G.R. No. 120747




SECOND DIVISION G.R. No. 120747 September 21, 2000 VICENTE GOMEZ, as successor-in-interest of awardee LUISA GOMEZ, petitioner, vs. COURT OF APPEALS, City of MANILA acting thru the City Tenants Security Committee now the Urban Settlement Office, Register of Deeds of Manila, respondents. BUENA, J.: Sought to be reversed in this petition for review on certiorari under Rule 45 of the Rules of Court is the decision1 of the Court of Appeals in C.A. G.R. Sp. No. 32101 promulgated on 22 February 1995 which annulled and set aside the decision of the Regional Trial Court of Manila, Branch 12 in Civil Case No. 51930. Impugned similarly is the resolution2 of the Court of Appeals dated 29 June 1995 denying petitioner's motion for reconsideration. From the records, we find the following antecedents: Pursuant to the Land for the Landless Program of the City of Manila and in accordance with City Ordinance No. 6880, the Office of City Mayor issued Resolution No. 16-A,3 Series of 1978, dated 17 May 1978, which effectively set guidelines and criteria for the award of city home lots to qualified and deserving applicants. Attached to said resolution and made as integral part thereof was a Contract to Sell4 that further laid down terms and conditions which the lot awardee must comply with. On 30 June 1978, the City of Manila, through the City Tenants Security Committee (CTSC) presently known as the Urban Settlement Office (URBAN), passed Resolution 17-785 which in effect awarded to 46 applicants, 37 homelots in the former Ampil-Gorospe estate located in Tondo, Manila. Luisa Gomez, predecessor-in-interest of herein petitioner Vicente Gomez, was awarded Lot 4, Block 1, subject to the provisions of Resolution No. 3-78 of the CTSC and building, subdivision and zoning rules and regulations. Consequently, a certificate of award6 dated 02 July 1978 was granted by the CTSC in favor of Luisa Gomez, who paid the purchase price of the lot in the amount of P3,556.00 on installment basis,7 said payments being duly covered by official receipts. In 1979, Luisa Gomez traveled to the Unites States of America but returned to the Philippines in the same year. On 18 January 1980, Luisa Gomez finally paid in full the P3,556.00 purchase price of the lot. Despite the full payment, Luisa still paid in installment an amount of P8,244.00, in excess of the purchase price, which the City of Manila, through the CTSC, accepted. Additionally, the lot was declared for taxation purposes and the corresponding real estate taxes thereon paid from 1980-1988. In 1982, Luisa, together with her spouse Daniel, left again for the United States of America where she died8 on 09 January 1983. She is survived by her husband and four children, namely, Ramona G. Takorda, Edgardo Gomez, Erlinda G. Pena, and Rebecca G. Dizon.9 Subsequently, in a memorandum dated 07 February 1984, the Urban Settlements Officer and Member-Executive Secretary of the CTSC directed the Western Police District, City Hall Detachment, to conduct an investigation regarding reported violations of the terms and conditions of the award committed by the lot awardees. Thus, on 23 November 1984, a team headed by Pfc. Reynaldo Cristobal of the Western Police District, proceeded to the former Ampil-Gorospe estate where the subject lots are located, and conducted an investigation of alleged violations thereat. On 19 December 1984, team leader Pfc. Reynaldo Cristobal rendered an investigation report10 addressed to the City Mayor of Manila, as Chairman of the CTSC, stating, among others, the following findings: ". . . After the said operation, it was found out that of all the lot awardees in the said estate, the following were confirmed to have violated the terms and conditions of their respective awards as indicated opposite their names, to wit: ". . . 2. Name of awardee: Daniel Gomez Address: No. 2557-C Juan Luna St. Tondo, Manila Violation: The place was found actually occupied by Mrs. Erlinda Perez and her family together with Mr. Mignony Lorghas and family, who are paying monthly rentals of P210.00 each to Vicente Gomez, brother of awardee. Daniel Gomez is now presently residing in the United States of America and only returns for vacation once in a while as a 'Balikbayan' . . ." Thus, on 01 July 1986, the CTSC, headed by then City Mayor Gemiliano Lopez, Jr. as Chairman, issued Resolution No. 015-86,11 adopting the findings of the investigation report submitted by Pfc. Cristobal, and ordering the cancellation of the lot awards of Daniel Gomez and other awardees who were found to have committed violations, and further declaring the forfeiture of payments made by said awardees as reasonable compensation for the use of the homelots. In a letter12 dated 04 August 1986, herein petitioner Vicente Gomez, acting as attorney-in-fact13 of his brother Daniel Gomez (spouse of Luisa Gomez) asked for reconsideration of the CTSC resolution revoking the award of the lot. On 28 June 1988, Daniel Gomez, spouse of awardee Luisa Gomez, died in the United States of America. Eventually, on 01 February 1989, the surviving children of the deceased spouses, who were American citizens and residents of the United States of America, executed an affidavit of adjudication with deed of donation14 disposing gratuitously Lot No. 1, Block 4, in-Favor of their uncle Vicente Gomez. On 20 February 1989, petitioner Vicente Gomez filed a memorandum15 before the CTSC praying that Resolution 15-86 be set aside and that the award of the lot be restored to Luisa Gomez, or her heirs or successor-in-interest, preferably Vicente Gomez. Thereafter, two supplemental memoranda, dated 26 July 198916 and 10 January 1990,17 were submitted by petitioner before the CTSC reiterating the prayer in the initial memorandum. On 05 February 1990, herein petitioner filed before the Regional Trial Court (RTC) of Manila, Branch 12, a petition for certiorari, prohibition and mandamus docketed as Civil Case No. 90-51930, entitled "Vicente Gomez, as successor-in-interest of Awardee, Luisa Gomez, petitioner, versus City Tenant's Security Committee (now Urban Settlement Office) and Register of Deeds of Manila, respondents." In an order18 dated 24 April 1990, the lower court directed the petitioner to amend its petition so as to implead the proper government agency. Hence, petitioner filed an amended petition19 impleading the City of Manila as respondent, to which the latter submitted an answer.20 Accordingly, after the presentation of evidence, the lower court promulgated its decision2 1 dated 20 January 1993, the decretal portion of which reads: Wherefore, the petition is hereby granted: "1. Ordering the City of Manila through its agency the City Tenants Security Committee (now Urban Settlement Office) to set aside the order of cancellation of the award for Lot No. 4, Block 1 (formerly of the Ampil-Gorospe estate) in favor of Luisa Gomez, her heirs and successor-in-interest, the herein petitioner; "2. Prohibiting the City of Manila through its agency including the Register of Deeds of Manila from awarding the same lot and issuing the corresponding certificate of title therefor to any other person; "3. Ordering the City of Manila through its agency the City Tenant's Security Committee (now Urban Settlement Office) to execute a Deed of Absolute Sale over the aforementioned lot in favor of the petitioner as successor-in-interest of the awardee and further ordering them to stop and/or refrain from disturbing the peaceful physical possession thereof of (sic) the petitioner; and "4. Ordering the City of Manila through its agency the City Tenant's Security Committee (now Urban Settlement Office) to refund to the petitioner his overpayments amounting to P8,244.00 and to pay the costs of suit." On appeal, the Court of Appeals reversed the lower court's decision prompting petitioner to file a motion for reconsideration which the appellate court denied via its assailed resolution dated 29 June 1995. Hence, the instant appeal where the core of controversy revolves around the propriety of CTSC's act of canceling the lot award, through Resolution No. 015-86, and further declaring the forfeiture of amounts paid by the awardee, as reasonable compensation for the use of the home lot. The petition is unmeritorious. A thorough scrutiny of the records and an even more exhaustive perusal of the evidence, both documentary and testimonial, would lead to the inevitable conclusion that the fact of cancellation of the award covering Lot 4, Block 1, by the City of Manila, acting through the CTSC, was properly exercised within the bounds of law and contractual stipulation between the parties. Viewed broadly, petitioner anchors his case on the premise, albeit erroneous, that upon full payment of the purchase price of the lot in January 1980, Luisa Gomez, actual awardee, already acquired a vested right over the real property subject of the present controversy. Thus, according to petitioner, upon the death of Luisa Gomez on 09 January 1983, the alleged vested right was transmitted by operation of law to her lawful heirs, pursuant to Article 777 of the Civil Code. Additionally, petitioner submits that by virtue of the affidavit of adjudication with Deed of Donation executed on 01 February 1989 in his favor by the surviving children of Luisa, he, in effect, became the successor-in-interest of Luisa and thus entitled to whatever rights enjoyed by the latter over the property. In the light of existing law and jurisprudence and based on the evidence adduced, this Court finds difficulty giving credence and weight to petitioner's submissions. We therefore rule that the cancellation of the award of Lot 4, Block 1, through the expediency of Resolution No. 015-86, was proper. Primarily, it must be stressed that the contract entered into between the City of Manila and awardee Luisa Gomez was not one of sale but a contract to sell, which, under both statutory and case law, has its own attributes, peculiarities and effects. Speaking through Mr. Justice Florenz Regalado, this Court in Adelfa Properties, Inc. vs. Court of Appeals,22 mapped out the bold distinctions between these species of contracts, to wit: "In a contract of sale, the title passes to the vendee upon the delivery of the thing sold; whereas in a contract to sell, by agreement, the ownership is reserved in the vendor and is not to pass until the full payment of the price. In a contract of sale, the vendor has lost and cannot recover ownership until and unless the contract is resolved or rescinded; whereas in a contract to sell, title is retained by the vendor until the full payment of the purchase price, such payment being a positive suspensive condition and failure of which is not a breach but an event that prevents the obligation of the vendor to convey title from being effective. Thus, a deed of sale is considered absolute in nature where there is neither a stipulation in the deed that title to the property sold is reserved in the seller until the full payment of the price, nor one giving the vendor the right to unilaterally resolve the contract the moment the buyer fails to pay within a fixed period." To our mind, however, this pronouncement should not curtail the right of the parties in a contract to sell to provide additional stipulations, nor bar them from imposing conditions relative to the transfer of ownership. To be sure, a contract of sale may either be absolute or conditional. One form of conditional sales is what is now popularly termed as a "Contract to Sell", where ownership or title is retained until the fulfillment of a positive suspensive condition normally the payment of the purchase price in the manner agreed upon.23 (Emphasis ours) From the above disquisition in Galang and applying Article 1306 of the Civil Code, the contracting parties are accorded the liberality and freedom to establish such stipulations, clauses, terms and conditions as they may deem convenient, provided the same are not contrary to law, morals, good custom, public order or public policy. In the law on contracts, such fundamental principle is known as the autonomy of contracts. Under the present circumstances, we see no hindrance that prohibits the parties from stipulating other lawful conditions, aside from full payment of the purchase price, which they pledge to bind themselves and upon which transfer of ownership depends. In the instant case, we uphold the Contract to Sell, duly annexed and attached to Resolution 16-A, which explicitly provides for additional terms and conditions upon which the lot awardees are bound. Although unsigned, the Contract to Sell, in addition to the provisions of Resolution 16-A, constitutes the law between the contracting parties. After all, under the law there exists a binding contract between the parties whose minds have met on a certain matter notwithstanding that they did not affix their signatures to its written form.24 For a contract, like a contract to sell, involves a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service. Contracts, in general, are perfected by mere consent, which is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute.25 As to the matter of acceptance, the same may be evidenced by some acts, or conduct, communicated to the offeror, either in a formal or an informal manner, that clearly manifest the intention or determination to accept the offer to buy or sell.26 In the case at bar, acceptance on the part of the vendee was manifested through a plethora of acts, such as payment of the purchase price, declaration of the property for taxation purposes, and payment of real estate taxes thereon, and similar acts showing vendee's assent to the contract. Verily, Resolution 16-A and the Contract to Sell which was annexed, attached and made to form part of said resolution, clearly laid down the terms and conditions which the awardee-vendee must comply with. Accordingly, as an awardee, Luisa Gomez, her heirs and successors-in-interest alike, are duty-bound to perform the correlative obligations embodied in Resolution 16-A and the Contract to-Sell. Resolution 16-A, Series of 1978, explicitly provides that aside from the requirement of Filipino citizenship and legal age, the basic criteria for award of the lot pursuant to the Land for the Landless Program of the City of Manila shall be the following: "a) Occupancy — The applicant must be the legal and actual or physical occupant of the lot in question at the time of its acquisition by the City. He must be the owner of the house and lot, must be using the same for his residential purposes, and must have had a lessee-lessor relationship with the previous owner of the land or landed estate of which the subject lot is a part. "b) Non-ownership of land — The applicant and/or his spouse, if he is married, must not be an owner of any parcel of land in Manila, Metropolitan Manila or elsewhere in the Philippines. Neither must he and/or his spouse be a prospective owner or a buyer on installment basis of any lot other than that which he is occupying and for which he is applying for award from the City. "c) Capacity to pay — The applicant must have such financial means and/or support as will enable him to make regular payments of amortizations or installments for the lot if the same is awarded to him." Of equal importance are the essential terms and conditions embraced in the Contract to Sell, which awardee Luisa Gomez, her heirs and successors-in-interest, violated, to wit: ". . . Par.(3). The vendee shall occupy and use the lot exclusively for his/her residential purpose . . . ". . . Par. (5). The vendee hereby warrants and declares under oath that he/she is a bona fide and actual occupant and tenant of the lot; . . . and that he/she fully understands that any false statement or misrepresentation hereof (sic) shall be sufficient cause for the automatic cancellation of his/her rights under this agreement as well as ground for criminal prosecution. "Par. (6). Until complete payment of the purchase price and compliance with all the vendee's obligations herein, title to the lot remains in the name of the owner. During the effectivity of this agreement, however, the owner may transfer its title or assign its rights and interest under this agreement to any person, corporation, bank or financial institution. "Title shall pass to the vendee upon execution of a final deed of sale in his/her favor. . . . "Par. (8). In order not to defeat the purpose of this social land reform program of the City of Manila. and to prevent real estate speculations within twenty years from complete payment of the purchase price and execution of the final deed of sale, the lot and residential house or improvement thereon shall not be sold, transferred, mortgaged, leased or otherwise alienated or encumbered without the written consent of the City Mayor. "Par. (9). During the effectivity of this agreement, the residential house or improvement thereon shall not be leased, sold, transferred or otherwise alienated by the vendee without the written consent of the owner. . . "Par. (14). In the event that the vendee dies before full payment of the purchase price of the lot, his/her surviving spouse, children heirs and/or successors-in-interest shall succeed in all his/her rights and interest, as well as assume all/his/her obligations under this agreement. "Par. (15). This agreement shall be binding upon the heirs. executors and administrators of the vendee." (emphasis ours) Petitioner urges that awardee Luisa Gomez did not commit any violation of the lot award. On the contrary, the records would indubitably show that Luisa Gomez, including her heirs and successors-in-interest, have performed acts that constitute gross, if not brazen, violation of the aforementioned terms and conditions of the award, as evidenced by the investigation report submitted by Pfc. Cristobal, dated 19 December 1984. Results of the investigation conducted on 23 November 1984, reveal that the lot was actually occupied and leased by a certain Erlinda Perez and Mignony Lorghas, together with their respective families, who were paying rentals to petitioner Vicente Gomez for the lease of the subject premises. Moreover, in a conference held on 13 January 1989 at the Office of the Acting Urban Settlement Officer, Lorghas admitted that she has been leasing the property and paying rent to petitioner Vicente Gomez, thus:27 "Atty. Bernardo: Mrs. Lorghas, how long have you been renting the property? Mrs. Lorghas: I was living there since 1960 until today. I was renting a small room downfloor (sic). When the family of Mr. Gomez died, kami na ang tumira sa itaas until now. Atty. Bernardo: Magkano ang upa mo? Mrs. Lorghas: P300 a month. Atty. Bernardo: Kanino? Mrs. Lorghas: Kay Vicente Gomez. Atty. Bernardo: Meron bang resibo? Mrs. Lorghas: Wala po. Atty. Bernardo: Noong 1973, kayo na rin ang nakatira sa lugar ni Gomez. Mrs. Lorghas: Opo." Certainly, said acts constitute a brazen transgression of Resolution 16-A and clear contravention of the Contract to Sell, specifically par. (3), (8) and (9) thereof. The contract provides in no uncertain terms, that the abovementioned terms and conditions shall bind the heirs, executors and administrators of the vendee. The contract further states that breach thereof would result to the automatic cancellation of the vendee's rights thereunder. Thus, par.(10) (b) (a) of the Contract to Sell, which reads: ". . . any violation of the terms and conditions of this agreement shall automatically cause the cancellation of the vendee's rights under this agreement without necessity of prior notice or judicial declaration . . ." Such kind of stipulation was upheld by this Court in the Adelfa case where we categorically declared that Article 1592 of the Civil Code, which requires rescission either by judicial action, or notarial act, does not apply to a contract to sell.28 Moreover, judicial action for rescission of a contract is not necessary where the contract provides for automatic rescission in case of breach,29 as in the contract involved in the present controversy. Likewise, this Court sustains the forfeiture of the payments made by awardee as reasonable compensation for the use of the lot. At this juncture, par. (1) of the Contract to Sell furnishes support to this conclusion: ". . . In case of the cancellation of the vendee's rights under this agreement as hereinafter stipulated, all payments made by him/her shall be forfeited and considered as rentals for the use of the lot . . . " Further, Article 1486 of the Civil Code provides that a stipulation that the installments or rents paid shall not be returned to the vendee or lessee shall be valid insofar as the same may not be unconscionable under the circumstances.30 Applying the foregoing, we are of the considered view that the payment of the purchase price of P3,556.00, constitutes fair and reasonable rental for the period in which said property was under the control of awardee Luisa Gomez, her heirs and successors-in-interest. Undeniably, the awardee together with her heirs and successors-in-interest, have gained benefits, financial or otherwise, for a period of eight years — from the time of actual award of the lot to the time of cancellation thereof (1978-1986). Nonetheless, we ought to stress that in the present case, forfeiture of the installments paid as rentals, only applies to the purchase price of P3,556.00 and not to the overpayment of the amount of P8,244.00. Under these circumstances, the vendor should refund the amount of P8,244.00 representing the overpayment made, plus interest, to be computed in accordance with the "rule of thumb" enunciated in the landmark case of Eastern Shipping Lines, Inc. vs. Court of Appeals 31 and reiterated in the case of Philippine National Bank vs. Court of Appeals.32 For us to uphold the forfeiture of the amount representing the overpayment would be to revolt against the dictates of justice and fairness. A contrary ruling would unjustly enrich the vendor to the prejudice of the vendee. In the same vein, the provisions of Article 777 of the Civil Code notwithstanding, we hold that the surviving children of awardee Luisa Gomez are not qualified transferees of Lot 4, Block 1 for failure to conform with the prerequisites set by Resolution 16-A, to wit, Filipino citizenship and actual occupancy, which in the present case, are basic criteria for the award of the lot, pursuant to the "Land for the Landless Program" of the City of Manila. The records reveal that the children of Luisa Gomez are American citizens and permanent residents of the United States of America. Notably, Resolution 16-A specifically enumerates Filipino citizenship and actual occupancy of the lot for residential purposes, as qualifications for entitlement to the lot award. For this court to consider said surviving children as qualified awardee-transferees would render illusory the purposes for which Resolution 16-A and the "Land for the Landless Program" of the City of Manila were adopted. Even assuming arguendo that the surviving children of Luisa Gomez are entitled to the lot by virtue of Article 777 of the Civil Code, said heirs nevertheless abandoned their right when they violated the terms and conditions of the award by donating the subject property to petitioner Vicente Gomez. As paragraph (15) of the agreement provides that the heirs of the vendee shall be bound thereby, it is then incumbent upon said heirs to render strict compliance with the provisions thereof. In particular, paragraph (8) of the Contract proscribes the sale, transfer, mortgage, lease, alienation or encumbrance of the lot, residential house, or improvement thereon, without the written consent of the City Mayor, within a period of twenty (20) years from complete payment of the purchase price and execution of the final deed of sale. The execution of the Deed of Donation by the surviving children of Luisa Gomez on February 1, 1989, in favor of Vicente Gomez, was clearly within the prohibited period of 20 years from the full payment of the purchase price on January 18, 1980. Without doubt, the prohibition applies to them. Furthermore, the subject lot and residential house were occupied by, and leased to, third persons, in crystalline and evident derogation of the terms of the award. WHEREFORE, premises considered, the instant petition is DISMISSED for lack of merit, and the assailed decision of the Court of Appeals with respect to the cancellation of the award of Lot 4, Block 1, is AFFIRMED SUBJECT TO MODIFICATION as to the forfeiture of amounts paid by the vendee. As modified, the City of Manila, is hereby ordered to refund with dispatch the amount of P8,244.00 representing the overpayment made by petitioner plus interest. SO ORDERED. Bellosillo, Mendoza, Quisumbing and De Leon, Jr., JJ ., concur. Footnotes: 1 Penned by Justice Ramon Mabutas, Jr. and concurred in by Justice Nathanael P. De Pano, Jr. and Justice Artemon D. Luna; Rollo, pp. 30-42. 2 Rollo, p. 53. 3 Original Records, pp. 108-122. 4 Ibid, pp. 118-122. 5 Ibid, pp. 104-105. 6 Ibid, p. 10. 7 Ibid, p. 149; TSN, 18 July 1990. 8 Certificate of Death, O.R, p. 32. 9 Stipulation of Facts, dated 07 June 1990; O.R., p. 86. 10 O.R., pp. 123-124. 11 Ibid, pp. 11-12. 12 Ibid, p. 13. 13 Evidenced by Special Power of Attorney, dated 21 October 1987; O.R pp. 6-8. 14 O.R., p. 9. 15 Ibid, pp. 14-17. 16 Ibid, pp. 19-20. 17 Ibid, pp. 27-31. 18 Ibid, p. 59. 19 Ibid, pp. 61-66. 20 Ibid, pp. 72-74. 21 Ibid, pp. 149-157. 22 240 SCRA 565 [1995]; Pingol et al. vs. Court of Appeals, 226 SCRA 118 [1993]. 23 Galang vs. Court of Appeals, 225 SCRA 37 [1993]. 24 People's Industrial and Commercial Corporation vs. Court of Appeals, 281 SCRA 207 [1997]. 25 Adelfa Properties, Inc. vs. Court of Appeals, 240 SCRA 565 [1995]. 26 Ibid. 27 TSN, 13 January 1989. 28 People's Industrial and Commercial Corporation vs. Court of Appeals, 281 SCRA 206 [1997]; Albea vs. Inquimboy, et al, 86 Phil. 477 [1950]; Alfonso, et al. vs. Court of Appeals, et al., 186 SCRA 400 [1990]. 29 Palay Inc. et al. vs. Jacobo C. Clave, et al., 124 SCRA 638 [1983]. 30 People's Industrial and Commercial Corporation vs. Court of Appeals, 281 SCRA 207[1997]; Delta Sales Corporation vs. Niu Kim Duan, 213 SCRA 259 [1992]. 31 234 SCRA 78 [1994]. 32 263 SCRA 766 [1996]. The Lawphil Project - Arellano Law Foundation