GR No.
128066 June 19, 2000 Pure Foods for reneging on its contract, and
Jardine Davies v. Court of Appeals
Topic: Recovery of moral damages
Doctrine: The award for moral damages to
a corporation whose reputation has been
besmirched is proper.
Facts: During the height of the power crisis
in 1992 which the country experiencing,
Pure Foods Corporation decided to install
two 1500 KW generators in its food
processing plant in San Roque, Marikina
City to remedy and curtail further losses due
to the series of power failures.
Sometime in November 1992, bidding for
the supply and installation of the generators
was held. Out of the eight prospective
bidders, Far East Mills Supply Corporation
or hereinafter FEMSCO won the bid.
Thereafter, in a letter dated December 12,
1992 addressed to FEMSCO President
Alfonso Po, Pure Foods confirmed the
award of the contract to FEMSCO. Later,
however, ten days thereafter, Pure Foods
unilaterally canceled the award due to
alleged "significant factors” and re-bid of
the project." Consequently, FEMSCO
protested the cancellation of the award.
However, on March 26, 1993, before the
matter could be resolved, Pure Foods
already awarded the project and entered into
a contract with Jardine Nell, a division of
Jardine Davies, Inc. hereafter Jardine.
FEMSCO thus wrote Pure Foods to honor
its contract with the former, and to Jardine
to cease and desist from delivering and
installing the two generators at Pure Foods.
Its demand letters unheeded, FEMSCO sued
Jardine for its unwarranted interference and
inducement.
Trial then ensued, Demurrer to Evidence
filed by Jardine was granted while Pure
Foods was ordered to indemnify FEMSCO.
The trial court dismissed the counterclaim
filed by Pure Foods for lack of factual and
legal basis.
Upon appeal, Court of Appeals affirmed in
toto the decision of the trial court. It also
ordered Jardine and Pure Foods to each pay
FEMSCO P2,000,000 as moral damages.
Issue: Whether or not the award for moral
damages is proper.
Ruling: Yes. The award for moral damages
to a corporation whose reputation has been
besmirched is proper.
The controversy in this case lies in the
consent - whether there was an acceptance
of the offer, and if so, if it was
communicated, thereby there is a perfected
contract.
Article 1326 of the Civil Code, provides that
"advertisements for bidders are simply
invitations to make proposals," accordingly,
the Terms and Conditions of the Bidding
disseminated by petitioner Pure Foods
constitutes the "advertisement" to bid on the
project. The bid proposals or quotations
submitted by the prospective suppliers
including respondent FEMSCO, are the
offer and, the reply of petitioner Pure Foods,
the acceptance or rejection of the respective
offers. The December 12, 1992 letter of
petitioner Pure Foods to FEMSCO
constituted acceptance of respondent
FEMSCO’s offer as contemplated by law.
Hence, by the unilateral cancellation of the
contract, the defendant has acted with bad
faith and this was further aggravated by the
subsequent inking of a contract between
defendant Pure foods and erstwhile co-
defendant Jardine. It is very evident that
Pure foods 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.
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. The Court thus sustain
respondent appellate court's award of moral
damages. However, the award is reduced
from P2,000,000.00 to P1,000,000.00, as
moral damages are never intended to enrich
the recipient.
Further, the Court finds no sufficient
evidence on record to support the allegation
that Jardine induced Pure Foods to violate
the contract with FEMSCO and therefore the
award for moral damages is not granted.