Gomez v. Court of Appeals
REITERATIONFacts
The Antecedents: Pursuant to the City of Manila's Land for the Landless Program and City Ordinance No. 6880, Resolution No. 16-A, Series of 1978, set guidelines for awarding city home lots. Resolution 17-78 awarded homelots, including Lot 4, Block 1, to Luisa Gomez, subject to Resolution No. 3-78 and building/subdivision rules. A Certificate of Award was issued to Luisa Gomez on July 2, 1978. Luisa Gomez paid the purchase price of P3,556.00 in installments and later in full on January 18, 1980. She also made an overpayment of P8,244.00, which was accepted. The lot was declared for taxation, and taxes were paid from 1980-1988. Luisa Gomez, who had traveled to the US in 1979 and returned, left again in 1982 and died in the US on January 9, 1983. Her heirs were Ramona G. Takorda, Edgardo Gomez, Erlinda G. Pena, and Rebecca G. Dizon. In 1984, an investigation was ordered regarding alleged violations of award terms. An investigation report dated December 19, 1984, found that Lot 4, Block 1, was occupied by Erlinda Perez and Mignony Lorghas, who were paying monthly rentals of P210.00 each to Vicente Gomez, brother of awardee Daniel Gomez (Luisa's spouse). Daniel Gomez resided in the US. On July 1, 1986, the City Tenants Security Committee (CTSC) issued Resolution No. 015-86, canceling the awards of Daniel Gomez and others for violations and forfeiting payments. Vicente Gomez, as attorney-in-fact for Daniel, sought reconsideration. Daniel Gomez died in the US on June 28, 1988. On February 1, 1989, Luisa's surviving children, American citizens residing in the US, executed an affidavit of adjudication with deed of donation in favor of Vicente Gomez. Vicente Gomez filed a petition for certiorari, prohibition, and mandamus with the RTC, seeking to set aside the cancellation and restore the award to Luisa or her heirs/successor-in-interest, preferably himself. Procedural History: The Regional Trial Court (RTC) of Manila, Branch 12, granted Vicente Gomez's petition, ordering the City of Manila to set aside the cancellation, prohibit awarding the lot to others, execute a Deed of Absolute Sale in favor of Vicente Gomez, refund the overpayment of P8,244.00, and pay costs. The Court of Appeals reversed the RTC decision, annulling the RTC's decision and denying petitioner's motion for reconsideration. The Petition: Petitioner Vicente Gomez seeks reversal of the Court of Appeals' decision, arguing that upon full payment, Luisa Gomez acquired a vested right which was transmitted to her heirs, and subsequently to him via donation. The core issue is the propriety of the CTSC's cancellation of the lot award and forfeiture of payments.
Issue(s)
Whether the cancellation of the lot award and forfeiture of payments made by Luisa Gomez were proper despite full payment of the purchase price, and whether Luisa Gomez, her heirs, or her successor-in-interest violated the terms and conditions of the Contract to Sell. Whether the surviving children of Luisa Gomez were qualified transferees of the lot. Whether the overpayment of P8,244.00 should be refunded.
Ruling
The petition is dismissed for lack of merit. The assailed decision of the Court of Appeals regarding the cancellation of the award is affirmed, subject to modification concerning the forfeiture of amounts paid. The City of Manila is ordered to refund the overpayment of P8,244.00 with interest.
Ratio Decidendi
On the propriety of cancellation and forfeiture and contract violations: The Court held that the agreement was a contract to sell, not a contract of sale. In a contract to sell, ownership is reserved in the vendor until full payment and compliance with all stipulated conditions. The Contract to Sell, annexed to Resolution 16-A, explicitly laid down terms and conditions beyond mere payment of the purchase price. These included actual occupancy and use of the lot for residential purposes, and a prohibition against leasing the property without the owner's consent. The investigation report and testimony confirmed that the lot was occupied and leased to third parties, with rentals paid to Vicente Gomez. This constituted a clear violation of paragraphs (3), (8), and (9) of the Contract to Sell. Such violations, under paragraph (10)(b)(a) of the contract, automatically caused the cancellation of the vendee's rights without need for prior notice or judicial declaration. This stipulation is valid and enforceable in a contract to sell, as Article 1592 of the Civil Code requiring judicial action for rescission does not apply. Furthermore, paragraph (1) of the Contract to Sell stipulated that in case of cancellation, all payments made shall be forfeited and considered as rentals for the use of the lot. This is consistent with Article 1486 of the Civil Code, which allows forfeiture of installments if not unconscionable. The Court found the forfeiture of the P3,556.00 purchase price as reasonable compensation for the eight years the property was under the control of the awardee and her successors. On the qualification of heirs and successor-in-interest: The Court ruled that the surviving children of Luisa Gomez were not qualified transferees. Resolution 16-A, which formed part of the award, required Filipino citizenship and actual occupancy for residential purposes as basic criteria for entitlement. The children were American citizens and residents of the US. To consider them qualified would render illusory the purpose of the "Land for the Landless Program." Even if they were considered heirs by virtue of Article 777 of the Civil Code, they abandoned their right when they violated the terms by donating the property to Vicente Gomez. Paragraph (8) of the Contract to Sell prohibited sale, transfer, lease, or encumbrance without the City Mayor's written consent within twenty years from full payment and execution of the deed of sale. The donation occurred within this prohibited period. Moreover, the continued leasing of the property to third parties by the heirs or their successor also constituted a violation of the award terms. On the refund of overpayment: While the forfeiture of the purchase price was upheld as reasonable rental, the Court found that the overpayment of P8,244.00 should be refunded with interest. Forfeiting this amount would unjustly enrich the vendor and be contrary to justice and fairness. The refund of this overpayment, plus interest computed according to the Eastern Shipping Lines, Inc. case, was ordered.
Main Doctrine
The cancellation of a lot award under the Land for the Landless Program, based on violations of the terms and conditions of the Contract to Sell, is proper, even if the purchase price has been fully paid, as ownership in a contract to sell is retained by the vendor until full payment and compliance with all stipulated conditions. Forfeiture of payments made as rentals is also permissible as per contractual stipulation.