By EDMER F. PANESA
January 6, 2010, 5:08pm [ manilabulletin online ]
The Government Service Insurance System and its over one million members stand to lose at least P400 million over a long-running legal battle for several parcels of land in San Antonio Village, Pasig City.
This after the Supreme Court affirmed a 2006 decision of the Court of Appeals ordering the GSIS to pay at least P399,828,000 for 78 lots mistakenly foreclosed by the state pension fund in payment of a loan gone sour.
The lots have an aggregate area of 33,319 square meters.
The SC’s first division came out with the decision despite a previous threat from the GSIS that failing to grant its petition to reverse the CA ruling would mean “deciding against the fate of the GSIS funds that exist for the service of the government employees who deserve to be favored in law under the principles of social justice and equity.”
In a 33-page decision penned by Justice Teresita Leonardo de Castro, the SC said that while it was aware of the problems facing the GSIS at this time like the recurring glitch in its computer system and the influx of calamity loan applications from members, it has no choice but to uphold the rights of private claimant Rosario Enriquez Santiago.
De Castro’s decision was concurred in by Chief Justice Reynato Puno and Justices Conchita Carpio Morales, Lucas Bersamin and Martin Villarama Jr.
“Being government employees ourselves, we understand the need to preserve the actuarial insolvency of the GSIS, especially at this time when, right after the series of calamities that have severely affected the country, GSIS needs to release funds for the various loan applications being made nationwide,” the High Court said.
“The Court, in dismissing this petition, is aware of the predicament that petitioner finds itself in at this time. However, justice requires us to look at both sides and at the entirety of the case now before us. In doing so, we recognize that rights of private citizens had already arisen and we uphold such rights.”
Court records showed that the case that was originally filed by the successor-in-interest of the couple Jose Zulueta and Soledad Ramos before the Pasig Regional Trial Court (RTC) in 1990.
From September 1956 to October 1957, the Zulueta couple obtained various loans from the GSIS totaling P3.117 million secured by a real estate mortgage on several parcels of land in Pasig City and covered by three mother titles under their name.
Since they were not able to pay for the loans, the GSIS, on August 14, 1974, extra-judicially foreclosed the mortgages for P5.23 million. Being the highest bidder, the GSIS was issued a certificate of sale by the sheriff.
However, the GSIS also mistakenly foreclosed – because they had not been offered as collateral – the 78 lots in question.
After trial, the Pasig RTC rendered a decision dated December 17, 1997 favoring the claimant, prompting the GSIS to bring the case before the CA. The appellate court, on February 22, 2002, upheld the RTC ruling.
The CA decision was affirmed in toto by the SC in a decision dated Oct. 28, 2003, which became final and executory on February 24, 2004.
The RTC eventually issued a writ of execution and fixed the current fair market value of the subject lots at P35,000 per square meter, or a total of more than P1.166 billion. This was despite the claim of the GSIS that its funds and properties were exempt from execution, citing Section 9 of Republic Act 8291 or the GSIS Act of 1997.
After the RTC issued notices of garnishment on GSIS’ banks, the pension fund moved to quash the writ of execution. When the RTC denied the motion, the GSIS again went to the CA to file a special civil action for certiorari and prohibition.
On August 3, 2006, the CA ruled against the GSIS petition and noted that there was already a final executory judgment. The CA likewise ruled that the GSIS cannot claim immunity from the enforcement of the final and executory judgment because based on a previous SC ruling, the pension fund’s relationship with the claimant was “purely private and contractual in nature.”
Nevertheless, the CA found merit in the claim of GSIS that the valuation of the lots at P35,000 per square meter has no factual and legal basis and set the reasonable value at P12, 000 per sq. m. It ordered the pension fund to pay Santiago the amount of almost P400 million.
It said that any difference between the P12, 000 per sq. m. valuation and the fair market value of the subject lots as of April 29, 2004, as may be finally determined by the lower court, can be recovered later.
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