G.R. No. L-20503 and L-20632, June 30, 1965
Case Parties:

THE PHILIPPINE ASSOCIATION OF GOVERNMENT RETIREES, INC., petitioner-appellee, vs. THE GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), THE GENERAL MANAGER, GSIS and THE BOARD OF TRUSTEES, GSIS, respondent-appellants.
SIMEON MORALES, plaintiff-appellee, vs. THE GOVERNMENT SERVICE INSURANCE SYSTEM and RODOLFO ANDAL, in his capacity as General Manager, GSIS, defendants-appellants.

FACTS

In G.R. No. L-20503, the Philippine Association of Government Retirees, Inc. (PAGR) filed a petition against the GSIS. The case originated after the Supreme Court’s decision in Bautista v. Auditor General (G.R. No. L-10859, August 29, 1958), which held that a government employee compulsorily retired at age 65 under Commonwealth Act No. 186 , as amended, was entitled to a refund of the 5% discount deducted from his five-year lump sum annuity. Following this decision, many retirees filed claims for refunds. The GSIS, through its Board of Trustees, passed Resolution No. 2944 on December 2, 1958, offering to pay retirees a “retirement annuity differential” computed under a specific formula, in lieu of a direct refund of the discount, and requested retirees to sign quitclaim forms to receive this differential. Many retirees accepted, but PAGR objected and filed the instant petition seeking a court order compelling the GSIS to refund the full 5% discount to its members, plus damages and attorney’s fees. The Court of First Instance of Manila ruled in favor of the retirees, ordering the refund.
In G.R. No. L-20632, plaintiff Simeon Morales, a former Bureau of Internal Revenue employee compulsorily retired at age 65, sought to recover the 5% discount (amounting to P1,066.25) deducted by the GSIS from the lump sum payment of his annuity’s present value for the first five years. The GSIS computed the present value with the discount under Section 11(a)-3 of Commonwealth Act No. 186 , as amended. Morales contended the present value should simply be his monthly annuity multiplied by 60 months, without discount. The Municipal Court and the Court of First Instance of Manila ruled in his favor, ordering payment of the amount plus interest and attorney’s fees.

ISSUE

The common issue in both cases is whether a government employee compulsorily retired at the age of 65 years under Commonwealth Act No. 186 , as amended, is entitled to the refund of the 5% discount made by the GSIS from his five-year lump sum annuity under Section 11(a)-3 of said Act.

RULING

The Supreme Court affirmed the decisions of the lower courts, ruling in favor of the retirees. The Court held that the issue had been squarely decided in the Bautista case, which established that such retirees are entitled to a refund of the 5% discount. The Court rejected the GSIS’s arguments for reconsideration, which were based on newly found legislative views expressed during the consideration of Republic Act No. 660 , stating that such views do not necessarily reflect the intent of Congress and are not controlling in statutory interpretation. The Court found no reason to modify or disturb the doctrine laid down in Bautista. The decisions appealed from were affirmed, with costs against the GSIS.