CA affirms trial court ruling to reconvey 150-hectare land in Batangas to original owner

By Rey Panaligan

The Court of Appeals (CA) has affirmed a 2017 trial court ruling that ordered the cancellation of the P321.6 million contracts and the deed of sale over a 150-hectare land in Barangay Batulao in Nasugbu, Batangas.

In a decision written by Associate Justice Ronaldo Roberto Martin, the CA said the Batangas City regional trial court (RTC) was correct in ordering RGV Development Corporation (RGVDC) and the Armed Forces of the Philippines Retirement and Separation Benefits System (AFP-RSBS) to reconvey the 150-hectare land to Group Developers, Inc. (GDI), the original owner of the property.

The CA held that RGVDC, owned by businessman Rodolfo G. Valencia, did not comply with its obligations to GDI under their memoranda of agreement (MOAs) for the sale of the property, thus, entitling GDI to rescind the agreements and the deed of absolute sale.

One of the MOAs executed between 1997 and 1999 provided that GDI would execute a deed of sale over the property in favor of RGVDC’s assignee and subsidiary, Monterossa Development Corporation (MDC).

Case records showed that under the MOAs, the purchase price of the subject property was P321.6 million, but out of this amount, P117.16 million was to be distributed to the informal settlers, while P129.47 million was to be spent for the development of the relocation sites of the informal settlers.

The records also stated that since the subject property was then mortgaged to Manila Banking Corporation (MBC), it was agreed that out of P321.6 million, RGVDC will directly pay the amount of P55 million to the Bangko Sentral ng Pilipinas (BSP) for the partial settlement of the loan of GDI to MBC, while P16.6 million will be for the legal and miscellaneous expenses incurred in the redemption of the subject property with the MBC.

The CA said the RTC was correct in its ruling that out of the P321.6 million contract price for the property, only P1 million was actually received by GDI as earnest money.

“The amount of P117,166,400.00 and P129,474,250.00 constituted the bulk of the purchase price, and as such, RGVDC’s non-compliance with their obligation constituted non-payment of the full purchase price, and consequently, a breach of contract on their part,” the CA declared.

It held that “in this case, RGVDC failed to pay the purchase price which gave GDI a right to demand the fulfillment or cancellation of the obligation under an existing valid contract.”

“Here, GDI opted to have the contracts rescinded, which is well within its right…,” it stressed.

In its complaint for reconveyance of the 150-hectare property, GDI told the trial court it chanced upon a newspaper advertisement that AFP-RSBS was offering for sale 1.5 million shares of stocks of MDC in Barangay Batulao in Nasugbu, Batangas for P892.5 million.

GDI said it discovered that the property had been transferred by MDC to AFP-RSBS. It filed a case for reconveyance before the Batangas City RTC.

RGVDC claimed that it had already fulfilled its obligation under the MOAs and granting that it did not comply with the deposit, the beneficiaries of the amount are the tenants/occupants of the subject property, and not GDI.

It also said that GDI is already barred from denying its satisfaction with its dealings with RGVDC in view of the execution of the deed of absolute sale and the transfer of the title over the subject property to MDC since 1998.

For its part, MDC denied the claim of simulation of contracts as it pointed out that there was an actual transfer of ownership when it paid P321.6 million to GDI, which resulted in the execution of the deed of absolute sale.

AFP-RSBS, on the other hand, claimed that as part of its business undertakings, it entered into a joint venture with AG&P for the construction and marketing of a 28-storey condominium in Binondo, Manila, named as Chinatown Steel Towers, Inc. (CSTI).

It said that in 1999, CSTI and RGVDC executed a deed of assignment allowing the former to transfer and assign in favor of the latter all its shares of stocks and assets consisting primarily of 120 condominium units at the Chinatown Steel Towers, in exchange for the subject property which at that time was in the name of MDC.

RGVDC also executed a deed of assignment transferring and assigning all its rights and interests over the shares of stock with MDC to AFP-RSBS.

Thus, AFP-RSBS said that the deed of assignment was in effect a corporate swap, whereby CSTI would hand over all of its shares of stocks comprising of 120 condominium units to RGVDC in exchange for the latter’s right and interest in MDC to AFP-RSBS, which consists of all its shares of stocks including the subject property.

The CA said that AFB-RSBS is an assignee in “bad faith.”

“Had AFP-RSBS carefully examined the documents handed over by RGVDC, it would have easily discovered that the latter was not able to comply with its obligations to GDI, which would have prompted AFP-RSBS to inquire into the title of RGVDC as regards the subject property,” the CA explained.

It held that RGVDC should pay AFP-RSBS the proceeds of the sale of the 120 condominium units of CSTI.

“Thus, the RTC correctly ordered that Rodolfo and RGVDC return the proceeds of the sale of the 120 condominium units of CSTI to AFP-RSBS as it is an assignee of MDC. Besides, Rodolfo and RGVDC did not present any evidence that it was CSTI that received the proceeds of the sale of the 120 condominium units,” the CA said.

Also affirmed by the CA was the trial court’s order that directed GDI to return to RGVDC the amount of P55 million that was paid to the BSP to redeem the 150-hectare property.