Public money

There is a growing list of cases were shaky claims against government-owned or controlled corporations were upheld by the courts. I suspect that, because only public money was at stake, there might have been little enthusiasm on the part of the defense to hold the line more firmly.

There could be other, more horrible reasons, of course. But I will not even begin speculating on those.

The most horrific of these cases involves a public payout of billions of pesos and legal fees for the claimants’ lawyers estimated at about P3 billion. I will discuss this case at a later date, after all the documentation has been done.

Today, I will re-tell the story of a bizarre case that ends with the courts ordering the GSIS to pay one claimant P1 billion. That is money that belongs to the millions of members of the pension fund, me included.

The story begins in the early 1950s, when former Speaker Jose Zulueta and his wife Soledad Ramos decided to develop their land in Oranbo, Pasig, Rizal into a residential subdivision. The property development involved 100,986 sq meters of land covered by three mother titles. The land was subdivided into 199 subdivision lots now known as Antonio Subdivision.

For this property development, Zulueta borrowed a total of P3.117 million from the GSIS. The loan was secured by a real estate mortgage including the three mother titles but expressly excluding 78 of the 199 subdivision lots that Zulueta had already sold.

Zulueta was unable to repay the loans. The GSIS subsequently foreclosed on the mortgaged property. The three mother titles, excluding the 78 lots expressly stated in the original mortgage, were then consolidated in the name of the GSIS.

On May 7, 1990, Antonio Vic Zulueta, the son of Jose and Soledad, filed suit against the GSIS for recovery of ownership of the 78 excluded lots. The suit was filed with the Pasig regional trial court (Branch 71). They were represented in court by Eduardo M. Santiago.

When Eduardo Santiago passed away in 1996, his widow Rosario Enriquez Santiago substituted him in the case. Mrs. Santiago claims that when the GSIS consolidated its ownership over the mortgaged Zulueta properties, it acquired included ownership over the 78 lots expressly excluded in the original mortgage. All the lots that accrued to the GSIS were eventually sold to individual buyers.

For its part, the GSIS maintained that all the 78 lots in question were earlier sold by Zulueta himself and the claim would lead to gross injustice. As evidence, the pension fund produced in court copies of the TCTs in the name of the Zulueta buyers.

Records clearly show that long before the 1974 foreclosure by the GSIS, the elder Zulueta had already sold 46 of the lots to subdivision homeowners. Some of the sales were, in fact, made in the early 1950s, before a loan agreement was concluded between Speaker Zulueta and the GSIS.

At least in as far as the 46 lots were concerned, it was legally impossible for the pension fund to have acquired ownership over them because they were already titled to the Zulueta buyers. After the foreclosure proceedings, 23 more of the 78 excluded lots were titled to individuals who had bought them from Zulueta himself. The 9 remaining lots were likewise subsequently titled in the name of homeowners who had entered into deeds of conditional sale with Zulueta.

In a word, all the 78 lots excluded from the mortgage were sold by Zulueta and titled in the names of individuals who had bought them from the original owner.

Against the evidence, the trial court ruled on December 17, 1997 granting the claims of the plaintiffs and ordering the GSIS to return the 78 lots to Santiago. Since the lots were already sold (by Zulueta) to third parties, it was impossible for the GSIS to comply with the court order. That being the case, the court ordered the GSIS to pay Santiago the current fair market value of the 78 lots.

The pension fund brought the matter up to the Court of Appeals. The lower court was upheld, to the surprise of the government lawyers.

Hoping to find justice, the case was raised to the Supreme Court. On December 18, 2009 the First Division of the High Court upheld the decision of the trial court and the Court of Appeals. The High Court ordered the GSIS to pay Santiago P399 million as partial execution of the decision.

A motion for reconsideration was filed on January 12, 2010. The pension fund and all its members await the ruling with great suspense.

It could be that because the evidence was so clear in their favor, the lawyers for the GSIS handled the case with less than the passionate diligence required. If that is not the reason, then something more sinister might explain the outcome.

But if we look at similar cases involving private claims for public money, it does seem that there is some amount of readiness to grant private claims. After all, no one is really bloodied by handing out money that belongs to no one in particular. It is not like any single individual dies by a thousand cuts. It is more like ten thousand individuals are skinned ever so slightly they fail to notice it.

Awarding public money to pay off private claims, no matter how tenuous such claims may be, is an easy thing to do. It almost seems like a victimless crime.

There aren’t many willing to court trouble to defend public monies from sometimes unjust private claims. That might be the heart of the problem: a lack of adequate vigilance to protect the commons or, in the case of public corporations, to stand on behalf of the Republic.

Most often, these things happen with the public left completely unaware.