G.R. No. 225920 , April 03, 2024
FELIMON C. TORRES, PETITIONER, VS. BOARD OF TRUSTEES, GOVERNMENT SERVICE INSURANCE SYSTEM; HOUSING FINANCE ADMINISTRATION DEPARTMENT AND COMMITTEE ON CLAIMS, GOVERNMENT SERVICE INSURANCE SYSTEM, RESPONDENTS.

FACTS

Second Lieutenant Dominador dela Cena Torres, Jr., an active Philippine Air Force combat pilot, entered into a Deed of Conditional Sale (DCS) for a low-cost housing unit in 1979, financed by a GSIS housing loan payable through salary deductions. On September 2, 1980, Dominador died in a helicopter crash in the line of duty, intestate, single, and without issue. He was survived by his parents, who later died, leaving his sibling, petitioner Felimon C. Torres, as heir. Uninformed of Dominador’s death, GSIS sent notices regarding unpaid amortizations and later a Notice of Foreclosure/Cancellation. Petitioner claimed that the housing loan was covered by a Sales Redemption Insurance (SRI) policy, premiums for which were allegedly deducted from Dominador’s salary, thus waiving the amortizations. GSIS countered that Dominador’s DCS was not covered by SRI because he did not submit to the requisite physical and medical examinations, and there was no record of SRI premium payment. On September 15, 2005, GSIS issued a Notice of Cancellation of the DCS. Petitioner filed a petition before the GSIS Board, seeking consolidation of title, which was dismissed. The Court of Appeals affirmed the GSIS Board’s decision, ruling that petitioner failed to prove a valid SRI policy existed due to Dominador’s non-compliance with preconditions and lack of premium payment evidence.

ISSUE

Whether Dominador’s housing loan was covered by a valid Sales Redemption Insurance (SRI) policy at the time of his death, thereby waiving the unpaid amortizations.

RULING

No. The Supreme Court denied the petition and affirmed the lower rulings. The Court held that for an SRI policy to be effective, the borrower must comply with specific preconditions, including submission to physical and medical examinations by the GSIS Medical Services Center, as mandated by GSIS Board Resolution No. 206. Dominador failed to undergo these examinations. Furthermore, insurance coverage requires payment of premium, and no evidence, such as receipts or the policy itself, was presented to prove that SRI premiums were paid or that a policy was issued. The compulsory nature of the insurance under GSIS rules does not dispense with these requirements. Thus, no valid SRI coverage existed to extinguish the housing loan obligation upon Dominador’s death. The Court emphasized that factual findings of administrative agencies, supported by substantial evidence, are accorded respect and finality. While commiserating with petitioner’s predicament, the Court ruled that equity cannot be applied against statutory law and contractual requirements.