AGCAOILI

No.

VS.
L-30056,

August

GSIS
30,

1988

FACTS:
The appellant Government Service Insurance System (GSIS) approved the
application of the appellee Marcelo Agcaoili for the purchase of the house and lot in the
GSIS Housing Project at Nangka, Marikina, Rizal, but said application was subject to the
condition that the latter should forthwith occupy the house. Agcaoili lost no time in
occupying the house but he could not stay in it and had to leave the very next day
because the house was nothing more than a shell, in such a state that civilized
occupation was not possible: ceiling, stairs, double walling, lighting facilities, water
connection, bathroom, toilet kitchen, drainage, were inexistent. Agcaoili did however
asked a homeless friend, a certain Villanueva, to stay in the premises as some sort of
watchman, pending the completion of the construction of the house. He thereafter
complained
to
the
GSIS
but
to
no
avail.
Subsequently, the GSIS asked Agcaoili to pay the monthly amortizations of P35.56 and
other fees. He paid the first monthly amortizations and incidental fees, but refused to
make further payments until and unless the GSIS completed the housing unit. Thereafter,
GSIS cancelled the award and required Agcaoili to vacate the premise. The house and lot
was consequently awarded to another applicant. Agcaoili reacted by instituting suit in
the Court of First Instance of Manila for specific performance and damages. The
judgment was rendered in favor of Agcaoili. GSIS then appealed from that judgment.
ISSUE:
Was the cancellation by GSIS of the award in favor of petitioner Agcaoili just and proper?
RULING:
No. It was 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. There would be no
sense to require the awardee to immediately occupy and live in a shell of a house,
structure consisting only of four walls with openings, and a roof. GSIS had an obligation
to deliver to Agcaoili a reasonably habitable dwelling in return for his undertaking to pay
the stipulated price. Since GSIS did not fulfill that obligation, and was not willing to put
the house in habitable state, it cannot invoke Agcaoilis suspension of payment of
amortizations as cause to cancel the contract between them. It is axiomatic that In
reciprocal obligations, neither party incurs in delay if the other does not comply in a
proper manner with what is incumbent upon him.