Ex-Oriental Mindoro governor’s firm ordered to return P321-M land

MANILA, Philippines (UPDATED) – The Court of Appeals (CA) affirmed a lower court’s decision that the firm of former Oriental Mindoro governor Rodolfo Valencia should return 150 hectares of land in Nasugbu, Batangas, worth P321.6 million to its original owner.

The CA’s 8th Division upheld the decision by the Batangas City Regional Trial Court (RTC) ordering Valencia’s company, RGV Development Corporation (RGVDC), and the Armed Forces of the Philippines Retirement and Separation Benefits System (AFP-RSBS) to return the land to Group Developers Incorporated (GDI).

“RGVDC did not comply with its obligations to GDI under the Memorandum of Agreement, entitling GDI to rescind the MOA and the Deed of Absolute Sale,” said the CA in a decision promulgated February 28 and signed by associate justices Ronaldo Roberto Martin, Ramon Bato, and Ramon Cruz.

In a letter sent to Rappler on March 21, RGVDC said that, although it had not received the decision yet, it would appeal the CA’s ruling.

“The case referred to in the article is still undergoing judicial process. Because of the complexity of the case – whatever the decision arrived at by the Court of Appeals – an appeal for reconsideration of the decision in the interest of truth and justice is likely to be forthcoming,” said RGVDC vice chairman Jaime Cura. 

The case 

The case started when the original land owners, the GDI, saw in the papers in 2007 that the AFP-RSBS was selling the property in Batangas that they had just sold to RGVDC. 

It was way back in 1991 when the GDI executed a deed of sale to RGVDC, where Valencia is a majority owner, and to RGVDC’s assignee and subsidiary, the Monterrosa Development Corporation (MDC), whose president is Gabriel Valencia. 

“GDI found about the transfer of the subject property from MDC to AFP-RSBS. Thus, GDI filed a complaint for the reconveyance of the said property,” court records said. 

GDI was contending that of the agreed upon P321.6 million, RGVDC had only paid them P1 million in earnest money. 

Of the P321.6 million, it was agreed that RGVDC was going to pay P55 million directly to the Bangko Sentral ng Pilipinas (BSP) to pay the loan that GDI had taken out from Manila Banking Corporation. At the time of the sale, the disputed property was mortgaged to the Manila Banking Corporation.

Bulk of the P321.6 million was going to be spent on clearing the property of informal settlers and relocating them. The RGVDC was going to do the clearing and relocating, the expenses of which were included in the P321.6 million. 

The Batangas trial court found that “RGVDC made the undertaking to clear the subject property of informal settlers…RGVDC did not comply with the said prestation and effectively constituted non-payment of the full purchase price and a breach of contract on the part of RGVDC.”

RGVDC and MDC argued at the CA that they had already fulfilled their obligation under the agreement, which was to clear the property of informal settlers. They did it through the help of the Department of Agrarian Reform (DAR), and said that GDI’s execution of a deed of absolute sale meant they were satisfied with the compliance. 

The CA however found that the RGVDC did not actually pay the informal settlers as it did not deposit the agreed upon disturbance compensation to a joint account with GDI.  

RGVDC argued that GDI was not entitled to receive the disturbance compensation as it was to be paid directly to the settlers. 

“Had RGVDC indeed complied with its obligation, it could have easily done so by presenting evidence that it paid disturbance compensation and developed relocation sites for the informal settlers. However, in this case, Valencia, RGVDC merely asserted that RGVDC already fulfilled its obligation without presenting any proof thereof,” the CA said. 

Rescind contracts

“RGVDC failed to pay the purchase price which gave GDI a right to demand the fulfilment or cancellation of the obligation under an existing valid contract. Here, GDI opted to have the contracts rescinded, which is well within its right in view of the aforecited case,” said the CA. 

As for the AFP-RSBS, which was trying to clear itself of fraud arguing that it acquired the property in good faith, the CA said “it should have been more careful in the examination of the title and documents presented to it by RGVDC in connection with the property.”

The AFP-RSBS acquired the Batangas property in a corporate swap. The AFP-RSBS had at the time entered into a joint venture with Chinatown Steel Towers Inc (CSTI) for the construction of a Binondo condominium. 

The agreement was for CSTI to hand over all its shares of stocks – made up of 120 condo units – to RGVDC in exchange of the shares of stocks in the Batangas property.

Because the CA ruled that the AFP-RSBS is “an assignee in bad faith,” the appellate court also ruled that Valencia and RGVDC should pay the AFP-RSBS what it earned from the sale of the 120 condo units.

“The RTC correctly ordered that Rodolfo [Valencia] 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,” said the CA. 

RGVDC’s Cura told Rappler that the company is just a “victim” of “GDI’s failure to fulfil its eagle and moral obligations under the official terms of agreement.” 

“Since Governor Valencia is a returning candidate for governor of Oriental Mindoro in the coming elections in May, it is important that any attempt to tarnish his good reputation be immediately addressed and corrected, as necessary,” Cura said. – Rappler.com