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    GAW Vs IAC

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    Guinevere Raymundo
    1) Henry Gaw entered into a dealership agreement with Prime White Cement Corporation (PWCC) to exclusively deal white cement. The agreement required Gaw to deposit $200,000 and increase deposits to $500,000 within 90 days. 2) Gaw subsequently entered into a marketing agreement with Uy Diet Tan to help increase his cement volume. However, Tan later sued Gaw for payment. 3) The appellate court reversed the lower court's ruling in favor of Gaw, ordering him to pay Tan $100,000 in damages. Gaw appealed, arguing the marketing agreement novated the dealership agreement. 4) The Supreme Court disagreed, finding no novation occurred as P

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    GAW Vs IAC

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    Guinevere Raymundo
    805 views2 pages
    1) Henry Gaw entered into a dealership agreement with Prime White Cement Corporation (PWCC) to exclusively deal white cement. The agreement required Gaw to deposit $200,000 and increase deposits to $500,000 within 90 days. 2) Gaw subsequently entered into a marketing agreement with Uy Diet Tan to help increase his cement volume. However, Tan later sued Gaw for payment. 3) The appellate court reversed the lower court's ruling in favor of Gaw, ordering him to pay Tan $100,000 in damages. Gaw appealed, arguing the marketing agreement novated the dealership agreement. 4) The Supreme Court disagreed, finding no novation occurred as P

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    GAW vs IAC

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    1) Henry Gaw entered into a dealership agreement with Prime White Cement Corporation (PWCC) to exclusively deal white cement. The agreement required Gaw to deposit $200,000 and increase deposits to $500,000 within 90 days. 2) Gaw subsequently entered into a marketing agreement with Uy Diet Tan to help increase his cement volume. However, Tan later sued Gaw for payment. 3) The appellate court reversed the lower court's ruling in favor of Gaw, ordering him to pay Tan $100,000 in damages. Gaw appealed, arguing the marketing agreement novated the dealership agreement. 4) The Supreme Court disagreed, finding no novation occurred as P

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    805 views2 pages

    GAW Vs IAC

    Uploaded by

    Guinevere Raymundo
    1) Henry Gaw entered into a dealership agreement with Prime White Cement Corporation (PWCC) to exclusively deal white cement. The agreement required Gaw to deposit $200,000 and increase deposits to $500,000 within 90 days. 2) Gaw subsequently entered into a marketing agreement with Uy Diet Tan to help increase his cement volume. However, Tan later sued Gaw for payment. 3) The appellate court reversed the lower court's ruling in favor of Gaw, ordering him to pay Tan $100,000 in damages. Gaw appealed, arguing the marketing agreement novated the dealership agreement. 4) The Supreme Court disagreed, finding no novation occurred as P

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    GAW vs INTERMEDIATE APPELLATE COURT

    G.R. No. 70451. March 24, 1993


    FACTS:
    Henry Gaw is a businessman engaged in the buy and sell of hardware and construction
    materials. Through a dealership agreement, on December 12, 1978, his trading firm, the K.H.
    Gaw Enterprises, was appointed as one of the four (4) exclusive dealers of white cement of Prime
    White Cement Corporation (PWCC for brevity). Among others, the agreement stipulated that for
    five (5) years, the dealer would take delivery from PWCC at least 2,600 bags of white cement a
    month; that in consideration of the execution of the contract, the dealer would deposit Two
    Hundred Thousand Pesos (P200, 000.00) "to be repaid or returned" to the dealer under a scheme
    set forth in the same contract, and that the dealer would increase its allocation to 6,5000 bags a
    month and "increase its loan" to PWCC to Five Hundred Thousand Pesos (P500,000.00) "in a
    contract akin, so as to abreast itself, or cope up with other dealers, within ninety (90) days" from
    the execution of the agreement.
    To avail of the provision on the increased volume of monthly delivery of cement, on February 2,
    1979, Gaw entered into a marketing agreement with Foundation Commercial, a single
    proprietorship, through Uy Diet Tan
    March 5, 1979.Tan filed a case against Gaw in the Court of First Instance of Rizal. Tan alleged that
    when he tried to deposit the money to PWCC, the auditor of PWCC said that he should write the
    check under the name of Gaw. Tan praying that Gaw should honor his contract and pay him for
    moral damages, litigation costs and atty.s fees. Tan also filed a restraining order against Gaw to
    prevent Gaw from disposing the cement bags.
    Gaw filed a case against Tan on the ground that the case against him caused him to lose profit.
    Court held in favor of Gaw, thus ordering Tan to pay Gaw. Tan filed a motion for reconsideration
    but was denied. Tan appealed in the Immediate Appellate Court. The said court reversed the
    decision of the lower court and ordered Gaw to pay P100,000 to Tan for actual damages. Gaw
    filed a motion for reconsideration but was denied.
    ISSUE : Whether or not there is novation if PWCC accepted the payment from Tan.
    HELD:
    NO. While in a sense the marketing agreement between Gaw and Tan is related to the original
    dealership agreement between the former and PWCC, as the term of the former is co-terminous
    with that latter, we cannot subscribe to petitioner's contention that the marketing agreement
    was "an attempted novation" of the dealership agreement. Arguing that "Tan intended to step
    into the shoes of petitioner Gaw as debtor of Prime White in respect to the additional deposit of
    P250,000.00," Gaw cites Article 1293 of the Civil Code which provides that '(n)ovation which
    consists in substituting a new debtor in the place of the original one may even without the
    knowledge or against the will of the latter, but not without the consent of the creditor." Yet Gaw
    fails to prove that PWCC, the creditor, knew all about the so-called substitution.
    It is axiomatic that novation is never presumed. It must be explicitly stated in the contract and
    there must be a manifest incompatibility between the old and the new obligation in every aspect.
    The fact that the two agreements are co-terminous with each other does not imply that a new
    obligation had arisen when the marketing agreement was signed, thus displacing the dealership
    contract. Not only was Gaw not released from complying with the terms and conditions of the
    dealership agreement but he was, in a sense, already implementing the latter.

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