G.R. No. 209370 - Fort Bonifacio Development Corp. vs. Fong

Petitioner Fort Bonifacio Development Corporation (FBDC) is a domestic corporation engaged in real estate development.
On June 5, 2000, FBDC entered into a Trade Contract with MS Maxco Company, Inc. (MS Maxco), formerly operating as L&M Maxco Specialist Engineering Construction, for the structural and partial architectural works of the Bonifacio Ridge Condominium project in Taguig City.
Under the contract, FBDC was entitled to withhold five percent (5%) of the contract price as retention money.

The Trade Contract allowed FBDC to hire other contractors to correct defects or complete unfinished work caused by MS Maxco’s negligence, with costs deductible from the contract price.
MS Maxco incurred delays and failed to meet contractual terms, causing FBDC to engage other contractors for completion and corrective work costing P11,567,779.12, deducted from MS Maxco’s retention money.
MS Maxco was prohibited from assigning or transferring any rights or liabilities under the contract without FBDC’s written consent.

In April 2005, FBDC received a letter from respondent Valentin L. Fong (Fong), stating MS Maxco had assigned to him P1,577,115.90 of its receivables from FBDC via a notarized Deed of Assignment dated February 28, 2005.
The assigned amount represented MS Maxco’s claim to a portion of its retention money withheld by FBDC.
FBDC acknowledged the retention money but argued it was not yet due and was subject to garnishment by MS Maxco’s creditors.
Despite Fong’s demands, FBDC refused to pay the assigned amount, stating that after the defects rectification and garnishment, no retention money remained to satisfy Fong’s claims.

Fong, doing business as VF Industrial Sales, filed suit against FBDC for P1,577,115.90 plus legal interest, costs, and expenses, asserting enforcement of the assigned receivable.
FBDC denied liability, emphasizing that the retention money had been exhausted through deductions and garnishments and that it was not bound by the assignment as it was not a party to it.
The Regional Trial Court (RTC) ruled in favor of Fong, holding that the assignment was valid and binding upon FBDC after notice via the April 18, 2005 letter. It found that FBDC’s payment to MS Maxco’s other creditors was effectively from its own funds since the assignment preceded such garnishment.
The RTC further ruled that the provision prohibiting assignment without FBDC’s consent did not bind Fong as assignee, since contractual stipulations generally do not bind third parties.
FBDC appealed to the Court of Appeals (CA), which affirmed the RTC ruling, upholding the validity and binding effect of the assignment and FBDC’s liability. The CA held that consent of FBDC was not required for assignment under law and that sufficient retention money remained as of December 6, 2005, to satisfy Fong’s claim.
The CA denied FBDC’s motion for reconsideration, leading to this petition before the Supreme Court.

Whether the Court of Appeals erred in ruling that FBDC was bound by the Deed of Assignment between MS Maxco and Fong despite the contractual prohibition on assignment without written consent.
Whether FBDC is liable to pay Fong the amount of P1,577,115.90, representing a portion of MS Maxco’s retention money purportedly assigned to Fong.