OBLICON

1. GSIS v. COA, G.R. No. 138381, Nov. 10, 2004

Facts:
On account of the consolidated cases of the parties involved, the Court promulgated a decision,
on the one hand, ordering the refund of amounts representing fringe benefits granted to GSIS
employees; and on the other, affirming the disallowance in excess of that approved by the COA
which was later on deducted by GSIS from the employees retirement benefits.
The GSIS retirees then filed a motion for amendatory and clarificatory judgment (amendatory
motion) asking the court whether the GSIS may lawfully deduct any amount from their
retirement benefits in light of Section 39 of Republic Act No. 8291. The court then ruled that the
said provision provides the Exemption of Retirement benefits from Tax, Legal Process and Lien.
As settled in several cases, retirement pay accruing to a public officer may not be withheld and
applied to his indebtedness to the government. Hence, the GSIS employees retained their
retirement benefits including those which were properly disallowed by the COA.
Issues:
1. Whether the GSIS employees have the obligation to return the benefits which were justifiably
disallowed by the COA and erroneously granted to and received by them.
2. Whether GSIS can seek restoration of the amounts erroneously granted to and received by the
employees.
Held:
1. Yes. The GSIS employees resultantly retained benefits to which they were not legally entitled
which, in turn, gave rise to an obligation on their part to return the amounts under the principle of
solutio indebiti. Under Article 2154 of the Civil Code, if something is received and unduly
delivered through mistake when there is no right to demand it, the obligation to return the thing
arises.
2. Yes. While GSIS cannot directly proceed against its employees retirement benefits, it can
nonetheless seek restoration of the amounts by means of a proper court action for its recovery.
There is no prohibition against enforcing a final monetary judgment against its employees other
assets and properties. This is only fair and consistent with basic principles of due process.