The Public Estates Authority hired Elpidio Uy to perform landscaping works for the Heritage Park project. Due to delays caused by the Authority, including its inability to deliver all the project land to Uy, the contracted completion period was extended. Uy then filed an arbitration case seeking damages from the Authority. The Authority argued that its liability was extinguished through novation when it assigned the project to another entity. However, the Court held that novation did not occur since Uy did not consent to the assignment as required by law. Consent of the creditor is necessary for novation.
The Public Estates Authority hired Elpidio Uy to perform landscaping works for the Heritage Park project. Due to delays caused by the Authority, including its inability to deliver all the project land to Uy, the contracted completion period was extended. Uy then filed an arbitration case seeking damages from the Authority. The Authority argued that its liability was extinguished through novation when it assigned the project to another entity. However, the Court held that novation did not occur since Uy did not consent to the assignment as required by law. Consent of the creditor is necessary for novation.
The Public Estates Authority hired Elpidio Uy to perform landscaping works for the Heritage Park project. Due to delays caused by the Authority, including its inability to deliver all the project land to Uy, the contracted completion period was extended. Uy then filed an arbitration case seeking damages from the Authority. The Authority argued that its liability was extinguished through novation when it assigned the project to another entity. However, the Court held that novation did not occur since Uy did not consent to the assignment as required by law. Consent of the creditor is necessary for novation.
The Public Estates Authority hired Elpidio Uy to perform landscaping works for the Heritage Park project. Due to delays caused by the Authority, including its inability to deliver all the project land to Uy, the contracted completion period was extended. Uy then filed an arbitration case seeking damages from the Authority. The Authority argued that its liability was extinguished through novation when it assigned the project to another entity. However, the Court held that novation did not occur since Uy did not consent to the assignment as required by law. Consent of the creditor is necessary for novation.
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G.R. Nos. 147933-34.
December 12, 2001
PUBLIC ESTATES AUTHORITY, petitioner, vs. ELPIDIO S. UY, doing business under the name and style EDISON DEVELOPMENT & CONSTRUCTION, AND THE COURT OF APPEALS, respondents. FACTS: Petitioner is the government agency tasked by the Bases Conversion Development Authority to develop the Heritage Park, petitioner executed with respondent Elpidio S. Uy, doing business under the name and style Edison Development & Construction, a Landscaping and Construction Agreement, whereby respondent undertook to perform all landscaping works. The Agreement stipulated that the completion date for the landscaping job was within 450 days, commencing within 14 days after receipt by respondent from petitioner of a written notice to proceed. Due to delays, the contracted period was extended to 693 days. Among the causes of the delay was petitioners inability to deliver to respondent 45 hectares of the property for landscaping, because of the existence of squatters and a public cemetery. Respondent instituted with the Construction Industry Arbitration Commission an action, seeking to collect from petitioner damages arising from its delay in the delivery of the entire property for landscaping. ISSUE: Whether or not the petitioners liability to respondent has been extinguished by novation HELD: Petitioners argument that its liability to respondent has been extinguished by novation when it assigned and turned over all its contracted works at the Heritage Park to the heritage Park Management Corporation. This, however, cannot bind respondent, who was not a party to the assignment. Moreover, it has not been shown that respondent gave his consent to the turn-over. Article 1293 of the Civil Code expressly provides: Novation which consists in substituting a new debtor in the place of the original one, may be made even without the knowledge or against the will of the latter, but not without the consent of the creditor. Payment by the new debtor gives him the rights mentioned in articles 1236 and 1237.
Bisaya Land Transportation v. Sanchez, G.R. No. 74623 August 31,
1987, 153 SCRA 532
Facts: Bisaya Land Transportation Company, Inc. (BISTRANCO) has been
engaged in the shipping business and one of its ports of call is found in Butuan City. When BISTRANCO was under receivership Mariano Sanchez (Sanchez) was appointed by BISTRANCO as its acting shipping agent for its vessels in Butuan City by its Receiver Atty. Adolfo V. Amor (Amor) pending the execution of the formal contract of agency. Thereafter a formal Contract of Agency was executed between BISTRANCO, represented by Receiver Atty. Amor and Sanchez. Sanchez then executed a Supplemental Shipping Agency Contract after finding that a paragraph of the Contract of Agency was quite prejudicial to him which was then signed by both parties. However both the Contract of Agency and the Supplemental Shipping Agency Contract (Contracts) were never submitted by Atty. Amor to the receivership court for its approval. By virtue of the Contracts, Sanchez performed his duties as shipping agent of BISTRANCO. Under Sanchezs endeavors, he had managed to increase the volume of the shipping business of BISTRANCO at Butuan City and helped it flourished. Then one day, BISTRANCO wrote Sanchez that they would commence operating its branch office at Butuan City and thereafter actually operated a branch office which in effect repudiated the Contracts. Under the rules of court it is necessary that the acts of the receiver have the approval or authorization of the court which appointed him as a receiver. A court-appointed receiver cannot validly enter into a contract without the approval of the court. Issue: Whether the status of the Contracts which Receiver Atty. Amor entered into with Sanchez, without the approval of the court which appointed him receiver is either void or unenforceable. Held: Unenforceable but ratified. Contract is valid.