Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&amp;view=article&amp;id=28782:g-r-no-l-30056-august-30,-1988-marcelo-agcaoili-v-government-service-insurance-system&amp;catid=1240&amp;Itemid=566
Timestamp: 2019-04-26 04:20:44+00:00

Document:
MARCELO AGCAOILI, Plaintiff-Appellee, v. GOVERNMENT SERVICE INSURANCE SYSTEM, Defendant-Appellant.
Artemio L. Agcaoili for Plaintiff-Appellee.
Office of the Government Corporate Counsel, for Defendant-Appellant.
2.	ID.; AMBIGUOUS PROVISIONS IN A CONTRACT MUST BE INTERPRETED AGAINST PARTY CAUSING SUCH AMBIGUITY. — The party to a contract who is responsible for alleged imprecision or ambiguity in its terms will not be permitted to make capital of such imprecision or ambiguity; the question of interpretation arising therefrom should be resolved against it.
3.	ID.; ID.; SPECIFIC PERFORMANCE; EQUITY JURISDICTION, WHEN PROPERLY EXERCISED TO ADJUST CONTRACTUAL RIGHTS. — Where specific performance according to the literal terms of a contract would result in inequity by reason of the circumstances obtaining at the time of judgment being significantly different from those existing at the generation of the rights litigated, the Court may exercise its equity jurisdiction to adjust those rights and, in determining the precise relief to be given, "balance the equities" or the respective interests of the parties and take account of the relative hardship that one form of relief or another may occasion to them.
The appellant Government Service Insurance System, (GSIS, for short) having approved the application of the appellee Agcaoili for the purchase of a house and lot in the GSIS Housing Project at Nangka, Marikina, Rizal, subject to the condition that the latter should forthwith occupy the house, a condition that Agcaoili tried to fulfill but could not for the reason that the house was absolutely uninhabitable; Agcaoili, after paying the first installment and other fees, having thereafter refused to make further payment of other stipulated installments until GSIS had made the house habitable; and appellant having refused to do so, opting instead to cancel the award and demand the vacation by Agcaoili of the premises; and Agcaoili having sued the GSIS in the Court of First Instance of Manila for specific performance with damages and having obtained a favorable judgment, the case was appealed to this Court by the GSIS. Its appeal must fail.
"Please be informed that your application to purchase a house and lot in our GSIS Housing Project at Nangka, Marikina, Rizal, has been approved by this Office. Lot No. 26, Block No. (48) 2, together with the housing unit constructed thereon, has been allocated to you.
"You are, therefore, advised to occupy the said house immediately.
Agcaoili lost no time in occupying the house. He could not stay in it, however, and had to leave the very next day, because the house was nothing more than a shell, in such a state of incompleteness that civilized occupation was not possible: ceiling, stairs, double walling, lighting facilities, water connection, bathroom, toilet kitchen, drainage, were inexistent. Agcaoili did however ask a homeless friend, a certain Villanueva, to stay in the premises as some sort of watchman, pending completion of the construction of the house. Agcaoili thereafter complained to the GSIS, to no avail.
Agcaoili’s offer to buy from GSIS was contained in a printed form drawn up by the latter, entitled "Application to Purchase a House and/or Lot." Agcaoili filled up the form, signed it, and submitted it. 12 The acceptance of the application was also set out in a form (mimeographed) also prepared by the GSIS. As already mentioned, this form sent to Agcaoili, duly filled up, advised him of the approval of his "application to purchase a house and lot in our GSIS Housing Project at NANGKA, MARIKINA, RIZAL," and that "Lot No. 26, Block No. (48) 2, together with the housing unit constructed thereon, has been allocated to you." Neither the application form nor the acceptance or approval form of the GSIS — nor the notice to commence payment of monthly amortizations, which again refers to "the house and lot awarded" — contained any hint that the house was incomplete, and was being sold "as is," i.e., in whatever state of completion it might be at the time. On the other hand, the condition explicitly imposed on Agcaoili — "to occupy the said house immediately," or in any case within three (3) days from notice, otherwise his "application shall be considered automatically disapproved and the said house and lot will be awarded to another applicant" — would imply that construction of the house was more or less complete, and it was by reasonable standards, habitable, and that indeed, the awardee should stay and live in it; it could not be interpreted as meaning that the awardee would occupy it in the sense of a pioneer or settler in a rude wilderness, making do with whatever he found available in the environment.
There was then a perfected contract of sale between the parties; there had been a meeting of the minds upon the purchase by Agcaoili of a determinate house and lot in the GSIS Housing Project at Nangka, Marikina, Rizal at a definite price payable in amortizations at P31.56 per month, and from that moment the parties acquired the right to reciprocally demand performance. 13 It was, to be sure, the duty of the GSIS, as seller, to deliver the thing sold in a condition suitable for its enjoyment by the buyer for the purpose contemplated, 14 in other words, to deliver the house subject of the contract in a reasonably livable state. This it failed to do.
Nor may the GSIS succeed in justifying its cancellation of the award to Agcaoili by the claim that the latter had not complied with the condition of occupying the house within three (3) days. The record shows that Agcaoili did try to fulfill the condition; he did try to occupy the house but found it to be so uninhabitable that he had to leave it the following day. He did however leave a friend in the structure, who being homeless and hence willing to accept shelter even of the most rudimentary sort, agreed to stay therein and look after it. Thus the argument that Agcaoili breached the agreement by failing to occupy the house, and by allowing another person to stay in it without the consent of the GSIS, must be rejected as devoid of merit.
Finally, the GSIS should not be heard to say that the agreement between it and Agcaoili is silent, or imprecise as to its exact prestation. Blame for the imprecision cannot be imputed to Agcaoili; it was after all the GSIS which caused the contract to come into being by its written acceptance of Agcaoili’s offer to purchase, that offer being contained in a printed form supplied by the GSIS. Said appellant having caused the ambiguity of which it would now make capital, the question of interpretation arising therefrom, should be resolved against it.
It will not do, however, to dispose of the controversy by simply declaring that the contract between the parties had not been validly cancelled and was therefore still in force, and that Agcaoili could not be compelled by the GSIS to pay the stipulated price of the house and lot subject of the contract until and unless it had first completed construction of the house. This would leave the contract hanging or in suspended animation, as it were, Agcaoili unwilling to pay unless the house were first completed, and the GSIS averse to completing construction, which is precisely what has been the state of affairs between the parties for more than twenty (20) years now. On the other hand, assuming it to be feasible to still finish the construction of the house at this time, to compel the GSIS to do so that Agcaoili’s prestation to pay the price might in turn be demanded, without modifying the price therefor, would not be quite fair. The cost to the GSIS of completion of construction at present prices would make the stipulated price disproportionate, unrealistic.
The situation calls for the exercise by this Court of its equity jurisdiction, to the end that it may render complete justice to both parties.
In the exercise of its equity jurisdiction, the Court may adjust the rights of parties in accordance with the circumstances obtaining at the time of rendition of judgment, when these are significantly different from those existing at the time of generation of those rights.
That adjustment is entirely consistent with the Civil Law principle that in the exercise of rights a person must act with justice, give everyone his due, and observe honesty and good faith. 20 Adjustment of rights has been held to be particularly applicable when there has been a depreciation of currency.
WHEREFORE, the judgment of the Court a quo insofar as it invalidates and sets aside the cancellation by respondent GSIS of the award in favor of petitioner Agcaoili of Lot No. 26, Block No. (48) 2 of the GSIS low cost housing project at Nangka, Marikina, Rizal, and orders the former to respect the aforesaid award and to pay damages in the amounts specified, is AFFIRMED as being in accord with the facts and the law. Said judgments is however modified by deleting the requirement for respondent GSIS "to complete the house in question so as to make the same habitable," and instead it is hereby ORDERED that the contract between the parties relative to the property above described be modified by adding to the cost of the land, as of the time of perfection of the contract, the cost of the house in its unfinished state also as of the time of perfection of the contract, and correspondingly adjusting the amortizations to be paid by petitioner Agcaoili, the modification to be effected after determination by the Court a quo of the value of said house on the basis of the agreement of the parties, or if this is not possible, by such commissioner or commissioners as the Court may appoint. No pronouncement as to costs.
Cruz, Gancayco, Aquino and Medialdea, JJ., concur.
1.	Dated June 24, 1964.
2.	Dated October 5, 1965 (Exh. A); Folder of Exhibits p. 1.
3.	O.R. No. 188558, Oct. 10, 1966.
4.	Exh. D, Folder of Exhibits, p. 4.
5.	Docketed as Civil Case No. 69417.
6.	The letter was sent thru the awardees’ "Samahang Lakas ng Mahihirap," copy having been marked at the trial as Exh. F; to the letter was attached a resolution of said Samahan adopted at its meeting of July 23, 1967 and to which, in turn, was appended a 3-page list of uncompleted houses with a specification of items not completed.
7.	By Hon. Manuel P. Barcelona, presiding over Br. VIII of the CFI of Manila; Record on Appeal, pp. 22-25, Rollo, p. 13.
8.	Parenthetical insertions identifying the parties, supplied.
9.	Appellant’s brief, pp. 11-14.
11.	Appellant’s brief, pp. 8-10.
13.	Art. 1475, Civil Code; Pacific Oxygen & Acetylene Co. v. Central Bank, 37 SCRA 685.
14.	Lim v. de los Santos, 8 SCRA 798.
15.	Art. 1169, last paragraph, Civil Code.
16.	Cristobal v. Melchor, 101 SCRA 857, 865.
17.	71 Am. Jur. 2d, 101.
19.	27 Am Jur. 2d. 818.
21.	71 Am. Jur. 2d, 120.
23.	Record on Appeal, p. 5; Rollo, p. 13.

References: v. 
	Art. 1475
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	Art. 1169
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