G.R. No. L-10749; April 25, 1958
BRIGIDO R. VALENCIA, petitioner, vs. REHABILITATION FINANCE CORPORATION and COURT OF APPEALS, respondents.

FACTS

Prior to May 15, 1952, respondent Rehabilitation Finance Corporation (RFC) issued an invitation to bid for the construction of a reinforced concrete building in Davao City. Petitioner Brigido R. Valencia submitted a bid dated May 15, 1952, which contained several items: Item I for P389,980 for the complete construction including electrical and plumbing installations; Item II for P358,480 for the building only; Item III for P18,900 for electrical installations only; and Item IV for P12,600 for plumbing installations only. The bid was accompanied by a bidder’s bond. On June 9, 1952, RFC’s Board of Governors passed a resolution awarding the contract for the plumbing installations to Valencia for P12,600. Petitioner was notified of this award via a letter dated June 16, 1952, which he received on June 22, 1952. A subsequent letter dated July 28, 1952, requested him to sign the contract and post a performance bond. In his reply dated August 28, 1952, petitioner expressed appreciation for the award but suggested it would be advantageous to award the plumbing to the main building contractor. Petitioner failed to sign the contract or post the bond. RFC subsequently awarded the plumbing contract to the building contractor for P19,000. RFC then filed an action in the Court of First Instance of Manila to recover P6,200 (the difference between Valencia’s bid and the new contract price) as damages, plus attorney’s fees. The trial court absolved Valencia and awarded him attorney’s fees on his counterclaim. The Court of Appeals reversed this decision, sentencing Valencia to pay RFC P6,200 as actual damages with interest, P1,000 as attorney’s fees, and costs.

ISSUE

1. Whether a valid and obligatory contract was perfected between RFC and Valencia for the plumbing installations.
2. Whether RFC’s award of only the plumbing installations constituted a counter-offer that modified Valencia’s original bid.
3. Whether the acceptance of Valencia’s offer was invalid because it was communicated after the expiration date of his bidder’s bond (June 15, 1952).
4. Whether the requirement of a performance bond was a condition precedent that prevented the perfection of a contract.

RULING

The Supreme Court affirmed the decision of the Court of Appeals, holding that a valid contract was perfected.
1. A valid contract was perfected. The Court held that petitioner’s bid contained several distinct and independent proposals. RFC’s acceptance of Item IV (plumbing installations only for P12,600) was an unqualified acceptance of a separate offer, not a modification. A meeting of the minds occurred when RFC resolved to award the plumbing contract to Valencia and notified him thereof. The contract was perfected at that moment.
2. RFC’s award was not a counter-offer. The bid submitted was not an indivisible proposal for a single contract. It was a multiple offer allowing RFC to accept any of the items separately. Accepting one item did not alter the terms of that specific item; it was an acceptance of an offer as made.
3. The acceptance was not invalid due to the bond’s expiration. The bidder’s bond was merely security and its expiration date did not govern the period during which the offer itself remained open. The offer, not having specified a time limit, was accepted within a reasonable time. Notification of the award on June 22, 1952, was timely.
4. The performance bond was not a condition precedent to perfection. The requirement to post a performance bond was a condition subsequent to the perfection of the contract, pertaining to its fulfillment, not its birth. The contractual obligation arose upon acceptance of the offer. The bond was a security for the faithful performance of an already existing contract. Petitioner’s failure to post the bond constituted a breach of that contract, entitling RFC to damages.
Therefore, petitioner Valencia was liable for breach of contract. The Court affirmed the award of P6,200 as actual damages (the difference in cost to RFC), with legal interest from the filing of the complaint, plus P1,000 as attorney’s fees, and costs.