G.R. No. L-15874. September 19, 1961
RICARDO L. MANALILI, PLAINTIFF AND APPELLANT, VS. GOVERNMENT SERVICE INSURANCE SYSTEM, RESPONDENT AND APPELLEE.
DE LEON, J.:
such is a holder of a backpay certificate of indebtedness issued by the
Treasurer of the Philippines under Republic Act No. 304 with a
remaining face value of P8,007.29 after several partial redemptions by
the Government. The certificate was supposed to have been completely
redeemed by the Government on June 8, 1958.
On April 12, 1957 and again on December 16, 1957, appellant was,
upon application, granted real estate loans by appellee Government
Service Insurance System (hereinafter referred to as GSIS, for short)
in the aggregate amount of P13,600.00, payable in monthly
amortizations. The loans were secured with a mortgage on appellant’s
property situated in Tayug, Pangasinan, the mortgage contract
providing, among other things, that “If the mortgagor shall at any
time, fail or refuse to pay any of the amortizations on the
indebtedness or the interest when due, or whatever other obligation
herein agreed, then all the amortization and other obligations of the
Mortgagor of any nature, shall become due, payable and defaulted and
the Mortgagee may immediately foreclose this mortgage judicially or
extra-judicially * * *.”
As appellant failed to pay the monthly amortizations from December,
1957, despite repeated demands by the GSIS, the latter, on February 28,
1959, applied for the extra-judicial foreclosure of his mortgaged
property.
To settle his obligations with the GSIS, appellant made
representations to the Army Finance Service, the Executive Secretary
and finally direct to the National Treasurer for the speedy release of
his backpay check, but his efforts were to no avail. On April 10, 1959,
he also wrote to Colonel Vicente Tiongson, a member of the GSIS Board
of Trustees, requesting that his backpay certificate of indebtedness be
applied in payment of his overdue unpaid amortizations, but the request
was denied by the Board of Trustees on the same date.
In order to compel the GSIS to accept his backpay certificate of
indebtedness, appellant on April 14, 1959 filed with the Court of First
Instance of Pangasinan the present proceedings for mandamus.
Resisting the action, the GSIS alleged, in effect, that it cannot be
compelled by mandamus to accept appellant’s backpay certificate in
payment of his obligations because his indebtedness to the GSIS was not
subsisting at the time of the approval of Republic Act No. 304,
otherwise known as the Backpay Law, as well as the Amendatory Act,
Republic Act No. 897.
After the parties had submitted a stipulation of facts and filed
their respective memorandum, the lower court on June 24, 1959 rendered
decision dismissing appellant’s complaint. Reconsideration of the
decision having been denied, appellant appealed directly to this Court.
The pertinent provisions of section 2 of both Republic Act No. 304
and Republic Act No. 897, which were approved on June 18, 1948 and June
20, 1953, respectively, read:
“SEC. 2. The Treasurer of the Philippines shall,
upon application, and within one year from the approval of this Act,
and under such rules and regulations as may be promulgated by the
Secretary of Finance, acknowledged and file requests for the
recognition of the right to the salaries or wages as provided in
section one hereof, and notice of such acknowledgement shall be issued
to the applicant, which state the total amount of such salaries or
wages due the applicant and certify that it shall be redeemed by the
Government of the Philippines within ten years from the date of their
issuance without interest: Provided, That upon application
and subject to such rules and regulations as may be approved by the
Secretary of Finance, a certificate of indebtedness may be issued by
the Treasurer of the Philippines covering the whole or a part of the
total salaries or wages the right to which has been duly acknowledged
and recognized, provided that the face value of such certificate of
indebtedness shall not exceed the amount that the applicant may need
for the payment of (1) obligations subsisting at the time of the
approval of this Act for which the applicant may directly be liable to
the Government or to any of its branches or instrumentalities, or the
corporations owned or controlled by the Government, or to any citizen
of the Philippines, or to any association or corporation organized
under the laws of the Philippines, who may be willing to accept the
same for such settlement; * * * And provided, also, That
investment funds of banks or other financial institutions owned or
controlled by the Government shall, subject to availability of loanable
funds, and any provisions of their charters, articles of
incorporations, by-laws, or rules and regulations to the contrary
notwithstanding, accept or discount at not more than two per centum per annum
for ten years such certificate for the following purposes only: (1) the
acquisition of real property for use as the applicant’s home or (2) the
building or construction or reconstruction of the residential house of
the payee of such certificate. * * *.” (Republic Act No. 304.)“SEC.
2. Section two of the said Act (Republic Act 304) as amended by
Republic Act Numbered Eight Hundred, is further amended to read:” ‘SEC. 2. * * * Provided,
That upon application and subject to such rules and regulations as may
be approved by the Secretary of Finance a certificate of indebtedness
may be issued by the Treasurer of the Philippines covering the whole or
a part of the total salaries or wages the right to which has been duly
acknowledged and recognized, provided that the face value of such
certificate of indebtedness shall not exceed the amount that the
applicant may need for the payment of (1) obligations subsisting
at the time of the approval of this amendatory Act for which the
applicant may directly be liable to the Government or to any of its
branches or instrumentalities, or the corporations owned or controlled
by the Government, or to any citizen of the Philippines, or to any
association or corporation organized under the laws of the Philippines,
who may be willing to accept the same for such settlement. * * *.”
(Republic Act No. 897)
Under the provisions of section 2, Republic Act No. 304, this Court, in the case of Diokno vs.
Rehabilitation Finance Corporation (91 Phil., 608; 48 Off. Gaz., p.
2717), has ruled that the acceptance or discount of backpay
certificates in the payment of outstanding obligations to a government
owned or controlled corporation is merely discretionary on the part of
the latter and consequently cannot be compelled by mandamus. Speaking
through Justice Labrador, this Court said:
“* * * we are of the opinion that the law in
question (section 2 of the Backpay Law), insofar as the discount and
acceptance of backpay certificates are concerned, should be interpreted
to be directory merely, not mandatory, as claimed by
plaintiff-appellant, the same to be construed as a directive for the
Rehabilitation Finance Corporation to invest a reasonable portion of
its funds for the discount of backpay certificates, from time to time
and in its sound discretion, as circumstances and its resources may
warrant.“Having come to the conclusion that section 2 of the
Backpay Law is directory merely, we now address ourselves to the
propriety of the action, which the plaintiff-appellant labels as
specific performance. As the action is not based on any contractual
relation between the plaintiff-appellant and the defendant-appellee, it
may be one for specific performance; it is in effect predicated on a
supposed legal duty imposed by law and is properly designated as a
special civil action of mandamus, because the appellant seeks to compel
the appellee to accept his backpay certificate in payment of his
outstanding obligation. We are not impressed by the defense, technical
in a sense, that the Rehabilitation Finance Corporation is not
expressly authorized to accept certificates in payment of outstanding
loans. There is no provision expressly authorizing this procedure or
system; but neither is there one prohibiting it. We believe the
legislature could not have intended to discriminate against those who
have already built their houses, who have contracted obligations in so
doing. We prefer to predicate our ruling that this special action
does not lie on the ground that the duty imposed by the Backpay Law
upon the appellee as to the acceptance or discount of backpay
certificates is neither clear nor ministerial, but discretionary merely
and that, mandamus does not issue to control the exercise of discretion
of a public officer * * *.“We must admit, however, that
appellant’s case is not entirely without any merit or justification;
similar situations have already been favorably acted upon by the
Congress, when it ordered that certificates be accepted in payment of
outstanding obligations, and by the Rehabilitation Finance Corporation
in its above-mentioned resolution. But we feel we are powerless to
enforce his claim, as the acceptance and discount of backpay
certificates has been placed within the sound discretion of the
Rehabilitation Finance Corporation, and subject to the availability of
loanable funds, and said discretion may not be reviewed or controlled
by us. It is clear that his remedy must be available in other quarters,
not in the court of justice.” (Italics supplied.)
In the above cited case, plaintiff Diokno’s indebtedness to the
Rehabilitation Finance Corporation was incurred on January 27, 1950. He
could not, therefore, avail himself of the provisions of section 2 of
Republic Act No. 304, approved on June 18, 1948, because said section
provides that the application for recognition of backpay must have been
filed within one year after the approval of said Act, and the debt must
be subsisting at the time of said approval.
The same construction, in effect, has been given to the provisions
of section 2 of the Amendatory Act (Republic Act No. 897). Thus, in the
case of Florentino et al. vs. Philippine National Bank (98
Phil., 959; 52 Off. Gaz., 2522), where petitioner Florentino incurred
his debt to the Philippine National Bank on January 2, 1953, so that
his obligation was subsisting when the Amendatory Act 897 was approved
(on June 21, 1953), it was held that the bank had no option but to
accept backpay certificates in payment of debt owed to it by the
ex-USAFFE and guerilla holders of certificates. This ruling was
reiterated in the case of Sabelino vs. Rehabilitation Finance Corporation (G. R. No. L-11790, September 30, 1958). Again, in the case of Philippine National Bank vs.
Ereneta, et al. 106 Phil., 133; 57 Off. Gaz., [29] 5240), where the
plaintiff bank refused to accept the backpay certificate of defendant
Ramon Ereneta on the ground that its policy was to refuse acceptance of
certificates of indebtedness in payment of the obligations subsisting
at the time of approval of Republic Act No. 897, this Court held that
the acceptance of such backpay certificates in payment of loans to
government corporations is obligatory upon the appellee bank. Of
course, added the Court, after the enactment of Republic Act No. 1576
dated June 16, 1956, which adds a new provision, section 9-a, to
Republic Act No. 1300, otherwise known as the Revised Charter of the
Philippine National Bank, the obligation imposed upon the bank has been
removed. To the same effect is our latest ruling in the case of Buyco vs. Philippine National Bank (112 Phil., 588; 59 Off. Gaz. [11] 1737).
Conformably with the ruling in the above cited cases, particularly the case of Diokno vs. Rehabilitation Finance Corporation, supra,
we are constrained to find and so hold that the provisions of the
Backpay Law, Republic Act No. 304, as to herein appellee GSIS is merely
directory or discretionary and not mandatory, appellant’s indebtedness
having been incurred only in April and December of 1957, that is, long
after the approval of either Republic Act No. 304 or its Amendatory Act
No. 897. Consequently, mandamus will not lie, the duty imposed upon the
appellee GSIS as to the acceptance or discount of appellant’s backpay
certificate being neither clear nor ministerial.
Appellant also claims in his brief that his obligation to appellee
GSIS has been extinguished due to confusion or merger of rights, or
compensated with what the Government of the Philippines owes him under
his backpay certificate of indebtedness, which became due and
demandable as of June 18, 1958. The claim, apparently, is predicated on
the theory that the Government of the Philippines and the GSIS are one
and identical and that a claim against one is necessarily a claim
against the other. But while appellant may be considered a creditor to
the Government insofar as his backpay claim is concerned, he does not
enjoy the same standing as regards the GSIS, herein appellee. It can
readily be gleaned from the GSIS charter that it is a private
corporation with a personality separate and distinct from the
Government. Indeed, this Court has had occasion to rule in the case of
Abad Santos vs. Auditor General (79 Phil., 190) that “the
Government Service Insurance System is not the government itself, but
is a separate institution, with its existence, own personality,
autonomous and independent.” Under the circumstances, there can be no
compensation, much less confusion or merger of rights, as to extinguish
appellants outstanding obligations to the GSIS.
For all the foregoing considerations, the judgment appealed from is hereby affirmed, with costs against the appellant.
Bengzon, C. J., Padilla, Labrador, Reyes, J. B. L., Barrera, Paredes, Dizon, and Natividad, JJ., concur.
Bautista Angelo, J., on leave, took no part.
Concepcion, J., took no part.