GSIS v. CA (1933)

GSIS v. CA (1933)

Topic: Mutuality of Contracts

PARTIES:

·       Petitioners: GSIS

·       Respondents: CA, Sps. Raul and Esperanc Leuterio

FACTS:

·       Dec. 18, 1963 – GSIS conducted a lottery draw for the allocation of lots and housing units in Project 8-C of GSIS village; Sps. Leuterio won and was issued a Cert. of Acknowledgment to purchase the subject house and lot.

·       1965 – Parties entered into a deed of Conditional Sale evidencing the conveyance of the subject property and all improvements thereon to the Leuterio spouses for the purchase price of P19K payable over a 15 year period, in 180 equal monthly instalments of P168 each.

·       Three year elapsed before the deed was notarized, and a copy of the same was given to the Spouses.

·       After the land dev’t and housing construction of Proj 8-C were completed in 1966, GSIS Board of Trustees increased the purchase price indicated in the Deeds of Conditional Sale covering houses and lots therein; the new price was based on the alleged final cost of construction of the GSIS village.

·       The trial court found that the appended words were inserted into the document without the knowledge or consent of the Leuterio spouses.

·       1970’s, a group (not including respondents) of conditional vendees of the houses and lots of Proj 8-C brought suit against GSIS questioning the increase in purchase price; they wrote a “Plea for Justice” to Pres. Marcos requesting for a directive to petitioner’s management to “accept payments of amortization installments on the original amounts stated in the Deeds of Conditional Sale.”

·       Office of the Pres created an Ad Hoc committee à the committee found that the final cost of the Village justified a higher price range for the houses and lots

·       Based on the findings, GSIS increased the purchase prices of the houses.

·       May 30, 1973 – Pres. Exec Ass. Jocobo C. Clave, through a memo, advised GSIS that Pres. Marcos approved the “Plea” and wanted its “immediate implementation.”

·       The attempt by petitioner to have the presidential endorsement reconsidered was denied on Dec. 18, 1980.

·       After years of diligently paying monthly amortizations and real estate taxes, the private respondent spouses informed GSIS that the payments had been completed and the execution of an absolute sale in their favor was in order. No action was taken by GSIS.

·       May 20, 1984 – Sps. Leutorio filed a Complaint for Specific Performance at the RTC Manila with Damages to compel GSIS to execute the final Deed of Sale over the subject property; the RTC found for the Leuterios.

·       Jan. 24, 1992 – The CA upheld the decision of the RTC solely on the basis of estoppel. It held that GSIS cannot increase the price of the subject house and lot after it failed to protest against Sps. Leuterios’ P200-amortization or to require the payment by them of bigger monthly instalments.

ISSUE: W/N the Sps. Leuterio agreed to the notation “subject to adjustment pending the margin of the parties’ Conditional Deed of Sale.”

·       If no agreement, the Leuterio spouses are only obligated to pay the purchase price of P19K as stipulated in the main body of the Conditional Deed of Sale.

JUDGMENT:

·       The CA did not err in finding that the purchase price agreed upon by the parties was P19K and this agreement was not made subject to any posterior even or condition. This is based on the explicit testimony of Raul Leuterio that when he signed the Deed of Conditional Sale in 1965, the notation “subject to adjustment pending approval of the Board of Trustees” was not in the deed.

·       The purchase price mutually agreed upon by the parties was P19K and the spouses did not give their consent for GSIS to make unilateral upward adjustment of the purchase price depending on the final cost of construction.

·       It is illegal for petitioner to claim this prerogative, for Article 1473 of the Civil Code provides that “the fixing of the price can never be left to the discretion  of one of the contracting parties.”

P.L. Uy Realty v. ALS Management (2012)

P.L. Uy Realty Corporation v. ALS Management and Development Corp. (2012)

Topic: Obligatory Force

PARTIES:

·       Petitioner: P.L. Uy Realty Corp

·       Respondents: ALS Management and Dev’t

FACTS:

·       Sept. 3, 1980 – PLU (vendor) and ALS (vendee) executed a Deed of Absolute Sale with Mortgage covering a parcel of land in the name of PLU, located at F. Blumentritt Street, Mandaluyong.

·       The purchase price for the land was set at P8M. The parties also stipulated in Par. 4 of the Deed on the eviction of informal settlers

·       Sec.6 of the Deed provided that “realty taxes during the validity of this mortgage, shall be for the account of ALS.”

·       Dec. 23, 1980 – Parties entered into an agreement

·       Par. 4 provided that in the event the informal settlers do not leave the property, PLU would reimburse ALS 

·       ALS failed to pay the second payment despite demands.

·       Aug. 25, 1982 – PLU filed a complaint against ALS for Foreclosure of Mortgage and Annulment of the documents; PLU alleged having had entered into an oral agreement with ALS where the latter would agree to take over the task of ejecting the squatters from the property issued in its name, through the efforts of ALS, the property was already 90% clear of informal settlers

·       May 9, 1986 – RTC Makati ruled that the obligation of PLU to clear the property of informal settlers was superseded by an oral agreement between the parties whereby ALS assumed the responsibility of ejecting said informal settlers and declared that the removal of the informal settlers on the property is still a subsisting and valid condition; that because the informal settlers still occupied 28% of the property, the condition as to their eviction, had not yet been complied with.

·       RTC Makati found that the obligation of ALS to pay the balance of the purchase price has not yet fallen due and demandable; thus it dismissed the case for being premature.

·       ALS appealed the case to the SC, questioning RTC’s decision that it had assumed the responsibility of ejecting the informal settlers on the property.

·       During the course of the trial, the Court conducted an ocular inspection and found 1 ½ hectares of the 5.4 hectare property still being occupied by informal settlers.

·       The RTC Pasig likewise dismissed the complaint, finding that the payment of the installments has not yet become due and demandable as the suspensive condition, the ejection of the informal settlers on the property, has not yet occurred; and even if ALS has taken up the obligation to eject the informal settlers, its inaction cannot be deemed as constructive fulfillment of the suspensive condition; that the foreclosure of the mortgage is not the proper remedy, and that PLU should have caused the ejectment of the informal settlers.

JUDGMENT: Dismissed.

RATIONALE/DOCTRINE:

·       Note that Art. 1306 of the Civil Code guarantees the freedom of parties to stipulate the terms of their contract provided that they are not contrary to law, morals, good customs, public order, or public policy. Thus, when the provisions of a contract are valid, the parties are bound by such terms under the principle that a contract is the law between the parties.

·       Here, both parties knew for a fact that the property subject of their contract was occupied by informal settlers, whose eviction would entail court actions that in turn, would require some amount of time. They also knew that the length of time that would take to conclude such court actions was not within their power to determine.

·       Despite such knowledge, both parties still agreed to the stipulation that the payment of the balance of the purchase price would be deferred until the informal settlers are ejected. There was never any allegation that PLU was coerced into signing the Deed of Sale with Mortgage or that its consent was in any way vitiated. PLU was free to accept or decline such contractual provision. Thus, PLU cannot now be allowed to renege on its agreement.