JARDINE DAVIES V.

CA 333 SCRA 684

1315-1319 – Stages and Essential Requisites of Contracts

Synopsis: This case basically deals about the perfection of contract based on bidding. Central to this case is the application of Article1326.
This revolves on the issue whether there was a perfected contract when Pure Foods sent a reply letter confirming the award of bid to FEMSCO.
There was already a perfected contract for the bid proposals were the offers and the letter (and its wordings) reflect a categorical acceptance.
Thus, the elements of a contract are all present and complete, thus the contract is perfected.
FACTS: In 1992, there was a power crisis, so petitioner Pure Foods Corporation decided to install two 1500 KW generators in its food
processing plant in San Roque, Marikina City.

There was a bidding, several suppliers and dealers were to attend the pre- bidding conference to discuss the condition that would best suit the
needs of Pure Foods. Out of the eight prospective bidders in 1992, Pure Foods confirmed the award to FEMSCO.

Immediately, FEMSCO submitted the required bond and insurance policy and started the project by purchasing the necessary materials.
However, Pure Foods unilaterally cancelled the award for there were significant factors were uncovered concerning the review of the
project.

FEMSCO protested the cancellation of the award and sought a meeting, and on 1993, before the matter could be resolved,
PUREFOOD already awarded the project and entered into a contract with Jardine Nell which was not one of the bidders. FEMSCO wrote
Pure Foods to honor its contract.

RTC ruled in favor of FEMSCO the sum of P2.3M and have it perform the obligations. CA affirmed the RTC decision.

Pure Food’s Arguments

It argues that its 12 December 1992 letter to FEMSCO was not an acceptance of the latter's bid proposal and award of the
project but more of a qualified acceptance constituting a counter-offer which required FEMSCO's express conforme. Since PUREFOODS
never received FEMSCO's conforme, Jardine also contends that it had no prior knowledge of the supposed contract between Pure Foods and
FEMSCO.

ISSUE: WON there was a perfected contract between Pure Foods and FEMSCO

Contract, Concept and Application

A contract is defined as "a juridical convention manifested in legal form, by virtue of which one or more persons bind themselves in favor of
another or others, or reciprocally, to the fulfillment of a prestation to give, to do, or not to do."

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 consequences which, according to their nature, may
be in keeping with good faith, usage and law.

To produce a contract, 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. Accordingly, the acceptance can be withdrawn or revoked before it
is made known to the offer. HELD: 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.

What Constituted the Offer and Acceptance?

Pure Foods started the process of entering into the contract by conducting a bidding. Article 1326 of the Civil Code provides that
‘advertisements for bidders are simply invitations to make proposals” applies. Accordingly, the Terms and Conditions of the Bidding
disseminated by Pure Foods constitute advertisement to bid on the project. The bid proposals or quotations submitted by the suppliers
are the offers. And the reply of Pure Foods is the acceptance or rejection of such.

The 1992 Letter of Pure Foods to FEMSCO constituted the acceptance of the offer as contemplated by law. The tenor of the law
stating that “this will confirm that Pure Foods has awarded to your firm” could not be more categorical.

Even if arguing that the reply was a conditional counter-offer, the FEMSCO’s submission of the performance bond and contractor’s all-
risk insurance was an implied acceptance.

Accordingly, for all intents and purposes, the contract at that point has been perfected and the conformity of FEMSCO
would only be a mere surplusage.