Government Service Insurance System vs. Regional Trial Court of Pasig City, Branch 71

A final and executory judgment is immutable and may not be modified or reopened at the execution stage to allow a losing party to introduce a defense of prior reconveyance that should have been raised at trial; the GSIS’s statutory exemption from execution is not absolute and does not bar enforcement of a final judgment arising from its private contractual or business dealings.

GSIS is a government financial institution governed by Republic Act No. 8291, which contains a provision exempting its funds and properties from legal processes. Private respondent Rosario Enriquez Vda. de Santiago is the widow and substitute of Eduardo M. Santiago, who traced his claim to Antonio Vic Zulueta, the Zulueta spouses’ successor-in-interest, over parcels of land in Pasig City. The consolidated petitions arise from the enforcement of a judgment that had already been affirmed by the CA and the SC in prior proceedings, with GSIS resisting execution on statutory and factual grounds.

From September 1956 to October 1957, spouses Jose C. Zulueta and Soledad Ramos obtained various loans from GSIS totaling ₱3,117,000.00, secured by a real estate mortgage over several parcels of land in Pasig City covered by TCT Nos. 26105, 37177, and 50356 in their names. Because of default, GSIS extrajudicially foreclosed the mortgages dated September 25, 1956, March 6, 1957, April 4, 1957, and October 15, 1957, for ₱5,229,917.84 on August 14, 1974. GSIS was the highest bidder and was issued a certificate of sale. On November 25, 1975, GSIS consolidated its title over the lots subject of the foreclosure sale and subsequently disposed of the foreclosed properties together with lots not covered by the foreclosure sale. On March 6, 1980, GSIS sold the foreclosed properties to Yorkstown Development Corporation, but the Office of the President disapproved the sale and the Register of Deeds of Rizal cancelled the titles issued to Yorkstown. After re-acquiring the properties, GSIS began disposing of the foreclosed lots, including the excluded ones. The lots had been divided into smaller lots, but GSIS consolidated title on the three mother titles because these were what the Zulueta spouses had mortgaged. Under the first mortgage dated September 25, 1956, 78 lots out of the 199 lots covered by TCT No. 26105 were expressly excluded from the mother title’s mortgage.

On April 7, 1990, Antonio Vic Zulueta, the Zulueta spouses’ successor-in-interest, transferred all his rights and interests in the excluded lots to Eduardo M. Santiago; Santiago’s lawyer had written GSIS on May 11, 1989 asking for the return of the lots. On May 7, 1990, Antonio, represented by Santiago, filed an action for reconveyance against GSIS in the RTC of Pasig City, Branch 71, docketed as Civil Case No. 59439. After a court battle between Antonio and Santiago over the revocation of the special power of attorney in Santiago’s favor, Antonio was substituted by Santiago, who upon his death on March 6, 1996 was substituted by his widow, Rosario Enriquez Vda. de Santiago.

After trial, the RTC rendered a decision dated December 17, 1997 finding that neither prescription nor laches had set in. The decision ordered the reconveyance of the 78 lots released and excluded from the foreclosure sale, including additional exclusions from the public sale, and provided that if the lots could not be reconveyed, GSIS should pay their fair market value; it also ordered the cancellation of the land titles and notices of lis pendens and the payment of costs. The decision was affirmed by the CA on February 22, 2002 and by the SC on October 28, 2003, and became final and executory on February 24, 2004.

On April 2, 2004, private respondent filed a motion for execution. GSIS opposed, invoking Section 39 of Republic Act No. 8291 and jurisprudence exempting its funds and properties from execution. On April 27, 2004, the RTC granted the motion and fixed the current fair market value of the subject lots at ₱35,000.00 per square meter, or ₱1,166,165,000.00 based on an aggregate area of 33,319 square meters. A writ of execution issued on April 28, 2004. On April 29, 2004, Sheriff Cresenciano Rabello, Jr. and private respondent’s counsel, Atty. Jose Suing, went to the GSIS main office to serve the writ and a notice to Atty. Winston F. Garcia, GSIS president and general manager, demanding payment of ₱1,166,165,000.00; on the same date, they served notices of garnishment on DBP, LBP, PNB, and Philippine Veterans Bank. On May 4, 2004, GSIS filed a motion to quash the writ on the grounds that it was exempt from execution under Section 39 of Republic Act No. 8291, that it was deprived of the opportunity to contest the order of execution because the writ was served before its receipt of an official copy, and that the ₱35,000.00 per square meter valuation was unrealistic, too high, and without legal and factual basis. Private respondent opposed, arguing that the motion was pro forma, that GSIS was served through its counsel Atty. Lucio L. Yu, Jr., who read the order when he met the sheriff and Atty. Suing on April 29, 2004, and that the valuation was based on findings affirmed by the CA and the SC. On May 13, 2004, the RTC denied the motion to quash and granted the motions for cancellation of lis pendens.

The Sheriff’s Partial Report dated May 3, 2004 stated that reconveyance was not possible as of April 29, 2004 because the 78 excluded lots were no longer registered in GSIS’s name, had been sold to third-party buyers, and were occupied by houses and buildings; the report concluded that reconveyance was very impossible and that garnishment was resorted to. The CA later found that the RTC’s ₱35,000.00 per square meter valuation had no factual and legal basis, while GSIS’s own appraisal as of December 18, 2003 ranged from ₱12,000.00 to ₱15,000.00 per square meter.

• Finality and Prior Reconveyance: Petitioner argued that execution should harmonize with truth and equity; that a final judgment may be modified or reversed where gross injustice and unjust enrichment would result; and that it had already reconveyed the subject lots to Zulueta’s buyers, so the decision should be deemed satisfied to that extent and not enforced through payment.
• Primary and Secondary Modes of Execution: Petitioner maintained that reconveyance was the primary mode of satisfying the judgment and payment of fair market value only secondary; the CA erred in ordering payment without first giving GSIS an opportunity to show compliance with reconveyance.
• Exemption from Execution: Petitioner argued that under Section 39 of Republic Act No. 8291 its funds and properties were exempt from taxes, legal processes, liens, attachments, garnishments, and executions; that this exemption was state policy under the social justice provisions of the Constitution; and that Rubia vs. GSIS should be revisited because it wrongly distinguished between funds for benefits and funds for investments.
• Valuation and Due Process: Petitioner contended that the RTC’s valuation of ₱35,000.00 per square meter was unrealistic, too high, and without legal and factual basis, and that it was deprived of the opportunity to contest the order of execution because the writ was served before it received an official copy.
• Number and Identity of Lots: Petitioner claimed that only 76 lots, not 78, and only 32,534 square meters, not 33,319 square meters, were involved; that two lots were double-enumerated; and that one of the lots was also involved in Dela Merced vs. GSIS, making reconveyance to two parties physically impossible.
• Negligence of Counsel: Petitioner argued that it should not be bound by the mistakes or grave negligence of its former counsel and officials in failing to raise the prior reconveyance as a defense, and that such negligence should not prejudice the 1,500,000 GSIS members and pensioners.
• Prescription: Petitioner reiterated that even if correct, the claim for reconveyance had prescribed.
• Partiality: Petitioner argued that the RTC judge acted with obvious partiality toward private respondent, as shown by undue and passionate haste in executing the final judgment, and sought his inhibition.

• Forum Shopping and Finality: Respondent countered that the petitions should be dismissed for forum shopping and because the judgment had become final and executory; once final, the prevailing party should not be denied the fruits of victory by subterfuge, citing Quelnan vs. VHF Philippines.
• Prescription and Laches: Respondent argued that prescription and laches had already been laid to rest by the final judgment and could no longer be relitigated; the CA had found no laches.
• Reconveyance Impossible and Prior Sale as Defense: Respondent argued that the alleged primary mode of reconveyance had been rendered impossible by GSIS’s own acts; GSIS itself had claimed in October 11, 1996 that it could no longer return the titles; the alleged prior sale by Zulueta was a defense that should have been raised at trial, not at execution.
• Insufficient Proof of Prior Reconveyance: Respondent maintained that GSIS’s claims of prior reconveyance were conjectural because it did not identify the lots, state how many were reconveyed, or present the deeds; the internal memorandum had no probative value and needed authentication; documents from the Register of Deeds showed that GSIS, not Zulueta, conveyed the lots to third parties.
• Partiality: Respondent argued that the questioned acts of the RTC were within its power and appropriate, and that they were merely adverse rulings, not evidence of bias.
• Dela Merced: Respondent argued that GSIS was not sure of the identity of the alleged Dela Merced lot and that a mere conjecture could not justify reopening a final judgment.
• Execution and Garnishment: Respondent prayed that the petitions be dismissed, that the RTC orders be declared valid insofar as they referred to execution or garnishment up to ₱399,828,000.00, and that the RTC be ordered to implement the writ and determine the market value of the 78 lots for the unsatisfied portion.

• Finality of Judgment and Prior Reconveyance: Whether a final and executory judgment may be modified or reopened at the execution stage to consider GSIS’s claims of prior reconveyance, double enumeration, and a reduced number or area of lots.
• Exemption from Execution: Whether GSIS’s funds and properties are exempt from execution and garnishment under Section 39 of Republic Act No. 8291, or whether Rubia vs. GSIS should be reversed.
• Manner of Execution: Whether reconveyance must be the primary mode of satisfying the judgment before payment of the fair market value may be enforced.
• Valuation of Subject Lots: Whether the RTC’s valuation of the subject lots at ₱35,000.00 per square meter is valid, and whether a hearing to determine the fair market value as of April 29, 2004 is proper.
• Due Process in Execution: Whether GSIS was deprived of the opportunity to contest the order of execution because the writ was served before it received an official copy.
• Negligence of Counsel: Whether GSIS may be excused from the failure of its former counsel to raise the defense of prior reconveyance.
• Forum Shopping: Whether GSIS committed forum shopping in filing G.R. No. 175393 and G.R. No. 177731.

• Finality of Judgment and Prior Reconveyance: No. The final and executory judgment is immutable; the claimed prior reconveyance and reduction of lots or area should have been raised at trial and cannot be used to reopen the judgment at execution.
• Exemption from Execution: No. Section 39 of Republic Act No. 8291 does not absolutely exempt GSIS funds and properties; the exemption is limited to social security benefits and does not bar execution of a final judgment arising from GSIS’s private contractual or business dealings.
• Manner of Execution: No. Reconveyance need not first be attempted where the sheriff’s partial report showed it was impossible because the lots were no longer registered in GSIS’s name; payment of fair market value was proper.
• Valuation of Subject Lots: No as to ₱35,000.00 per square meter; the RTC’s valuation had no factual and legal basis. Yes as to hearing; the CA correctly directed a hearing to determine fair market value as of April 29, 2004, with partial execution at ₱399,828,000.99 based on GSIS’s own appraisal.
• Due Process in Execution: No. GSIS was given the opportunity to contest the execution through its opposition and supplemental opposition and later motion to quash; any defect was cured.
• Negligence of Counsel: No. Clients are bound by the mistakes, negligence, and omissions of their counsel; the grounds raised did not fall under the exceptions.
• Forum Shopping: Yes. GSIS filed two consolidated cases involving the same parties and issues in an attempt to stay execution; the SC admonished GSIS against bending procedural rules.

• Finality of Judgment and Prior Reconveyance: The SC applied the rule that once a judgment becomes final and executory, it is immutable and unalterable and may no longer be modified in any respect, even if the modification is meant to correct an erroneous conclusion of fact or law, whether by the court that rendered it or by the SC. The recognized exceptions are correction of clerical errors, nunc pro tunc entries that do not prejudice a party, and void judgments. None was present. The modification sought by GSIS would require presentation of alleged newly discovered evidence that should have been raised as affirmative defenses during trial. The judgment had been upheld, not declared void, by the SC. The SC could not at the execution stage hold that there had already been reconveyance and thereby nullify a final judgment passed upon by the RTC, the CA, and the SC. The quantity of 78 lots and the area of 33,319 square meters could not be reduced, following Mayon Estate Corporation vs. Altrua.

• Exemption from Execution: The SC followed Rubia vs. GSIS and held that the exemption from execution under Section 39 of Republic Act No. 8291 is not absolute. The exemption must be read consistently with the principal purpose of maintaining the actuarial solvency of GSIS and protecting assets used to finance retirement, disability, and life insurance benefits of members; it is limited to the purposes and objects covered. An expansive interpretation exempting all GSIS assets from legal processes absolutely would be unwarranted. Section 36 of the same Act grants GSIS the ancillary power to invest excess funds, and in the exercise of that power GSIS assumes a character similar to a private corporation, may sue and be sued, and may be held liable for its contracts. Here, the final judgment arose from loans extended by GSIS in the course of its business and secured by a mortgage; its relationship with private respondent’s predecessors-in-interest was purely private and contractual. GSIS also failed to return properties it had wrongfully foreclosed, and the SC had previously held that GSIS is not an ordinary mortgagee and is expected to exercise greater care and prudence.

• Manner of Execution: The SC held that there was no need for the RTC to first issue a writ of execution for reconveyance because such recourse would be futile. The Sheriff’s Partial Report dated May 3, 2004 stated that reconveyance was not possible as of April 29, 2004 since the subject lots were no longer registered in the name of GSIS, had been sold to third-party buyers, and were occupied by houses and buildings. GSIS did not deny the facts stated in the sheriff’s partial report, so the SC accorded the report full faith and credit in keeping with the presumption of regularity in the performance of official duty. The sheriff therefore properly proceeded to enforce payment of the fair market value of the subject lots.

• Valuation of Subject Lots: The SC agreed with the CA that the RTC’s valuation at ₱35,000.00 per square meter had no factual and legal basis. Although the amount fell within the ₱10,000.00 to ₱45,000.00 range mentioned in the testimony of Eduardo M. Santiago, the RTC did not set out in its decision the facts proved and the conclusions drawn therefrom, as required by People vs. Lizada. The fair market value cannot be a mere ballpark figure; there must be some factual and legal basis for a reasonable valuation. GSIS’s own appraisal as of December 18, 2003 ranged from ₱12,000.00 to ₱15,000.00 per square meter. Since GSIS itself admitted a reasonable value of at least ₱12,000.00 per square meter for an aggregate area of 33,319 square meters, partial execution could proceed on the basis of ₱399,828,000.99. Any difference between that valuation and the fair market value as of April 29, 2004, as finally determined by the RTC, could be recovered later. The fair market value as of April 29, 2004 was the reckoning date because it was on that date that reconveyance was ascertained to be no longer possible.

• Due Process in Execution: The SC rejected GSIS’s claim that it was deprived of the opportunity to contest the order of execution. GSIS was in fact given the opportunity to question the order of execution because it filed an opposition and supplemental opposition to private respondent’s motion for execution in the RTC. Even supposing that GSIS was denied the opportunity to move for reconsideration of the order of execution, this was subsequently cured when it filed a motion to quash where it raised its objections to the issuance of the order and writ of execution.

• Negligence of Counsel: The SC held that clients are bound by the mistakes, negligence, and omissions of their counsel. While exceptional circumstances may excuse a client from counsel’s failure, the grounds raised by GSIS did not persuade the SC to consider the case as an exception. Following Romago, Inc. vs. Siemens Building Technologies, Inc., the SC emphasized that public interest demands an end to every litigation and that a belated effort to reopen a case that has already attained finality would serve no purpose other than to delay the administration of justice. Reversing the CA would put a premium on the negligence of GSIS’s former counsel and encourage endless litigation.

• Forum Shopping: The SC noted that GSIS deliberately filed two cases, herein consolidated, involving the same parties and issues in its attempt to stay the execution of the judgment against it. The rules on forum shopping are meant to prevent the possibility of conflicting decisions being rendered by different fora upon the same issues. The SC admonished GSIS from bending the rules of procedure to suit its purposes, stressing that obedience to the rules promulgated by the SC to ensure the efficient administration of justice must be the norm, not the exception.

• Immutability of final and executory judgments — Once a judgment becomes final and executory, it is immutable and unalterable and may not be modified in any respect, even if the modification is meant to correct an erroneous conclusion of fact or law, whether by the court that rendered it or by the SC. The recognized exceptions are correction of clerical errors, nunc pro tunc entries that do not prejudice a party, and void judgments. The SC applied the doctrine because GSIS’s claims of prior reconveyance and reduced lots or area were defenses that should have been raised at trial, not at execution.
• Non-absolute GSIS exemption from execution — Section 39 of Republic Act No. 8291 exempts GSIS funds and properties from legal processes, but the exemption is not absolute. It must be read consistently with the purpose of maintaining actuarial solvency and protecting assets used for retirement, disability, and life insurance benefits; it is limited to the purposes and objects covered. It does not bar execution of a final judgment arising from GSIS’s private contractual or business dealings, especially where GSIS invested excess funds under Section 36 and acted like a private corporation.
• Execution by payment when reconveyance is impossible — When a judgment orders reconveyance but the property can no longer be reconveyed because it has passed to third-party buyers, the sheriff may proceed to enforce payment of the fair market value. The valuation must have factual and legal basis, and the fair market value is reckoned as of the date reconveyance was ascertained to be impossible.
• Negligence of counsel binds the client — A client is bound by the mistakes, negligence, and omissions of counsel. The SC may excuse the client only in exceptional circumstances; the grounds raised by GSIS did not qualify, and reopening the case would put a premium on counsel’s negligence and encourage endless litigation.
• Forum shopping — Forum shopping exists where a party files multiple cases involving the same parties and issues, regardless of which party will prevail, because the result of one action will determine the other. The SC found that GSIS filed two consolidated cases involving the same parties and issues in an attempt to stay execution and admonished it against bending procedural rules.

• "It is settled that when a final judgment is executory, it becomes immutable and unalterable. The judgment may no longer be modified in any respect, even if the modification is meant to correct what is perceived to be an erroneous conclusion of fact or law, and regardless of whether the modification is attempted to be made by the court rendering it or by the highest Court of the land." — The SC states the core doctrine of immutability of final judgments, which it applied to reject GSIS’s attempt to reopen the case at the execution stage.
• "The processual exemption of the GSIS funds and properties under Section 39 of the GSIS Charter, in our view, should be read consistently with its avowed principal purpose: to maintain actuarial solvency of the GSIS in the protection of assets which are to be used to finance the retirement, disability and life insurance benefits of its members. Clearly, the exemption should be limited to the purposes and objects covered. Any interpretation that would give it an expansive construction to exempt all GSIS assets from legal processes absolutely would be unwarranted." — The SC quotes with approval the CA’s ruling that GSIS’s statutory exemption is not absolute and is limited to the purposes for which it was granted.
• "Since GSIS did not deny the facts stated in the sheriff’s partial report, We accord the same full faith and credit in keeping with the presumption of regularity in the performance of official duty." — The SC relies on the sheriff’s partial report to conclude that reconveyance was impossible and that payment of fair market value was the proper mode of execution.
• "Clients are bound by the mistakes, negligence and omission of their counsel. While in exceptional circumstances, clients may be excused from the failure of counsel, the grounds raised in the present case do not persuade this Court to consider it as an exception to the rule." — The SC rejects GSIS’s attempt to escape the final judgment by blaming its former counsel for failing to raise the defense of prior reconveyance.

• Spouses Gomez vs. Correa, et al., G.R. No. 153923, October 2, 2009 — Controlling precedent quoted by the SC on the immutability of final judgments and the limited exceptions.
• Rubia vs. GSIS, G.R. No. 151439, June 21, 2004, 432 SCRA 529 — Controlling precedent holding that GSIS’s exemption from execution is not absolute; followed, and the request to reverse it was denied.
• GSIS vs. Santiago, G.R. No. 155206, October 28, 2003, 414 SCRA 563 — Prior final judgment in the same controversy; cited to stress that GSIS is not an ordinary mortgagee and is expected to exercise greater care and prudence.
• Mayon Estate Corporation vs. Altrua, 440 SCRA 377 — Followed on the immutability of final judgments; the quantity and area of the lots adjudged could not be reduced at execution.
• People vs. Lizada, 396 SCRA 62 — Relied on by the CA and quoted with approval on the need for trial courts to set out the facts and conclusions supporting valuation; the RTC’s ₱35,000.00 per square meter valuation lacked basis.
• Romago, Inc. vs. Siemens Building Technologies, Inc., G.R. No. 181969, October 2, 2009 — Controlling precedent on the binding effect of counsel’s negligence; quoted to reject GSIS’s attempt to reopen the case.
• Collantes vs. Court of Appeals, G.R. No. 169604, March 6, 2007, 517 SCRA 561 — Cited on the rules against forum shopping; the SC used it to admonish GSIS for filing two cases involving the same parties and issues.
• Springsun Management Systems Corporation vs. Camerino, 449 SCRA 65 — Cited by the CA, and quoted with approval, on estoppel barring an issue not timely presented; GSIS’s prior reconveyance and double-enumeration claims were raised too late.

• Section 39, Republic Act No. 8291 (GSIS Act of 1997) — Exempts GSIS funds and properties from tax, legal processes, liens, attachments, garnishments, and executions. The SC held the exemption not absolute and limited to social security benefits; it did not bar execution of the final judgment arising from GSIS’s private contractual or business dealings.
• Section 36, Republic Act No. 8291 — Grants GSIS the ancillary power to invest excess funds. The SC, through the CA, reasoned that when GSIS exercises this power it assumes a character similar to a private corporation, may sue and be sued, and may be held liable for its contracts.
• Rule 45, Rules of Court — The procedural basis for G.R. No. 177731, GSIS’s petition for review on certiorari from the CA decision and resolution.
• Rule 65, Rules of Court — The procedural basis for G.R. No. 175393, GSIS’s petition for certiorari and prohibition, and for the mandamus petition filed in the RTC of Pasay City.
• Section 37, Rule 138, Revised Rules of Court — Provides for an attorney’s charging lien on judgments for payment of money and executions; the CA ruled that the asserted charging lien should be recorded in the RTC that rendered the judgment, and the SC affirmed the CA resolution.