G.R. No. 137904, 19 October 2001, 367 SCRA 672

FACTS:

In 1971, petitioners mortgaged their 200-square meter property in Quezon City to the respondent GSIS to secure a housing loan of P47,000.00. As petitioners failed to pay their loan when it fell due, GSIS foreclosed the mortgage on October 28, 1983. With a bid of P154,896.00, GSIS emerged as the highest bidder in the public auction of the property.

In a bid to redeem their property, petitioner Arnel Arrienda wrote on September 26, 1984 to the Acquired Assets Department (AAD) of the GSIS signifying the petitioners’ intention to redeem their property. Two days after or on September 28, petitioner vda. de Urbano wrote the GSIS Board of Trustees (the “Board”) to inform them of her desire to redeem the subject property and for advice on the procedure for redemption.3 GSIS responded on October 16, 1984 advising her to pay the total redemption price of P154,896.00 on or before the expiry date of redemption on November 18, 1984 in full and in cash, failing which the property would be offered for sale through public bidding.

On October 29, 1984, petitioner vda. de Urbano requested for more time to redeem the subject property. In a letter dated January 10, 1985, AAD Manager Marcial Secoquian informed petitioners that the Board adopted Resolution No. 929 on November 16, 1984 approving the “sale of the subject property to petitioner Purificacion Urbano for the sum of P174,572.62, provided that the aforesaid price shall be paid in CASH, within sixty (60) days from notice of this resolution, failing which, the property shall be sold thru public bidding with the fair market value of the property as the minimum bid price.

ISSUE:

Whether or not petitioners have the right to repurchase?

RULING:

They are not entitled to repurchase as a matter of right. The Board exercised its discretion in accordance with law in denying their requests and the GSIS cannot be faulted for petitioners’ failure to repurchase as it acted upon petitioners’ application under the Operation Pabahay. The sale of the subject property to respondent dela Cruz cannot therefore be annulled on the basis of petitioners’ alleged right to repurchase.

P.D. 1146 was amended by P.D. 1981 dated July 19, 1985 as follows:

“WHEREAS, the GSIS Board of Trustees should be vested with powers and authority necessary or proper to ensure a fair and profitable return of the investments of the funds administered by the GSIS, and, for this purpose, the GSIS Board of Trustees should be given full and sole responsibility of controlling and monitoring insurance investments operations and fixing and determining the terms and conditions of financial accommodations to its members, including the power to compromise or release any claim or settled liability to the GSIS;

WHEREAS, it has thus become necessary to amend Presidential Decree No. 1146 to clarify some of its provisions to make it more responsive to the needs of the members of the GSIS and to assure the actuarial solvency of the Fund administered by the GSIS during these times of grave economic crisis affecting the country;

Sec. 7. There is hereby incorporated a new paragraph after the third paragraph of Section 36, which shall read as follows:

“The Board of Trustees has the following powers and functions, among others:
(a) To formulate the policies, guidelines and programs to effectively carry out the purposes and objectives of this Act;
(f) The provisions of any law to the contrary notwithstanding, to compromise or release, in whole or in part, any claim or settled liability to the System, regardless of the amount involved, under such terms and conditions as it may impose for the best interest of the System; . . .” (emphasis supplied)

The above laws grant the GSIS Board of Trustees (the “Board”) the power, nay, the responsibility, to exercise discretion in “determining the terms and conditions of financial accommodations to its members” with the dual purpose of making the GSIS “more responsive to the needs of the members of the GSIS” and assuring “the actuarial solvency of the Fund administered by the GSIS.” As mandated by P.D. 1146, this discretion may be exercised in acquiring, utilizing or disposing of, in any manner recognized by law, “real or personal properties in the Philippines or elsewhere necessary to carry out the purposes of this Act.” Contrary to petitioners’ position, there is no restriction or qualification that the GSIS should dispose of its real properties in favor only of GSIS members. Based on these laws, the Board could exercise its discretion on whether to accept or reject petitioners’ offer to repurchase the subject property taking into account the dual purpose enunciated in the “whereas clause” of P.D. 1981, i.e., making the GSIS “more responsive to the needs of the members of the GSIS” and assuring “the actuarial solvency of the Fund administered by the GSIS.

*Case digest by Claudette Anne G. Sayson, JD – 4, Andres Bonifacio College, SY 2019 – 2020