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Oblicon-Article 1324-Czarina Jardine Davies Inc., vs. CA & Far East Mills Supply Corp. [G.R. No. 128066.

June 19, 2000. 333 SCRA 684] Pure Foods Corp. vs. CA & Far East Mills Supply Corp. [G.R. No. 128069 June 19, 2000] The Case: A case for specific performance Facts: PUREFOODS decided to install 2 1500 KW in its food processing plant in Marikina city. Sometime in November 1992, bidding for supply and installation of the generators was held. Several suppliers and dealers were invited to attend a pre-bidding conference. Out of 8 prospective bidders who attended the pre-bidding conference, only 3 bidders, namely: FAR EAST MILLS SUPPLY CORPORATION (FEMSCO), MONARK and ADVANCE POWER. On Dec. 12, 1992 PUREFOODS confirmed the award of contract to FEMSCO. (See fulltext case for the letter) 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 acknowledged. FEMSCO also made arrangements with its principal and started the PUREFOODS project by purchasing the necessary materials. PUREFOODS on the other hand returned FEMSCO s Bidder s Bond in the amount of P1, 000,000.00, as requested. On Dec. 22, 1992 PUREFOODS cancelled its award of contract to FEMSCO 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." Consequently, FEMSCO protested the cancellation of the award and sought a meeting with PUREFOODS. However, on 26 March 1993 PUREFOODS already awarded the project and entered into a contract with JARDINE NELL, a division of Jardine Davies, Inc. (JARDINE), which incidentally was not one of the bidders. Issue: Whether there was an acceptance of offer between PUREFOODS and FEMSCO Held/Ruling: 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. 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 Accordingly, the acceptance can be withdrawn or revoked before it is made known to the offeror. In the instant case, there is 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 a bidding, Art. 1326 of the Civil Code, which provides that "[a]dvertisements for bidders are simply invitations to make proposals," applies. Accordingly, the Terms and Conditions of the Biddingdisseminated by petitioner PUREFOODS constitutes the "advertisement" to bid on the project. The bid proposals or quotations submitted by the prospective suppliers including respondent FEMSCO, are the offers. And, the reply of petitioner PUREFOODS, the acceptance or rejection of the respective offers. Quite obviously, 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. Thus, the first "condition" was merely a reiteration of the contract price and billing scheme based on the Terms and Conditions of Bidding and the bid or previous offer of respondent FEMSCO. The second and third "conditions" were nothing more than general statements that all items and materials including those excluded in the list but necessary to complete the project shall be deemed included and should be brand new. The fourth "condition" concerned the completion of the work to be done, i.e., within twenty (20) days from the delivery of the generator set, the purchase of which was part of the contract. The fifth "condition" had to do with the putting up of a performance bond and an all-risk insurance, both of which should be given upon commencement of the project. The sixth "condition" related to the standard warranty of one (1) year. In fine, the enumerated "basic terms and conditions" were prescriptions on how the obligation was to be performed and implemented.They were far from being conditions imposed on the perfection of the contract.

Article 1324. When the offerer has allowed the offeree a certain period to accept, the offer may be withdrawn at any time before acceptance by communicating such withdrawal, except when the option is founded upon a consideration, something paid or promised.