Tuesday 23 October, 2018
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Ipa-reimburse na lang! AFP General Insurance held liable for Chinese shipbuilder’s reneging on PNOC deal

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The Court of Appeals (CA) has affirmed the Armed Forces of the Philippines (AFP) General Insurance Corporation was jointly liable with a Chinese shipbuilder to pay the P10.75-million bid bond to Philippine National Oil Company (PNOC) Shipping and Transport Corporation after the latter reneged on its tanker contract in 2007.

Although the CA 7th Division ordered AFP General Insurance to comply with its bond obligation, it ruled the military insurer was entitled to reimbursement from Sina Marine Service Pte., Ltd., and its president Rizalino Jose Cabanban.

The case arose from the PNOC’s April 23, 2007, forfeiture of Sina Marine’s bid bond, after the shipbuilder informed the state firm on April 20 that it could not deliver the very same double hull petroleum tanker inspected by officials and it could provide a replacement unit instead.

Sina Marine and AFP General Insurance argued the bond was prematurely forfeited because the signing of the memorandum of agreement was scheduled that April 30.

But, the CA said the PNOC’s issuance of the notice of award on March 29 was enough basis to declare Sina Marine to have reneged on its obligation. The contract was deemed to have been perfected at the time because “consent of both parties was manifested by the meeting of the bid offer given by Sina Marine.”

Sina Marine’s offer of another vessel effectively “amends the original object of the contract,” read the decision penned by Associate Justice Renato Francisco.

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