Marcelo Agcaoili vs. Government Service Insurance System

G.R. No. L-30056, August 30, 1988; per Narvasa, J.

Facts

The Government Service Insurance System (GSIS) approved the application of appellee Agcaoili for the purchase of house and lot in the GSIS Housing Project at Nangka Marikina, Rizal, with the condition that Agcaoili should occupy the said house and lot within three days from receipt of notice otherwise the application shall be automatically disapproved and will be awarded to another applicant. Agcaoili tried to fulfil the condition but could not because the house was uninhabitable. The fixtures, ceilings, and even utilities were inexistent. The appellee refused to pay the remaining instalments and fees until GSIS made the house inhabitable but to no avail. GSIS opted to cancel the award and demand Agcaoili to vacate the premises. Agcaoili sued GSIS in the Court of First Instance of Manila for specific performance with damages and obtained a favourable judgement. Hence this petition for appeal by GSIS.

Issue

Whether or not the Court may require specific performance of the contract in question according to its literal terms

Ruling

The Supreme Court ruled that 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 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.