G.R. No. 204039 - United Coconut Planters Bank vs. Spouses Uy

Case Summary (G.R. No. 204039)

Key Dates

Contract to Sell entered 1997; MOA and Sale of Receivables/Assignment executed 23 April 1998; complaint filed with HLURB Regional Office 17 April 2006; HLURB Regional Office decision 29 November 2006; HLURB Board decision 17 September 2007; OP decision 24 March 2010; CA decision 23 May 2012 and resolution denying reconsideration 18 October 2012; Supreme Court decision (appeal) rendered in the present record.

Applicable Law and Constitutional Basis

Applicable constitutional framework: 1987 Constitution (decision rendered after 1990). Governing legal concepts applied and discussed include assignment of credits/receivables (assignment of rights), principles on stare decisis and precedential weight, exceptions to Rule 45 review (when factual findings may be revisited), and ordinary burdens of proof (party pleading payment must prove it). Administrative adjudicatory jurisdiction of HLURB and appellate powers of CA and the Supreme Court were exercised in the course of review.

Factual Background — Contract and Assignment

Spouses Uy contracted with PPGI in 1997 to buy a Kiener Hills condominium unit for P1,151,718.75 (P100,000 down payment; 40 monthly installments of P26,297.97). On 23 April 1998 PPGI and UCPB executed a Memorandum of Agreement and instruments described as Sale of Receivables and Assignment of Rights and Interests: PPGI transferred to UCPB the right to collect receivables from condominium buyers as partial settlement of a large loan PPGI owed to UCPB.

Procedural History — Administrative Determinations

HLURB Regional Office (29 November 2006): found respondents entitled to refund because PPGI failed to complete the units, but held UCPB not solidarily liable with PPGI because only receivables (not the entire project) were conveyed; suspended proceedings against PPGI due to corporate rehabilitation and directed buyers to file claims with the Rehabilitation Receiver.
HLURB Board (17 September 2007): reversed the Regional Office, held that UCPB had stepped into PPGI’s shoes under the MOA and was successor-in-interest, and therefore declared UCPB solidarily liable with PPGI to refund payments (ordered refund of P1,151,718.75 with legal interest, plus exemplary damages and attorney’s fees). OP (24 March 2010): affirmed the HLURB Board, reasoning that the agreements transferred rights, titles, interests and participations in Kiener Hills to UCPB, making UCPB successor-in-interest and responsible for reimbursement; suspension benefit applied only to PPGI.

Court of Appeals Ruling

The CA (23 May 2012) affirmed with modification. It agreed respondents were entitled to refund but held UCPB was not solidarily liable for the full purchase price; liability of UCPB was limited to amounts actually paid to UCPB after its assumption or after the assignment (23 April 1998). The CA relied on prior CA precedents (including United Coconut Planters Bank v. O’Halloran) treating UCPB as assignee of receivables, not the developer; it allocated liability between UCPB and PPGI so that UCPB would refund P552,152.34 and PPGI would refund P599,566.41 (splitting the total purchase price). CA denied UCPB’s motion for reconsideration by resolution dated 18 October 2012.

Issues Raised on Appeal to the Supreme Court

Whether the CA gravely erred in applying O’Halloran and related CA decisions under stare decisis.
Whether the CA gravely erred in holding UCPB liable for amounts respondents did not pay UCPB or which UCPB did not receive.

Supreme Court: Stare Decisis and Binding Precedent

The Court reaffirmed that the doctrine of stare decisis binds lower courts only to decisions of the Supreme Court. Decisions of the Court of Appeals, even if persuasive and logically sound, do not constitute binding precedents for the Supreme Court or other courts under the doctrine; at most they have persuasive effect. Thus reliance on CA precedents does not render the CA’s ruling immune from review; the Supreme Court evaluates the correctness of legal propositions regardless of CA decisions.

Supreme Court: Nature of the UCPB–PPGI Transaction and Liability

Applying prior Supreme Court pronouncements (Spouses Choi, Liam, and other cases cited within the record), the Court examined the written agreements between PPGI and UCPB and concluded they constituted an assignment of receivables (assignment of credit) rather than a subrogation or novation that would substitute UCPB for PPGI as developer. The agreements expressly transferred receivables, rights, title interests and participation arising from contracts to sell but expressly excluded assumption of liabilities under individual contracts (with limited exceptions). Under principles governing assignment of credit, the assignee acquires the right to enforce the credit but does not automatically assume the assignor’s liabilities and obligations under the underlying contract unless the instrument and circumstances show such an intention. Prior decisions of this Court interpreting identical or substantially similar agreements led to the conclusion that UCPB was a mere assignee and therefore only jointly (not solidarily) liable with PPGI to refund the amounts UCPB actually received from buyers.

Supreme Court: Estoppel and UCPB Communications

The Court addressed the estoppel argument raised by buyers, noting that UCPB’s letters to buyers assuring completion by the developer did not amount to representations that UCPB had become the owner or would itself complete the project. Accordingly, estoppel did not attach to convert UCPB’s status into that of developer or to obligate UCPB to assume PPGI’s full liabilities.

Scope of Review Under Rule 45 and Exceptions

The Court reiterated the Rule 45 principle that only questions of law may normally be raised in a petition for review, with factual findings of lower courts being generally final an

Case Syllabus (G.R. No. 204039)

Case Caption, Citation and Panel

Reported at 823 Phil. 284, Third Division, G.R. No. 204039, January 10, 2018.
Petitioner: United Coconut Planters Bank (UCPB).
Respondents: Spouses Walter Uy and Lily Uy.
Decision penned by Justice Martires; concurred in by Justices Velasco, Jr. (Chairperson), Bersamin, Leonen, and Gesmundo.
Procedural history includes decisions of the HLURB Regional Office (29 November 2006), HLURB Board of Commissioners (17 September 2007), Office of the President (24 March 2010), Court of Appeals (23 May 2012 decision and 18 October 2012 resolution denying reconsideration), culminating in this Supreme Court decision.

Factual Background

Prime Town Property Group, Inc. (PPGI) and E. Ganzon Inc. were joint developers of the Kiener Hills Mactan Condominium Project (Kiener Hills).
In 1997, Spouses Walter and Lily Uy entered into a Contract to Sell with PPGI for a unit in Kiener Hills.
Total contract price: P1,151,718.75.
Payment terms under the Contract to Sell: P100,000.00 down payment; balance payable in 40 monthly installments of P26,297.97 from 16 January 1997 to 16 April 2000.
On 23 April 1998, PPGI and UCPB executed a Memorandum of Agreement (MOA) and a Sale of Receivables and Assignment of Rights and Interests, by which PPGI transferred the right to collect receivables of the buyers (including the Uys) to UCPB.
The assignment was part of PPGI’s partial settlement of its P1,814,500,000.00 loan with UCPB.
On 17 April 2006, the HLURB Regional Office received the Uys’ complaint for sum of money and damages against PPGI and UCPB, alleging that despite full payment of the purchase price, PPGI failed to complete construction of their units.

HLURB Regional Office Decision (29 November 2006)

The HLURB Regional Office found the Uys were entitled to a refund due to PPGI’s failure to complete the units.
The Regional Office held that UCPB could not be solidarily liable with PPGI because only the accounts receivable were conveyed to UCPB and not the entire condominium project.
Proceedings were suspended as to PPGI because it was in corporate rehabilitation.
Dispositive order: proceedings suspended; complainants directed to file their claim before the Rehabilitation Receiver; no judgment as to costs.

HLURB Board of Commissioners Decision (17 September 2007)

The HLURB Board reversed and set aside the Regional Office decision in material respects.
While agreeing that proceedings against PPGI should be suspended due to corporate rehabilitation, the Board found UCPB solidarily liable with PPGI because UCPB “stepped into [PPGI’s] shoes” with respect to Kiener Hills pursuant to the MOA.
The Board characterized UCPB as successor-in-interest such that delay in completion could be attributable to UCPB.
The Board ordered: UCPB to refund P1,151,718.75 with legal interest at 6% per annum reckoned from extrajudicial demand on May 24, 2005 until fully paid (without prejudice to UCPB’s claims against PPGI); declared UCPB and PPGI jointly and severally liable for exemplary damages of P30,000.00 and attorney’s fees of P30,000.00.

Office of the President Decision (24 March 2010)

The Office of the President (OP) affirmed the HLURB Board decision.
OP concluded the MOA transferred all rights, titles, interests, and participations over Kiener Hills to UCPB and that UCPB, as successor-in-interest, assumed obligations related to Kiener Hills, including reimbursement of payments to the Uys.
OP held the benefit of suspension of actions attached only to PPGI and not to UCPB.
Dispositive: the appealed decision was affirmed.

Court of Appeals Decision (23 May 2012) and Reconsideration (18 October 2012)

The Court of Appeals (CA) affirmed with modification the OP decision.
The CA agreed the Uys were entitled to full refund of payments they may have made but held UCPB was not solidarily liable with PPGI.
The CA limited UCPB’s liability to the amount the Uys had paid to UCPB upon UCPB’s assumption as party entitled to receive payments (or as of 23 April 1998 when MOA and Assignment were executed).
The CA cited United Coconut Planters Bank v. O’Halloran as precedent where assignment of receivables did not make UCPB the developer and thus not solidarily liable.
CA’s monetary orders: (1) UCPB ordered to pay Spouses Uy P552,152.34 with legal interest at 6% per annum from filing of complaint until fully paid, without prejudice to UCPB’s claims against Primetown; (2) Primetown (PPGI) liable to pay Spouses Uy P599,566.41 with legal interest at 6% per annum from filing of complaint until fully paid.
UCPB’s motion for reconsideration was denied by the CA on 18 October 2012.

Issues Presented to the Supreme Court

Issue I: Whether the Court of Appeals grievously erred in construing the applicability of its prior final and executory decision in UCPB v. John P. O’Halloran and Josefina O’Halloran under the principle of stare decisis.
Issue II: Whether the CA grievously erred in ruling that UCPB is liable to respondents for the amount the respondents did not pay the bank and which UCPB did not receive.

Procedural and Doctrinal Points Raised in the Petition

UCPB sought review of the CA decision, contending that the sole issue was the actual amount of its liability and pointing out the CA decision had become final and exe