G.R. No. 221147 - Asian Construction and Development Corp. vs. MERO Structures, Inc.

In anticipation of the Philippine Centennial Exposition in 1998, First Centennial Clark Corporation (FCCC) was created to design, construct, operate, and manage the National Centennial Exposition Theme Park in Clark Special Economic Zone.
On March 16, 1998, FCCC entered into a Construction Agreement with Asian Construction and Development Corporation (Asiakonstrukt) for architectural concept, design, storyline, and construction works.
On the same date, MERO Structures, Inc. (MERO) submitted a Materials Only Proposal to Asiakonstrukt for supply of the MERO KK System Spaceframe at US$570,000.00, payable 20% upon award and the balance via letter of credit; Asiakonstrukt accepted on March 17, 1998.
MERO shipped the spaceframe under bill of lading dated April 5, 1998 to “Philippine Centennial Exposition c/o Asiakonstrukt.”

On June 16, 1998, Asiakonstrukt proposed to FCCC the design, supply, and installation of the flag structure using MERO’s spaceframe, requesting full payment of materials on delivery, 50% downpayment for installation, and project completion by June 28. FCCC’s board approved June 16 subject to COA rules, sponsorship reimbursements, and a MERO certification, and sought NDC financing. FCCC formally approved Asiakonstrukt’s proposal June 17, 1998.
Asiakonstrukt informed MERO June 18 of the award and that MERO would be paid upon FCCC’s payment by June 26. Asiakonstrukt’s August 10 demand for full payment went unmet; MERO repeatedly demanded payment (1998–2000). In October and November 1999 letters, MERO asked to be paid directly by FCCC and Asiakonstrukt did not object to that request. A May 22, 2000 meeting with FCCC yielded no payment. On September 21, 2000, MERO made a final demand for US$570,000 plus 1.5% monthly interest.

MERO filed a Complaint for sum of money against Asiakonstrukt, FCCC, and NDC on February 21, 2002, praying for US$1,033,990.00 inclusive of interest, litigation expenses, moral and exemplary damages, and for NDC to furnish advances.
NDC questioned MERO’s personality to sue and validity of verification; FCCC denied privity and contended its approval was conditional and never took effect; Asiakonstrukt admitted the spaceframe’s value but disputed the 18% interest and blamed FCCC/NDC for nonpayment; cross-claims for attorney’s fees were interposed.
RTC Decision dated July 19, 2011 ordered Asiakonstrukt to pay P25,650,000.00 (US$570,000×P45.00) with 6% interest from decision and 12% after finality, dismissed NDC’s liability, and denied motions for reconsideration.
CA Decision February 18, 2015 affirmed RTC with modification: 12% per annum interest from default until June 30, 2013; thereafter 6% per annum until fully paid; Motion for Reconsideration denied October 21, 2015.
Asiakonstrukt filed Petition for Review on Certiorari in the Supreme Court.

Whether the Court of Appeals erred in refusing to treat the October 13 and November 8, 1999 letters as creating a new written contract effecting novation or subrogation, allowing MERO to collect directly from FCCC.
Whether the Court of Appeals erred in failing to exclude Novum Structures LLC (formerly MERO) as a party, given the alleged transfer of interest.