Case Summary (G.R. No. 252073)
Trial Court Ruling (RTC, January 12, 2015)
The RTC found:
- Jurisdiction lay with the RTC, not HLURB or GSIS-BOT, as the relief sought (specific performance, injunction, damages) was incapable of pecuniary estimation.
- Board Resolution No. 365 was an internal policy not binding on petitioners without any contractual stipulation or notice.
- Petitioners had paid 167 of 180 installments; no arrears existed at cancellation because payments were applied to the most onerous obligation per Civil Code rules on application of payments.
- Petitioner liability was limited to 13 remaining installments plus interest on late payments.
It ordered GSIS to: nullify the cancellation, apply 167 payments to principal, and require petitioners to settle 13 installments plus interest.
Court of Appeals Ruling (July 23, 2019)
The CA reversed, holding:
- Under Section 30 of R.A. 8291 and its Implementing Rules (Section 27), GSIS–Board of Trustees (BOT) has original and exclusive jurisdiction over disputes “arising under” GSIS-administered laws, including housing loans and Board Resolution No. 365.
- Petitioners’ challenge to cancellation and application of payments fell within GSIS-BOT’s quasi-judicial domain.
The CA nullified the RTC decision and dismissed the complaint without prejudice; its resolution on reconsideration was denied (February 13, 2020).
Issues Before the Supreme Court
- Whether the RTC had jurisdiction over petitioners’ complaint for specific performance, injunction, and damages.
- Whether the cancellation of the Deed of Conditional Sale was correctly nullified by the RTC.
- Whether GSIS must credit petitioners’ payments first to accrued arrears from February 1991 onward.
Ruling on Jurisdiction and Due Process
The Court affirmed that Section 30 of R.A. 8291 grants GSIS-BOT authority to settle disputes “arising under” GSIS-administered statutes. It clarified:
- GSIS-BOT’s quasi-judicial functions encompass adjudication of member benefits, loan availability, interest rates, and actuarial-solvency concerns—matters demanding its specialized expertise.
- GSIS-BOT cannot act as investigator, prosecutor, and judge in controversies involving its own contractual obligations, for that would violate the 1987 Constitution’s due process guarantee and the principles against potestative conditions and unilateral contract modification.
- Disputes invoking general civil-law principles (specific performance, application of payments, mutuality of contracts) lie outside GSIS-BOT’s exclusive domain and fall within RTC jurisdiction.
Ruling on Merits and Application of Civil-Law Principles
On the merits, the Court upheld the RTC’s factual findings under the “rule on finality of factual determinations” in Rule 45:
- GSIS failed to notify petitioners of any graduated amortization; it controlled the deductions yet never corrected alleged errors for 14 years.
- The DCS terms fixed the interest rates and payment schedule; no provision allowed unilat ...continue reading
Case Syllabus (G.R. No. 252073)
Facts
- Lourdes V. Rafael, an employee of the Department of Budget and Management (DBM), applied on May 9, 1990 for a house-and-lot loan from GSIS under a “15 years graduated” payment scheme with a fixed monthly amortization of ₱3,094.35.
- On November 20, 1990 petitioners and ARB Construction Company, Inc. executed a Deed of Conditional Sale over a 140-sqm lot at Soldier Hills 4, Molino 6, Bacoor City for ₱310,800, payable in 180 monthly installments of ₱3,094.35 with interest rates of 6% on the first ₱30,000, 9% on the next ₱40,000, and 12% on the balance, compounded monthly, plus ½% per month penalty on overdue installments.
- The property was turned over in May 1991, and DBM began deducting ₱3,094.35 monthly from Lourdes’s salary. On March 11, 1992 ARB sold and assigned its rights under the conditional sale to GSIS.
- By January 25, 2005 GSIS sent notice that petitioners had an outstanding balance of ₱384,354.72 as of December 31, 2004 and demanded full payment within 15 days or cancellation of the Deed of Conditional Sale.
- On February 21, 2005 GSIS issued a formal Notice of Cancellation effective 30 days from receipt, followed by another notice on July 22, 2005, prompting Lourdes’s inquiry.
- GSIS explained that under Board Resolution No. 365 the monthly amortization should have been graduated to ₱3,548.40 in years 6–10 and ₱5,365.15 in years 11–15, and that salary deductions beginning May 1991 had been credited to interest and penalties for supposed non-payment from January to April 1991.
- Petitioners alleged they had paid 172 installments totaling ₱532,248.20, that GSIS failed to notify them of any graduated increases or correct start date, and that GSIS was estopped from altering payment terms not in the Deed of Conditional Sale. They sought specific performance, injunction, damages, application of payments to principal, issuance of Deed of Absolute Sale, or refund of payments