G.R. No. L-37751 July 20, 1982
MANUEL LAPINIG and LEONCIO CHAVAS, petitioners, vs. THE HONORABLE COURT OF APPEALS and FRANCISCO V. JORVINA, respondents.

FACTS

Private respondent Francisco V. Jorvina was awarded Lot 10, Block E-156 by the People’s Homesite and Housing Corporation (PHHC) in 1958, paid the required deposit, and subsequently executed a Conditional Contract to Sell with PHHC on March 20, 1964, making installment payments thereafter. However, following a reinvestigation by the Presidential Investigating Committee (Gancayco Committee) in 1965, which recommended cancellation of Jorvina’s award without notice or hearing for him, the PHHC Board of Directors cancelled Jorvina’s award and re-awarded the lot to Manuel Lapinig and Andronico Alcovendas (later substituted by Leoncio Chavas). The PHHC then executed a new Conditional Contract to Sell with Lapinig and Chavas. Jorvina filed a complaint seeking re-award of the lot, while Lapinig and Chavas intervened.
The Court of First Instance dismissed Jorvina’s complaint, upholding PHHC’s authority to cancel and re-award the lot. On appeal, the Court of Appeals reversed, ruling in favor of Jorvina. Lapinig and Chavas then elevated the case to the Supreme Court.

ISSUE

Whether the Court of Appeals erred in ruling that Jorvina has a better right to the disputed lot than petitioners Lapinig and Chavas.

RULING

The Supreme Court affirmed the decision of the Court of Appeals. The legal logic centers on the existence of a perfected and partially executed contract between Jorvina and PHHC, and the absence of due process in its cancellation. A Conditional Contract to Sell is a binding bilateral contract that creates reciprocal obligations upon perfection by mere consent. The contract between Jorvina and PHHC, executed in 1964 and upon which Jorvina made payments, was a perfected contract. Its unilateral cancellation by PHHC based on a committee recommendation, without affording Jorvina notice and an opportunity to be heard, violated fundamental due process. The Court distinguished this case from prior rulings favoring bona fide occupants, noting the record lacked evidence that petitioners were possessors in good faith prior to Jorvina’s award. Furthermore, the subsequent Conditional Contract to Sell presented by petitioners was not signed by the PHHC General Manager and therefore created no enforceable right. Consequently, Jorvina’s vested rights under a perfected contract, unjustly cancelled without due process, prevail over the subsequent claims of the petitioners.