G.R. No. 204039 , January 10, 2018
UNITED COCONUT PLANTERS BANK, Petitioner, vs. SPOUSES WALTER UY AND LILY UY, Respondents.

FACTS

Spouses Walter and Lily Uy entered into a Contract to Sell with Prime Town Property Group, Inc. (PPGI) for a condominium unit in the Kiener Hills project. They made installment payments towards the total purchase price. In 1998, PPGI and United Coconut Planters Bank (UCPB) executed agreements, including a Sale of Receivables and Assignment of Rights, whereby PPGI assigned its right to collect the receivables from the buyers to UCPB as partial settlement of a loan. The Uys later filed a complaint for sum of money and damages against PPGI and UCPB before the HLURB, alleging full payment but failure of PPGI to complete the construction of their unit.
The HLURB Board held UCPB solidarily liable with PPGI for a refund, ruling UCPB stepped into PPGI’s shoes as successor-in-interest. The Office of the President affirmed this. The Court of Appeals modified the ruling, finding UCPB not solidarily liable but responsible only for payments received by it after the assignment. It computed this amount at Php 552,152.34. Both parties sought further review.

ISSUE

Whether the Court of Appeals correctly determined the extent of UCPB’s liability for the refund claim of the respondent spouses.

RULING

The Supreme Court affirmed the CA’s ruling with modification, further reducing UCPB’s liability. The Court clarified that UCPB, by virtue of the assignment agreements, became merely an assignee of the receivables or credit. It did not assume the role of the developer or become a party to the Contract to Sell between PPGI and the Uys. Consequently, UCPB’s obligation is limited to the amount it actually received from the assignment.
The legal logic rests on the nature of assignment and the principle that an assignee of credit assumes only the rights and obligations pertaining to the credit itself, not the assignor’s other contractual duties. The assignee steps into the shoes of the assignor only in relation to the assigned right to collect, not the underlying development obligations. Therefore, UCPB cannot be held liable for PPGI’s failure to develop the project, nor for the full contract price.
The Court then scrutinized the evidence on payments received. It found that of the total payments made by the Uys, only Php 157,757.82 was sufficiently substantiated by official receipts issued by UCPB itself, proving it had actually collected this amount. The burden of proving payment lies with the party alleging it. Thus, UCPB’s liability is confined to this proven amount, plus legal interest, without prejudice to any separate action the Uys may pursue against PPGI for the balance.