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NORTHERN MINDANAO INDUSTRIAL PORT v. ILIGAN CEMENT CORPORATION

FACTS:

Iligan Cement Corporation (ICC) invited Northern Mindanao Industrial & Port Services Corporation (NOMIPSCO) and other companies to a pre-bidding conference for a cargo handling contract. NOMIPSCO submitted the lowest bid, but ICC awarded the contract to Europort Logistics and Equipment Incorporated. NOMIPSCO filed a complaint against ICC, alleging abuse of rights and seeking damages and attorney's fees.

The Court of Appeals ruled in favor of ICC, stating that NOMIPSCO had no legal right to claim abuse of rights or challenge the validity of the cargo handling contract. The court emphasized that an advertisement to bidders is only an invitation to make proposals, and the advertiser is not bound to accept the lowest bidder unless stated otherwise. The court concluded that NOMIPSCO's complaint failed to state a cause of action.

Petitioner argues that ICC acted in bad faith by using the bidding process as a ruse to secure the lowest bid from NOMIPSCO and set the contract price with Europort. Petitioner alleges that ICC falsely marked their bid folder as "No Bid Submitted" and that ICC awarded the project based on undisclosed criteria. Petitioner contends that ICC's actions violated the principle of abuse of rights under Article 19 of the Civil Code.

ISSUES:

  1. Whether respondent acted in bad faith in using the bidding process for the cargo handling contract as a ruse.

  2. Whether respondent awarded the project based on criteria, parameters, and policies that were not disclosed to petitioner prior to the bidding.

  3. Whether Europort, which eventually won the project, had the legal personality to execute the cargo handling contract with respondent.

  4. Whether or not petitioner was deliberately excluded from the bidding process.

  5. Whether or not the award of the project was based on undisclosed criteria, parameters, and policies.

  6. Whether or not it was an abuse of rights for respondent to establish a policy of awarding the contract to a new contractor.

  7. Whether or not respondent had the right to reject bids and not be bound by the highest bidder.

  8. Whether or not Europort's change of corporate name affected its eligibility in the bidding process.

RULING:

  1. The Court denies the Petition. It is found that petitioner's allegations do not reconcile with the facts and evidence on record. The Court determined that there was a bona fide bidding process for the cargo handling contract, and the project was awarded to Europort Logistics and Equipment Incorporated (formerly Oroport) which had changed its corporate name. The change in corporate name did not affect the identity of the corporation, its property, rights, or liabilities. Therefore, the change in the corporate name does not make Europort a new corporation or successor of the original corporation.

  2. The evidence and testimonies do not support petitioner's claim that it was deliberately excluded from the bidding process. Petitioner participated in the bidding process and its bid was considered.

  3. The evidence does not support petitioner's claim that the award was based on undisclosed criteria. The witness testified that there was no consultation prior to the award, disproving petitioner's claim.

  4. It is within the prerogative of respondent to establish a policy of awarding the contract to a new contractor. Petitioner has no right to interfere with this exercise of discretion.

  5. Respondent had the right to reject bids and was not bound to accept the highest bidder unless the contrary appears. This is a policy decision that courts will not interfere with unless there is evidence of arbitrariness or fraud.

  6. Europort's change of corporate name did not affect its eligibility in the bidding process. It is the same corporation with a different name, and its character is unchanged.

PRINCIPLES:

  • A change in corporate name does not result in the creation of a new corporation or change in the existing corporation's identity, property, rights, or liabilities.

  • The corporate identity remains the same despite a change in corporate name.

  • Advertisements for bidders are invitations to make proposals, and the advertiser is not bound to accept the highest or lowest bidder unless the contrary appears (Article 1326 of the Civil Code).

  • The right to reject bids signifies that the party calling for bids cannot be compelled to accept a bid or execute a deed of sale in favor of the bidder. This right cannot be used as a basis for a cause of action for damages.