Monday, February 27, 2012

Jardine Davies Inc. vs. CA

Facts: Petitioner PURE FOODS CORPORATION decided to install two generators in its food processing plant in San Roque, Marikina City to recover from losses due to the series of power failures. Consequently, bidding for the supply and installation of the generators was held. Several suppliers and dealers were invited to attend a pre-bidding conference to discuss the conditions, propose scheme and specifications that would best suit the needs of PUREFOODS. Out of the eight (8) prospective bidders who attended the pre-bidding conference, only three (3) bidders, namely, respondent FAR EAST MILLS SUPPLY CORPORATION (hereafter FEMSCO. FEMSCO started the PUREFOODS project and bought the necessary materials. However, PUREFOODS unilaterally canceled the award because significant factors were uncovered which dictates the cancellation and warrant a total review and re-bid of the said project. Consequently, FEMSCO protested the cancellation of the award and sought a meeting with PUREFOODS. However, on 26 March 1993, before the matter could be resolved, PUREFOODS already awarded the project and entered into a contract with JARDINE NELL, a division of Jardine Davies, Inc. which incidentally was not one of the bidders. FEMSCO sued PUREFOODS for reneging on its contract and JARDINE for its unwarranted interference and inducement. 

Issues: Whether or not there existed a perfected contract between PUREFOODS and FEMSCO. 

And granting there existed a perfected contract, whether there is any showing that JARDINE induced or connived with PUREFOODS to violate the latter's contract with FEMSCO. 

Held: The Supreme Court held that there was no issue as regards the subject matter of the contract and the cause of the obligation. The controversy lies in the consent — whether there was an acceptance of the offer, and if so, if it was communicated, thereby perfecting the contract. Since petitioner PUREFOODS started the process of entering into the contract by conducting bidding, Art. 1326 of the Civil Code, which provides that advertisements for bidders are simply invitations to make proposals applies. The Supreme Court also re-stated the distinguishment between a condition imposed on the perfection of a contract and a condition imposed merely on the performance of an obligation. While failure to comply with the first condition results in the failure of a contract, failure to comply with the second merely gives the other party options and/or remedies to protect his interests.

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