Vda. De Urbano v.

GSIS
G.R. No. 137904 – 19 October 2001
Puno, J. (First Division)

Topic: Aids to Construction – Construction of Statute in Relation to Other Statutes

Petitioners: Purificacion M. Vda. de Urbano, Pedro de Castro, Aurelio Arrienda, Arnel Arrienda, Albert
Arrienda, Alice Pedron, and Marilyn Bilog
Respondents: Government Service Insurance System (GSIS), Feliciano Belmonte, Jr., Zacarias Beltran,
Jr., Marcial Secoquian, and Crispina Dela Cruz

FACTS:
• Petition for review on certiorari to annul and set aside CA’s 30 October 1998 decision and March 4,
1999 resolution affirming the decision of the Regional Trial Court of Quezon City, Branch 102,
dismissing petitioner's complaint for annulment of contract, reconveyance and damages
• 1971: Petitioners mortgaged their 200-sq.m. property in Quezon City to GSIS for a housing loan
of P47,000.00
• Petitioners failed to pay their loan when it fell due, which led GSIS to foreclose the mortgage in a
public auction on October 28, where it emerged as the highest bidder (P154,896).
• After a series of negotiations by the petitioners who insisted on repurchasing the property despite the
lack of financial capacity, the GSIS sold the property to respondent Crispina dela Cruz.

ISSUES:
1. W/N petitioners have a right to repurchase the subject property
2. W/N GSIS have a duty to dispose of the subject property through public bidding
3. W/N GSIS is in bad faith in dealing with petitioners

HELD: Petition devoid of merit

1. Petitioners do not have a right to repurchase as they have already been given chances by the
GSIS even after the deadline for redemption lapsed
• The GSIS Charter, P.D. 1146, as amended by P.D. 1981, gived the GSIS Board of Trustees
(Board) the responsibility to determine the terms and conditions of financial accommodations
to its members with the purpose of making the GSIS more responsive to the needs of the
members of the GSIS
• GSIS can acquire, utilize, dispose of real or personal properties in the Philippines or elsewhere
in any manner provided by law
• No restriction or qualification that GSIS should dispose of its real properties in favor only of its
members
• Right to redeem became functus officio on the date of the expiry; the period after is classified
not as redemption but repurchase
• Repurchase of foreclosed property after redemption period imposes no such obligation. After
expiry, the purchaser may or may not re-sell the property but no law will compel him to do so;
and the owner/purchaser is not bound by the bid price, he can set his own price
• Resolution 929: GSIS set the purchase price of P174,572 in cash within 60 days from notice of
the resolution, otherwise the property would be sold through public bidding – Petitioners failed
to purchase
 • Resolution 593: GSIS granted petitioners another 60 days within which to purchase the
property for the same amount and under the same terms stated in Resolution No. 929 –
Petitioners failed again
• Resolution 1022: GSIS denied petitioners' subsequent request to repurchase the subject
property (10 months have lapsed since the deadline)
- Board’s denial of petitioners’ request is based on factual assessment of their financial
capacity to repurchase the foreclosed property
- GSIS struck a balance between being "responsive to the needs of the members of the
GSIS" and assuring "the actuarial solvency” of GSIS funds, tilting the scale in favor of the
latter  Valid based on GSIS charter
• Petitioners cannot also reacquire the property through the GSIS’ Operation Pabahay as they
need a certificate of award or sale issued in favor of the applicant, and GSIS has already been
negotiating with Crispina dela Cruz at that time, so Urbano’s request cannot be acted upon
2. No, the property comes within the exception in being disposed of through public bidding
• Petitioners claim Sec. 79 of P.D. 1445 and COA Circular No. 86-264 mandate the GSIS to
dispose of its assets, such as the subject property, primarily through public bidding and only
upon its failure, through a negotiated sale
• GSIS contends Sec. 79 of P.D. 1445 does not apply to the case at bar since it covers
unserviceable government property and not acquired assets like the subject property\
• GSIS claims the said COA circular also does not cover the property, as the sale of
merchandise/inventory held for sale in the regular course of business" is carved out as an
exception under the circular. GSIS posits that this interpretation of COA Circular No. 86-264
was made clear by the subsequent COA Circular No. 89-296.
• Court upheld the position of the GSIS
• COA Circular No. 86-264 (16 Oct 1986): General guidelines on the divestment or disposal of
assets of government-owned and/or controlled corporations, and their subsidiaries
 As a rule, public auction or bidding shall be the primary mode of disposal of assets, but
sale through negotiation can be resorted to only in case of failure of public auction
 Exception: Sales of merchandise/inventory held for sale in the regular course of business
• COA Circular No. 89-296 (27 Jan 1989): Audit Guidelines on the Divestment or Disposal of
Property and Other Assets of National Government Agencies and Instrumentalities, Local
Government Units and Government-Owned or Controlled Corporations and their Subsidiaries
 “..shall not apply to the disposal of merchandise or inventory held for sale in the regular
course of business nor to the disposal by government financial institutions of foreclosed
assets or collaterals acquired in the regular course of business”
• When the Board approved the sale of the subject property to dela Cruz in 1987 and when the
Deed of Sale was executed between between the same parties in January 1988, Circular No.
86-264 was in force
• Question is whether the subject property is covered by COA circular 86-264, or if it falls under
the exception
• Court derives insight from the exceptions provided under the subsequent COA Circular
89-296, since according to the rule in statutory construction, statues which relate to the
same thing should be construed together, as if they were one law
• In the absence of any express repeal or amendment therein, the new provision was enacted in
accord with the legislative policy embodied in those prior statutes, and they all should be
construed together
 • Agpalo: Statutes in pari materia should be read and construed together because enactments of
the same legislature on the same subject are supposed to form part of one uniform system; later
statutes are supplementary or complementary to the earlier enactments and in the passage of its
acts the legislature is supposed to have in mind the existing legislations on the subject and to
have enacted its new act with reference thereto
• When both COA Circular No. 86-264 and COA Circular No. 89-296 were issued, it was aimed
to give flexibility to government-owned and controlled corporations (GOCCs) to allow them to
generate more revenue for national development
• Sale of property was done “in the regular course of business”
• The Court of Appeals was correct in ruling that there is no contract between GSIS and the
petitioners that obligates the GSIS to sell the subject property through public bidding
• No “meeting of the minds” between GSIS and the petitioners when the former allowed the
latter to repurchase based on the amount GSIS gave (P174,572)
• NCC 1319: No valid and perfected contract; appellants cannot claim any right under Board
Resolution No. 929
3. GSIS was not in bad faith in dealing with the petitioners
• Denial of petitioners’ further requests for repurchase was based on the factual determination of
their financial incapacity
• Worth noting that GSIS sold the subject property to respondent dela Cruz only after giving
petitioners an almost one year opportunity to repurchase the property and only after
ascertaining that the purchase price proposed by private respondent dela Cruz in payment of the
subject property would benefit the GSIS
• Negotiation and subsequent sale of the subject property by the GSIS to dela Cruz was not of
public interest as it was a purely private transaction, so petitioners cannot demand that it be
informed of such negotiation and sale. They also do not have any interest on the property after
they failed to comply with GSIS' terms for repurchase and upon GSIS' denial of petitioners'
offer to repurchase under their proposed terms and conditions

RULING:
WHEREFORE, the petition is DENIED and the impugned decision and resolution of the Court of
Appeals are AFFIRMED