GR 120747; (September, 2000) (Digest)
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.
FACTS
Pursuant to the Land for the Landless Program, the City of Manila awarded Luisa Gomez a homelot in 1978. She fully paid the purchase price by 1980 and even made an excess payment, which the City accepted. She also paid real estate taxes. Luisa died in 1983. In 1984, an investigation found that the lot was occupied by tenants paying rent to Vicente Gomez, Luisa’s brother-in-law, while Luisa’s spouse, Daniel, resided in the U.S. Consequently, the City Tenants Security Committee (CTSC) cancelled the award in 1986 for violation of its terms. In 1989, Luisa’s heirs, who were American citizens, executed an affidavit of adjudication and donated the lot to Vicente Gomez. Vicente then sought to annul the CTSC’s cancellation order.
ISSUE
Whether the Court of Appeals correctly upheld the cancellation of the award for violation of the terms of the Contract to Sell.
RULING
Yes, the Supreme Court affirmed the cancellation. The legal logic rests on the binding nature of the Contract to Sell, which explicitly prohibited the sale, transfer, lease, or encumbrance of the lot without the City Mayor’s written consent within twenty years from full payment. Luisa Gomez’s full payment was made in 1980. The investigation conclusively established that the lot was leased to third parties, a clear violation of paragraph 8 of the Contract. This violation warranted the award’s cancellation. Furthermore, the subsequent donation of the lot by Luisa’s heirs to Vicente Gomez in 1989 was executed within the same 20-year prohibited period, constituting another breach. The heirs, as successors-in-interest, were bound by the same contractual restrictions. However, the Court modified the forfeiture penalty. While the cancellation was valid, the City of Manila was ordered to refund the excess payment of P8,244.00 made by Luisa Gomez, as its acceptance created an obligation to return it. The principle against unjust enrichment dictated this refund, separating the penalty of cancellation from the obligation to return amounts received beyond the stipulated price.