FACTS:

Petitioner Placewell International Services Corporation (PISC) deployed respondent Ireneo B. Camote to work as a building carpenter for SAAD Trading and Contracting Co. (SAAD) in the Kingdom of Saudi Arabia (KSA) with a contract duration of two years and a salary of US$370.00 per month. However, during his employment, respondent was found incompetent by his foreign employer, SAAD. Despite this, respondent pleaded for his retention and agreed to accept a lower salary of SR 800.00 per month. Respondent worked for SAAD until his return to the Philippines after two years. Respondent then filed a complaint for monetary claims, alleging that he and his fellow workers were required to sign a new employment contract written in Arabic, under the threat of losing their jobs if they refused. He claimed that he only received SR 590.00 per month for the entire duration of the new contract, was not given overtime pay, and encountered difficulties pursuing their cause of action with the Philippine Embassy. The labor arbiter held that the modification of respondent's employment contract was not allowed under Republic Act No. 8042 (RA 8042) and that respondent should have received the original contracted salary of US$370.00 per month. The labor arbiter also found that there was no differential in respondent's overtime pay and awarded attorney's fees. Petitioner appealed to the NLRC, which set aside the labor arbiter's decision for lack of cause of action. Respondent filed a petition for certiorari with the Court of Appeals, which set aside the NLRC's resolution and reinstated the labor arbiter's decision. The Court of Appeals held that there was a diminution of respondent's salary in violation of RA 8042 and that the allegation of incompetence against respondent was unsubstantiated.

ISSUES:

1. Whether the modification of respondent's employment contract is allowed under Section 10 of Republic Act No. 8042 (R.A. No. 8042).

2. Whether there was just cause for the demotion of respondent.

RULING:

1. The Court of Appeals held that the modification of respondent's employment contract, which resulted in a diminution of salary, is not allowed under Section 10 of R.A. No. 8042. Therefore, respondent should have received the original contracted salary of US$370.00 per month instead of the lower rate given by the employer.

2. The Court of Appeals found that the allegation of incompetence against respondent was not substantiated. Since there was no just cause for the demotion, the appellate court reinstated the decision of the Labor Arbiter.

PRINCIPLES:

• Modification of employment contracts resulting in a diminution of salary is not allowed under Section 10 of Republic Act No. 8042.

• In order for a demotion to be valid, there must be just cause shown.