"Contracts are perfected by mere consent, upon the acceptance by the offeree of the offer made by the offeror."
JARDINE DAVIES INC. vs. COURT OF APPEALS and FAR EAST MILLS SUPPLY CORPORATION
THE FACT
PUREFOODS decided to install two generators in its food processing plant in San Roque, Marikina City. Sometime in November 1992, bidding for the supply and installation of the generators was held. The contract for the project was thereafter awarded to FEMSCO.
Immediately, FEMSCO submitted the required performance bond and contractor's all-risk insurance policy. 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 requested.
Later, however, PUREFOODS unilaterally canceled the award as "significant factors were uncovered and brought to their attention which dictates the cancellation and warrants a total review and re-bid of the project." Consequently, FEMSCO protested the cancellation of the award and sought a meeting with PUREFOODS. However, before the matter could be resolved, PUREFOODS already awarded the project and entered into a contract with JARDINE.
FEMSCO thus wrote PUREFOODS to honor its contract with the former, and to JARDINE to cease and desist from delivering and installing the two (2) generators at PUREFOODS. Its demand letters unheeded, FEMSCO sued both PUREFOODS and JARDINE.
THE ISSUE
Whether or not there existed a perfected contract between PUREFOODS AND FEMSCO.
THE RULING
Yes, a contract was perfected. 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." There can be no contract unless the following requisites concur: (a) consent of the contracting parties; (b) object certain which is the subject matter of the contract; and, (c) cause of the obligation which is established. A contract binds both contracting parties and has the force of law between them.
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.
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," which expressly stated that the performance bond and the contractor's all-risk insurance should be given upon the commencement of the contract. Corollary, the acknowledgment thereof by petitioner PUREFOODS, not to mention its return of FEMSCO's bidder's bond, was a concrete manifestation of its knowledge that respondent FEMSCO indeed consented to the "conditional counter-offer." After all, as earlier adverted to, an acceptance may either be express or implied, and this can be inferred from the contemporaneous and subsequent acts of the contracting parties.
Accordingly, for all intents and purposes, the contract at that point has been perfected, and respondent FEMSCO's conforme would only be a mere surplusage.
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