UCPB vs. Spouses Uy

An assignee of receivables under a contract to sell is not solidarily liable with the assignor-developer for the full refund of payments made by unit buyers, and is liable only for the amount it actually received from the buyers, the assignment of credit not constituting novation by subrogation, and the doctrine of stare decisis operating only upon decisions of the Supreme Court to the exclusion of lower courts.

Prime Town Property Group, Inc. (PPGI) and E. Ganzon Inc. were the joint developers of the Kiener Hills Mactan Condominium Project. In 1997, spouses Walter and Lily Uy entered into a Contract to Sell with PPGI for a condominium unit in Kiener Hills, with a total contract price of ₱1,151,718.75 payable as ₱100,000.00 down payment and the balance in 40 monthly installments of ₱26,297.97 from 16 January 1997 to 16 April 2000. On 23 April 1998, PPGI and UCPB executed a Memorandum of Agreement and a Sale of Receivables and Assignment of Rights and Interests, by which PPGI transferred the right to collect receivables from Kiener Hills buyers—including respondents—as partial settlement of PPGI's ₱1,814,500,000.00 loan with UCPB. The agreements expressly excluded any and all liabilities PPGI may have assumed under the individual Contracts to Sell, except for amounts not exceeding ₱30,000,000.00.

Prime Town Property Group, Inc. (PPGI) and E. Ganzon Inc. were the joint developers of the Kiener Hills Mactan Condominium Project. In 1997, spouses Walter and Lily Uy entered into a Contract to Sell with PPGI for a unit in Kiener Hills, with a total contract price of ₱1,151,718.75 payable as ₱100,000.00 down payment and the balance in 40 monthly installments of ₱26,297.97 from 16 January 1997 to 16 April 2000.

On 23 April 1998, PPGI and UCPB executed a Memorandum of Agreement and a Sale of Receivables and Assignment of Rights and Interests, whereby PPGI transferred the right to collect receivables from Kiener Hills buyers—including respondents—as partial settlement of PPGI's ₱1,814,500,000.00 loan with UCPB. The agreements expressly excluded any and all liabilities PPGI may have assumed under the individual Contracts to Sell, except for amounts not exceeding ₱30,000,000.00. PPGI subsequently sent letters to the buyers stating that the new payment arrangement would not amend or cancel the existing Contracts to Sell.

Respondents claimed to have fully paid the purchase price, but PPGI failed to complete the construction of their units. On 17 April 2006, respondents filed a complaint for sum of money and damages against PPGI and UCPB before the HLURB Regional Office. The HLURB Regional Office found respondents entitled to a refund but held UCPB not solidarily liable, since only the accounts receivable were conveyed to UCPB and not the entire condominium project. The HLURB Board of Commissioners reversed this, finding UCPB solidarily liable as PPGI's successor-in-interest. The Office of the President affirmed, and the Court of Appeals affirmed with modification, limiting UCPB's liability to ₱552,152.34—the amount the CA computed by subtracting payments already made to PPGI from the total contract price, on the assumption that the balance was actually paid to and received by UCPB.

A closer scrutiny of the records, however, revealed that the only document identifying the amount respondents had paid to UCPB was UCPB's demand letter, which was materially reproduced in respondents' complaint before the HLURB Regional Office. That letter showed that UCPB received only ₱157,757.82 from respondents. While respondents alleged full payment of the purchase price, only ₱157,757.82 was sufficiently substantiated as having been actually received by UCPB.

• Scope of the Issue: UCPB maintained that the only issue to be resolved was the actual amount of its liability, noting that the CA decision had become final and executory as to respondents because they failed to file their own appeal.
• Amount of Liability: UCPB argued that the CA erred in computing its liability because it was only bound to refund the amount it had actually received from respondents, not the full balance the CA computed by subtracting payments to PPGI from the total contract price.
• Applicability of O'Halloran: UCPB relied on the CA decision in UCPB vs. O'Halloran and similar cases to support its position that the assignment of receivables did not make it the developer of Kiener Hills and that it could not be held liable for amounts it did not receive.

• Stare Decisis Does Not Apply to CA Decisions: Respondents argued that O'Halloran and other cases cited by UCPB were not binding under the doctrine of stare decisis because they were decided by the Court of Appeals and not by the Supreme Court, and that only decisions of the Supreme Court form part of the legal system.
• Question of Fact: Respondents contended that the resolution of the correct amount of UCPB's liability was a question of fact, which was beyond the ambit of a petition for review under Rule 45.
• Estoppel: Respondents argued that estoppel arose against UCPB, distinguishing the circumstances from those in O'Halloran.

• Stare Decisis: Whether the doctrine of stare decisis applies to decisions of the Court of Appeals, such that the CA ruling in UCPB vs. O'Halloran is binding precedent.
• Nature of UCPB's Liability: Whether UCPB is solidarily liable with PPGI for the full refund of respondents' payments, or merely jointly liable for the amount it actually received.
• Amount of Liability: Whether the CA correctly computed UCPB's liability at ₱552,152.34, or whether UCPB's liability should be limited to ₱157,757.82, the only amount supported by the records as having been actually received by UCPB.

• Stare Decisis: No. The doctrine of stare decisis becomes operative only when judicial precedents are set by pronouncements of the Supreme Court to the exclusion of lower courts; CA decisions have, at most, persuasive effect. However, the Supreme Court's own rulings in Spouses Choi vs. UCPB and Liam vs. UCPB—which involved the same parties, agreements, and issues—are binding.
• Nature of UCPB's Liability: No. UCPB is only jointly—not solidarily—liable with PPGI, because the transaction was an assignment of credit, not a subrogation; UCPB did not assume PPGI's obligations as developer under the Contracts to Sell.
• Amount of Liability: No. The CA's computation of ₱552,152.34 was based on an unsupported assumption that the balance was actually paid to and received by UCPB. The only amount supported by the records is ₱157,757.82, and respondents bore the burden of proving the amount UCPB actually received.

• Stare Decisis: The Court explained that under Article 8 of the Civil Code, the doctrine of stare decisis requires courts to follow rules already established in final decisions of the Supreme Court. Decisions of lower courts, including the Court of Appeals, do not become part of the legal system and have, at most, persuasive effect. Respondents were therefore correct that the CA's reliance on its own decision in O'Halloran could not be justified under stare decisis. Nevertheless, the Court's own decisions in Spouses Choi vs. UCPB and Liam vs. UCPB squarely governed the same facts—same parties (PPGI and UCPB), same agreements (the MOA and Sale of Receivables and Assignment of Rights and Interests), and same controversy (disgruntled unit owners seeking refunds after Kiener Hills was not completed). These Supreme Court rulings were binding and dispositive of UCPB's liability.

• Nature of UCPB's Liability: Relying on Spouses Choi and Liam, the Court held that the agreements between PPGI and UCPB unequivocally constituted an assignment of credit, not a novation by subrogation. The Agreement expressly provided that the sale/assignment was limited to receivables and "does not include except for the amount not exceeding 30,000,000.00 either singly or cumulatively any and all liabilities which [Primetown] may have assumed under the individual Contract to Sell." PPGI's letters to buyers confirmed that the payment arrangement would not amend or cancel the existing Contracts to Sell. Because UCPB was a mere assignee of the right to collect receivables, it did not assume PPGI's obligations as developer, including the obligation to complete the condominium project or to deliver the units. The Court also rejected the estoppel argument, noting that UCPB's letters to buyers only assured completion of the project by the developer and did not represent UCPB as the new owner or as the entity that would itself complete construction.

• Amount of Liability: While Rule 45 generally limits review to questions of law, the Court found that an exception applied: the CA's judgment was based on a misapprehension of facts, as its computation assumed without evidentiary support that the balance of the contract price was actually paid to and received by UCPB. The only document in the records identifying the amount respondents paid to UCPB was UCPB's demand letter, reproduced in respondents' HLURB complaint, which showed that UCPB received only ₱157,757.82. Because one who pleads payment bears the burden of proving the fact of payment, it was incumbent upon respondents to substantiate the actual amount UCPB received. They failed to do so beyond ₱157,757.82. Accordingly, UCPB's liability was limited to that amount.

• Stare Decisis — The doctrine of stare decisis et non quieta movere, entrenched in Article 8 of the Civil Code, enjoins adherence to judicial precedents set by final decisions of the Supreme Court. It becomes operative only when judicial precedents are established by pronouncements of the Supreme Court, to the exclusion of lower courts. Decisions of the Court of Appeals and other lower courts have, at most, persuasive effect and do not form part of the legal system. In this case, respondents correctly contested the CA's reliance on its own decision in O'Halloran as binding precedent, but the Court's own rulings in Spouses Choi vs. UCPB and Liam vs. UCPB were binding and controlled the outcome.

• Assignment of Credit — An assignment of credit is an agreement by virtue of which the owner of a credit (assignor), by a legal cause and without need of the debtor's consent, transfers that credit and its accessory rights to another (assignee), who acquires the power to enforce it to the same extent as the assignor. The obligations between assignor and assignee depend upon the judicial relation which is the basis of the assignment. An assignment is construed in accordance with the rules of construction governing contracts generally, the primary object being to ascertain and carry out the intention of the parties. In this case, the Court held that the MOA and Deed of Sale/Assignment between PPGI and UCPB unequivocally constituted an assignment of credit, not a subrogation, because the agreements expressly limited the transfer to receivables and excluded PPGI's liabilities under the Contracts to Sell. No novation by subrogation occurred.

• Burden of Proving Payment — One who pleads payment has the burden of proving the fact of payment. In this case, respondents alleged full payment of the purchase price but only ₱157,757.82 was substantiated as having been actually received by UCPB. The Court applied this doctrine to limit UCPB's refund liability to the amount respondents could prove UCPB had received.

• "The doctrine of stare decisis becomes operative only when judicial precedents are set by pronouncements of this Court to the exclusion of lower courts. It is true regardless whether the decisions of the lower courts are logically or legally sound as only decisions issued by this Court become part of the legal system. At the most, decisions of lower courts only have a persuasive effect." — This passage defines the scope of stare decisis in Philippine jurisprudence, clarifying that only Supreme Court decisions constitute binding precedent.

• "Considering that UCPB is a mere assignee of the rights and receivables under the Agreement, UCPB did not assume the obligations and liabilities of Primetown under its contract to sell with Spouses Choi." — This passage, quoted from Spouses Choi vs. UCPB, articulates the ratio decidendi that an assignee of receivables does not assume the assignor-developer's obligations under contracts to sell, thereby limiting the assignee's liability to amounts actually received.

• "While respondents alleged that they had paid in full the purchase price of the condominium units, only ₱157,757.82 was sufficiently substantiated to have been actually received by UCPB. Thus, UCPB should only be held liable for ₱157,757.82 because it was the only amount which was unequivocally shown it had received. This is especially true considering that one who pleads payment has the burden of proving the fact of payment." — This passage applies the burden-of-proof doctrine to limit the assignee's refund liability to the amount supported by the records.

• Spouses Choi vs. UCPB, 755 Phil. 849 (2015) — Controlling precedent. The Supreme Court ruled that the transaction between PPGI and UCPB was an assignment of credit, not a subrogation, and that UCPB did not assume PPGI's obligations as developer. The Court held UCPB only jointly liable with PPGI for the amount it actually received from buyers, and rejected the estoppel argument. This case involved the same parties, agreements, and project as the present case.

• Liam vs. UCPB, G.R. No. 194664, 15 June 2016, 793 SCRA 383 — Controlling precedent. The Court maintained its position that the transaction between PPGI and UCPB was merely an assignment of credit, such that only the right to collect receivables was transferred, not the obligation to complete the condominium project. No novation by subrogation occurred.

• De Mesa vs. Pepsi-Cola Products Phils. Inc., 504 Phil. 685 (2005) — Cited for the proposition that the doctrine of stare decisis requires courts to follow rules established in final decisions of the Supreme Court, and that such decisions become judicial precedent binding on all courts in the land.

• Heirs of Alcaraz vs. Republic of the Phils., 502 Phil. 521 (2005) — Cited for the principle that when a case is appealed, the appellate court has the power to review the case in its entirety and render an entirely new decision as it deems a just determination of the controversy.

• UCPB vs. O'Halloran, CA-G.R. SP No. 101699 (23 July 2009) — A Court of Appeals decision cited by the CA below. The Supreme Court clarified that this decision was not binding under stare decisis because it was not issued by the Supreme Court, though its reasoning was consistent with the Court's own rulings in Choi and Liam.

• Article 8, Civil Code — Provides that judicial decisions applying or interpreting laws or the Constitution shall form part of the legal system of the Philippines. The Court cited this provision as the textual basis for the doctrine of stare decisis, explaining that only decisions of the Supreme Court—not lower courts—form part of the legal system.

• Rule 45, Rules of Court — Governs petitions for review on certiorari to the Supreme Court, which are limited to questions of law. The Court recognized an exception where the judgment of the lower court is based on a misapprehension of facts, which justified review of the factual matter of UCPB's actual liability.

Presbitero J. Velasco, Jr. (Chairperson), Lucas P. Bersamin, Marvic M.V.F. Leonen, and Alexander G. Gesmundo concurred. No separate concurring opinions were noted.