GSIS vs.

CA
G.R. No. L-52478 | 30 October 1986
FACTS
Sps. Medina applied for a loan with GSIS in the amount of P600,000. But only P35
0,000 had been approved (BR 5041) subject to the conditions:
a. that 9% per annum shall be the interest rate, compounded monthly;
b. that the loan shall be repayable in 10 years at a monthly mortization of
P4,433.65 including principal and interest, and that any installment or amortiza
tion due and unpaid shall bear an interest of 9%/12 per month.
The Office of the Economic Coordinator, in a 2nd Indorsement, further reduced th
e approved amount to P295,000. The Medinas accepted the reduced amount, executed
a promissory note and a REM in favor of GSIS. On June 6, 1962, the approved loa
n was restored to P350,000 and was denominated as Account No. 31055.
As a consequence, the Medinas subsequently executed an Amendment of Real Estate
Mortgage. Upon application by the Medinas, GSIS adopted Resolution No. 121, as a
mended by Resolution No. 348, granting an additional loan of P230,000 on the sec
urity of the same mortgaged properties and additional properties. The loan was d
enominated as Account No. 31442.
Beginning 1965, the Medinas defaulted in their payments and in 1967, they began
defaulting in the payment of their fire insurance premiums. On May 3, 1974, GSIS
informed the debtors that they had arrearages in the amount of P575,652.42 as o
f April 18, 1974 and demanded payment within 7 days, otherwise, it would foreclo
se the mortgage.
On Apr. 21, 1975, GSIS applied for foreclosure of the mortgage. The Medinas file
d a complaint, praying for the issuance of a restraining order or writ of PI, bu
t no such RO or WPI was issued in view of PD No. 385. On Apr. 25, 1975, the Medi
nas made a last partial payment in the amount of P209, 662.80.
The properties of the medinas were sold at public auction with GSIS as the highe
st bidder. Hence, the Medinas filed an amended complaint, praying for the declar
ation of nullity of their 2 REM contracts with the GSIS, as well as of the EJ fo
reclosure proceedings, and for the refund of excess payments, damages and AF.
TC: N&V + Medinas to pay GSIS P1,611.12 in fully payment of their obligation wit
h 9% p.a. interest from Dec. 11, 1975
CA: Affirmed: GSIS to reimburse P9,580 OP and pay Sp Medina P3,000 AF and P1,000
litigation exp;
SC: PRC ?; MR: due course
ISSUE # 1
WON the CA erred in holding that the amendment of the REM dated July 6, 1962 sup
erseded the mortgage contract dated Apr. 4, 1962, particularly wrt the compoundi
ng of interest
HELD
Said Amendment was never intended to completely supersede the mortgage contract
dated April 4, 1962. In fact, GSIS, as a matter of policy, imposes uniform terms
and conditions for all its real estate loans, particularly with respect to comp
ounding of interest.
GSIS: Did not supersede; amended only wrt the amount secured thereby and the amo
unt of monthly amortizations; others deemed rewritten
Medinas: no express stipulation on the compounded interest ? OP
o The difference in the computation lies in the inclusion of the compounded inte
rest as demanded by the GSIS on the one hand and the exclusion thereof, as insis
ted by the Medinas on the other.
ISSUE # 2
WON the CA erred in sustaining the Sp. Medinas claim of OP, by crediting the fire
insurance proceeds in the sum of P11,152.02 to the total payment made by said s
pouses as of Dec. 11, 1975
HELD
YES. The plaintiffs were not entitled to a credit of P19,381.07 as FI proceeds,
as they were only entitled to and were credited with P11,152.02.
ISSUE # 3
WON the CA erred in holding that the interest rates on the loan accounts of the
Medinas are usurious
HELD
NO. Usury Law applies only to interest by way of compensation for the use or for
bearance of money. Interest by way of damages is governed by Article 2209 of the
Civil Code
ISSUE # 4:
WON the CA erred in affirming the annulment of the subject EJ foreclosure and sh
eriff s Certificate of Sale
HELD
Since the Medinas failed to settle their accounts with the GSIS, the latter had
a perfect right to foreclose the mortgage.
? Reversed and set aside VALID.