GR 137904; (October, 2001) (Digest)
G.R. No. 137904 ; October 19, 2001
PURIFICACION M. VDA. DE URBANO, ET AL., petitioners, vs. GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), ET AL., respondents.
FACTS
Petitioners mortgaged their property to GSIS to secure a housing loan. Due to non-payment, GSIS foreclosed the mortgage in 1983 and acquired the property as the highest bidder at the auction. Petitioners attempted to redeem the property within the one-year redemption period but failed to raise the required cash. After the redemption period expired in November 1984, GSIS consolidated its title in August 1985. Subsequently, GSIS, through a series of Board Resolutions, offered petitioners opportunities to repurchase the property for cash, rejecting their proposals for installment payments. Petitioners persistently requested restructuring or liberal payment terms, which GSIS denied. Meanwhile, GSIS negotiated with private respondent Crispina dela Cruz for a spot cash sale.
ISSUE
Whether GSIS acted with grave abuse of discretion or in bad faith in denying petitioners’ requests for installment repurchase and in subsequently selling the property to a third party.
RULING
The Supreme Court denied the petition, affirming the Court of Appeals. GSIS did not act with grave abuse of discretion or bad faith. The legal redemption period under Act No. 3135 expired in November 1984. Any subsequent opportunity for petitioners to repurchase was a mere privilege or concession granted by GSIS, not a legal right. As a trustee of its members’ funds, GSIS is mandated to ensure the solvency and sound management of its assets. Its charter, P.D. 1146, and the Government Auditing Code required it to obtain the most advantageous terms for the disposal of acquired assets. GSIS’s insistence on cash payment for the repurchase was a valid exercise of its fiduciary duty to protect its funds and was justified by petitioners’ demonstrated financial incapacity. The subsequent sale to a third party for a higher spot cash price was a prudent business decision that benefited the GSIS fund. The negotiation and sale were private transactions not imbued with public interest; thus, GSIS had no obligation to disclose them to petitioners, who no longer had a legal interest in the property. Absent proof of bad faith, claims for damages were unwarranted.