JARDINE DAVIES INC. vs.

CA and FAR
EAST MILLS DIGEST
DECEMBER 21, 2016   ~ LEAVE A COMMENT

JARDINE DAVIES INC., petitioner, vs. COURT OF APPEALS and FAR EAST
MILLS SUPPLY CORPORATION, respondents.    GRN 128066  June 19, 2000

PURE FOODS CORPORATION, petitioner, vs. COURT OF APPEALS and

FAR EAST MILLS SUPPLY CORPORATION, respondents.   GRN  128069
June 19, 2000

FACTS:

In 1992, petitioner PUREFOODS decided to install two 1500 KW generators in its

food processing plant in San Roque, Marikina City. A bidding for the supply and
installation of the generators was held. Out of the 8 prospective bidders who attended
the pre-bidding conference, only 3 bidders, namely, respondent FAR EAST MILLS
SUPPLY CORPORATION (FEMSCO), MONARK and ADVANCE POWER
submitted bid proposals and gave bid bonds.
In a letter dated 12 December 1992 addressed to FEMSCO President Alfonso Po,
PUREFOODS confirmed the award of the contract to FEMSCO. FEMSCO submitted
the required performance bond in the amount of P1,841,187.90 and contractor’s all-
risk insurance policy in the amount of P6,137,293.00 which PUREFOODS through its
VP Benedicto G. Tope acknowledged in a letter dated 18 December 1992.
However, in a letter dated 22 December 1992, PUREFOODS through its Senior VP
Teodoro L. Dimayuga unilaterally canceled the award as “significant factors were
uncovered and brought to their attention which dictate the cancellation and warrant a
total review and re-bid of the project. FEMSCO protested the cancellation of the
award. Before the matter could be resolved, PUREFOODS awarded the project and
entered into a contract with JARDINE NELL, a division of Jardine Davies, Inc.
(JARDINE), which was not one of the bidders.
FEMSCO sued PUREFOODS and JARDINE: PUREFOODS for reneging on its
contract, and JARDINE for its unwarranted interference and inducement.
RTC- Pasig, granted JARDINE’s Demurrer to Evidence. The RTC ordered
PUREFOODS to indemnify FEMSCO. FEMSCO and PUREFOODS appealed to CA.
FEMSCO appealed the  Resolution of the trial court which granted the Demurrer to
Evidence filed by JARDINE resulting in the dismissal of the complaint against it.
CA affirmed the Decision of the trial court. It also reversed the Resolution of the
lower court and ordered JARDINE to pay FEMSCO moral damages for inducing
PUREFOODS to violate the latter’s contract with FEMSCO. CA denied MR. Hence,
these 2 petitions for review.
ISSUE: WON FEMSCO should be awarded with Moral Damages.
RULING:

YES. Contracts are perfected by mere consent, upon the acceptance by the offeree of
the offer made by the offeror. From that moment, the parties are bound not only to the
fulfillment of what has been expressly stipulated but also to all the consequences
which, according to their nature, may be in keeping with good faith, usage and law.
The acceptance must not qualify the terms of the offer. However, the acceptance may
be express or implied. For a contract to arise, the acceptance must be made known to
the offeror. Acceptance can be withdrawn or revoked before it is made known to the
offeror.
In the instant case, since PUREFOODS started the process of entering into the
contract by conducting a bidding, Art. 1326 of the Civil Code, which provides that
“advertisements for bidders are simply invitations to make proposals,” applies.  
The 12 December 1992 letter of petitioner PUREFOODS to FEMSCO constituted
acceptance of respondent FEMSCO’s offer as contemplated by law. The tenor of the
letter, i.e., “This will confirm that Pure Foods has awarded to your firm (FEMSCO)
the project,” could not be more categorical. While the same letter enumerated certain
“basic terms and conditions,” these conditions were imposed on the performance of
the obligation rather than on the perfection of the contract.
But even granting arguendo that the 12 December 1992 letter of petitioner
PUREFOODS constituted a “conditional counter-offer,” respondent FEMCO’s
submission of the performance bond and contractor’s all-risk insurance was an
implied acceptance, if not a clear indication of its acquiescence to, the “conditional
counter-offer,”
Petitioner PUREFOODS also argues that it was never in bad faith. But by the
unilateral cancellation of the contract, the defendant (petitioner PURE FOODS) has
acted with bad faith and this was further aggravated by the subsequent inking of a
contract between defendant Purefoods and erstwhile co-defendant Jardine. It is very
evident that Purefoods thought that by the expedient means of merely writing a letter
would automatically cancel or nullify the existing contract entered into by both parties
after a process of bidding. This, to the Court’s mind, is a flagrant violation of the
express provisions of the law and is contrary to fair and just dealings to which every
man is due.
This Court has awarded in the past moral damages to a corporation whose reputation
has been besmirched. In the instant case, respondent FEMSCO has sufficiently shown
that its reputation was tarnished after it immediately ordered equipment from its
suppliers on account of the urgency of the project, only to be canceled later. We thus
sustain respondent appellate court’s award of moral damages. We however reduce the
award from P2Mto P1M, as moral damages are never intended to enrich the recipient.
Likewise, the award of exemplary damages by way of example for the public good is
excessive and should be reduced to P100,000.00.
Petitioner JARDINE maintains on the other hand that respondent appellate court erred
in ordering it to pay moral damages to respondent FEMSCO as it supposedly induced
PUREFOODS to violate the contract with FEMSCO. We agree. While it may seem
that petitioners PUREFOODS and JARDINE connived to deceive respondent
FEMSCO, we find no specific evidence on record to support such perception. There is
no showing whatsoever that petitioner JARDINE induced petitioner PUREFOODS.
The similarity in the design submitted to petitioner PUREFOODS by both petitioner
JARDINE and respondent FEMSCO, and the tender of a lower offer by petitioner
JARDINE are insufficient to show that petitioner JARDINE indeed induced petitioner
PUREFOODS to violate its contract with respondent FEMSCO.