Ma. Concepcion L.

Drilon

BAMM302

Agcaoili vs GSIS

Facts and Summary

The appellant Government Service Insurance System (GSIS) approved theapplication 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 Agcaoili is entitled to specific performance with damages

Breach of Obligation

An agreement for the sale of

a house and lot on
installments
stipulating that the buyer
must occupy the house
within a specified period
under pain of cancellation
if he failed to do so, must
be construed as
imposing on the seller the
obligation to deliver a
reasonably habitable
dwelling place, one that is
in a condition suitable for
its enjoyment by the
buyer for the purpose
contemplated. The seller's
delivery of a mere shell of
a house consisting of four
walls, openings and a roof
is a breach of said
obligation which prevents
him from cancelling the sale
on the ground of the
purchaser's suspension of
payment of the amortizations
that the latter had
undertaken to pay, it being
axiomatic that "(i)in
reciprocal obligations,
neither party incurs in delay
if the other does not comply
or is not ready to
comply in a proper manner
with what is incumbent
upon him." (Art. 1169,
last paragraph, Civil Code)
An agreement for the sale of
a house and lot on
installments
stipulating that the buyer
must occupy the house
within a specified period
under pain of cancellation
if he failed to do so, must
be construed as
imposing on the seller the
obligation to deliver a
reasonably habitable
dwelling place, one that is
in a condition suitable for
its enjoyment by the
buyer for the purpose
contemplated. The seller's
delivery of a mere shell of
a house consisting of four
walls, openings and a roof
is a breach of said
obligation which prevents
him from cancelling the sale
on the ground of the
purchaser's suspension of
payment of the amortizations
that the latter had
undertaken to pay, it being
axiomatic that "(i)in
reciprocal obligations,
neither party incurs in delay
if the other does not comply
or is not ready to
comply in a proper manner
with what is incumbent
upon him." (Art. 1169,
last paragraph, Civil Code)
An agreement for the sale of
a house and lot on
installments
stipulating that the buyer
must occupy the house
within a specified period
under pain of cancellation
if he failed to do so, must
be construed as
imposing on the seller the
obligation to deliver a
reasonably habitable
dwelling place, one that is
in a condition suitable for
its enjoyment by the
buyer for the purpose
contemplated. The seller's
delivery of a mere shell of
a house consisting of four
walls, openings and a roof
is a breach of said
obligation which prevents
him from cancelling the sale
on the ground of the
purchaser's suspension of
payment of the amortizations
that the latter had
undertaken to pay, it being
axiomatic that "(i)in
reciprocal obligations,
neither party incurs in delay
if the other does not comply
or is not ready to
comply in a proper manner
with what is incumbent
upon him." (Art. 1169,
last paragraph, Civil Code)
Negligence- since the seller failed to meet the conditions of their agreement due to
carelessness in delivering a reasonably habitable dwelling place, one that is in a condition
suitable for its enjoyment by a house consisting of four walls, openings and a roof, even though
the buyer failed to pay the amount for a specific period of time as they agreed upon, it is still a
breach of obligation towards the seller.
Ruling

Yes, Agcaoili is entitled to specific performance with damages. There was a perfected
contract of sale upon the purchase of the plaintiff. It was then the duty of GSIS as seller to
deliver the thing sold in a condition suitable for its enjoyment by the buyer. The house
contemplated was one that could be occupied for purpose of residence in reasonable comfort and
convenience. The records show that the plaintiff tried to fulfil the condition but found the house
uninhabitable and could not stay any longer.
Solar Harvest vs Davao Corrugated Carton Corporation
Facts and Summary
The petitioner (Solar Harvest, Inc., Solar for brevity) entered into an agreement with
respondent, Davao Corrugated Carton Corporation (DCCC for brevity), for the purchase of
corrugated carton boxes, specifically designed for petitioners business of exporting fresh
bananas. The agreement was not reduced into writing. To start the production, Solar deposited in
DCCC’s US Dollar Savings Account with Westmont bank, as full payment for the ordered
boxes. Despite such payment, Solar did not receive any boxes from DCCC. Solar wrote a
demand letter for reimbursement of the amount paid. DCCC replied that the boxes had been
completed as early as April 3, 1998 and that Solar failed to pick them up from the formers
warehouse 30 days from completion, as agreed upon. It was also mentioned that Solar placed an
additional order, out of which, half had been manufactured without any advanced payment from
Solar. (Solar alleges that the agreement was for DCCC to deliver within 30 days from payment
the said cartons to Tagum Agricultural Development Corporation (TADECO) which the latter
failed to manufacture and deliver within such time.) DCCC then demanded Solar to remove the
boxes from the factory and to pay the balance for the additional boxes.
Issue
Whether or not the respondent (Davao Corrugated Carton Corporation) is in default.
Breach of Obligation
Delay – knowing that the agreement of the date for the delivery of boxes was violated,
the latter automatically incurs delay. However, when different dates for performance of the
obligation are fixed, the default for each obligation must be determined, that is, the other party
would incur in delay only from the moment the other party demands fulfillment of the formers
obligation as in contract of sale, the general rule is that the fulfillment of the party’s respective
obligation should be simultaneous.
Ruling
No. It was unthinkable that, over a period of more than two years, Solar did not even
demand for the delivery of the boxes. Even assuming that the agreement was for DCCC to
deliver the boxes, the latter would not be liable for breach of contract as Solar had not yet
demanded from it the delivery of the boxes.
 Solar alleges that they made a follow-up upon respondent, which, however, would not
qualify as a demand for the fulfillment obligation. The former also testified that they made a
follow-up of the boxes, but not a demand.