termination of employment under the Labor Code.

PRINCIPLES:

  • Termination of employment may only be done for just or authorized causes in accordance with the Labor Code.

  • A breach of contract of employment may occur when there is a violation of the terms and conditions agreed upon by the parties.

  • Wage distortion arises when salary scales are disrupted, leading to inconsistencies in the compensation of employees.