AGCAOILI VS. GSIS No.

L-30056, August 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 HousingProject at Nangka, Marikina, Rizal, but said application was subject to the condition that thelatter should forthwith occupy the house. Agcaoili lost no time in occupying the house but hecould not stay in it and had to leave the very next day because the house was nothing morethan 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 assome 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.