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.”