G.R. No. 221147 . September 29, 2021
ASIAN CONSTRUCTION AND DEVELOPMENT CORPORATION, PETITIONER, VS. MERO STRUCTURES, INC., SUBSTITUTED BY NOVUM STRUCTURES LLC, INC., FIRST CENTENNIAL CLARK CORP., AND NATIONAL DEVELOPMENT COMPANY, RESPONDENTS.

FACTS

First Centennial Clark Corporation (FCCC) was created for the Philippines’ National Centennial Exposition in 1998. On March 16, 1998, FCCC entered into a Construction Agreement with petitioner Asian Construction and Development Corporation (Asiakonstrukt) for the Exposition Theme Park. On the same date, respondent MERO Structures, Inc. (MERO) submitted a Materials Only Proposal to Asiakonstrukt for the supply of a spaceframe for a flag structure for US$570,000.00, with 20% payable upon award and the remainder via letter of credit. Asiakonstrukt accepted the proposal on March 17, 1998. MERO shipped the spaceframe on April 5, 1998. On June 16, 1998, Asiakonstrukt submitted a proposal to FCCC for the design, supply, and installation of the flag structure using MERO’s spaceframe. FCCC approved the proposal on June 17, 1998, subject to certain conditions. Asiakonstrukt informed MERO of the award on June 18, 1998, promising payment after FCCC’s payment. Despite demands, Asiakonstrukt failed to pay MERO. In a letter dated October 13, 1999, MERO requested direct payment from FCCC, and Asiakonstrukt, in a reply dated November 8, 1999, interposed no objection. MERO filed a Complaint for sum of money before the Regional Trial Court (RTC) on February 21, 2002. During proceedings, MERO changed its name to Novum Structures LLC after conversion to a limited liability company. The RTC ruled in favor of MERO, holding Asiakonstrukt liable for the principal amount with interest and granting Asiakonstrukt the right to reimbursement from FCCC, while dismissing the complaint against National Development Company (NDC). The Court of Appeals (CA) affirmed with modification, adjusting the interest rates in line with Nacar v. Gallery Frames. Asiakonstrukt filed a Petition for Review on Certiorari.

ISSUE

1. Whether the CA erred in not considering the letters dated October 13, 1999, and November 8, 1999, as a new written contract wherein the parties agreed that MERO would collect directly from FCCC.
2. Whether the CA erred in affirming the RTC decision without excluding the transfer of interest, given MERO’s change of name to Novum Structures LLC.

RULING

1. No. The Supreme Court held that the letters did not constitute a novation or a new contract that would release Asiakonstrukt from its obligation to MERO. The letter from MERO merely requested direct payment from FCCC, and Asiakonstrukt’s reply simply stated it had no objection. This did not extinguish Asiakonstrukt’s original obligation to MERO, as there was no clear agreement to substitute FCCC as the debtor or to release Asiakonstrukt from liability. The original contract between Asiakonstrukt and MERO remained valid and enforceable.
2. No. The Supreme Court held that there was no transfer of interest, but merely a change of name by MERO to Novum Structures LLC after its conversion to a limited liability company. The composition of the entity remained the same, and thus, no new party was impleaded. The CA correctly affirmed the RTC’s decision in this regard.
The Petition for Review on Certiorari was DENIED. The CA Decision and Resolution were AFFIRMED.