Title
A. Magsaysay, Inc. vs. Cebu Portland Cement Co.
Case
G.R. No. L-9098
Decision Date
Nov 26, 1956
Cebu Portland Cement invited bids for coal transport; A. Magsaysay, Inc. claimed a binding contract after Board Resolution No. 417. Court ruled no contract perfected, absolving Cement Co. of liability due to unresolved terms and lack of final agreement.
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Case Digest (G.R. No. L-9098)

Facts:

  1. Invitation for Quotations:

    • Cebu Portland Cement Co., a government-controlled corporation, invited shipping companies to submit quotations for hauling coal from Malangas, Zamboanga, to Bacnotan, La Union, with a deadline of December 18, 1953.
    • A. Magsaysay, Inc., through its traffic manager, Roberto Ho, submitted a written proposal on December 1, 1953, containing prices, terms, and conditions. Three other companies also submitted quotations.
  2. Board Resolution No. 417:

    • On January 5, 1954, the Cement Company’s Board of Directors resolved to call for bids for the transportation of coal. However, upon representations by A. Magsaysay, Inc., that it had submitted the lowest quotation, the Board cancelled the call for bids.
    • On January 7, 1954, the Board adopted Resolution No. 417, directing the management to enter into a contract with A. Magsaysay, Inc., for the transportation of coal at P7.84 per ton for 30,000 tons, to be shipped within four months. The General Manager was authorized to work out the other details of the contract.
  3. Drafting of the Charter Party Agreement:

    • On January 8, 1954, Roberto Ho submitted a draft Charter Party agreement to Eduardo Taylor, the Cement Company’s Manager. After discussions, the draft was revised and simplified.
    • The final draft was submitted to Taylor on January 17, 1954, and he forwarded it to the Board of Directors the next day.
  4. Revocation of Resolution No. 417:

    • Instead of approving the draft, the Board revoked Resolution No. 417 and directed the management to submit the matter to public bidding to ensure equal footing for all bidders.
  5. Filing of the Lawsuit:

    • A. Magsaysay, Inc., filed a lawsuit on February 2, 1954, alleging that a contract had been perfected and that the Cement Company refused to comply. It sought P50,000 in damages.
  6. Trial Court Decision:

    • The trial court held that Resolution No. 417 did not constitute an unconditional acceptance but found that the final draft of the agreement (Exhibit E) was binding. It awarded damages to A. Magsaysay, Inc.

Issue:

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Ruling:

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Ratio:

  1. Perfection of Contracts:

    • Under Article 1319 of the Civil Code, consent is manifested by the meeting of the offer and acceptance upon the thing and the cause that constitute the contract. If material details remain unresolved, no contract is perfected.
  2. Authority of the General Manager:

    • While the General Manager was authorized to work out the details of the contract, this did not obligate him to finalize the agreement. He could remit the matter to the Board for final decision.
  3. Burden of Proof:

    • The burden of proving the existence of a binding contract lies with the party asserting it. In this case, A. Magsaysay, Inc., failed to provide sufficient evidence to show that a final agreement had been reached.
  4. Evasion of Responsibility:

    • The Court noted the tendency of public officials to evade responsibility, which contributed to the lack of a final decision on the draft agreement.


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