DUMEZ COMPANY OF FRANCE, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION AND FLORANTE JOSE, RESPONDENTS.

Petitioner Dumez Company of France (“Dumez”) is a
French corporation which hires Filipino workers through Eastern Construction
Company, Inc. (“ECCOI”), a corporation existing under the laws of and
domiciled in the Philippines.  Sometime in 1984, Dumez needed additional
manpower, including four (4) Senior Draftsmen at a proposed wage of US$600.00
per month for its Medical City
project in Riyadh, Saudi
Arabia. 
Upon approval by the Philippine Overseas Employment Administration
(“POEA”) of its corresponding request, petitioner alleges, ECCOI
summoned these draftsmen and gave each of them copy of their respective
Manpower Requisition Slip which indicated their name, category (“Senior
Draftsmen”) and monthly basic salary (US$600.00).  Among the draftsmen hired was private
respondent Florante Jose.  Consequently, ECCOI and the draftsmen entered
into an overseas employment agreement.

Since ECCOI has no personality in Saudi
Arabia, the draftsmen signed another set of
overseas employment agree­ments with Dumez. 
Private respondent signed his agreement on 16 January 1985.  The
monthly salary under Section 3 (j) of that agreement is based on eight (8)
hours per day for six (6) working days and one (1) paid rest day per week or a
total of 240 hours per month.  Though the
employment agreements of the other three (3) Senior Draftsmen reflected the
amount of US$600.00 as the monthly base salary and US$2.50 as the normal hourly
rate, that of private respondent, however, showed the amount of US$680.00
monthly base salary but with the same hourly rate of US$2.50.

On 23 January 1985,
private respondent commenced working at Medical
City, Riyadh,
Saudi Arabia.  Petitioner avers that it discovered the
discrepancy in respondent’s monthly base salary when the site management in Saudi
Arabia prepared the papers relating to
respondent’s first month’s salary.  This
was subsequently communicated to the Philippine office.  Mrs. Carmen Francisco of ECCOI explained in
her affidavit that the discrepancy was due to a typographical error, further
alleging that private respondent was given a copy of the Manpower Requisition
Slip prior to his signing of the employment agreement with Dumez.  Petitioner also claims that Florante Jose was subsequently informed that the necessary
correction would have to be made on his salary and was requested to sign new
contract papers showing his monthly basic salary as US$600.00 with an hourly
rate of US$2.50, but that Jose insisted on being paid US$680.00 a month.  Petitioner eventually acceded by paying
US$680.00 for services rendered in the first month of his employment subject,
however, to the condition that Mr. Jose would be transferred to a new job
classification that would match his desired salary scale.  Petitioner found that no job with a higher classification was at that
particular time available.  On 9 February 1985, Mr. Jose’s services
were terminated on the ground of “surplus employee, excess of manpower and
retrenchment.” On 28 February
1985, private respondent was repatriated to the Philippines
with petitioner shouldering his return fare expenses.

On 13 September 1985,
private respondent filed a complaint for illegal dismissal before the POEA,
raising the issue of whether or not there had been a breach of contract of
employment on the part of Dumez.

The POEA in its decision dated 9 April 1987 dismissed the complaint for lack of merit,
holding that the termination of private respondent’s services was for a just
cause in accordance with Article 284 of the Labor Code and that the requirement
of notice was duly complied with.  The
POEA also ruled that there was no breach of contract on Dumez’ part for the
reason that 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. 
It likewise noted that computation of the monthly base salary at US$2.50
per hour for 240 hours per month results in US$600.00.

On appeal, the National Labor Relations Commission
(“NLRC”) in its decision dated 20 January 1988 reversed the POEA, and
ordered petitioner Dumez to pay private respondent’s salary corresponding to
the unexpired portion of his contract term of one (1) year in the amount of
US$680.00 per month at the peso equivalent thereof at the time of payment.  It held that the dismissal was not due to “surplus employee,
excess of manpower and retrenchment” but rather to “wage
distortion” which is not one of the valid grounds for termination of
employment under the Labor Code.  The
Commission also ruled that private respondent was not a “surplus
employee” because he was hired for a one year contract and he only worked
for one month and that if there had not been a dispute regarding his salary,
respondent would not have been dismissed. 
Public respondent found the allegation of retrenchment as unavailing
considering that a valid retrenchment measure must be based on actual and
substantial economic losses which had not been duly supported by petitioner’s
evidence.

In the instant Petition, petitioner Dumez argues that there was
no illegal dismissal considering that the contract of employment was inexistent
as there was no meeting of the
minds concerning the offer and acceptance. 
Even assuming arguendo, petitioner
continues, that there existed a contract
of employment, private respondent’s refusal to accept the actual salary of
US$600.00 constituted serious misconduct, fraud or an analogous case under
Article 283 (a), (c) and (d) of the Labor Code.

Private respondent Jose, on the other hand, contends that there
was constituted a valid and subsisting
contract of employment but that petitioner Dumez reneged on its
undertaking.  The Solicitor General in
its Comment suggests that the contract in controversy was voidable
by reason of vitiated consent.

It is clear from the facts here that the amount of the monthly
salary base was a prime or essential consideration of the parties in signing
the employment contract.  Mutual mistake,
however, prevented the proposed contract from arising.  Each of the parties signed the employment
agreement bearing a different salary rate in mind.  While private respondent insists that he
entered the employment agreement on the belief that he would be receiving the
amount of US$680.00 as his monthly basic salary as stated in the employment
agreement, Dumez was able to prove that said amount of US$680.00 was the result
of a clerical error and that it
had always intended to give only the amount of US$600.00 for the services of
private respondent.

The evidence of both parties corroborate petitioner’s claim.  The employment agreements signed by the other
Senior Draftsmen with petitioner and the Manpower Requisition Slips of each of
them duly show the amount of US$600.00 as the monthly salary base.  The POEA itself mentioned in its decision
that it had approved the proposed wage schedule of four (4) Senior Draftsmen at
US$600.00 per month per draftsman. 
Although the employment agreement between private respondent and Dumez
showed the amount of US$680.00 as the monthly base salary, this amount is
contradicted by the normal hourly rate of US$2.50 inscribed thereon.  Using the base salary at US$2.50 per hour, we
arrive at the amount of US$600.00 as the monthly base salary as follows:

US$ 2.50     — normal hourly rate per employment
contract

x       240     — number of hours worked 6 days a week in
a month plus paid rest days per employment agreement Section 3(J)

US$600.00  — monthly base salary

The discrepancy was moreover adequately explained by the ECCOI
employee, Mrs. Francisco, as the result of a typing error overlooked because of
the volume of paperwork involved in documenting the persons recruited and
hired.  She likewise stated that Mr. Jose
had been provided with a copy of his Manpower Requisition Slip, which
allegation the pleadings filed by private respondent did not controvert.  Private respondent did not prove any special
qualification or circumstance that might have warranted a US$80.00 monthly
differential from the salary rate of the other Senior Draftsmen.

The mutual mistake here present should be distinguished from
mistake which vitiates consent in a voidable
contract.  The latter case pre-supposes a
valid and existing contract with all the essential requisites present, with the
element of consent, however, being vitiated. 
In the case at bar, the element of consent was not present at all.  There was no concurrence of the offer and
acceptance upon the subject matter and the cause which are to constitute the
contract.^[1]
Petitioner was willing to offer only the amount of US$600.00 for the kind of
services expected of private respondent, while private respondent would accept
employment with petitioner only at a monthly salary base of US$680.00.  The correct monthly base salary figure was an
essential consideration as far as each was concerned.  In a situation wherein one or both parties
consider that certain matters or specifics, in addition to the subject matter
and the causa should be stipulated and agreed upon,
the area of agreement must extend to all points that the parties deem material
or there is no contract.^[2]

Petitioner cannot escape the fact,
however, that it was due to its own error or negligence in the clerical
processing of the employment papers that mutual mistake attended the execution
of the contract.  Negligence causing
damage to another may generate liability though both parties may be innocent of
any deliberate fraud.  Thus, it has been
held by this Court that as between two (2) innocent persons, he whose
negligence has enabled a third party to cause the damage shall bear the loss.^[3]
Though petitioner in the case at bar was clearly innocent of deliberate wrong
doing, the failure of the administrative systems of petitioner created some
basis for private respondent’s belief (or hope) that he was accepting a US$680.00 monthly salary and thus
generated a mutual mistake which occasioned some damage or loss on the part of
private respondent.  On general
principles of equity, petitioner should compensate private respondent.  We believe that an amount equivalent to
two-month’s salary under the putative employment agreement, at US$600.00 a month or its peso equivalent at the
time of payment, would be sufficient recompense for what might be designated as
frustration of expectations not without basis on the part of private respondent
that he had landed a job.

ACCORDINGLY, the Court Resolved to GRANT the Petition and
to SET ASIDE and NULLIFY the Decision of the National Labor Relations
Commission dated 20 January 1988.  The Court also Resolved to REINSTATE the
Decision of the Philippine Overseas Employment Administration in POEA Case No.
85-09-0689 with modification that private respondent Florante
Jose shall be awarded the amount of US$1,200.00 or its peso equivalent at the
time of payment.  No costs.

Fernan, C.J., (Chairman), Gutierrez,
Jr., Bidin, and
Davide, Jr., JJ., concur.

^[1]
Article 1319, Civil Code.

^[2]
A. Magsaysay, Inc. v. Cebu
Portland Cement Co., 100 Phil. 351 (1956).

^[3]
Penullar vs. Philippine National Bank, 120
SCRA 171 (1983).