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FLORITA LIAM v. UNITED COCONUT PLANTERS BANK

FACTS:

The petitioner, Florita Liam, entered into a contract to sell a condominium unit with developer Primetown Property Group, Inc. (PPGI). PPGI obtained a loan from United Coconut Planters Bank (UCPB) to fund the construction of the project. To partially settle the loan, PPGI transferred its right to collect receivables from condominium buyers, including Liam, to UCPB. Liam was notified of this transfer and instructed to make payments to UCPB. However, Liam stopped making payments when she requested a deferment until the unit was ready for delivery and asked for a refund of her previous payments. UCPB proposed a financing package, but Liam preferred to downgrade her unit. She filed a complaint before the HLURB against PPGI and UCPB for specific performance, alleging that UCPB promised to deliver the unit within six months and raising issues of biased interest rates, unfair tax charges, and devaluation of market values. PPGI denied receiving any demand from Liam and sought deferment due to a pending petition for corporate rehabilitation. UCPB argued that it had no obligation to deliver the unit, claiming it was not the developer but only acquired PPGI's right to collect receivables. UCPB asserted that the units were already complete and Liam should resume payment.

The case involves a dispute between Liam and UCPB arising from a contract to sell a condominium unit. Liam entered into a contract with PPGI to purchase a unit, but the unit was not completed on time. Liam filed a complaint against PPGI for specific performance, and UCPB, as the assignee of PPGI's rights and interests, was included in the complaint. The HLURB ruled in favor of Liam, ordering UCPB to deliver the unit or refund the installment payments. UCPB appealed to the Office of the President (OP), contesting its obligation to refund Liam's payments. The OP affirmed the HLURB's ruling. UCPB then appealed to the Court of Appeals (CA), which reversed the OP's decision, holding that UCPB was not liable for specific performance. Liam filed a petition before the Supreme Court, raising various issues for resolution.

The facts in the case are not disputed by the parties: a) PPGI and Liam have a valid Contract to Sell; b) PPGI entered into agreements with UCPB without Liam's consent; c) PPGI failed to deliver the condominium unit within the agreed period. The interpretation of the agreements between PPGI and UCPB and their impact on the Contract to Sell between PPGI and Liam is the main point of contention. These matters involve legal questions on the applicable law and do not require an assessment of the evidentiary value but rather the determination of the law's provisions in relation to the given facts.

ISSUES:

  1. Whether the transactions between PPGI and UCPB are a subrogation or an assignment of credit.

  2. Whether the consent of the debtor is necessary in an assignment of credit.

  3. Whether the MOA and Deed of Sale/Assignment between PPGI and UCPB show that an assignment of credit was intended.

  4. Whether the agreement between PPGI and UCPB was an assignment of credit or a subrogation.

  5. Whether UCPB should be held solidarily liable with Primetown for the obligations and liabilities of Primetown under the contract to sell with Liam.

  6. Whether UCPB's failure to post an appeal bond rendered the HLURB Arbiter's decision final and executory.

  7. Whether or not the Regional Trial Court (RTC) has jurisdiction over a case involving a civil action for collection of sum of money amounting to less than P400,000.00, filed with a counterclaim amounting to more than P300,000.00.

  8. Whether or not a party is required to pay additional docket fees for the counterclaim if the original case is already within the jurisdictional amount of the RTC.

RULING:

  1. The transactions between PPGI and UCPB are an assignment of credit, not a subrogation.

  2. In an assignment of credit, the consent of the debtor is not necessary, only notice is required.

  3. The MOA and Deed of Sale/Assignment between PPGI and UCPB clearly show that an assignment of credit was intended.

  4. The Court held that the agreement between PPGI and UCPB was an assignment of credit. The Court found that the provisions of the Memorandum of Agreement (MOA) and the Deed of Sale/Assignment clearly stated that UCPB became an assignee of PPGI's outstanding receivables from its condominium buyers. There was no proviso or extraneous factor that incited a contrary interpretation. The absence of the debtor's consent to the transactions between PPGI and UCPB affirmed their nature as an assignment of credit. The purpose of notice to the debtor was only to inform them that payment should be made to the assignee and not to the original creditor. The Court also found that UCPB's acquisition of PPGI's receivables did not involve any changes in the Contract to Sell between PPGI and Liam, nor did it vary the rights and obligations of the parties therein. Therefore, there was no novation by subrogation.

  5. UCPB should not be held solidarily liable with Primetown for the obligations and liabilities of Primetown under the contract to sell with Liam. UCPB is merely a assignee of the rights and receivables under the agreement it executed with Primetown.

  6. UCPB's failure to post an appeal bond did not render the HLURB Arbiter's decision final and executory. The posting of an appeal bond is required only in cases where the appealed judgment involves a monetary award. The decision of the HLURB Arbiter did not involve a judgment for a specific sum of money.

  7. Yes. The RTC has jurisdiction over a case involving a civil action for collection of sum of money amounting to less than P400,000.00, filed with a counterclaim amounting to more than P300,000.00. In this case, the jurisdiction of the RTC is determined by the amount involved in the main action without considering the counterclaim, as long as the counterclaim is within its jurisdiction.

  8. No. A party is not required to pay additional docket fees for the counterclaim if the original case is already within the jurisdictional amount of the RTC. The payment of the prescribed docket fees for the original case is sufficient, and the counterclaim shall be considered compulsory to avoid multiplicity of suits.

PRINCIPLES:

  • A question of law arises when there is doubt as to what the law is on a certain state of facts, while a question of fact arises when there is doubt as to the truth or falsity of the alleged facts.

  • An assignment of credit is the transfer of the right of the assignor to the assignee, allowing the assignee to enforce it against the debtor.

  • Subrogation is a process where a third party pays the obligation of the debtor with the creditor's consent, resulting in the third party stepping into the shoes of the original creditor.

  • An assignment of credit does not require the consent of the debtor, only notice. Subrogation requires an agreement among all parties involved.

  • The intention of the parties in a contract is determined by the language used in the contract itself.

  • The intention of the parties is the primary consideration in determining the true nature of a contract. If the words of a contract appear to contravene the evident intention of the parties, the latter shall prevail. However, if the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall control.

  • The consent of the debtor is not essential in the assignment of credit. What the law requires is merely notice to the debtor. A creditor may validly assign his credit and its accessories without the debtor's consent.

  • An assignee of a contract is not liable for the obligations under the contract unless there is an agreement or legal provision to the contrary.

  • An assignee of a contract is not liable for the obligations and liabilities of the assignor, unless there is a legal or contractual basis to hold the assignee solidarity liable.

  • The posting of an appeal bond is required only in cases where the appealed judgment involves a monetary award.

  • The jurisdiction of the RTC is determined by the amount involved in the main action without considering the counterclaim, as long as the counterclaim is within its jurisdiction.

  • A party is not required to pay additional docket fees for the counterclaim if the original case is already within the jurisdictional amount of the RTC.

  • The payment of the prescribed docket fees for the original case is sufficient, and the counterclaim shall be considered compulsory to avoid multiplicity of suits.