G.R. No. 82340 ; August 12, 1991
DUMEZ COMPANY OF FRANCE, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and FLORANTE JOSE, respondents.

FACTS

Petitioner Dumez Company of France, a French corporation, hired Filipino workers through its local agent, Eastern Construction Company, Inc. (ECCOI). In 1984, Dumez needed Senior Draftsmen for a project in Saudi Arabia at a proposed wage of US$600 per month. Private respondent Florante Jose was among those hired. While the employment agreements of other draftsmen reflected a US$600 monthly salary, Jose’s contract with Dumez, signed on 16 January 1985, stated a monthly base salary of US$680, though it retained the same hourly rate of US$2.50. Upon Jose’s commencement of work on 23 January 1985, Dumez discovered the discrepancy, attributing it to a clerical error, and asserted the correct salary was US$600. Jose insisted on the US$680 rate. Dumez paid him US$680 for the first month but conditioned it on a transfer to a higher job classification, which was unavailable. His services were terminated on 9 February 1985 on the ground of “surplus employee, excess of manpower and retrenchment,” and he was repatriated.

ISSUE

Whether a valid contract of employment existed between the parties and, if not, whether petitioner is liable for damages arising from the mutual mistake in the contract’s execution.

RULING

The Supreme Court ruled that no valid contract of employment was perfected. The essential element of consent was absent due to a mutual mistake regarding a material term—the monthly salary. Petitioner intended to offer only US$600, while private respondent, based on the written contract, would only accept US$680. There was no concurrence of offer and acceptance on the subject matter and cause, which are essential for a contract under Article 1319 of the Civil Code. The Court distinguished this from a voidable contract due to vitiated consent, as here, consent was entirely lacking from the outset. However, the Court held petitioner liable under general principles of equity. The mutual mistake was enabled by petitioner’s own negligence in the clerical processing of the employment papers. As between two innocent parties, the one whose negligence enabled the damage must bear the loss. Consequently, while reinstating the POEA’s dismissal of the illegal dismissal complaint, the Court modified the decision to award Jose US$1,200 (equivalent to two months’ salary at US$600) as equitable compensation for the frustration of his expectations, which had some basis in the erroneous contract.