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 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