Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&amp;view=article&amp;id=84230:59842&amp;catid=1594&amp;Itemid=566
Timestamp: 2019-04-19 18:35:23+00:00

Document:
G.R. No. 209370, March 25, 2015 - FORT BONIFACIO DEVELOPMENT CORPORATION, Petitioner, v. VALENTIN L. FONG, Respondent.
FORT BONIFACIO DEVELOPMENT CORPORATION, Petitioner, v. VALENTIN L. FONG, Respondent.
Assailed in this petition for review on certiorari1 are the Decision2 dated May 17, 2013 and the Resolution3 dated September 2, 2013 rendered by the Court of Appeals (CA) in CA-G.R. CV. No. 93407, which affirmed the Decision4 dated January 28, 2009 of the Regional Trial Court of Mandaluyong City, Branch 214 (RTC) in Civil Case No. MC06-2928, finding petitioner Fort Bonifacio Development Corporation (FBDC) liable to respondent Valentin L. Fong (Fong), as proprietor of VF Industrial Sales, for the amount of P1,577,115.90 with legal interest computed from February 13, 2006.
Sometime in April 2005, FBDC received a letter14 dated April 18, 2005 (April 18, 2005 letter) from the counsel of Fong informing it that MS Maxco had already assigned its receivables from FBDC to him (Fong) by virtue of a notarized Deed of Assignment15 dated February 28, 2005.16 Under the Deed of Assignment, MS Maxco assigned the amount of P1,577,115.90 to Fong as payment of the former’s obligation to the latter, which amount was to be taken from the retention money with FBDC.17 In its letter-reply18 dated October 11, 2005, FBDC acknowledged the five percent (5%) retention money of MS Maxco, but asserted that the same was not yet due and demandable and that it was already the subject of garnishment19 by MS Maxco’s other creditors.
Aggrieved, FBDC appealed42 to the CA, assailing the RTC’s conclusion that the Deed of Assignment was binding upon it and that it was liable to satisfy Fong’s claims.
FBDC’s motion for reconsideration48 was denied in a Resolution49 dated September 2, 2013, hence, this petition.
The issues for the Court’s resolution are whether or not the CA erred in ruling that FBDC was bound by the Deed of Assignment between MS Maxco and Fong, and even assuming that it was, whether or not FBDC was liable to pay Fong the amount of ?1,577,115.90, representing a portion of MS Maxco’s retention money.
The reason that a contracting party’s assignees, although seemingly a third party to the transaction, remain bound by the original party’s transaction under the relativity principle further lies in the concept of subrogation, which inheres in assignment.
Fong, as mere assignee of MS Maxco’s rights under the Trade Contract it had previously entered with FBDC, i.e., the right to recover any credit owing to any unutilized retention money, is equally bound by the foregoing provision and hence, cannot validly enforce the same without FBDC’s consent.
Art. 1628. The vendor in good faith shall be responsible for the existence and legality of the credit at the time of the sale, unless it should have been sold as doubtful; but not for the solvency of the debtor, unless it has been so expressly stipulated or unless the insolvency was prior to the sale and of common knowledge.
The vendor in bad faith shall always be answerable for the payment of all expenses, and for damages.
WHEREFORE, the petition is GRANTED. The assailed Decision dated May 17, 2013 and the Resolution dated September 2, 2013 rendered by the Court of Appeals in CA-G.R. CV. No. 93407 are hereby REVERSED and SET ASIDE, and a new one is entered DISMISSING the instant complaint against petitioner Fort Bonifacio Development Corporation.
Sereno, C.J., (Chairperson,) Leonardo-De Castro, Bersamin, and Perez, JJ., concur.
2 Id. at 40-54. Penned by Associate Justice Nina G. Antonio-Valenzuela with Associate Justices Isaias P. Dicdican and Myra V. Garcia-Fernandez concurring.
4 Id. at 219-228. Penned by Judge Edwin D. Sorongon.
8 See id. at 63 and 133.
Without prejudice to his other rights and remedies, the Client [FBDC] or Construction Manager on behalf of the Client shall be entitled to employ and pay other persons to remedy any negligence, act, omission or default of the Trade Contractor [MS Maxco] where notice has been given under Clause 5.13 and the Trade Contractor has failed to remedy or take steps diligently to remedy the same.
All damages, loss, and/or expense suffered or incurred by the Client in doing so shall be borne by the Trade Contractor and may be deducted from the Contract Sum and approximate adjustments made to the interim certificates.
Nothing contained elsewhere in this Contract shall in any way limit or exclude any of the rights of the Client to deduct or set-off (whether under this Contract or otherwise) any sums to which he is or may become entitled whether as damages or otherwise from or against the Contract Sum or from or against any monies otherwise due to the Trade Contractor under this Contract. The Construction Manager shall give the Trade Contractor ten working days notice of any such deduction or set-off and such [w]ithholding [n]otice shall specify the reasons for the deduction or set-off and shall state the amount of it or them.
10 See id. at 8 and 222.
11 See id. at 47.
13 See Section 19.1 of the Trade Contract; id. at 144.
16 See id. at 9 and 221.
19 Records show that MS Maxco was also impleaded in other cases, to wit: CIAC Case No. 11-2002 entitled “Asia-Con Builders Inc. v. L&M Maxco Company, Inc. and Lee Meng Yong” pending before the Construction Industry Arbitration Commission; and Civil Case No. 05-164 entitled “Concrete Masters, Inc. v. L&M Maxco Company, Inc.” pending before the Regional Trial Court of Makati City. See id. at 43-44.
20 See letters dated October 14, 2005 (id. at 64); dated October 26, 2005 (id. at 65); and January 17, 2006 (id. at 67).
22 See Complaint For Sum of Money filed on February 13, 2006; id. at 57-59.
24 See Answer Ex Abundanti Ad Cautelam dated July 14, 2006; id. at 167-218.
25 See id. at 176-180.
26 See id. at 183.
27 See id. at 186.
28 See id. at 188-189.
29 See id. at 192 and 195.
30 See id. at 210.
33 Art. 1624. An assignment of credits and other incorporeal rights shall be perfected in accordance with the provisions of Article 1475.
42 See Notice of Appeal Ex Abundanti Ad Cautelam dated March 17, 2009;id. at 229-230.
46 See id. at 51-53.
47 See id. at 53.
48 Dated June 10, 2013. Id. at 299-318.
50 See Article 1159 of the Civil Code.
51Mendiola v. Commerz Trading Int’l., Inc., G.R. No. 200895, July 31, 2013, 703 SCRA 137, 142-143.
52 See BA Finance Corporation v. CA, 278 Phil. 176, 182 (1991).
53 See Mercantile Insurance Co., Inc. v. Felipe Ysmael, Jr. & Co., Inc., 251 Phil. 66 (1989); BPI Credit Corporation v. CA, G.R. No. 96755, December 4, 1991, 204 SCRA 601.
54Gonzales vs. Land Bank of the Philippines, 262 Phil. 568, 574 (1990).
55Koa v. CA, G.R. No. 84847, March 5, 1993, 219 SCRA 541, 546, citing Fidelita Mut. L. Ins. Co. v. Clark, 203 U.S. 64, 51 L. ed., 91 27 s. Ct. 19; Judson v. Corcoran, 17 How (US) 612, 156 L. ed. 231.

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