Case Digest (G.R. No. 149927)
Facts:
In November 1992, Insular Life Assurance Company, Ltd. (petitioner) invited bids for the construction of its proposed Lucena City building. It issued Bid Documents, Instructions to Bidders, and a Bid Proposal Form requiring a 60-day valid bid and a bid bond equivalent to 10% of the bid. Asset Builders Corporation (respondent) submitted the lowest compliant offer of ₱12,961,845.54, secured by a bid bond. After opening bids on November 9, 1993, petitioner referred the proposals to Adrian Wilson International Associates, Inc. for evaluation. Post-qualification inspections and credit investigations ensued in January 1994. On February 24, 1994, petitioner proposed adjusting respondent’s bid to ₱13,000,000 to cover a mandated wage increase; respondent agreed. On March 14, 1994, petitioner issued a Notice to Proceed pending execution of the Construction Agreement and informed respondent’s president of a pre-construction meeting scheduled for March 22. Respondent participated in site coCase Digest (G.R. No. 149927)
Facts:
- Bidding Invitation and Requirements
- In November 1992, petitioner Insular Life issued Bid Documents for the proposed Insular Life Building in Lucena City, including Instruction to Bidders specifying:
- Bid bond requirement (10% bond or 5% cashier’s check), valid 60 days.
- Bid validity of 60 days with option to extend.
- Winning bidder to execute contract within five days of Notice of Award, else bond forfeited as liquidated damages.
- Asset Builders Corporation (respondent) and four others submitted bids secured by bonds, with respondent’s amount at ₱12,961,845.54 and a commitment to enter into contract within ten days from award notice.
- Evaluation, Post-qualification, and Award Recommendation
- On November 9, 1993, bids were opened; AWIA (petitioner’s consultant) reported respondent as lowest bidder.
- January–February 1994: Post-qualification inspections and credit investigations on respondent and two other bidders; petitioner’s officers and consultant recommended award to respondent based on technical and financial competence.
- Pre-construction Steps and Bid Adjustment
- February 24, 1994: Conference proposed upward adjustment of respondent’s bid to ₱13,000,000 to cover wage increases; respondent later agreed.
- March 14, 1994: Notice to Proceed signed, allowing mobilization pending execution of Construction Agreement. Pre-construction meeting scheduled March 22, 1994; ground-breaking ceremony held.
- Withdrawal and Letters Exchanged
- Respondent never executed the Construction Agreement or formally acknowledged Notice of Award.
- April 5, 1994: Respondent’s letter withdrew from project citing delays in permits and cost escalation.
- April 25, 1994: Petitioner retained respondent’s bid bond as liquidated damages and hired another contractor; respondent countered it never received Notice of Award and its bid validity lapsed on January 8, 1994.
- Court Proceedings
- December 1994: Petitioner filed suit for damages (₱1,500,000 difference or liquidated damages).
- RTC Makati (December 5, 1997) dismissed petitioner’s complaint and awarded ₱500,000 business injury and ₱75,000 attorney’s fees to respondent on counterclaim.
- Court of Appeals affirmed (September 20, 2000) and denied reconsideration (March 7, 2001). Petitioner sought Supreme Court review.
Issues:
- Whether a valid construction contract was perfected between petitioner and respondent.
- Whether petitioner notified respondent of the award before withdrawal of its bid.
- Whether respondent’s withdrawal constituted breach.
- Whether the contract reached consummation stage.
- Whether respondent is estopped from denying contract perfection.
- Which party is liable for damages.
- Whether petitioner should be penalized for filing suit.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)