SUBJECT:  TOPIC:  Date Made:  Digest Maker: 

Persons  Stare Decisis  15 Aug 2018  Alrick and Rikki 

CASE NAME: UCPB v.​ ​spouses Walter and Lily Uy, G.R. No. 204039 
PONENTE: MARTIRES​, ​J. Case Date: January 10, 2018 
Case Summary:  
Respondents Walter and Lily Uy filed a complaint for sum of money and damages against 
PPGI and its successor-in-interest UCPB, claiming that despite paying in full for a unit in 
Kiener Hills, PPGI failed to complete the construction of their unit. The case reached the CA 
which in its decision, applied UCPB v. O’Halloran under the principle of stare decisis. 
SC ruled that the CA erred in its reliance on the decision in UCPB v. O’Halloran as a binding 
precedent since it was not issued by the SC. 
Rule of Law/Doctrine: Only decisions issued by the SC become part of the legal system. At 
the most, decisions of lower courts only have a persuasive effect. 
 
Detailed Facts: 
- 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  (respondents)  entered  into  a  Contract  to  Sell  with 
PPGI  for  a  unit  in  Kiener  Hills  amounting  to  P1,151,718.75  payable  according  to  the 
following  terms:  (a)  P100,000.00  as  down  payment;  and  (b)  the  balance  paid  in  40 
monthly installments at P26,297.97 from 16 January 1997 to 16 April 2000.  
- On 23 April 1998, as partial payment of PPGI’s loan to petitioner United Coconut 
Planters Bank (UCPB), PPGI entered in to an agreement with UCPB, which had the 
effect of, among others, transferring the right to collect receivables from the buyers of 
units in Kiener Hills to UCPB. 
- On  17  April 2006, the respondents filed with the HLURB Regional Office, a complaint for 
sum  of  money  and  damages  against  PPGI  and  UCPB,  claiming  that  despite  their  full 
payment  of  the  purchase  price,  PPGI  failed  to  complete  the  construction  of  their unit 
in Kiener Hills. 
- On  29  November  2006,  HLURB  regional  office  found  that  respondents  were entitled to 
a  refund  but  held  that  UCPB  cannot  be solidarily liable with PPGI as only the accounts 
receivable were conveyed to them and not the entire condominium project. 
- The  HLURB  regional  office  suspended  the  proceedings  as  to  PPGI  on  account  of  its 
being  in  corporate  rehabilitation.  Respondents  were  then  directed  to  the 
Rehabilitation Receiver to file their claim. 
- Unsatisfied,  respondents  appealed  before  the  HLURB-Board  of  Commissioners  who 
then  reversed  the  regional  office’s  decision,  finding  UCPB,  as  PPGI’s 
successor-in-interest,  to  be  solidarily  liable with PPGI, and was ordered to refund to the 
complainant  the  total amount with interest at the legal rate of 6% per annum until fully 
paid. 
- UCPB appealed before the OP which affirmed the decision of the HLURB board. 
- UCPB  then  appealed  before  the  CA  which  affirmed  with  modification  the  OP’s 
decision.  It  held  that  the  respondents  are  entitled  to  a  full  refund while also ruling that 
the  UCPB  is  not  solidarily  liable  with  PPGI,  hence  limiting  UCPB’s  liability  to the amount 
respondents have paid after UCPB assumed the right to collect the receivables. 
- Citing  similarities  in facts and issues with UCPB v. O'Halloran, a case previously decided 
by  the  CA  with  finality,  the  CA  ruled  that  the  assignment  of  the  receivables  did  not 
make  UCPB  the  developer  of  Kiener  Hills,  and  as  such,  UCPB  cannot  be  deemed  as 
 the  debtor  with  respect  to  the  construction, development, and delivery of the subject 
condominium units. 
- UCPB moved for reconsideration but was denied.  
- UCPB  appealed  to  the  SC  raising  that  the  CA  erred  in  applying  UCPB  v.  O’Halloran 
and in finding them liable for the amount which they did not receive. 
Issue: 
W/N the decision of the CA in UCPB v. O’Halloran is applicable to the instant case under the 
principle of ​stare decisis? ​  
Holding: 
- No. The decision in UCPB v. O’Halloran is not a binding precedent since it was not 
issued by the SC. 
- In ​De Mesa v. Pepsi-Cola Products Phils. Inc​, the SC explained the doctrine of ​stare 
decisis:​  
o “... it requires our courts to follow a rule already ​established in a​ final decision of 
the Supreme Court.​ ​ ​That decision becomes a judicial precedent to be followed 
in subsequent cases by all courts in the land.​ The doctrine of stare decisis is 
based on the principle that once a question of law has been examined and 
decided, it should be deemed settled and closed to further argument…” 
- The doctrine of ​stare decisis becomes operative only when judicial precedents are set 
by pronouncements of the SC​ to the exclusion of lower courts 
- Regardless whether the decisions of the lower courts are logically or legally sound, 
only decisions issued by the SC become part of the legal system​. At the most, 
decisions of lower courts​ only have a ​persuasive effect. 
Ruling: 
SC AFFIRMED with MODIFICATION the decision of the CA 
Relevant Provisions 
NCC Art 8. Judicial decisions applying or interpreting the laws or the Constitution shall form a 
part of the legal system of the Philippines.