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Phil. Charter Insurance Corp. v. CCP

This case involves a construction project between Central Colleges of the Philippines (CCP) and Dynamic Planners and Construction Corporation (DPCC). DPCC was contracted to build a five-story school building for CCP but encountered delays in the second phase of construction. CCP sent a letter informing DPCC and Philippine Charter Insurance Corporation (PCIC), who issued performance bonds for DPCC, that the contract was breached. When negotiations failed, CCP filed a complaint. The court ruled that DPCC incurred delay based on Article 1169 of the Civil Code, which states that an obligor incurs delay when the obligee demands fulfillment of the obligation either judicially or extrajudicially. Thus, CCP

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141 views2 pages

Phil. Charter Insurance Corp. v. CCP

This case involves a construction project between Central Colleges of the Philippines (CCP) and Dynamic Planners and Construction Corporation (DPCC). DPCC was contracted to build a five-story school building for CCP but encountered delays in the second phase of construction. CCP sent a letter informing DPCC and Philippine Charter Insurance Corporation (PCIC), who issued performance bonds for DPCC, that the contract was breached. When negotiations failed, CCP filed a complaint. The court ruled that DPCC incurred delay based on Article 1169 of the Civil Code, which states that an obligor incurs delay when the obligee demands fulfillment of the obligation either judicially or extrajudicially. Thus, CCP

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VEDIA GENON
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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77

Phil. Charter Insurance Corp. v. CCP


G.R. Nos. 180631-33
Leonen, J.

DOCTRINE OF THE LAW: The civil law concept of delay or default commences from
the time the obligor demands, judicially or extra judicially, the fulfillment of the obligation
from the obligee. In legal parlance, demand is the assertion of a legal or procedural
right.

FACTS: This is a petition for review on certiorari of the decision and resolution of the
Court of Appeals. Respondent Central Colleges of the Philippines (CCP), an
educational institution, contracted the services of Dynamic Planners and Construction
Corporation (DPCC) to be its general contractor for the construction of its five (5)-
storey school building at Aurora Boulevard, Quezon City with a total contract price of
P248 million. As embodied in a contract agreement, the construction of the entire
building would be done in two phases with each phase valued at P124 million. To
guarantee the fulfillment of the obligation, DPCC posted three bonds, all issued by the
Philippine Charter Insurance Corporation (PCIC). All the bonds were callable on
demand and set to expire on October 30, 2003. Phase 1 of the project was completed
without issue. The Phase 2 of the project, however, encountered numerous delays. A
letter by CCP addressed to DPCC and PCIC informed them of the breach in the
contract and its plan to claim on the construction bonds. However, all negotiations came
to a dead end thus a complaint was filed in court. DPCC AND PCIC are ordered jointly
and severally to pay the total amount of P13,924,351.47. DPCC and PCIC denied any
liability and proffered that CCP unlawfully withheld the materials, equipment, formworks
and scaffoldings left at the premises amounting to P4,232,264.12. PCIC moved for the
reconsideration of the said decision, but the CA disposed of it with a denial. Hence, this
petition.

ISSUE: Whether DPCC incurred delay.

RULING: Yes. DPCC incurred delay from the time CCP called its attention that it had
breached the contract and extra judicially demanded the fulfillment of its commitment
against the bonds. The Court finds itself unable to agree. Article 1169 of the New Civil
Code provides: Art. 1169. Those obliged to deliver or to do something incur in delay
from the time the oblige judicially or extra judicially demands from them the fulfillment of
their obligation. Hence, DPCC incurred delay. It is the obligor ‘s culpable delay, not
merely the time element, which gives the oblige the right to seek the performance of the
obligation. As such, CCP ‘s cause of action accrued from the time that DPCC became
in culpable delay as contemplated in the surety and performance bonds. Petition was
partly granted with modifications.

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