G.R. No. 195567 November 25, 1993
GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), petitioner, vs. HONORABLE COURT OF APPEALS and SPOUSES RAUL and ESPERANZA LEUTERIO, respondents.

FACTS

On December 18, 1963, private respondent Esperanza Leuterio won a lottery draw conducted by petitioner GSIS for the allocation of lots and housing units in Project 8-C of GSIS Village. She was issued a Certificate of Acknowledgment to purchase the subject house and lot. In 1965, the parties entered into a Deed of Conditional Sale for the purchase price of P19,740.00, payable in 180 monthly installments. Paragraph 11 of the Deed stated that upon full payment, GSIS agreed to execute a final Deed of Sale. The Deed was notarized and a copy given to the spouses three years later. After the project’s completion in 1966, GSIS’s Board of Trustees increased the purchase price based on the final construction cost. A marginal notation “subject to adjustment pending approval of the Board of Trustees” appeared on the Leuterios’ Deed. The trial court found this notation was inserted without the knowledge or consent of the Leuterio spouses, a finding affirmed by the Court of Appeals. In the early 1970s, other conditional vendees sued GSIS over the price increase and sought presidential intervention. An Ad Hoc committee found the final cost justified a higher price. However, on May 30, 1973, Presidential Executive Assistant Jacobo C. Clave advised GSIS that President Marcos had approved the vendees’ “Plea” and wanted its immediate implementation. GSIS’s motion for reconsideration was denied on December 18, 1980. Meanwhile, the Leuterio spouses, after years of paying monthly amortizations and real estate taxes, informed GSIS in 1977 that payments were complete and requested execution of an absolute deed of sale. GSIS took no action. The spouses filed a Complaint for Specific Performance With Damages on May 20, 1984. The trial court ruled in favor of the Leuterios. The Court of Appeals affirmed solely on the basis of estoppel, holding GSIS could not increase the price after failing for years to protest the spouses’ P200.00 amortizations or require larger payments.

ISSUE

Whether the spouses Leuterio agreed to the marginal notation “subject to adjustment pending approval of the Board of Trustees” in the Deed of Conditional Sale, thereby obliging them to pay an increased purchase price.

RULING

The Supreme Court DISMISSED the petition and upheld the lower courts’ decisions, but on grounds different from the Court of Appeals’ estoppel rationale. The Court held that the decisive issue was a question of fact: whether the spouses agreed to the marginal notation. The Court, not being a trier of facts, found no reason to disturb the trial court’s finding, based on the testimony of Raul Leuterio and GSIS’s own judicial admissions, that the notation was inserted without the spouses’ knowledge or consent after they signed the Deed in 1965. Therefore, the mutually agreed purchase price remained P19,740.00. The Court ruled it was illegal for GSIS to claim a unilateral upward adjustment, as Article 1473 of the Civil Code provides that the fixing of the price can never be left to the discretion of one contracting party. The Court also rejected GSIS’s contention that the spouses were bound by the Ad Hoc committee’s recommendation, as it was set aside by President Marcos. Finally, the Court held that any increase in the final construction cost was a risk borne by GSIS alone due to its own business judgment, not a valid excuse to avoid its contractual obligation.