Tobias, Marlon G.

Consti 1/ Atty. Arias

EN BANC
[G.R. No. L-41299. February 21, 1983.]
SOCIAL SECURITY SYSTEM, petitioner, vs. COURT OF APPEALS,
DAVID B. CRUZ, SOCORRO CONCIO CRUZ, and LORNA C. CRUZ,
respondents.

FACTS: Spouses David and Socorro Cruz, applied and granted a real estate loan by the SSS
with residential lot located at Pateros, Rizal as collateral. The spouses Cruz complied with their
monthly payments. When delayed were incurred in their monthly payments SSS filed a petition
for extrajudicial foreclosure of their real estate mortgage executed by the spouses Cruz on the
ground that the spouses Cruz defaulted in payment, Pursuant for these application for
foreclosure notices were published in the Sunday Chronicle on the second notice the counsel
for spouses Cruz sent a letter to SSS informing the latter that his clients are up to date in their
payment of the monthly amortization and the SSS should not continue the publication of the
notices of foreclosure however their request was not granted thus the spouses Cruz filed an
action for damages against SSS before the Regional Trial Court of Rizal. SSS invoking its
immunity from suit being an agency of the government performing government function. The
trial court and court of appeal nevertheless awarded damages in favor of spouses Cruz which
was affirmed by court of appeal, Hence this petition.

ISSUE: Whether or not SSS has state immunity from suit and cannot be held liable for
damages.

HELD: The SSS has no state immunity from suit in the case at bar, even though it has a distinct
legal personality it can still be sued for damages. Whether the SSS performs governmental or
proprietary functions it becomes unnecessary for argumentation since that the waiver has been
provided through the mortgage contract between SSS and the spouses Cruz, the latter as
private citizen may bring a suit against the SSS.

It was found by both the Trial and Appellate Courts, that there was clear negligence on the part
of SSS when they mistook the loan account of Socorro J. Cruz for that of private respondent
Socorro C. Cruz. Its attention was called to the error, but it adamantly refused to acknowledge
its mistake. The SSS can be held liable for nominal damages. This type of damages is not for
the purpose of indemnifying private respondents for any loss suffered by them but to vindicate
or recognize their rights which have been violated or invaded by petitioner SSS.

The circumstances of the case also justify the award of attorney's fees, as granted by the
Trial and Appellate Courts, particularly considering that private respondents were
compel to litigate for the prosecution of their interests.

WHEREFORE, the judgment sought to be reviewed is hereby modified in that petitioner SSS
shall pay private respondents: P3,000.00 as nominal damages; and P5,000.00 as attorney's
fees