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    CCC INSURANCE CORPORATION V

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    liks5poyongan
    This case involves a dispute between Kawasaki Steel Corporation and CCC Insurance Corporation regarding surety and performance bonds issued by CCC for a construction project. CCC denied liability on the bonds, arguing that Kawasaki and its consortium partner FFMCCI novated their agreement without CCC's consent, releasing CCC from its bond obligations. The Court of Appeals ruled against CCC. The Supreme Court reversed, finding that the novation did release CCC without its consent, as novation requires an unequivocal declaration or incompatibility between the old and new obligations.

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    CCC INSURANCE CORPORATION V

    Uploaded by

    liks5poyongan
    141 views2 pages
    This case involves a dispute between Kawasaki Steel Corporation and CCC Insurance Corporation regarding surety and performance bonds issued by CCC for a construction project. CCC denied liability on the bonds, arguing that Kawasaki and its consortium partner FFMCCI novated their agreement without CCC's consent, releasing CCC from its bond obligations. The Court of Appeals ruled against CCC. The Supreme Court reversed, finding that the novation did release CCC without its consent, as novation requires an unequivocal declaration or incompatibility between the old and new obligations.

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    CCC INSURANCE CORPORATION v

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    This case involves a dispute between Kawasaki Steel Corporation and CCC Insurance Corporation regarding surety and performance bonds issued by CCC for a construction project. CCC denied liability on the bonds, arguing that Kawasaki and its consortium partner FFMCCI novated their agreement without CCC's consent, releasing CCC from its bond obligations. The Court of Appeals ruled against CCC. The Supreme Court reversed, finding that the novation did release CCC without its consent, as novation requires an unequivocal declaration or incompatibility between the old and new obligations.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    141 views2 pages

    CCC INSURANCE CORPORATION V

    Uploaded by

    liks5poyongan
    This case involves a dispute between Kawasaki Steel Corporation and CCC Insurance Corporation regarding surety and performance bonds issued by CCC for a construction project. CCC denied liability on the bonds, arguing that Kawasaki and its consortium partner FFMCCI novated their agreement without CCC's consent, releasing CCC from its bond obligations. The Court of Appeals ruled against CCC. The Supreme Court reversed, finding that the novation did release CCC without its consent, as novation requires an unequivocal declaration or incompatibility between the old and new obligations.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    CCC INSURANCE CORPORATION v. KAWASAKI STEEL CORPORATION, GR No.

    156162, 2015-06-22
    Facts:
    On August 16, 1988, Kawasaki, represented by its Manager, Yoshimitsu Hosoya, and F.F.
    Mañacop Construction Company, Inc. (FFMCCI), represented by its President, Florante F.
    Mañacop (Mañacop), executed a Consortium Agreement for Pangasinan Fishing Port
    Network Project (Consortium
    Agreement).[4] Kawasaki and FFMCCI formed a consortium (Kawasaki-FFMCCI
    Consortium) for the purpose of contracting with the Philippine Government for the
    construction of a fishing port network in Pangasinan (Project). According to their Consortium
    Agreement, Kawasaki and FFMCCI undertook to perform and accomplish their respective
    and specific portions of work in the intended contract with the Philippine Government.[5]
    The Project was awarded to the Kawasaki-FFMCCI Consortium for the contract price of
    P62,000,441.00, 33.37% of which or P20,692,026.00 was the price of work of FFMCCI. On
    October 4, 1988, the Republic of the Philippines (Republic), through the Department of
    Public Works and
    Highways (DPWH), represented by former Secretary Romulo M. del Rosario, as owner, and
    the Kawasaki-FFMCCI Consortium, represented by Shigeru Kohda, as contractor, entered
    into a Contract Agreement entitled Stage I-A Construction of Pangasinan Fishing Port
    Network (Construction
    Contract).[6]
    In accordance with Article 10 of the Consortium Agreement,[7] "Consortium Leader"
    Kawasaki, on behalf of the Consortium, secured from the Philippine Commercial
    International Bank (PCIB) Letter of Credit No. 38-001-183617[8] in the... amount of
    P6,200,044.10 in favor of DPWH, available from September 9, 1988 to November 19, 1990.
    Said Letter of Credit guaranteed the faithful performance by Kawasaki-FFMCCI Consortium
    of its obligation under the Construction Contract.
    CCCIC denied any liability on its Surety and Performance Bonds on the following grounds:
    (a) the rights of Kawasaki under the Surety and Performance Bonds had not yet accrued
    since the said Bonds were mere... counter-guarantees, for which CCCIC could only be held
    liable upon the filing of a claim by the Republic against the Kawasaki-FFMCCI Consortium;
    (b) Kawasaki and FFMCCI, without the consent of CCCIC, executed a new Agreement
    dated August 24, 1989 novating the terms of the
    Consortium Agreement, which prevented CCCIC from being subrogated to the right of
    Kawasaki against FFMCCI; (c) Kawasaki, in completing the Transferred Portion of Work
    was correspondingly compensated, which negated any allegation of loss on the part of
    Kawasaki; and (d) the... obligation of CCCIC was extinguished when the Republic granted
    the Kawasaki-FFMCCI Consortium an extension of time to complete the Project, without the
    consent of CCCIC.
    Issues:
    C.
    THE COURT OF APPEALS, CONTRARY TO LAW, ERRONEOUSLY FAILED TO
    CONSIDER THE FACT THAT KAWASAKI AND FFMCCI HAVE NOVATED THEIR
    ORIGINAL AGREEMENT WITHOUT THE KNOWLEDGE AND CONSENT OF CCCIC,
    THEREBY RELEASING THE LATTER FROM ANY OBLIGATION UNDER THE BONDS IT
    ISSUED
    THE COURT OF APPEALS, CONTRARY TO LAW, ERRONEOUSLY AWARDED
    ATTORNEY'S FEES TO KAWASAKI UNDER PARAGRAPH 2 OF ARTICLE 2208 OF THE
    CIVIL CODE.
    Ruling:
    Article 1292 of the Civil Code on novation further provides:
    Article 1292. In order that an obligation may be extinguished by another which substitute the
    same, it is imperative that it be so declared in unequivocal terms, or that the old and the
    new obligations be on every point incompatible with each... other.
    The cancellation of the old obligation by the new one is a necessary element of novation
    which may be effected either expressly or impliedly. While there is really no hard and fast
    rule to determine what might constitute sufficient change resulting in novation, the
    touchstone,... however, is irreconcilable incompatibility between the old and the new
    obligations.
    Principles:

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