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Builder foils GSIS takeover bid

by Rey E. Requejo
[] August 29, 2011

The Court of Appeals has affirmed the decision issued by the Regional Trial Court of Bacoor, Cavite enjoining the Government Service Insurance Corp. from foreclosing on a property of a real estate developer, which failed to settle its P2 billion loan obligation to the state pension fund.

The court’s sixth division through Associate Justice Florito Macalino ruled that the GSIS failed to show that the Bacoor RTC abused its discretion when it issued a writ of preliminary injunction in favor of New San Jose Builders Inc. and some 300 lot owners.

The appellate court said the lower court was correct in taking into consideration public interest in issuing the injunction.

The lot owners claimed that when they bought the property from New San Jose Builders, the land titles were clean, the court stressed.

The appellate court also did not give weight to the GSIS’ claim that its right to due process was violated when the trial court issued the injunction without conducting a hearing.

According to the appellate court, the pension fund for government employees was given an opportunity to oppose the issuance of the writ.

“What the law abhors is not the absence of previous notice but rather the absolute lack of opportunity to ventilate a party’s side,” it said.

Associate Justices Juan Enriquez Jr. and Ramon Bato Jr. concurred with the ruling.

Court records showed that the GSIS and New San Jose Builders entered into an agreement on December 10, 1997 where the realtor borrowed from the pension fund P600 million, payable in five years at 18 percent interest per year. A real estate mortgage secured the loan.

But the realty company failed to settle its loan obligations, prompting the GSIS to send several demand notices to the real estate firm.

In 2003, both parties discussed the possibility of laon restructuring, but did not reach an agreement.

Finally, the GSIS sent NSJBI two final demand letters on March 17, 2003 giving it five days to pay or else the mortgage will be foreclosed.

As of March 31, 2003, New San Jose’s obligation balooned to P1.99 billion inclusive of interest and surcharges, court records showed.

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