Title
Supreme Court
Government Service Insurance System vs. Regional Trial Court of Pasig City
Case
G.R. No. 175393
Decision Date
Dec 18, 2009
GSIS foreclosed mortgaged properties, excluding 78 lots; successor-in-interest sued for reconveyance. Courts ruled in favor, ordering GSIS to pay P399.8M despite exemption claims. Final judgment upheld.

Case Digest (G.R. No. 175393)
Expanded Legal Reasoning Model

Facts:

  • Background and Foreclosure
    • From September 1956 to October 1957, spouses Jose C. Zulueta and Soledad Ramos obtained various loans from GSIS totaling P3,117,000.00, secured by a real estate mortgage on several parcels of land in Pasig City as evidenced by multiple Transfer Certificates of Title.
    • Due to the Zulueta spouses’ default, GSIS extrajudicially foreclosed the mortgages on August 14, 1974, covering amounts totaling P5,229,917.84.
    • GSIS, as the highest bidder, was issued a foreclosure certificate and consolidated its title over the properties on November 25, 1975.
    • Subsequently, GSIS disposed of the foreclosed properties—including properties not actually subject to foreclosure—and later sold the foreclosed lots to a private developer; however, that sale was disapproved by the Office of the President and the titles were cancelled.
  • Litigation Involving the Excluded Lots
    • Among the foreclosed lots, 78 lots originally excluded from the mortgage based on the terms of the first mortgage (dated September 25, 1956) became the subject of dispute.
    • On April 7, 1990, Antonio Vic Zulueta, successor-in-interest of the Zulueta spouses, transferred his rights in the excluded lots to Eduardo M. Santiago.
    • Santiago, through his counsel, had earlier requested GSIS to return the excluded lots.
    • A separate action for reconveyance was filed by Santiago (later substituted by his widow, Rosario Enriquez Vda. de Santiago) against GSIS in the RTC of Pasig City (Branch 71) under Civil Case No. 59439.
  • RTC – CA – Supreme Court Proceedings
    • The Regional Trial Court rendered a decision on December 17, 1997, ordering GSIS to either reconvey the 78 excluded lots or, alternatively, to pay their fair market value.
      • The RTC order detailed the specific lots according to blocks and subdivisions.
    • The decision was affirmed in subsequent appellate proceedings, including:
      • The Court of Appeals’ decision dated February 22, 2002.
      • The Supreme Court’s affirmation on October 28, 2003, which became final and executory on February 24, 2004.
    • On April 2, 2004, private respondent filed a motion for execution based on the RTC judgment ordering the reconveyance or payment equivalent to a computed fair market value.
      • The RTC fixed the value at P35,000.00 per square meter, aggregating to a total of P1,166,165,000.00.
    • GSIS subsequently filed a motion to quash the writ of execution on several grounds, including:
      • Alleged exemption from execution under Section 39 of Republic Act No. 8291.
      • Procedural objections regarding notice and valuation.
    • In response, private respondent opposed the motion, affirming that proper service was effected and that the RTC’s valuation had been duly confirmed through appellate decisions.
    • Additional motions and orders followed:
      • The RTC, on May 13, 2004, denied GSIS’s motion to quash and granted other related motions.
      • GSIS then filed a special civil action (CA-G.R. SP No. 84079) and a separate petition for mandamus to secure the release of its funds held by banks.
      • Subsequent TROs and orders from the RTC of Pasay City followed to restrain the garnishment of GSIS funds.
    • Ultimately, GSIS consolidated two petitions before the Supreme Court:
      • G.R. No. 175393 (Petition for Certiorari and Prohibition) challenging RTC orders and their enforcement.
      • G.R. No. 177731 (Petition for Review on Certiorari) seeking to reverse the modification of the mode of satisfaction of the judgment.
      • Both petitions raised issues regarding the mode of execution (reconveyance vs. remuneration), alleged forum shopping, and exemption of GSIS funds.
  • Positions of the Parties
    • Petitioner (GSIS)
      • Contended that the primary mode of satisfying the RTC judgment should be through reconveyance of the 78 excluded lots.
      • Argued that under Section 39 of R.A. No. 8291, GSIS funds and properties are exempt from execution, and that the alternate mode of payment (based on an allegedly inflated valuation) was improper.
      • Asserted that any negligence of previous counsel in not adequately presenting the reconveyance defense should not penalize the institution representing 1,500,000 members.
      • Raised additional contentions regarding the potential injustice of double indemnification and unjust enrichment.
    • Private Respondent (Eduardo M. Santiago/ his widow)
      • Argued that the issues now raised were either already settled by the final and executory RTC judgment or were being raised as new defenses in a context where the judgment’s execution was the proper remedy.
      • Asserted that procedural rules (e.g., prohibition against forum shopping) barred GSIS from re-litigating issues already adjudicated.
      • Maintained that reconveyance had become factually impossible due to the sale and transfer of subject lots to third parties.
      • Emphasized that the lower court’s modification in opting for valuation and garnishment was in line with the evidenced impossibility of actual reconveyance.

Issues:

  • Whether the trial court and the Court of Appeals erred in modifying the mode of satisfying the RTC judgment by allowing payment of the fair market value of the 78 lots (fixed at P35,000.00 per square meter) rather than enforcing the primary mode of reconveyance.
    • Whether GSIS was improperly denied the opportunity to demonstrate compliance with reconveyance.
    • Whether such a modification (i.e., resorting to garnishment and monetary satisfaction) constitutes an abuse of discretion.
  • Whether GSIS funds and properties are absolutely exempt from execution and garnishment under Section 39 of Republic Act No. 8291.
    • Whether the GSIS exemption should be interpreted narrowly (limited to the purpose of safeguarding pension funds) or expansively.
    • Whether the facts in the case (including the contractual nature of the underlying dispute) require the application of the exemption.
  • Whether the consolidated petitions constitute improper forum shopping and whether re-opening of issues already rendered final and executory violates the doctrine of finality of judgments.
    • Whether GSIS is attempting to relitigate the correctness of the RTC judgment by raising new defenses or factual allegations (e.g., alleged reconveyance occurrences).
  • Whether claims of bias against the respondent trial court and assertions of “sophisticated misrepresentation” by GSIS amount to reversible errors justifying reversal or modification of the earlier judgment.
  • Whether the allegations regarding prescription or laches and double enumeration of subject lots have any merit, considering that such issues were previously decided.

Ruling:

  • (Subscriber-Only)

Ratio:

  • (Subscriber-Only)

Doctrine:

  • (Subscriber-Only)
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