- Petitioner
- Clarita D. Aclado
- Respondent
- Government Service Insurance System
- Citation
- G.R. No. 260428
- Court
- Supreme Court
- Division
- Second Division
- Ponente
- Lazaro-Javier, J.
- Decided
- March 1, 2023
Summary
A retired public school teacher challenged the unconscionable interest rates and penalties imposed by GSIS on her unpaid loans. Her PHP147,678.83 in gross loans ballooned to PHP638,172.59 due to 12% per annum compounded monthly interest on arrears plus 6% per annum compounded monthly penalties, leaving her with only PHP163,322.96 in retirement benefits. The Supreme Court granted her petition despite procedural defects, applying the relaxation doctrine for substantial justice. The Court found the interest rates unconscionable under Civil Code Articles 1229 and 2227, noting GSIS failed to provide prior demand before imposing penalties. The Court ordered GSIS to waive interest on arrears, impose only non-compounded 6% penalty from the date of actual default, and return excess payments, emphasizing that government corporations in contractual relationships are subject to private law principles regarding unconscionable contract terms.