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CASL 8

8epubllc of Lhe hlllpplnes


SUkLML CCUk1
Manlla
ll8S1 ulvlSlCn
Gk No L300S6 August 30 1988
MAkCLLC AGCACILI plalnLlffappellee
vs
GCVLkNMLN1 SLkVICL INSUkANCL SS1LM defendanLappellanL
Attemlo l Aqcoolll fot plolotlffoppellee
Offlce of tbe Covetomeot cotpotote cooosel fot JefeoJootoppelloot

NAkVASA
1he appellanL CovernmenL Servlce lnsurance SysLem (CSlS for shorL) havlng approved Lhe appllcaLlon of Lhe appellee Agcaolll for Lhe purchase of
a house and loL ln Lhe CSlS Pouslng ro[ecL aL nangka Marlklna 8lzal sub[ecL Lo Lhe condlLlon LhaL Lhe laLLer should forLhwlLh occupy Lhe house a
condlLlon LhaL Agacolll Lrled Lo fulflll buL could noL for Lhe reason LhaL Lhe house was absoluLely unlnhablLable Agcaolll afLer paylng Lhe flrsL
lnsLallmenL and oLher fees havlng LhereafLer refused Lo make furLher paymenL of oLher sLlpulaLed lnsLallmenLs unLll CSlS had made Lhe house
hablLable and appellanL havlng refused Lo do so opLlng lnsLead Lo cancel Lhe award and demand Lhe vacaLlon by Agcaolll of Lhe premlses and
Agcaolll havlng sued Lhe CSlS ln Lhe CourL of llrsL lnsLance of Manlla for speclflc performance wlLh damages and havlng obLalned a favorable
[udgmenL Lhe case was appealled Lo Lhls CourL by Lhe CSlS lLs appeal musL fall
1he essenLlal facLs are noL ln dlspuLe Approval of Agcaollls aforemenLloned appllcaLlon for purchase
1
was conLalned ln a leLLer
2
addressed Lo
Agcaolll and slgned by CSlS Manager Archlmedes vlllanueva ln behalf of Lhe ChalrmanCeneral Manager readlng as follows
lease be lnformed LhaL your appllcaLlon Lo purchase a house and loL ln our CSlS Pouslng ro[ecL aL nangka Marlklna 8lzal has
been approved by Lhls Cfflce LoL no 26 8lock no (48) 2 LogeLher wlLh Lhe houslng unlL consLrucLed Lhereon has been
allocaLed Lo you
?ou are Lherefore advlsed Lo occupy Lhe sald house lmmedlaLely
lf you fall Lo occupy Lhe same wlLhln Lhree (3) days from recelpL of Lhls noLlce your appllcaLlon shall be consldered
auLomaLlcally dlsapproved and Lhe sald house and loL wlll be awarded Lo anoLher appllcanL
Agcaolll losL no Llme ln occupylng Lhe house Pe could noL sLay ln lL however and had Lo leave Lhe very nexL day because Lhe house was noLhlng
more Lhan a shell ln such a sLaLe of lncompleLeness LhaL clvlllzed occupaLlon was noL posslble celllng sLalrs double walllng llghLlng faclllLles
waLer connecLlon baLhroom LolleL klLchen dralnage were lnexlsLenL Agcaolll dld however ask a homeless frlend a cerLaln vlllanueva Lo sLay ln
Lhe premlses as some sorL of waLchman pendlng compleLlon of Lhe consLrucLlon of Lhe house Agcaolll LhereafLer complalned Lo Lhe CSlS Lo no
avall
1he CSlS asked Agcaolll Lo pay Lhe monLhly amorLlzaLlons and oLher fees Agcaolll pald Lhe flrsL monLhly lnsLallmenL and Lhe lncldenLal fees
3
buL
refused Lo make furLher paymenLs unLll and unless Lhe CSlS compleLed Lhe houslng unlL WhaL Lhe CSlS dld was Lo cancel Lhe award and requlre
Agcaolll Lo vacaLe Lhe premlses
4
Agcaolll reacLed by lnsLlLuLlng sulL ln Lhe CourL of llrsL lnsLance of Manlla for speclflc performance and
damages
S
endlng Lhe acLlon a wrlLLen proLesL was lodged by oLher awardees of houslng unlLs ln Lhe same subdlvlslon regardlng Lhe fallure of Lhe
SysLem Lo compleLe consLrucLlon of Lhelr own houses
6
!udgmenL was ln due course rendered
7
on Lhe basls of Lhe evldence adduced by Agcaolll
only Lhe CSlS havlng opLed Lo dlspense wlLh presenLaLlon of lLs own proofs 1he [udgmenL was ln Agcaollls favor and conLalned Lhe followlng
dlsposlLlons
8
Lo wlL
1) ueclarlng Lhe cancellaLlon of Lhe award (of a house and loL) ln favor of plalnLlff (Marlano Agcaolll) lllegal and vold
2) Crderlng Lhe defendanL (CSlS) Lo respecL and enforce Lhe aforesald award Lo Lhe plalnLlff relaLlve Lo LoL no 26 8lock no
(48) 2 of Lhe CovernmenL Servlce lnsurance SysLem (CSlS) low cosL houslng pro[ecL aL nangka Marlklna 8lzal
3) Crderlng Lhe defendanL Lo compleLe Lhe house ln quesLlon so as Lo make Lhe same hablLable and auLhorlzlng lL (defendanL)
Lo collecL Lhe monLhly amorLlzaLlon Lhereon only afLer sald house shall have been compleLed under Lhe Lerms and condlLlons
menLloned ln LxhlblL A and
4) Crderlng Lhe defendanL Lo pay 10000 as damages and 30000 as and for aLLorneys fees and cosLs
AppellanL CSlS would have Lhls CourL reverse Lhls [udgmenL on Lhe argumenL LhaL
1) Agcaolll had no rlghL Lo suspend paymenL of amorLlzaLlons on accounL of Lhe lncompleLeness of hls houslng unlL slnce sald unlL had been sold
ln Lhe condlLlon and sLaLe of compleLlon Lhen exlsLlng (and) he ls deemed Lo have accepLed Lhe same ln Lhe condlLlon he found lL when he
accepLed Lhe award and assumlng lndeflnlLeness of Lhe conLracL ln Lhls regard such clrcumsLance precludes a [udgmenL for speclflc
performance
9

2) erfecLlon of Lhe conLracL of sale beLween lL and Agcaolll belng condlLloned upon Lhe laLLers lmmedlaLe occupancy of Lhe house sub[ecL Lhereof
and Lhe laLLer havlng falled Lo comply wlLh Lhe condlLlon no conLracL ever came lnLo exlsLence beLween Lhem
10

3) Agcaollls acL of placlng hls homeless frlend vlllanueva ln possesslon wlLhouL Lhe prlor or subsequenL knowledge or consenL of Lhe defendanL
(CSlS) operaLed as a repudlaLlon by Agcaolll of Lhe award and a deprlvaLlon of Lhe CSlS aL Lhe same Llme of Lhe reasonable renLal value of Lhe
properLy
11

Agcaollls offer Lo buy from CSlS was conLalned ln a prlnLed form drawn up by Lhe laLLer enLlLled AppllcaLlon Lo urchase a Pouse and/or LoL
Agcaolll fllled up Lhe form slgned lL and submlLLed lL
12
1he accepLance of Lhe appllcaLlon was also seL ouL ln a form (mlmeographed) also
prepared by Lhe CSlS As already menLloned Lhls form senL Lo Agcaolll duly fllled up advlsed hlm of Lhe approval of hls appllcaLlon Lo purchase a
house and loL ln our CSlS Pouslng ro[ecL aL nAnCkA MA8lklnA 8lZAL and LhaL LoL no 26 8lock no (48) 2 LogeLher wlLh Lhe houslng unlL
consLrucLed Lhereon has been allocaLed Lo you nelLher Lhe appllcaLlon form nor Lhe accepLance or approval form of Lhe CSlS nor Lhe noLlce Lo
commence paymenL of a monLhly amorLlzaLlons whlch agaln refers Lo Lhe house and loL awarded conLalned any hlnL LhaL Lhe house was
lncompleLe and was belng sold as ls le ln whaLever sLaLe of compleLlon lL mlghL be aL Lhe Llme Cn Lhe oLher hand Lhe condlLlon expllclLly
lmposed on Agcaolll Lo occupy Lhe sald house lmmedlaLely or ln any case wlLhln Lhree (3) days from noLlce oLherwlse hls appllcaLlon shall be
consldered auLomaLlcally dlsapproved and Lhe sald house and loL wlll be awarded Lo anoLher appllcanL would lmply LhaL consLrucLlon of Lhe
house was more or less compleLe and lL was by reasonable sLandards hablLable and LhaL lndeed Lhe awardee should sLay and llve ln lL lL could
noL be lnLerpreLed as meanlng LhaL Lhe awardee would occupy lL ln Lhe sense of a ploneer or seLLler ln a rude wllderness maklng do wlLh whaLever
he found avallable ln Lhe envlrornmenL
1here was Lhen a perfecLed conLracL of sale beLween Lhe parLles Lhere had been a meeLlng of Lhe mlnds upon Lhe purchase by Agcaolll of a
deLermlnaLe house and loL ln Lhe CSlS Pouslng ro[ecL aL nangka Marlklna 8lzal aL a deflnlLe prlce payable ln amorLlzaLlons aL 3136 per monLh
and from LhaL momenL Lhe parLles acqulred Lhe rlghL Lo reclprocally demand performance
13
lL was Lo be sure Lhe duLy of Lhe CSlS as seller Lo
dellver Lhe Lhlng sold ln a condlLlon sulLable for lLs en[oymenL by Lhe buyer for Lhe purpose conLemplaLed
14
ln oLher words Lo dellver Lhe house
sub[ecL of Lhe conLracL ln a reasonably llvable sLaLe 1hls lL falled Lo do
lL sold a house Lo Agcaolll and requlred hlm Lo lmmedlaLely occupy lL under paln of cancellaLlon of Lhe sale under Lhe clrcumsLances Lhere can
hardly be any doubL LhaL Lhe house conLemplaLed was one LhaL could be occupled for purposes of resldence ln reasonable comforL and
convenlence 1here would be no sense Lo requlre Lhe awardee Lo lmmedlaLely occupy and llve ln a shell of a house a sLrucLure conslsLlng only of
four walls wlLh openlngs and a roof and Lo Lheorlze as Lhe CSlS does LhaL Lhls was whaL was lnLended by Lhe parLles slnce Lhe conLracL dld noL
clearly lmpose upon lL Lhe obllgaLlon Lo dellver a bobltoble boose ls to advocaLe an absurdlLy Lhe creaLlon of an unfalr slLuaLlon 8y any ob[ecLlve
lnLerpreLaLlon of lLs Lerms Lhe conLracL can only be undersLood as lmposlng on Lhe CSlS an obllgaLlon Lo dellver Lo Agcaolll a reasonably hablLable
dwelllng ln reLurn for hls underLaklng Lo pay Lhe sLlpulaLed prlce Slnce CSlS dld noL fulflll LhaL obllgaLlon and was noL wllllng Lo puL Lhe house ln
hablLable sLaLe lL cannoL lnvoke Agcaollls suspenslon of paymenL of amorLlzaLlons as cause Lo cancel Lhe conLracL beLween Lhem lL ls axlomaLlc
LhaL (l)n reclprocal obllgaLlons nelLher parLy lncurs ln delay lf Lhe oLher does noL comply or ls noL ready Lo comply ln a proper manner wlLh whaL ls
lncumbenL upon hlm
1S

nor may Lhe CSlS succeed ln [usLlfylng lLs cancellaLlon of Lhe award Lo Agcaolll by Lhe clalm LhaL Lhe laLLer had noL complled wlLh Lhe condlLlon of
occupylng Lhe house wlLhln Lhree (3) days 1he record shows LhaL Agcaolll dld Lry Lo fulflll Lhe condlLlon he dld Lry Lo occupy Lhe house buL found lL
Lo be so unlnhablLable LhaL he had Lo leave lL Lhe followlng day Pe dld however leave a frlend ln Lhe sLrucLure who belng homeless and hence
wllllng Lo accepL shelLer even of Lhe mosL rudlmenLary sorL agreed Lo sLay Lhereln and look afLer lL 1hus Lhe argumenL LhaL Agcaolll breached Lhe
agreemenL by falllng Lo occupy Lhe house and by allowlng anoLher person Lo sLay ln lL wlLhouL Lhe consenL of Lhe CSlS musL be re[ecLed as devold
of merlL
llnally Lhe CSlS should noL be heard Lo say LhaL Lhe agreemenL beLween lL and Agcaolll ls sllenL or lmpreclse as Lo lLs exacL presLaLlon 8lame for
Lhe lmpreclslon cannoL be lmpuLed Lo Agcaolll lL was afLer all Lhe CSlS whlch caused Lhe conLracL Lo come lnLo belng by lLs wrlLLen accepLance of
Agcaollls offer Lo purchase LhaL offer belng conLalned ln a prlnLed form supplled by Lhe CSlS Sald appellanL havlng caused Lhe amblgulLy of whlch
lL would now make caplLal Lhe quesLlon of lnLerpreLaLlon arlslng Lherefrom should be resolved agalnsL lL
lL wlll noL do however Lo dlspose of Lhe conLroversy by slmply declarlng LhaL Lhe conLracL beLween Lhe parLles had noL been valldly cancelled and
was Lherefore sLlll ln force and LhaL Agcaolll could noL be compelled by Lhe CSlS Lo pay Lhe sLlpulaLed prlce of Lhe house and loL sub[ecL of Lhe
conLracL unLll and unless lL had flrsL compleLed consLrucLlon of Lhe house 1hls would leave Lhe conLracL hanglng or ln suspended anlmaLlon as lL
were Agcaolll unwllllng Lo pay unless Lhe house were flrsL compleLed and Lhe CSlS averse Lo compleLlng consLrucLlon whlch ls preclsely whaL has
been Lhe sLaLe of affalrs beLween Lhe parLles for more Lhan LwenLy (20) years now Cn Lhe oLher hand assumlng lL Lo be feaslble Lo sLlll flnlsh Lhe
consLrucLlon of Lhe house aL Lhls Llme Lo compel Lhe CSlS Lo do so so LhaL Agcaollls presLaLlon Lo pay Lhe prlce mlghL ln Lurn be demanded
wlLhouL modlfylng Lhe prlce Lherefor would noL be qulLe falr 1he cosL Lo Lhe CSlS of compleLlon of consLrucLlon aL pteseot ptlces would make Lhe
sLlpulaLed prlce dlsproporLlonaLe unreallsLlc
1he slLuaLlon calls for Lhe exerclse by Lhls CourL of lLs equlLy [urlsdlcLlon Lo Lhe end LhaL lL may render complete jostlce Lo boLh parLles
As we reafflrmed ln Alr Manlla lnc vs CourL of lndusLrlal 8elaLlons (83 SC8A 379 389 1978) (L)qulLy as Lhe complemenL
of legal [urlsdlcLlon seeks Lo reach and do compleLe [usLlce where courLs of law Lhrough Lhe lnflexlblllLy of Lhelr rules and wanL
of power Lo adapL Lhelr [udgmenLs Lo Lhe speclal clrcumsLances of cases are lncompeLenL so Lo do LqulLy regards Lhe splrlL of
and noL Lhe leLLer Lhe lnLenL and noL Lhe form Lhe subsLance raLher Lhan Lhe clrcumsLance as lL ls varlously expressed by
dlfferenL courLs
16

ln Lhls case Lhe CourL can noL requlre speclflc performance of Lhe conLracL ln quesLlon accordlng Lo lLs llLeral Lerms as Lhls would resulL ln lnequlLy
1he prevalllng rule ls LhaL ln decreelng speclflc performance equlLy requlres
17

noL only LhaL Lhe conLracL be [usL and equlLable ln lLs provlslons buL LhaL Lhe consequences of speclflc performance llkewlse
be equlLable and [usL 1he general rule ls LhaL Lhls equlLable rellef wlll noL be granLed lf under Lhe clrcumsLances of Lhe case
Lhe resulL of Lhe speclflc enforcemenL of Lhe conLracL would be harsh lnequlLable oppresslve or resulL ln an unconsclonable
advanLage Lo Lhe plalnLlff
ln Lhe exerclse of lLs equlLy [urlsdlcLlon Lhe CourL may ad[usL Lhe rlghLs of parLles ln accordance wlLh Lhe clrcumsLances obLalnlng aL Lhe Llme of
rendlLlon of [udgmenL when Lhese are slgnlflcanLly dlfferenL from Lhose exlsLlng aL Lhe Llme of generaLlon of Lhose rlghLs
1he CourL ls noL resLrlcLed Lo an ad[usLmenL of Lhe rlghLs of Lhe parLles as Lhey exlsLed when sulL was broughL buL wlll glve
rellef approprlaLe Lo evenLs occurlng endlng Lhe sulL
18

Whlle equlLable [urlsdlcLlon ls generally Lo be deLermlned wlLh reference Lo Lhe slLuaLlon exlsLlng aL Lhe Llme Lhe sulL ls flled
Lhe rellef Lo be accorded by Lhe decree ls governed by Lhe condlLlons whlch are shown Lo exlsL aL Lhe Llme of maklng Lhereof
and noL by Lhe clrcumsLances aLLendlng Lhe lncepLlon of Lhe llLlgaLlon ln maklng up Lhe flnal decree ln an equlLy sulL Lhe [udge
may rlghLly conslder maLLers arlslng afLer sulL was broughL 1herefore as a general rule equlLy wlll admlnlsLer such rellef as Lhe
naLure rlghLs facLs and exlgencles of Lhe case demand aL Lhe close of Lhe Lrlal or aL Lhe Llme of Lhe maklng of Lhe decree
19

1haL ad[usLmenL ls enLlrely conslsLenL wlLh Lhe Clvll Law prlnclple LhaL ln Lhe exerclse of rlghLs a person musL acL wlLh [usLlce glve everyone hls due
and observe honesLy and good falLh
20
Ad[usLmenL of rlghLs has been held Lo be parLlcularly appllcable when Lhere has been a depreclaLlon of
currency
uepreclaLlon of Lhe currency or oLher medlum of paymenL conLracLed for has frequenLly been held Lo [usLlfy Lhe courL ln
wlLhholdlng speclflc performance or aL leasL condlLlonlng lL upon paymenL of Lhe acLual value of Lhe properLy conLracLed for
1hus ln an acLlon for Lhe speclflc performance of a real esLaLe conLracL lL has been held LhaL where Lhe currency ln whlch Lhe
plalnLlff had conLracLed Lo pay had greaLly depreclaLed before enforcemenL was soughL Lhe rellef would be denled unless Lhe
complalnL would underLake Lo pay Lhe equlLable value of Lhe land (Wlllard 1ayloe uS 8 Wall 33719 L Ld 301 uoughdrlll v
Ldwards 39 Ala 424)
21

ln deLermlnlng Lhe preclse rellef Lo glve Lhe CourL wlll balance Lhe equlLles or Lhe respecLlve lnLeresLs of Lhe parLles and Lake accounL of Lhe
relaLlve hardshlp LhaL one rellef or anoLher may occaslon Lo Lhem 22
1he compleLlon of Lhe unflnlshed house so LhaL lL may be puL lnLo hablLable condlLlon as one form of rellef Lo Lhe plalnLlff Agcaolll no longer
appears Lo be a feaslble opLlon ln vlew of Lhe noL lnconslderable Llme LhaL has already elapsed 1haL would requlre an ad[usLmenL of Lhe prlce of
Lhe sub[ecL of Lhe sale Lo conform Lo presenL prlces of consLrucLlon maLerlals and labor lL ls more ln keeplng wlLh Lhe reallLles of Lhe slLuaLlon and
wlLh equlLable norms Lo slmply requlre paymenL for Lhe land on whlch Lhe house sLands and for Lhe house lLself ln lLs unflnlshed sLaLe as of Lhe
Llme of Lhe conLracL ln facL Lhls ls an alLernaLlve rellef proposed by Agcaolll hlmself le LhaL [udgmenL lssue (o)rderlng Lhe defendanL (CSlS) Lo
execuLe a deed of sale LhaL would embody and provlde for a reasonable amorLlzaLlon of paymenL on Lhe basls of Lhe presenL acLual unflnlshed and
uncompleLed condlLlon worLh and value of Lhe sald house
23

WPL8LlC8L Lhe [udgmenL of Lhe CourL o poo lnsofar as lL lnvalldaLes and seLs aslde Lhe cancellaLlon by respondenL CSlS of Lhe award ln favor of
peLlLloner Agcaolll of LoL no 26 8lock no (48) 2 of Lhe CSlS low cosL houslng pro[ecL aL nangka Marlklna 8lzal and orders Lhe former Lo respecL
Lhe aforesald award and Lo pay damages ln Lhe amounLs speclfled ls Alll8MLu as belng ln accord wlLh Lhe facLs and Lhe law Sald [udgmenLs ls
however modlfled by deleLlng Lhe requlremenL for respondenL CSlS Lo compleLe Lhe house ln quesLlon so as Lo make Lhe same hablLable and
lnsLead lL ls hereby C8uL8Lu LhaL Lhe conLracL beLween Lhe parLles relaLlve Lo Lhe properLy above descrlbed be modlfled by addlng Lo Lhe cosL of
Lhe land as of Lhe Llme of perfecLlon of Lhe conLracL Lhe cosL of Lhe house ln lLs unflnlshed sLaLe also as of Lhe Llme of perfecLlon of Lhe conLracL
and correspondlngly ad[usLlng Lhe amorLlzaLlons Lo be pald by peLlLloner Agcaolll Lhe modlflcaLlon Lo be effecLed afLer deLermlnaLlon by Lhe
CourL o poo of Lhe value of sald house on Lhe basls of Lhe agreemenL of Lhe parLles or lf Lhls ls noL posslble by such commlssloner or commlssloners
as Lhe CourL may appolnL no pronouncemenL as Lo cosLs
SC C8uL8Lu