Title
Supreme Court
Aclado vs. Government Service Insurance System
Case
G.R. No. 260428
Decision Date
Mar 1, 2023
A retired teacher contested GSIS-imposed loan interest and penalties, claiming they were excessive. The Supreme Court ruled in her favor, reducing penalties and ordering a refund, emphasizing fairness over procedural rigidity.

Case Summary (G.R. No. 260428)

Antecedents

Petitioner incurred multiple GSIS loans between 1996 and 2015 but failed to settle them prior to her retirement on August 5, 2016. GSIS applied 12% per annum compounded monthly interest on arrears and 6% per annum compounded monthly penalties. Her cash surrender value and retirement benefits were offset by the outstanding balances, resulting in net proceeds of ₱163,322.96. Petitioner disputed the validity and amounts of certain loans (ELA and SOS), requested scanned applications and checks, and sought reduction of interest and penalties. GSIS furnished her copies of negotiated checks, confirmed full payment after offsets, and denied her repeated requests to lower interest and penalties on grounds of prior condonation under Board Resolution No. 97 and lack of payment records.

GSIS Committee on Claims Decision

On January 15, 2019, the GSIS Committee on Claims (COC) denied the petition for reduction of interest and penalties, explaining that surcharges and a portion of interest had already been condoned up to December 31, 2007, and that excess payments totalling ₱139,075.28 had been refunded.

GSIS Board of Trustees Rulings

Under Board Resolution No. 100 (July 9, 2019), the GSIS Board dismissed petitioner’s appeal as belated—filed beyond the 60-day reglementary period under RA 8291’s Rules. Resolution No. 169 (November 12, 2019) denied her motion for reconsideration.

Court of Appeals Ruling

By Decision (June 3, 2021), the Court of Appeals affirmed the Board’s resolutions, holding that the COC decision attained finality when petitioner failed to perfect her appeal within 60 days. A subsequent motion for reconsideration was denied (April 5, 2022).

Issues Presented

  1. Whether the COC Decision of January 15, 2019 attained finality.
  2. Whether petitioner is entitled to reduction of interest on arrears and penalties.

Analysis on Finality of Decision

Under the 1987 Constitution and established jurisprudence, a judgment attains finality by operation of law when the reglementary period lapses without appeal. The doctrine of immutability precludes modification of a final decision except where substantial justice demands relaxation of procedural rules. Criteria include matters of property, special circumstances, merits of the case, lack of fault, absence of frivolity, and absence of prejudice. Petitioner’s right to retirement benefits of honor and property militates in favor of such relaxation. The GSIS Rules emphasize summary, non-litigious proceedings and merit-based determinations. Petitioner justified her late filing by lack of notice—her copy was sent to Taguig while she resided in Bataan and was unrepresented by counsel in a non-litigious forum. Denial on procedural grounds alone would defeat substantial justice and deprive her of benefits.

Analysis on Reduction of Penalties

Under Civil Code Articles 1229 and 2227, courts may equitably reduce or eliminate penalties deemed iniquitous or unconscionable. Factors include disparity between principal and penal amounts, purpose of penalty, parties’ circumstances, and notice of default. Petitioner’s gross loans of ₱147,678.83 ballooned to ₱638,172.59 due to compounded interest and penalties without prior demand or notice of default. GSIS sent only a single collection letter on

    ...continue reading

    Analyze Cases Smarter, Faster
    Jur is a legal research platform serving the Philippines with case digests and jurisprudence resources. AI digests are study aids only—use responsibly.

    About Privacy Terms