G.R. No. L-15436 December 30, 1961
EUSEBIO G. DIMAANO, petitioner, vs. THE AUDITOR GENERAL and THE GOVERNMENT SERVICE INSURANCE SYSTEM, respondents.

FACTS

Petitioner Eusebio G. Dimaano compulsorily retired on January 16, 1953, under Commonwealth Act No. 186, as amended by Republic Act No. 660. He was awarded a lump sum annuity of P20,500.80 for the first five years of retirement. The Government Service Insurance System (GSIS) deducted P1,012.68 from this amount, paying him only P19,488.12. Dimaano sought a refund of this deduction, claiming it was illegal under the Supreme Court’s ruling in Bautista vs. The Auditor General. The GSIS, however, maintained the deduction was lawful under Section 12(a) of the amended retirement law, which requires a retiree to have made contributions for at least five years, allowing such contributions to be deducted from the annuity. After the GSIS General Manager denied his claim, Dimaano appealed to the Auditor General, who upheld the GSIS’s decision.

ISSUE

Whether the GSIS was legally authorized to deduct the amount of the petitioner’s required contributions from his lump sum annuity upon his compulsory retirement.

RULING

The Supreme Court affirmed the decision of the Auditor General, denying the petitioner’s claim for refund. The legal logic centers on the interpretation of Section 12 of Commonwealth Act No. 186, as amended by Republic Act No. 660, the law in force at the time of Dimaano’s retirement in 1953. While paragraph (a) of Section 12, governing optional retirement, explicitly states that “In all cases… he has made contributions for at least five years,” paragraph (c), governing compulsory retirement, does not repeat this clause. The Court, following its precedent in Espejo vs. The Auditor General, ruled that the five-year contribution requirement is a general condition precedent to receiving retirement benefits, applicable to both optional and compulsory retirees. The phrase “In all cases” in paragraph (a) makes this requirement universal. The subsequent enactment of Republic Act No. 1573 in 1956, which explicitly applied the contribution requirement to “all cases of retirement,” was merely a clarifying amendment that removed any ambiguity; it did not establish a new rule. The Court distinguished the Bautista case, which prohibited a discount on the present cash value of the annuity, from the instant case involving a deduction for unpaid contributions. Consequently, the GSIS was authorized to deduct the equivalent of the petitioner’s required contributions from his annuity payment.