G.R. No.

L-30056

MARCELO AGCAOILI, Plaintiff-appellee,

VS.
GOVERNMENT SERVICE INSURANCE SYSTEM, Defendant-appellant

Article 1191. Power to Rescind Contracts

August 30, 1988

FACTS OF THE CASE:

The appellant Government Service Insurance System (GSIS) approved the

application 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

CONCLUSION:

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.

In reciprocal obligations, a party incurs delay if the other does not comply or is not
ready to comply in a proper manner with what is incumbent upon him. The defendant did
not fulfill its obligation to deliver the house in a habitable state, therefore, it cannot invoke
the plaintiff’s suspension of payment as a cause to cancel the contract between them.