G.R. No. 172925; October 30, 2009
Government Service Insurance System, Petitioner, vs. Jaime K. Ibarra, Respondent.

FACTS

This case involves the execution of a prior Court Resolution ordering the GSIS to pay respondent Jaime Ibarra permanent partial disability benefits for 25 months, subject to deductions and set-offs. The GSIS filed a Manifestation claiming compliance by remitting ₱77,274.50, computed as 25 months multiplied by a monthly income benefit of ₱3,090.98. This computation was based on the GSIS’s application of the outdated Presidential Decree No. 1146, which defined “Average Monthly Compensation” with a ceiling of ₱3,000. Applying this old law, the GSIS derived Ibarra’s revalued average monthly compensation as only ₱3,140.00, despite records showing his actual basic salary was ₱33,773.36.

ISSUE

Whether the GSIS correctly computed Ibarra’s disability benefits using the outdated provisions of P.D. No. 1146, specifically its ₱3,000 ceiling for average monthly compensation.

RULING

No. The Supreme Court found the GSIS’s computation erroneous. The legal logic is clear: Republic Act No. 8291, “The Government Service Insurance System Act of 1997,” had already amended P.D. No. 1146. Section 2(l) of R.A. 8291 provides a new definition for “Average Monthly Compensation” (AMC) based on the aggregate compensation of the last 36 months of service, with an initial ceiling of ₱10,000, not ₱3,000. The revalued AMC under Section 2(m) is also recalculated based on this higher threshold. The Court held that the GSIS could not have been unaware of this superseding law and its application was mandatory. Therefore, using the obsolete ₱3,000 ceiling was incorrect. The Court reiterated its order for the GSIS to recompute and pay the 25-month benefit based on R.A. 8291’s provisions, subject to lawful deductions, and to submit proof of compliance within 90 days.