G.R. No. 252073 SPOUSES LOURDES V. RAFAEL AND RAUL I. RAFAEL, PETITIONERS, VS. GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), RESPONDENT. July 18, 2022

1)	Decision[2]dated July 23, 2019, disposing, thus:
	WHEREFORE, the appeal isGRANTED. The Decision dated 12 January 2015 of the Regional Trial Court [Branch 89, Bacoor City] in Civil Case No. BCV-2005-125 is herebyNULLIFIEDand a new one enteredDISMISSINGthe Complaint filed by Spouses Lourdes V. Rafael and Raul I. Rafael, without prejudice to the filing of the appropriate action under RA No. 8291. SO ORDERED.[3]
2)	Resolution[4]dated February 13, 2020, denying petitioners' motion for reconsideration.

Antecedents

Petitioners Spouses Lourdes and Raul Rafael filed acomplaint for specific performance, injunction, and damagesagainst respondent Government Service Insurance System (GSIS), docketedCivil Case No. BCV-2005-125and raffled to the Regional Trial Court (RTC) – Branch 89, Bacoor City.

In theirComplaintdated November 14, 2005, petitioners alleged that Lourdes Rafael is an employee of the Department of Budget and Management (DBM).^[5]OnMay 9, 1990, she submitted anApplication for a House and Lotwith respondentGSIS. Subsequently, GSIS issued aBuyer's Data Sheetand aloan evaluation form, stating that the term of the loan is"15 years graduated"or"15 years GPS"–graduated payment schemewithmonthly amortizationofP3,094.35.^[6]

OnNovember 20, 1990, Lourdes and her husband Raul Rafael, on one hand, and ARB Construction Company, Inc. (ARB), on the other, entered into a Deed of Conditional Sale over a 140-square-meter lot identified as Block 23, Lot 18, Phase IV, Soldier Hills 4, Molino 6, Bacoor City, Cavite.^[7]Under the deed of conditional sale, they (petitioners) agreed: a) to pay the purchase price of P310,800.00, payable within 15 years or 180 equal monthly installments of P3,094.35 beginning February 1991; b) to pay "interest at six per centum (6%) for the first P30,000.00 and 9% & 40,000[.00] and twelve per centum (12%) for the balance of individual purchase price, per annum, compounded monthly, until fully paid;" and c) "[a]ny installment due and unpaid shall bear additional interest at the rate of one-half per centum (½%) per month until the same is fully paid."^[8]

InMay 1991, the property was turned over to them. TheDBM started to deductthemonthly amortizationofP3,094.35from thesalary of Lourdes. OnMarch 11, 1992, ARB transferred all its interests, rights, and participation in the Deed of Conditional Sale to GSISviaa Deed of Absolute Sale with Assignment.^[9]

Sometime inFebruary 2005, petitioners received aLetter dated January 25, 2005from GSIS informing them thatas of December 31, 2004, they had anoutstanding balance of P384,354.72and thatfinal demandwas being madeto settle the amount within 15 days from notice, otherwise, thedeed of conditional sale would be cancelled.^[10]

OnApril 18, 2005, they received anotarized Letter dated February 21, 2005, cancelling the Deed of Conditional Saleeffective 30 days from notice withdemand to vacate and turn over the property to GSIS.^[11]

Another notice to vacate was sent to them on July 22, 2005, promptingLourdes to inquire from GSISwhy the deed of conditional sale was cancelled.^[12]

GSIS responded: 1) since the monthly amortizations weregraduated, themonthly amortization of P3,094.35 increased to P3,548.40(from the6th to 10th yearof the Deed of Conditional Sale) andP5,365.15(from the11th to the 15th yearof the Deed of Conditional Sale); 2) Lourdes was informed thatthey were not paying the correct monthly installmentsbased on Board Resolution No. 365 of the GSIS Board of Trustees; and 3)deductionsfor themonthly amortizations should have started in January 1991andnot May 1991. As a result, themonthly amortizationsdeducted from her salary were not credited to the payment of her loanbut instead applied to interests and penaltiesfor hersupposed failure to pay the monthly amortizations from January to April 1991.^[13]

On September 28, 2005, they sent a letter to GSIS for the re-computation of their loanbut they did not receive any reply.^[14]

They claimed theyhad already paid P532,248.20, representing172 monthly installments deductedfrom the salary of Lourdesfrom May 1991 up to September 2005. Hence, according to them,GSIS is estoppedfrom claiming thatpayment of monthly installments should have started in January 1991or thatthe same should have been increased gradually every five (5) years. They pointed out that theDeed of Conditional Sale had no stipulationfor the graduated increase of the monthly installments. Also, they mentioned thatneither they nor the DBM received any prior notice from the GSIS regarding the supposed increase. Hence, they concluded that theact of GSIS in unilaterally increasing the required monthly installment payment was made without legal authorityand was ablatant and abusive breach of the provisions of the Deed of Conditional Sale.^[15]

They further argued that for stillaccepting the monthly installments despite the cancellation of the deed of conditional sale,GSISshowedmalice and bad faith. This also amounted tounjust enrichment and deprivation of their property rights without due process of law.

They prayed that GSIS beenjoined from further enforcing and/or implementing its cancellation of the Deed of Conditional Sale and their eviction from the subject property; theirpayments be credited to the principal loan obligation; and, based on their computation,their remaining balance be pegged at only P24,754.80 corresponding to eight (8) monthly installments.^[16]They manifested that they were ready and able to pay P24,754.80. They claimed that after payment of this amount, aDeed of Absolute Sale be issued to them. Alternatively, they prayed that should the cancellation of the Deed of Conditional Sale be sustained, theyought to be given the full refund of their installment payments and reimbursement for the improvementsmade on the property.^[17]

In itsAnswer, GSIS insisted that theremaining balance of the housing loan is P384,354.72. The adjustment of the monthly installments was made pursuant to Board Resolution No. 365, recalculating the interest in Deeds of Conditional Sale under the Graduated Payment Scheme, andLourdes was allegedly notified thereof. GSIS posited that the RTC had no jurisdiction over the subject matter of the complaint because jurisdiction was vested with the Housing and Land Use Regulatory Board (HLURB). GSIS also alleged that the complaint stated no cause of action because the deed of conditional sale stipulatedthe vendor's right to cancel the salefor failure to comply with the terms and conditions stated thereof. Lastly, according to GSIS, petitionersfailed to allegethat they had exhausted the available administrative remedies.^[18]

The parties, thereafter, presented their respective evidence.

In its subsequent memorandum, GSIS pleaded anew lack of jurisdiction and/or failure to exhaust administrative remedies. It pointed out that underSection 30 of Republic Act No. 8291 (RA 8291), theGSIS-Board of Trustees (GSIS-BOT) has original and exclusive jurisdictionto settle any dispute arising therefrom and any other laws administered by the GSIS. According to GSIS, the present case did not only involve the purchase of the subject lot from ARBbut also the loan transaction of Lourdes with the GSIS to finance this sale. Hence, GSIS asserted that the subject matter of the complaint was a dispute arising fromRA 8291vis-à-visthepower of the GSIS to grant loansunderSection 36(c)and its power to acquire real property underSection 41(d).^[19]

GSIS characterized petitioners' action as anaction to declare the condonation of their outstanding obligations. GSIS said that the courts had no power to do so because under Section 43(f),only the GSIS-BOT is empowered to grant condonation or compromise indebtedness. Too, GSIS underscored under Rule V, Section 44.5 of theRevised Implementing Rules and Regulations, the decision of the GSIS-BOT is appealable to the Court of Appeals.^[20]This allegedly implies that the trial court indeed has no jurisdiction over disputes arising from RA 8291.

Ruling of the Trial Court

By itsDecisiondated January 12, 2015, the trial court ruled in petitioners' favor. It held thatan action to declare as void the cancellation of the Deed of Conditional Saleisnot within the jurisdictionof the HLURB. In theComplaint, petitioners questionedthe unilateral cancellation by GSIS of the Deed of Conditional Saleandthe application of their monthly amortizations. They also sought damages. Based on the allegations of theComplaint, thesubject matter of the case is incapable of pecuniary estimation, hence, within the jurisdiction of the RTC.^[21]

The trial court likewise held that Board Resolution No. 365 is aninternal rule of GSIS, hence, inapplicable to petitionersbecause there wasno showing that the application of the Graduated Payment Scheme was even indicated in their Deed of Conditional Saleorthat GSIS ever notified Lourdes or her disbursing office, the DBM, of the supposedgraduated deduction and its applicationto her account.

Additionally, the trial court ruled that: (1) thecancellationof the Deed of Conditional Sale hadno factual and legal basisbecause there wasno provision thereinpertaining to thepayment of monthly amortizations based on the Graduated Payment Scheme; (2) petitioners are nonethelessshort by 13 monthly amortizationsas they had only paid 167 out of 180 monthly installments; (3) thedeductionswhichstarted in May 1991onward should beapplied to the arrears beginning February 1991 onwardfor the simple reason that theseaccrued arrearsare themost objectively onerousfor petitioners.

The trial court keenly noted thediscrepancyon the date when the monthly amortization should have commenced,i.e.,February 1991in the deed of conditional sale, andJanuary 1991in the letter of GSIS to the DBM.

While the trial court ruled that petitioners wereliable for additional interestat therate of ½ percent per month, which covered three (3) months of late payments (February, March, and April 1991), or P46.41 for each of the 167 monthly installments, totaling P7,750.47, itsignificantly heldthat there wereno arrearages to speak of at the timethe deed of conditional sale was cancelled since petitioners' payment wasdeemed to have been appliedto themost onerous obligationbeginning February 1991 onward.^[22]TheDecisiondisposed, as follows:

ACCORDINGLY, judgment is rendered:

1. Declaring defendant's cancellation of the Deed of Conditional Sale Account No. HSH4224433 as null and void;
   
   
2. Ordering the defendant to apply the 167 monthly amortizations made by the plaintiffs to their principal obligations corresponding to the period from February 1991 through February 2005;
   
   
3. Ordering the plaintiffs to pay defendant the unpaid balance corresponding to thirteen (13) monthly installments as well as P77,892.52 as additional interests due for the 167 monthly installments.

SO ORDERED.^[23]

In its motion for reconsideration, GSIS backtracked to say thatjurisdiction over the subject-matter herewas vested with theGSIS-BOTperSection 27of theImplementing RulesofRA 8291:

SECTION 27.Quasi-Judicial Functions of the GSIS. — The quasi-judicial functions of the GSIS shall be vested in its Board of Trustees.

27.1 The GSIS shall have original and exclusive jurisdiction to settle any dispute arising under Republic Act No. 8291, Commonwealth Act No. 186, as amended, including its implementing rules and regulations, policies and guidelines, and other laws administered by the GSIS with respect to:

27.1.1. Coverage of government agencies and employees;

27.1.2. Entitlement of members to the following benefits under these Rules:

1. Separation benefits
2. Unemployment or involuntary separation benefits
3. Retirement benefits
4. Disability benefits
5. Survivorship benefits
6. Funeral benefits
7. Life Insurance benefits

27.1.3. Collection and payment of contributions;

27.1.4. Housing loans and all its related policies, procedures and guidelines;

27.1.5. Optional Life Insurance and Pre-Need Benefits;

27.1.6. Criminal actions arising from this Act; and

27.1.7. Any other matter related to any or all of the foregoing which is necessary for their determination.

For clarity, the provisions of RA 8291 on the jurisdiction ofGSIS-BOTordain:

"E. ADJUDICATION OF CLAIMS AND DISPUTES

"SECTION 28. Prescription. —Claims for benefitsunder this Act except for life and retirement shall prescribe after four (4) years from the date of contingency.

"SECTION 29. Facility of Payment. — The GSIS shall prescriberules and regulations to facilitate payment of benefit, proceeds, and claimsunder this Act and any other laws administered by the GSIS. Payments made by the GSIS prior to its receipt of an adverse claim, to a beneficiary or claimant subsequently found not entitled thereto, shall not bar the legal and eligible recipient to his right to demand the payment of benefits, proceeds, and claims from the GSIS, who shall, however, have a right to institute the appropriate action in a court of law against the ineligible recipient.

"SECTION 30. Settlement of Disputes. — TheGSIS shall have original and exclusive jurisdiction to settle any disputearising underthis Act and any other laws administered by the GSIS.

The Board may designate any member of the Board, or official of the GSIS who is a lawyer, to act as hearing officer to receive evidence, make findings of fact and submit recommendations thereon. The hearing officer shall submit his findings and recommendations, together with all the documentary and testimonial evidence to the Board within thirty (30) working days from the time the parties have closed their respective evidence and filed their last pleading. The Board shall decide the case within thirty (30) days from the receipt of the hearing officer's findings and recommendations. The cases heard directly by the Board shall be decided within thirty (30) working days from the time they are submitted by the parties for decision.

Immediately, one may notice how incredulouslyexpansive Section 27of theImplementing Ruleshas made ofLetter EofRA 8291– Section 27 even includescriminal actionsas falling within the exclusive and original jurisdiction of the GSIS-BOT.

The motion for reconsideration was denied underOrderdated December 28, 2015.^[24]

Rulings of the Court of Appeals

By its assailedDecision^[25]dated July 23, 2019, the Court of Appealsreversed. It held thatjurisdiction over the case was vested in the GSIS-BOT, thus:

Corollarily, the law vested exclusive and original jurisdiction over disputes arising from RA No. 8291 or related laws with the GSIS. Section 30 of RA No. 8291 provides:

SECTION 30. Settlement of Disputes. — The GSIS shall have original and exclusive jurisdiction to settle any dispute arising under this Act and any other laws administered by the GSIS.

The Board may designate any member of the Board, or official of the GSIS who is a lawyer, to act as hearing officer to receive evidence, make findings of fact and submit recommendations thereon. The hearing officer shall submit his findings and recommendations, together with all the documentary and testimonial evidence to the Board within thirty (30) working days from the time the parties have closed their respective evidence and filed their last pleading. The Board shall decide the case within thirty (30) days from the receipt of the hearing officer's findings and recommendations. The cases heard directly by the Board shall be decided within thirty (30) working days from the time they are submitted by the parties for decision."

Meanwhile, the pertinent portions of the Revised Implementing Rules and Regulations of RA No. 8291 state:

SECTION 27. Quasi-Judicial Functions of the GSIS. — The quasi-judicial functions of the GSIS shall be vested in its Board of Trustees.

27.1. The GSIS shall have original and exclusive jurisdiction to settle any dispute arising under Republic Act No. 8291, Commonwealth Act No. 186, as amended, including its implementing rules and regulations, policies and guidelines, and other laws administered by the GSIS with respect to: x x x

27.1.4. Housing loans and all its related policies, procedures and guidelines; x x x

27.1.7. Any other matter related to any or all of the foregoing which is necessary for their determination.

In the case at bar, the issues raised by the parties were defined by the RTC in its Pre-Trial Order as follows: (1) whether or not the Court has jurisdiction over the subject matter of the claims; (2) whether or not GSIS Board Resolution No. 365 is applicable to the account of plaintiff Lourdes Rafael; (3) whether or not the cancellation of the Deed of Conditional Sale was valid, and if so, whether or not the improvements introduced by the plaintiffs to the property should be reimbursed to them; (4) whether or not plaintiffs have fully complied with the Deed of Conditional Sale; and (5) the actual amount paid by the plaintiffs to GSIS. The RTC also stated in its Decision that Spouses Rafael are "questioning the validity of GSIS' unilateral cancellation of the DCS and the manner of the application of their monthly amortizations." We find that the foregoing issues are clearly within the ambit of the GSIS-BOT's jurisdiction.

Firstly, the instant case involves the housing loan that Lourdes obtained from the GSIS. An examination of the records shows that prior to her purchase of the subject property, she has submitted an Application for a House and Lot to the GSIS and in turn, the latter issued a Buyer's Data Sheet and a loan evaluation form stating, inter alia, that her monthly amortization is P3,094.35. Although Spouses Rafael insisted that their obligation was solely based on the DCS they have executed with ARB, this claim is belied by the fact that the GSIS, through the DBM, has been deducting the monthly amortizations of P3,094.35 from Lourdes' salary from May 1991 or long before ARB transferred all its interests, rights and participation in the DCS to the GSIS via the Deed of Absolute Sale with Assignment dated March 11, 1992. Hence, the GSIS correctly pointed out in its Memorandum that the "instant case does not merely involve the purchase on installment of the subject property from ARB, but also the transaction of [Lourdes] with the defendant GSIS for a housing loan to finance the acquisition of the property."

Secondly, the parties raised the issue of the application of Board Resolution No. 365 to Lourdes' monthly amortizations.Spouses Rafael claimed that they have incurred arrearages because their monthly amortizations were increased due to the application of Board Resolution No. 365. On the other hand, the GSIS claimed that the resolution merely recalculated the interest for Deeds of Conditional Sale under the graduated payment scheme. The pertinent portions of Board Resolution No. 365 provide:

"4. x x x. the GSIS failed to notify the borrowers and their corresponding disbursing officers of the due dates of 6th and 11th year amortization amounts (i.e., the amortization increases every 5 years).

In addition, the GSIS failed to indicate in the contract, the three (3) installments in the graduating scheme.
x x x x

Recommendation

In the implementation of Deeds of Conditional Sale where the payment scheme is graduated and the GSIS failed to notify the borrower of the change in monthly amortization, the amount due to the borrower shall be calculated as follows:

1. The borrower shall be excused from the payment of interest, penalties and surcharges on the difference between the required amortization and the amortization for the first five (5) years, calculated as follows:

Required Monthly Amortization (i.e., 6th and 11th year)
Less: 1st tier graduated monthly amortization
Difference = without interest, penalties and surcharges
x x x

Evidently, Board Resolution No. 365 is a policy, procedure and guideline pertaining to housing loans. In this connection,the GSIS correctly invoked the 2017 case ofMunar, et al. v. Bautista. In that case, Munar, et al. purchased low-cost housing units from the San Lorenzo Ruiz Realty and Development Corporation (SLRRDC)viaDeeds of Conditional Sale and they obtained housing loans from the GSIS. It appears that the GSIS acquired all of SLRRDC's rights in the Deeds of Conditional Sale through a Deed of Absolute Sale and Assignment (DASA). Subsequently, the Deeds of Conditional Sale were cancelled but Munar,et al. received notices from the GSIS that they are still liable to pay for the accrued interests of the principal amount of the housing loan and they were also directed to pay the alleged arrears in order to stop the loans from further escalating in interest. The collection of arrearages was based on Board Resolution No. 48 issued by the GSIS-BOT pursuant to Section 41(a) of RA No. 8291. Munar,et al. filed a disbarment case against Atty. Elmer T. Bautista (GSIS' Former Chief Legal Counsel) and Atty. Winston F. Garcia (GSIS' Former General Manager) which was dismissed by the Integrated Bar of the Philippines (IBP) Board of Governors.In upholding the dismissal, the Supreme Court enunciated that the controversy should have been resolved in accordance with the GSIS Law as set forth in Sections 30 and 31 of RA No. 8291 which confers original and exclusive jurisdiction on the GSIS on matters arising therefrom.

We maintain a similar view in this case. The RTC itself recognized that "Board Resolution No. 365 is an internal rule of the GSIS" and that its "promulgation x x x was a tool" in addressing its problem in applying the graduated scheme of amortization by allowing it to recalculate the interest for DCS Accounts under the graduated payment scheme. Likewise, it is worthy to note that Board Resolution No. 365 was issued by the GSIS-BOT pursuant to its power under Sections 41(a) and (e) of RA No. 8291,viz.:

"(a) to formulate the policies, guidelines and programs to effectively carry out the purposes of this Act; x x x.

(e) to fix and periodically review and adjust the rates of interest and other terms and conditions for loans and credits extended to its members or other persons, whether natural or juridical."

Accordingly, the matter of whether Board Resolution No. 365 should be applied to Lourdes' account is a dispute arising under RA No. 8291 and the resolution thereof comes within the ambit of the quasi-judicial powers of the GSIS-BOT, as provided under Section 30 of RA No. 8291 and its implementing rules. Based on the foregoing,the GSIS correctly argued that the doctrine of primary jurisdiction applies in this case as the resolution of the issues raised in the present case requires the special knowledge, experience, and expertise of the GSIS-BOT. The doctrine of primary jurisdiction does not warrant a court to arrogate unto itself authority to resolve a controversy the jurisdiction over which is initially lodged with an administrative body of special competence. All the proceedings of the court in violation of the doctrine and all orders and decisions rendered thereby are null and void. Indeed, a judgment rendered by a body or tribunal that has no jurisdiction over the subject matter of the case is no judgment at all, it cannot be the source of any right or the creator of any obligation. (Emphasis supplied)^[26]

Consequently, the Court of Appeals dismissed the complaint without prejudice. Petitioners' motion for reconsideration was denied under the assailedResolution^[27]dated February 13, 2020.

The Present Petition

Petitioners now seek affirmative reliefviathe present petition for review oncertiorari. They assert thatthe jurisdiction of the GSIS is limited only to settlement of claims and disputes involving benefits of its members, such as retirement and separation benefits, permanent disability benefits, funeral and life insurance benefits,and all other disputes pertaining to its primary function of maintaining its actuarial solvency. Itdoes not have jurisdictionoverdisputesor causes of actionbetween a private individual and GSIS arising from a contractual obligationorfrom those outside of its primary function of maintaining its actuarial solvency. Also, GSIS isalready estoppedfrom arguing that the trial court had no jurisdiction over the complaint.^[28]

GSIS, in turn, by its Motion for Leave to File Herein Manifestation and Motion^[29]dated August 5, 2020, stated that petitioners failed to pay the requisite docket fees when they sought an extension of the period within which to file the instant petition. Also, they even failed to file the instant petition within the requested extended period.

By Resolution^[30]dated January 20, 2021, the Court directed: a) GSIS to comment on the petition; and b) petitioners to submit a proper verification with additional attestations per Section 4, Rule 7 of the 2019 Amended Rules of Court.

Subsequently, petitioners, through Submission/Compliance^[31]dated March 15, 2021, submitted their Amended Verification/Certification on Non-Forum Shopping and Affidavit of Material Dates.^[32]Petitioners essentially clarified that they timely filed their petition for review within the prescribed period and they paid the requisite fees.^[33]

Also, GSIS filed a Motion for Extension of Time (to File Comment) dated March 18, 2021.^[34]

In itsComment^[35]dated April 19, 2021, the GSIS counters that thecore issuehinges on there-computation of petitioners' housing loan balancebased on theGraduated Payment SchemeandGSIS Board Resolution No. 365. Under RA 8291, the GSIS-BOT has original and exclusive jurisdiction over all disputes arising from that law,including disputes pertaining to housing loans. Verily, petitionersshould have exhausted all administrative remediesinstead of resorting directly to the courts.^[36]

Petitionersonly started paying their monthly amortization four (4) months afterthe agreed first installment due date. Thefirst installment payment madeinMay 1991was applied to thefire insurance premium, sales redemption insurance premium, and aportion of the interest.No paymentwas made on theprincipalbecause the remitted amount was not even enough to cover the interests due from January to May 1991.

Pursuant to the Deed of Conditional Sale, the additional interest on any overdue installment shall continue until fully paid. Thefour (4)-month delay in the payment of the first monthly amortizationcaused the housing loan here to incur arrearages and surcharges. Since petitioners never updated their payments,the additional interest simply accumulated over each succeeding month. Additionally, petitioners never adjusted their amortization payments in accordance with the agreed Graduated Payment Scheme.^[37]

Itapplied the benefits of Board Resolution No. 365 to petitioners' accountby condoning interest, penalties, and surcharges on the difference between the actual amortization and correct amortization under the Graduated Payment Scheme. As a result,their outstanding obligation as of December 31, 2004 was recomputed and reduced to P384,354.72. The GSIS Housing Finance Administration sent petitioners aDemand Letter dated January 25, 2005to settle their obligation within 15 days from notice otherwise cancellation will take place. Sinceno payment was made, a Notice of Cancellation dated February 21, 2005 was sent to them effective within 30 days from receipt thereof.^[38]

Issues

1)	Does the trial court have jurisdiction over the complaint for specific performance,etc.?
2)	Did the trial court correctly nullify the cancellation of the Deed of Conditional Sale?
3)	If in the affirmative, is the GSIS legally obligated to credit the total payments first to the accrued arrears beginning February 1991 onward?

Our Ruling

We reverse.

One.The first paragraph of Section 30 of RA 8291 empowers GSIS tosettleany dispute arising underthis statute and other statutes administered by it –

SECTION 30.Settlement of Disputes. — TheGSIS shall have original and exclusive jurisdiction to settleany dispute arising underthis Act and any other laws administered by the GSIS.

The second paragraph then identifies thehearing officer(i.e., a Board member or a GSIS lawyer-official) and thedecision-making body(i.e., the Board) to decide thedisputereferred to in the first paragraph -

SECTION 30.Settlement of Disputes....

The Board maydesignate any member of the Board, or official of the GSIS who is a lawyer, to act as hearing officer to receive evidence, make findings of factandsubmit recommendations thereon. The hearing officer shall submit his findings and recommendations, together with all the documentary and testimonial evidence to the Board within thirty (30) working days from the time the parties have closed their respective evidence and filed their last pleading.The Board shall decide the casewithin thirty (30) days from the receipt of the hearing officer's findings and recommendations. The cases heard directly by the Board shall be decided within thirty (30) working days from the time they are submitted by the parties for decision.

Wecannot interpretandapplySection 30 in the manner the Court of Appeals did. To do so would violate the aggrieved party's right to due process. It is thesolemn dutyof this Court to ensure thatlaws are interpreted in a manner consistent with the letter, spirit, andintentof theConstitutionand the law.

The proceedings contemplated under Section 30 are atwo-foldfunction ofinvestigationandadjudicationof rights and obligations. They involve asequentialandseamlessprocess, andnotadisjointed one. The end-goal of theinvestigativestage is theproper administration of justicein theadjudicativestage. Theinvestigativeaspectcannotstand apart from theobjectivesof theadjudication– fairness and correctness of the decision rendered. This is because abiased investigationwill lead to askewed adjudication. The adagegarbage in,garbage out, holds true for the Section 30 process.

While technically, theinvestigativephase does not itself determine rights and obligations of specific parties on a specific set of facts, theinvestigationiscrucial toandpart and parcelof the purequasi-judicialfunction ofadjudication. Theinvestigation, therefore, cannot be treated like the investigation conducted by a party-litigant itself, which wouldnot yieldanimpartial result. Since, the fruits of the investigation will be the foundation of the adjudication, the investigationmust itself be impartialboth as to the qualities of the hearing officer and the report the latter renders.

On the other hand,adjudicationis simply aquasi-judicial function. Thus, it islegally demandedthat it becarried out impartiallyandindependentlyby animpartialandindependent decision-maker. As a result, thehearing officerwho investigated the complaint and made recommendations on the disputecannot directly participatein the adjudication of rights and obligations.

For thistwo-fold process, thecardinal rights of due process must be observed. Thisintuitiveconclusion is dictated by the common-sensical legal principle thata body cannot be the investigator, prosecutor, and judge of its own complaint or its own assailed action. More important, it isdemandedby years of jurisprudence that aquasi-judicialfunction, both as to the principal decision-making duty and the ancillary process of investigation to gather facts and make recommendations,must complywith thedue processrequirements, which in turnshould be evaluated basedon the standard set forth, curiously, inGovernment Service Insurance System v. Court of Appeals,^[39]amplifyingAng Tibay v. Court of Industrial Relations:^[40]

... what Ang Tibay failed to explicitly state was, prescinding from the general principles governing due process,the requirement of an impartial tribunalwhich, needless to say,dictates that one called upon to resolve a dispute may not sit as judge and jury simultaneously, neither may he review his decision on appeal.

InGovernment Service Insurance System v. Court of Appeals,^[41]the investigator who had already recommended a particular outcome on the applicant's eligibility for post-death benefits wasbarred from sitting in the Boardthat was determining this particular issue. He was told torecuse himselffrom directly participating in the determination of rights and obligations of the claimant. This was meant to ensure theimpartialityandindependenceof the decision-making process.

Accordingly, the clauseany dispute arising under this Act and any other laws administered by the GSIS– the basis for the jurisdiction of the GSIS-BOT jurisdiction underSection 30 of RA 8291–cannotbe invoked as regardsdisputesthatcompromisethe due process requirement ofimpartialityandindependenceof the hearing officer, the decision-maker, and the investigation and adjudication they each perform.

In addition, the clause must be construed in a manner thatdoes not make itapotestative conditiondependent upon the sole will of the obligor anddeemed writteninto every obligation assumed by GSIS.Ifpursuant to Section 30, it were up just to the GSIS-BOT to determine thefulfilment of its obligations, this scheme will be both unfair and offensive to the principle ofmutuality of contracts. We must avoid an interpretation of Section 30 that makes it apotestative condition, which in turn isvoid.^[42]

Thus, for these purposes,any dispute arising underwhat falls with the GSIS-BOT's jurisdictionmust refer onlytodisputesabout matters that theGSIS-BOThas thestatutory authorityto act on,but notto those that havenotbeen committed to it. These aredisputesregarding matters on which the GSIS-BOT has acquiredexpertiseandspecialized knowledge.

Section 30 must be read and applied consistent with thedoctrine of primary jurisdictionthat "courts willhold off from determining a controversyinvolving a questionwithin the jurisdiction of an administrative agency, particularly when its resolutiondemands the special knowledge, experience,andservicesof the administrative tribunal to determine technical and intricate matters of fact."^[43]

In the case of the GSIS-BOT, the disputes within its primary jurisdiction would include those concerning theavailability of benefits, theamounts thereof, theconditions of their availability, and thecircumstances warranting their termination or revocation, including those ofloans, to ensure the actuarial solvency of its funds, in other words, the determination of theinterpretations of the parametersof these benefits. These would be the same examples of matters that fall within the jurisdiction of the hearing officer to investigate and recommend about.

Conversely, disputes thatreducethe GSIS as anadverse party-litigant itself, and itspolicies, as merecounter-argumentsto the claims of a complaining party, donotqualify asany dispute arising under, as mentioned, Section 30 of RA 8291. Essentially, these aredisputesthat refer tomatters already extraneousto those within the authority, specialized knowledge, and expertise of GSIS-BOT to act on.

For instance, claims regarding theapplication of payments. This is beyond the power of GSIS-BOT to modify because this is embodied in theCivil Code. In view of the absence of astatutoryexception to thisCivil Codeprinciple, or one'sbindingacquiescence to a different manner of applying payments, its determination by GSIS-BOT isnothing but its opinion or counterargument. Another would be thedeemed acceptance of terms and conditionsby GSIS members who borrow money or avail of benefits from it. GSIS cannot pass and impose policies that modify jurisprudence oncontracts of adhesionandtheir binding effects. Let us also mentionchanges in GSIS policieson the benefits it offers, including those already availed of by GSIS members. If these changes arecontestedon the ground ofnovation principles, the GSIS-BOT will be theinappropriate bodyto decide this challenge.

Thereasonfor this differential treatment is that thesedisputes do not ariseunder the laws administered by the GSIS. Rather, these aredisputesrevolving aroundlaws other than the ones administered by GSIS–constitutional issues, general questions of law of central importance to the legal system as a whole, andissues related to the jurisdictional boundaries between two or more decision-makers. Since their determination depends upondifferent sets of laws, they arebeyond the jurisdictiongranted to the GSIS-BOT under Letter E of RA 8291.

Applying the above-discussed legal principles to petitioners'Complaint, we hold that their dispute with GSISdid not arise underthe laws administered by it, and therefore, the determination of their dispute relied upon the application ofother sets of lawsis a matter the GSIS-BOT hasneitherthe authoritynorthe specialized knowledge and expertise to resolveoriginallyandexclusively.

In support of this holding, we refer to both theprayer for reliefof theComplaintand itsallegations of ultimate facts, including the legal arguments mistakenly pleaded in theComplaint.

The forms ofrelief prayedfor by petitioners are something GSIS-BOTcannot give. The short-hand characterization of theComplaint– specific performance, injunction and damages – speaks volumes as to theapplicable laws.^[44]Here, petitioners pray that GSIS: a) be permanently enjoined from cancelling the deed of conditional sale; b) apply their paid monthly amortizations since May 1991 to their principal obligation; and c) solely apply the terms and conditions in Deed of Conditional Sale Account No. HSH4224433 dated November 10, 1990, to the exclusion of Board Resolution No. 365.

Certainly, these forms of relief arenot resolvedby relying upon the laws GSIS administers. GSIScannot determineif the aggrieved member is entitled to any of them.

As a decision-maker, GSIScannot restrainitself not to cancel the conditional sale or otherwisecompel itselfto continue and complete the sale; as acontracting partyit may, butnotas a decision-maker under Section 30.Specific performanceis the remedy of requiring exact performance of a contract in the specific form in which it was made, or according to the precise terms agreed upon. It is the actual accomplishment of a contract by a party bound to fulfill it.^[45]When the main relief sought is specific performance, theaction is incapable of pecuniary estimationwithin theexclusive jurisdiction of the Regional Trial Court.^[46]Also, GSIScannot compute damageswithbindingeffect;neithercan itimpose damagesagainst itself.

Necessarily, the trial court had to consultlawsthatdid not bearthe imprint of the specialized knowledge and expertise of GSIS. As a result, therelief grantedby the trial court wasnot anywhere nearthe authority of GSIS to grant,viz.:

ACCORDINGLY, judgment is rendered:

1. Declaring defendant's cancellation of the Deed of Conditional Sale Account No. HSH4224433 as null and void;

2. Ordering the defendant to apply the 167 monthly amortizations made by the plaintiffs to their principal obligations corresponding to the period from February 1991 through February 2005;

3. Ordering the plaintiffs to pay defendant the unpaid balance corresponding to thirteen (13) monthly installments as well as P77,892.52 as additional interests due for the 167 monthly installments.

Thenullificationof the conditional sale and its deed and theapplication of paymentordered by the trial court donotrefer to disputes arising under the laws administered by GSIS. While no doubt the dispute touched upon mattersemanating from GSIS, themore pivotal considerationswere ourcivil law principles.

True, petitionersalso assailthe application ofGSIS Board Resolution No. 365, which recalculated the interests for the Deed of Conditional Sale under the Graduated Payment Scheme.Butthey do soonly to support their causes of actionfor specific performance, injunction, and damages. The issue isnot the interpretation and applicationof this Board Resolution, which would have fallen within Section 30 of RA 8291.Rather, the issue iswhether this Board Resolution is in accord with the undertakings of the GSIS in the Deed of Conditional Sale Account No. HSH4224433 dated November 10, 1990. This issuehas nothing to dowith the laws administered by GSISbutwith the principles of ourcontract lawin particular and ourcivil lawin general.

In this instance, GSIS descended to the level of anordinary contracting partywhose actions under the relevant contractual undertakings are subject to review by our courts and certainlynot by the GSIS-BOT. To espouse otherwise is to institutionalize anunfair schemewhere the fulfillment of undertakings depends upon the sole will of the obligor. Construed in thisunfair manner, Section 30 would also constitute apotestative conditiondeemed written into any obligation assumed by GSIS –thatwhenever there are questions about thefulfillmentof the contract terms or conditions,the GSIS-BOT, a contracting party itself, alone will decide these questions. This certainly offends themutuality of contracts.

InRubia v. GSIS,^[47]the Court pronounced that "[n]eedless to say, where proper, under Section 36, theGSIS may be held liable for the contractsit has entered into in the course of its business investments. ForGSIS cannot claim a special immunityfrom liability in regard to its business ventures under said Section.Nor can it deny contracting parties, in our view,the right of redress and the enforcement of a claim, particularly as it arises from a purely contractual relationship of a private character between an individual and the GSIS."

GSIS, nonetheless, invokesMunar v. Bautista,^[48]which relevantly reads:

A careful perusal of the allegations in the complaint would show that the issue hinges on the validity of Board Resolution No. 48 which allowed GSIS to collect arrears for the cancelled housing loans. As aptly found by the IBP Board of Governors, the controversy should have been resolved in accordance with the GSIS Law as set forth in Sections 30 and 31 of R.A. No. 8291 which confers original and exclusive jurisdiction on the GSIS on matters arising therefrom such as in the instant case. The Court quotes the IBP-CBD Report and Recommendation, to wit:

The disbarment suit is a[n] unwarranted and improper collateral attack against the validity of a Board Resolution duly adopted by the GSIS[-BOT] in accordance with its mandate. The complaint assails the validity of Board Resolution No. 48.

A collateral attack against the official act of a duly mandated body such as the GSIS[-BOT], will undermine public interest and will militate against the legal presumption that an official duty has been regularly performed x x x[.]

[R.A. No.] 8291 or the GSIS Act of 1997 provides a remedy for [the petitioners]. Herein [petitioners]/borrowers should have filed a petition before the GSIS[-BOT] to question the validity of Board Resolution No. 48. X x x.

It should also be noted that Board Resolution No. 48 was passed to enhance the collection efforts of the GSIS in view of its fiduciary duty to its members regarding the GSIS funds. The assailed memorandum issued by Atty. Bautista was an enhancement of the collection efforts of the GSIS on delinquent accounts of members who availed of housing loans. The cancellation of the DCS and the cession of SLRRDC's rights in favor of GSIS warranted such collection upon the monthly salaries of the petitioners. There being no administrative declaration of the resolution's invalidity, it was incumbent upon Atty. Garcia to implement the same, as GSIS President and General Manager, in accordance with his mandate under Section 45 of R.A. No. 8291. Any disobedience would hold him liable under R.A. No. 3019 and the GSIS Charter.

Note that thedoctrineenunciated inMunarrevolves around theappropriateness of employing a collateral attack on a GSIS resolution. InMunar, instead of initiating a court case to directly challenge the GSIS resolution, the complaints initiated adisbarment proceedingto assail the GSIS resolution. Therefore,Munarisnot a precedentabout adirect challengeagainst a GSIS resolution on the basis oflawsnotbeing administered by GSIS.

While arguably questions about theinterpretation of a GSIS resolutionshould be lodged before the GSIS-BOT, because it has the specialized knowledge and expertise about its own resolutions for the higher public interest of ensuring its actuarial solvency,Munardefinitelydoes not referto disputes where thecontractual obligations of GSISare involved and pertain to grounds based onlawsnotbeing administered by GSIS.

Verily, the trial court correctly exercised jurisdiction over petitioners'Complaint.

This second issue involves the trial court's factual findings which we cannot disturb in this petition for review. As to these findings, the Court defers and accords finality. It is not the function of the Court to analyze and weigh all over again the evidence or premises supportive of the factual holdings of lower courts, or that would defeat the very essence of Rule 45 and would convert the Court into a trier of facts.^[49]

The trial courtcorrectly set asidethe cancellation of the Deed of Conditional Sale. Petitioners werenot at faultabout the delayed payments of their amortizations or the incorrect amounts of amortizations they had been paying. They werenot in controlof the amortization payments as to time and amount of payments. We alsocannot pin the blameon petitioners' intermediary, the DBM. It was not privy to their transactions. The entityin controlof all these was the GSIS. At the very least, it wasnegligentin performing its tasks. GSIShad all the dedicated budget and staffto professionalize its operations and make them efficient and effective.Yetit failed to observe the diligence of a reasonable service provider.

From 1991 to 2005, GSIS wascollecting the same amounts of monthly amortizations. Petitionerscorrectly reliedupon GSIS that it was doing its job professionally and correctly. GSIS had thelast clear chanceto correct the alleged error. It did not, for 14 long years. GSIS was also in charge of collecting these amortizationswhen they fell due. GSIS averred that the monthly amortizations should have been paid starting February 1991.YetGSIS startedcollecting only in May 1991. This wasnot, never, thefaultof petitioners. The duty belonged and still belongs to GSIS. Itcannot shiftthe blame to petitioners. It has focused budget and staff to do its job. Itwas not even able to send a simple noticeto petitioners about what was happening to their loan and their payments. Clearly,GSIS messed up. Theconsequencesareits own problem to bear.

Besides, a perusal of the stipulations of the Deed of Conditional Sale readily reveals thatGSIS was never given the discretion to unilaterally adjust interest rates, other than those stipulated in this Deed.Nor are there stipulationsthat themonthly amortizations should first be appliedtofire insurance premium, sales redemption insurance premium, and aportion of the interest, thus:

WHEREAS, the VENDOR has agreed to sell in favor of the VENDEE the sale of that certain parcel of land together with the house and other improvements existing thereon situated in the Soldiers Hills IV, PH IV, Bacoor, Cavite, Philippines, and particularly bounded and described as follows - (technical description) and containing an area of ONE HUNDRED FORTY square meters, more or less, which parcel of land and dwelling/improvement the VENDOR is the absolute and registered owner in accordance with the Land Registration Act of the Philippines (as amended) as evidenced by Transfer Certificate of Title No. T-262582 of the Land Records of the Province of Cavite, Philippines;

NOW THEREFORE, for and in consideration of the sum of THREE HUNDRED TEN THOUSAND AND EIGHT HUNDRED Pesos (P310,800.00), payable in the manner stated below, the VENDOR does hereby SELL, TRANSFER and CONVEY to the VENDEE, his/their heirs and successors-in-interest, by way of Conditional Sale, the parcel of land and dwelling/improvement above-described, subject to the following terms and conditions:

I. The VENDEE undertakes and agrees to pay to the VENDOR at its office at the above address, the purchase price of _____________ (P310,800.00 ), Philippine Currency within fifteen (15) years from date hereof, with interest at six per centum (6%) for the first P 30,000.00 and 9% & 40,000 per centum (12%) for the balance of individual purchase price, per annum, compounded monthly, until fully paid, said payment to be made on (180) equal monthly installments of ___________ Pesos (P3,094.35) such monthly installments to be payable within the first five (5) days of each and every month commencing on FEB - 1991, 198__ Any installment due and unpaid shall bear additional interest at the rate of one-half per centum (½%) per month until the same is fully paid."^[50]

GSISassumedthe terms of this conditional sale when onMarch 11, 1992, the original vendor transferred all its interests, rights, and participation in the Deed of Conditional Sale to GSISviaa Deed of Absolute Sale with Assignment.

Indeed, ifno ambiguityis found and the terms of the contract clearly reflect the intentions of the contracting parties, thestipulationwill beinterpreted as it is written.Cezar Yatco Real Estate Services, Inc. v. Bel-Air Village Association, Inc.^[51]ruled:

The cardinal rule in contract interpretation is found in Article 1370 of the Civil Code, which provides:

Article 1370. If the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall control.

If the words appear to be contrary to the evident intention of the parties, the latter shall prevail over the former.

InAbad v. Goldloop Properties, Inc., this Court ruled:

The cardinal rule in the interpretation of contracts is embodied in the first paragraph of Article 1370 of the Civil Code: "[i]f the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall control." This provision is akin to the "plain meaning rule" applied by Pennsylvania courts, which assumes that the intent of the parties to an instrument is "embodied in the writing itself, and when the words are clear and unambiguous the intent is to be discovered only from the express language of the agreement." It also resembles the "four comers" rule, a principle which allows courts in some cases to search beneath the semantic surface for clues to meaning. A court's purpose in examining a contract is to interpret the intent of the contracting parties, as objectively manifested by them. The process of interpreting a contract requires the court to make a preliminary inquiry as to whether the contract before it is ambiguous. A contract provision is ambiguous if it is susceptible of two reasonable alternative interpretations. Where the written terms of the contract are not ambiguous and can only be read one way, the court will interpret the contract as a matter of law. If the contract is determined to be ambiguous, then the interpretation of the contract is left to the court, to resolve the ambiguity in the light of the intrinsic evidence.

As held inAbad, courts must first determine whether or not a stipulation in a contract is ambiguous or susceptible of multiple interpretations. Absent any ambiguity, or when the terms of the contract are found to clearly reflect the intentions of the contracting parties, the stipulation will be interpreted as it is written, and will be treated as the binding law between the contracting parties. (citations omitted)

So must it be.

In this regard, the trial courtcorrectly heldthat:

• GSIS is legally obligated to credit the monthly amortizations of petitioners beginning May 1991 to their arrears beginning February 1991 onward pursuant to the provision of the Civil Code that where application of payments is not specified, the payments shall be first applied to the most onerous obligation.
• GSIS is legally obligated to apply a total of 167 monthly amortizations to petitioner's principal obligation.

While petitioners are legally bound to pay their unpaid balance of thirteen (13) monthly amortizations ofP3,094.35, given theblameworthinessof GSIS for its negligence, these 13 monthly amortizations shallno longer bearany interests, surcharges, or penaltieswhatsoever. After petitioners pay these thirteen (13) monthly amortizations ofP3,094.35, without need of demand, GSIS shallexecute the Deed of Absolute Saleandcause the transfer of the document of titleto petitioners,clearedof all encumbrances thereto.

ACCORDINGLY, the petition isGRANTED. The assailed Decision dated July 23, 2019 and Resolution dated February 13, 2020 of the Court of Appeals in CA-G.R. CV No. 108659 areREVERSEDandSET ASIDE. The Decision dated January 12, 2015 and Order dated December 28, 2015 of the Regional Trial Court, Branch 89, Bacoor City, in Civil Case No. BCV-2005-125, areREINSTATEDwith thefollowing modifications:

1. Petitioners shall pay the remaining balance of thirteen (13) monthly amortizations atP3,094.35,withoutany interests, surcharges, or penalties whatsoever; and
   
   
2. After petitioners shall have paid these thirteen (13) monthly amortizations ofP3,094.35, without need of demand, Government Service Insurance System shallexecute the Deed of Absolute Saleandcause the transfer of the document of titleto petitioners,clearedof all encumbrances thereto.

Further, the Court:

1.GRANTSthe Motion for Leave to File Herein Manifestation and Motion dated August 5, 2020 of Government Service Insurance System;

2.GRANTSthe Motion for Extension of Time (to File Comment) dated March 18, 2021 of Government Service Insurance System;

3.NOTESpetitioners' Submission/Compliance dated March 15, 2021; and

4.NOTESthe Comment dated April 19, 2021 of Government Service Insurance System.

SO ORDERED.

Leonen, SAJ. (Chairperson), M. Lopez, J. Lopez, andKho, Jr., JJ., concur.

^[2]Penned by Associate Justice Ramon M. Bato, Jr. and concurred in by Associate Justices Myra V. Garcia-Fernandez and Perpetua T. Atal-Paño, all members of the Seventh Division,id.at pp. 55-70.

^[3]Id.at 69.

^[4]Id.at 72-73.

^[5]Id.at 55.

^[6]Id.

^[7]Id.

^[8]Id.at 56.

^[9]Id.at 55-56.

^[10]Id.at 56.

^[11]Id.

^[12]Id.

^[13]Id.56-51.

^[14]Id.at 57.

^[15]Id.

^[16]Id.at 56-57.

^[17]Id.at 58.

^[18]Id.

^[19]Id.at 59.

^[20]Id.

^[21]Id.at 59-60.

^[22]Id.

^[23]Id.at 60.

^[24]Id.at 61.

^[25]Id.at 55-70.

^[26]Id.at 63-06.

^[27]Id.at 72-73.

^[28]Id.at 11-48.

^[29]Id.at 74-77.

^[30]Id.at 84.

^[31]Id.at 85-86.

^[32]Id.at 87-88.

^[33]Id.at 88.

^[34]Id.at 92-94.

^[35]Id.at 103-136.

^[36]Id.at 111-128.

^[37]Id.at 128.

^[38]Id.

^[39]357 Phil. 511, 531 (1998) [PerJ. Davide, Jr., First Division].

^[40]69 Phil. 635 (1940).

^[41]Supranote 39.

^[42]Romero v. Court of Appeals, 320 Phil. 269, 282 (1995) [PerJ. Vitug, Third Division].

^[43]Cordillera Global Network v. Paje,G.R. No. 215988, April 10, 2019, 901 SCRA 261, 291. [PerJ. Leonen, En Banc].

^[44]SeeGulfo v. Ancheta, 692 Phil. 587 (2012) [PerJ.Brion, Second Division].

^[45]Pajares v. Remarkable Laundry and Dry Cleaning, 806 Phil. 39, 48 (2017) [PerJ. Del Castillo, First Division].

^[46]Heirs of the Late Spouses Ramiro and Llamada v. Bacaron, G.R. No. 196874, February 06, 2019, 892 SCRA 1, 9 [PerJ. Jardeleza, First Division].

^[47]476 Phil. 623, 640 (2004) [PerJ. Quisumbing, Second Division].

^[48]805 Phil. 384, 397-398 (2017) [PerJ. Reyes, Third Division).

^[49]SeeHeirs of Spouses Liwagon, et al v. Heirs of Spouses Liwagon, 748 Phil. 675, 689 (2014) [PerJ. Villarama, Jr., Third Division].

^[50]Rollo, pp. 17-18.

^[51]G.R. No. 211780, November 21, 2018, 886 SCRA 351, 369-371, [PerJ. Leonen, Third Division].