GSIS vs. Deang (GR No. 135644, 17 September 2001)

FIRST DIVISION
G.R. No. 135644. September 17, 2001
GOVERNMENT SERVICE INSURANCE SYSTEM,, Petitioner, vs.

SPOUSES GONZALO and MATILDE LABUNG-DEANG, Respondents.
DECISION
PARDO, J.:
The petitioner in the case is the Government Service Insurance

System (hereafter, GSIS). Having lost the case in the trial court and
the Court of Appeals, it now comes to this Court for redress.
At the onset, we state that the issue is not suability or whether

GSIS may be sued despite the doctrine of state immunity from suit,
but liability, whether or not GSIS may be liable to pay damages to
respondent spouses given the applicable law and the circumstances
of the case. 1
The Case
The case is a petition 2 for review on certiorari of the decision of the

Court of Appeals 3 affirming the decision of the Regional Trial Court,
Angeles City 4 ordering GSIS to pay respondents Gonzalo (now
deceased) 5 and Matilde Labung-Deang (hereafter, spouses Deang)
temperate damages, attorneys fees, legal interests and costs of suit
for the loss of their title to real property mortgaged to the GSIS.
The Facts
Sometime in December 1969, the spouses Deang obtained a

housing loan from the GSIS in the amount of eight thousand five
hundred pesos (P8,500.00). Under the agreement, the loan was to
mature on December 23, 1979. The loan was secured by a real
estate mortgage constituted over the spouses property covered by
Transfer Certificate of Title No. 14926-R issued by the Register of
Deeds of Pampanga. 6 As required by the mortgage deed, the
spouses Daeng deposited the owners duplicate copy of the title with
the GSIS. 7cräläwvirtualibräry
On January 19, 1979, eleven (11) months before the maturity of

the loan, the spouses Deang settled their debt with the GSIS 8 and
requested for the release of the owners duplicate copy of the title
since they intended to secure a loan from a private lender and use
the land covered by it as collateral security for the loan of fifty
thousand pesos (P50,000.00) 9 which they applied for with one
Milagros Runes. 10 They would use the proceeds of the loan applied
for the renovation of the spouses residential house and for
business. 11 cräläwvirtualibräry
However, personnel of the GSIS were not able to release the

owners duplicate of the title as it could not be found despite diligent
search. 12 As stated earlier, the spouses as mortgagors deposited
the owners duplicate copy of the title with the GSIS located at its
office in San Fernando, Pampanga. 13 cräläwvirtualibräry
Satisfied that the owners duplicate copy of the title was really lost,
in 1979, GSIS commenced the reconstitution proceedings with the
Court of First Instance of Pampanga for the issuance of a new
owners copy of the same. 14 cräläwvirtualibräry
On June 22, 1979, GSIS issued a certificate of release of

mortgage. 15 cräläwvirtualibräry
On June 26, 1979, after the completion of judicial proceedings,

GSIS finally secured and released the reconstituted copy of the
owners duplicate of Transfer Certificate of Title No. 14926-R to the
spouses Deang. 16 cräläwvirtualibräry
On July 6, 1979, the spouses Deang filed with the Court of First
Instance, Angeles City a complaint against GSIS for damages,
claiming that as result of the delay in releasing the duplicate copy of
the owners title, they were unable to secure a loan from Milagros
Runes, the proceeds of which could have been used in defraying the
estimated cost of the renovation of their residential house and
which could have been invested in some profitable business
undertaking. 17 cräläwvirtualibräry
In its defense, GSIS explained that the owners duplicate copy of the
title was released within a reasonable time since it had to conduct
standard pre-audit and post-audit procedures to verify if the
spouses Deangs account had been fully settled. 18 cräläwvirtualibräry
On July 31, 1995, the trial court rendered a decision ruling for the
spouses Deang. The trial court reasoned that the loss of the owners
duplicate copy of the title in the possession of GSIS as security for
the mortgage... without justifiable cause constitutes negligence on
the part of the employee of GSIS who lost it, making GSIS liable for
damages. 19 We quote the dispositive portion of the decision: 20 cräläwvirtualibräry
IN VIEW OF THE FOREGOING, the Court renders judgment ordering

the GSIS:
a) To pay the plaintiffs-spouses the amount of P20,000.00 as

temperate damages;
b) To pay plaintiffs-spouses the amount of P15,000.00 as attorneys

fees;
c) To pay legal interest on the award in paragraphs a) and b) from

the filing of the complaint; and,
d) To pay cost of the suit.
SO ORDERED.
On August 30, 1995, GSIS appealed the decision to the Court of

Appeals. 21cräläwvirtualibräry
On September 21, 1998, the Court of Appeals promulgated a

decision affirming the appealed judgment, ruling: First, since
government owned and controlled corporations (hereafter, GOCCs)
whose charters provide that they can sue and be sued have a legal
personality separate and distinct from the government, GSIS is not
covered by Article 2180 22 of the Civil Code, and it is liable for
damages caused by their employees acting within the scope of their
assigned tasks. Second, the GSIS is liable to pay a reasonable
amount of damages and attorneys fees, which the appellate court
will not disturb. We quote the dispositive portion: 23
cräläwvirtualibräry
WHEREFORE, finding no reversible error in the appealed judgment,

the same is hereby AFFIRMED.
SO ORDERED.

GSIS vs. Deang (GR No. 135644, 17 September 2001)

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FIRST DIVISION

G.R. No. 135644. September 17, 2001

GOVERNMENT SERVICE INSURANCE SYSTEM,, Petitioner, vs.

The petitioner in the case is the Government Service Insurance

At the onset, we state that the issue is not suability or whether

The case is a petition 2 for review on certiorari of the decision of the

Sometime in December 1969, the spouses Deang obtained a

On January 19, 1979, eleven (11) months before the maturity of

However, personnel of the GSIS were not able to release the

On June 22, 1979, GSIS issued a certificate of release of

On June 26, 1979, after the completion of judicial proceedings,

IN VIEW OF THE FOREGOING, the Court renders judgment ordering

a) To pay the plaintiffs-spouses the amount of P20,000.00 as

b) To pay plaintiffs-spouses the amount of P15,000.00 as attorneys

c) To pay legal interest on the award in paragraphs a) and b) from

d) To pay cost of the suit.

On August 30, 1995, GSIS appealed the decision to the Court of

On September 21, 1998, the Court of Appeals promulgated a

WHEREFORE, finding no reversible error in the appealed judgment,

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