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.