G.R. No. 167000 – 666 Phil. 277 – 651 SCRA 279 – Political Law – Constitutional Law – State Immunity From Suit – Consent to be Sued; Consent by Law – GSIS Law
In 1974, Lapu-Lapu Development & Housing Corporation (LDHC) obtained a Php25M loan from the Government Service Insurance System (GSIS). The loan was secured by 78 parcels of land owned by LDHC. LDHC defaulted in its payment and the properties were foreclosed. The properties were then auctioned in public and the lone bidder was Group Management Corp. (GMC). However, GSIS failed to execute a final deed of sale in favor of GMC hence GMC filed a suit for specific performance against GSIS. GSIS invoked immunity from suit on the ground that its charter (R.A. No. 8291) granted it immunity from legal process and lien.
ISSUE: Whether or not GSIS is correct.
HELD: No. GSIS’ immunity from suit does not extend to its power to invest excess funds. Its power to invest is proprietary in nature. Under Section 36, RA 8291, the GSIS is granted the ancillary power to invest in business and other ventures for the benefit of the employees, by using its excess funds for investment purposes. In the exercise of such function and power, the GSIS is allowed to assume a character similar to a private corporation. Thus, it may sue and be sued, as also, explicitly granted by its charter. Needless to say, where proper, under Section 36, the GSIS may be held liable for the contracts it has entered into in the course of its business investments. For GSIS cannot claim a special immunity from liability in regard to its business ventures under said Section. Nor can it deny contracting parties, in our view, the right of redress and the enforcement of a claim, particularly as it arises from a purely contractual relationship, of a private character between an individual and the GSIS.
