Government Service Insurance System v. Court of Appeals
REITERATIONFacts
The Antecedents: Private respondents, Spouses Leuterio, won a house and lot in a lottery draw conducted by petitioner GSIS on December 18, 1963. They were issued a Certificate of Acknowledgment to purchase the property and subsequently entered into a Deed of Conditional Sale in 1965 for P19,740.00, payable over fifteen years. A marginal notation stating "subject to adjustment pending approval of the Board of Trustees" was allegedly not present when the Leuterios signed the deed. After project completion in 1966, GSIS increased the purchase price based on alleged final construction costs. The Leuterios, after diligently paying amortizations and taxes, informed GSIS of their completed payments and requested an absolute deed of sale, which GSIS did not act upon. Procedural History: The Spouses Leuterio filed a Complaint for Specific Performance with Damages to compel GSIS to execute the final Deed of Sale. The Regional Trial Court (RTC) ruled in favor of the Leuterios. The Court of Appeals (CA) upheld the RTC's decision, solely on the basis of estoppel, holding that GSIS could not increase the price after failing to protest the Leuterios' P200.00 amortization payments over the years. The Petition: GSIS filed a petition for review on certiorari, arguing that the CA erred in holding GSIS estopped from enforcing the price adjustment, in not binding the Leuterios to the ad hoc committee's recommendation, and in failing to consider the justification for the price adjustment.
Issue(s)
Whether petitioner GSIS is estopped from enforcing the adjustment of the selling price. Whether the Spouses Leuterio must be bound by the recommendation made by the ad hoc committee. Whether the Court of Appeals erred in affirming the trial court's decision ordering GSIS to execute the final Deed of Sale.
Ruling
The petition for review on certiorari is DISMISSED. Costs against petitioner. GSIS is ordered to execute a Final Deed of Sale in favor of the Spouses Raul and Esperanza Leuterio for the subject house and lot.
Ratio Decidendi
On the issue of price adjustment and estoppel: The Court held that the decisive issue was a question of fact: whether the Spouses Leuterio agreed to the marginal notation "subject to adjustment pending approval of the Board of Trustees." The Court affirmed the factual findings of the lower courts that this notation was not present when the Deed of Conditional Sale was signed in 1965. Petitioner's own Answer admitted the omission of the notation was an "honest mistake," and its Petition for Review stated the words were "inserted." These judicial admissions bound the petitioner. Consequently, the purchase price mutually agreed upon was P19,740.00, and the Leuterios did not consent to a unilateral upward adjustment. Article 1473 of the Civil Code prohibits the fixing of price to the discretion of one contracting party. The Court found no reversible error in the CA's ruling, though it based its decision on the factual finding of no agreement to the adjustment rather than solely on estoppel. On the issue of the ad hoc committee's recommendation: The Court rejected petitioner's contention that the spouses Leuterio are bound by the recommendation of the ad hoc committee. The records show that then President Ferdinand E. Marcos approved the "Plea" and wanted its "immediate implementation," effectively setting aside the committee's findings. Petitioner's attempt to have this presidential endorsement reconsidered was denied. On the issue of affirming the trial court's decision: The Court found no merit in the petition. The petitioner failed to factor the increased cost of construction into the purchase price, and it alone must suffer the loss resulting from this oversight or bad business judgment. The law on contracts does not excuse a party from specific performance due to a poor business decision. Therefore, the Court dismissed the petition and affirmed the order for GSIS to execute the final Deed of Sale.
Main Doctrine
A unilateral upward adjustment of the purchase price in a Deed of Conditional Sale, without the consent of the vendee, is illegal and cannot be enforced, especially when the vendor's own admissions confirm the absence of the adjustment clause at the time of signing.