MARCELO AGCAOILI, vs. GOVERNMENT SERVICE INSURANCE SYSTEM G.R. No.

L-
30056 August 30, 1988

FACTS:

Plaintiff, Marcelo Agcaoili applied to purchase a house and lot in GSIS Housing Project which was
approved by GSIS Manager Archimedes Villanueva. The former has been advised to occupy the said
house immediately to which failure to occupy within three days from receipt of notice will automatically
disapproved the application and the house and lot will be awarded to another applicant.

When the plaintiff occupied the house, he found out that it was nothing more than a shell in the state
of incompleteness, which he asked his homeless friend to be a watchman of the house. GSIS asked the
plaintiff to pay the monthly amortization and other fees. The latter paid the first monthly installment but
refused to pay the rest until and unless the GSIS completed the housing unit. GSIS then cancel the award
and required the plaintiff to vacate the premises.

Plaintiff institutes a suit for specific performance and damages. Judgment favored plaintiff declaring the
cancelation illegal and void and ordered the defendant to enforce the award and pay damages to
plaintiff. GSIS now comes to this court for an appeal.

ISSUE: Whether or not the decision of the lower court be reversed.

HELD:

There was then a perfected contract of sale between the parties; there had been a meeting of the minds
upon the purchase by Agcaoili of a determinate house and lot in the GSIS Housing Project at Nangka
Marikina, Rizal at a definite price payable in amortizations. From that moment the parties acquired the
right to reciprocally demand performance. It was, to be sure, 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 , in
other words, to deliver the house subject of the contract in a reasonably livable state. This it failed to do.

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. In the case at bar, it is apparent that GSIS
did not comply with its obligation to deliver a habitable house to plaintiff whereby giving defendant no
legal reason to cancel the award to plaintiff by the claim that the latter had not occupied the house
within three days. The record shows that plaintiff did try to occupy the house but found it uninhabitable
that he had to leave in the following day. Failure of the defendant to comply with the obligation of the
contract, then gives legal reason for plaintiff to ask for specific performance and damage against the
defendant.