EN BANC
[G.R. No. 146494.
GOVERNMENT SERVICE INSURANCE SYSTEM, Cebu City Branch, petitioner, vs. MILAGROS O. MONTESCLAROS, respondent.
D E C I S I O N
CARPIO, J.:
The Case
This is a petition for review on certiorari of the
Decision[1]
dated
The Facts
Sangguniang Bayan member Nicolas Montesclaros (“Nicolas”) married
Milagros Orbiso (“Milagros”) on
On 4 January 1985, Nicolas filed with the Government Service
Insurance System (“GSIS”) an application for retirement benefits effective 18
February 1985 under Presidential Decree No. 1146 or the Revised Government
Service Insurance Act of 1977 (“PD 1146”).
In his retirement application, Nicolas designated his wife Milagros as
his sole beneficiary.[4]
Nicolas’ last day of actual service was on
On
On
GSIS appealed to the Court of Appeals, which affirmed the decision of the trial court. Hence, this petition for review.
In the meantime, in a letter dated
The Court will resolve the
issue despite the manifestation of Milagros. The issue involves not only the
claim of Milagros but also that of other surviving spouses who are similarly
situated and whose claims GSIS would
also deny based on the proviso.
Social justice and public interest demand that we resolve the
constitutionality of the proviso.
The Ruling of the Court of Appeals
The Court of Appeals agreed with the trial court that the retirement benefits are onerous and conjugal because the pension came from the deceased pensioner’s salary deductions. The Court of Appeals held that the pension is not gratuitous since it is a deferred compensation for services rendered.
The Issues
GSIS raises the following issues:
1. Whether Section 16 of PD 1146 entitles Milagros to survivorship pension;
2. Whether retirement benefits form part of conjugal property;
3. Whether Articles 254 and 256 of the Family Code repealed Section 18 of PD 1146.[12]
The Court’s Ruling
The pertinent provisions of PD 1146 on survivorship benefits read:
SEC. 16. Survivorship Benefits. When a member
or pensioner dies, the beneficiary shall be entitled to survivorship benefits
provided for in sections seventeen and eighteen hereunder. The survivorship
pension shall consist of:
(1) basic survivorship pension which is fifty
percent of the basic monthly pension;
and
(2) dependent’s pension not exceeding fifty
percent of the basic monthly pension payable in accordance with the rules and
regulations prescribed by the System.
SEC. 17. Death of a Member. (a) Upon the death of a member, the primary beneficiaries
shall be entitled to:
(1) the basic monthly pension which is guaranteed
for five years; Provided, That, at the option of the beneficiaries, it
may be paid in lump sum as defined in
this Act: Provided, further, That, the member is entitled to old-age pension
at the time of his death; or
(2) the basic survivorship pension which is
guaranteed for thirty months and the dependent’s pension; Provided,
That, the deceased had paid at least
thirty-six monthly contributions within the five-year period immediately
preceding his death, or a total of at least one hundred eighty monthly
contributions prior to his death.
(b) At the end of the guaranteed periods
mentioned in the preceding sub-section (a), the survivorship pension shall be
paid as follows:
(1) when the dependent spouse is the only
survivor, he shall receive the basic survivorship pension for life or until he
remarries;
(2) when only
dependent children are the survivors, they shall be entitled to the
survivorship pension for as long as they are qualified;
(3) when the survivors are
the dependent spouse and the dependent children, they shall be entitled to the
survivorship pension so long as there are dependent children and, thereafter,
the surviving spouse shall receive the basic survivorship pension for life or
until he remarries.
(c) In the absence of primary beneficiaries, the
secondary beneficiaries designated by the deceased and recorded in the System,
shall be entitled to:
(1) a cash payment equivalent to thirty times the
basic survivorship pension when the member is qualified for old-age
pension; or
(2) a cash payment equivalent to fifty percent of the average monthly compensation
for each year he paid contributions, but not less than five hundred pesos; Provided,
That, the member paid at least
thirty-six monthly contributions within the five-year period immediately preceding his death or paid a
total of at least one hundred eighty monthly contributions prior to his death.
(d) When the primary beneficiaries are not entitled
to the benefits mentioned in paragraph (a) of this section, they shall receive
a cash payment equivalent to one hundred percent of the average monthly
compensation for each year the member paid contributions, but not less than
five hundred pesos. In the absence of
primary beneficiaries, the amount shall revert to the funds of the System.
SEC. 18. Death
of a Pensioner. Upon the death of a
pensioner, the primary beneficiaries shall receive the applicable pension
mentioned under paragraph (b) of section seventeen of this Act: Provided,
That, the dependent spouse shall not be entitled to said pension if his
marriage with the pensioner is contracted within three years before the
pensioner qualified for the pension.
When the pensioner dies within the period covered by the lump sum, the
survivorship pension shall be paid only after the expiration of the said
period. This shall also apply to the
pensioners living as of the effectivity of this Act, but the survivorship
benefit shall be based on the monthly pension being received at the time of
death. (Emphasis supplied)
Under PD 1146, the primary beneficiaries are (1) the dependent
spouse until such spouse remarries, and (2) the dependent children.[13] The secondary beneficiaries are the dependent
parents and legitimate descendants except dependent children.[14] The law defines dependent as “the
legitimate, legitimated, legally adopted, acknowledged natural or illegitimate
child who is unmarried, not gainfully employed, and not over twenty-one years
of age or is over twenty-one years of age but physically or mentally
incapacitated and incapable of self-support.” The term also includes the legitimate spouse dependent for support
on the member, and the legitimate parent wholly dependent on the member
for support.[15]
The main question for
resolution is the validity of the proviso in Section 18 of PD 1146, which
proviso prohibits the dependent spouse from receiving survivorship pension if
such dependent spouse married the pensioner within three years before the
pensioner qualified for the pension (“the proviso”).
We hold that the proviso,
which was the sole basis for the rejection by GSIS of Milagros’ claim, is
unconstitutional because it violates the due process clause. The proviso is
also discriminatory and denies equal protection of the law.
Retirement Benefits as Property Interest
Under Section 5 of PD 1146,
it is mandatory for the government employee to pay monthly contributions. PD 1146 mandates the government to include in
its annual appropriation the necessary amounts for its share of the
contributions. It is compulsory on the government employer to take off and
withhold from the employees’ monthly salaries their contributions and to remit
the same to GSIS.[16] The government employer must also remit its
corresponding share to GSIS.[17] Considering the mandatory salary deductions
from the government employee, the government pensions do not constitute mere
gratuity but form part of compensation.
In a pension plan where
employee participation is mandatory, the prevailing view is that employees have
contractual or vested rights in the pension where the pension is part of the
terms of employment.[18] The reason for providing retirement benefits
is to compensate service to the government. Retirement benefits to government
employees are part of emolument to encourage and retain qualified employees in
the government service. Retirement benefits to government employees reward them
for giving the best years of their lives in the service of their country.[19]
Thus, where the employee
retires and meets the eligibility requirements, he acquires a vested right to
benefits that is protected by the due process clause.[20] Retirees enjoy a protected property interest
whenever they acquire a right to immediate payment under pre-existing law.[21] Thus, a pensioner acquires a vested right to
benefits that have become due as provided under the terms of the public
employees’ pension statute.[22] No law can deprive such person of his pension
rights without due process of law, that is, without notice and opportunity to
be heard.[23]
In addition to retirement
and disability benefits, PD 1146 also provides for benefits to survivors of
deceased government employees and pensioners.
Under PD 1146, the dependent spouse is one of the beneficiaries of
survivorship benefits. A widow’s right
to receive pension following the demise of her husband is also part of the
husband’s contractual compensation.[24]
Denial of Due Process
The proviso is contrary to
Section 1, Article III of the Constitution, which provides that “[n]o person
shall be deprived of life, liberty, or property without due process of law, nor
shall any person be denied the equal protection of the laws.” The proviso is unduly oppressive in
outrightly denying a dependent spouse’s claim for survivorship pension if the
dependent spouse contracted marriage to the pensioner within the three-year
prohibited period. There is outright confiscation of benefits due the surviving
spouse without giving the surviving spouse an opportunity to be heard. The proviso undermines the purpose of PD
1146, which is to assure comprehensive and integrated social security and
insurance benefits to government employees and their dependents in the event of
sickness, disability, death, and retirement of the government employees.
The “whereas” clauses of PD
1146 state:
WHEREAS, the Government
Service Insurance System in promoting the efficiency and welfare of the
employees of the Government of the
WHEREAS, it is necessary to
preserve at all times the actuarial solvency of the funds administered by the
System; to guarantee to the government employee all the benefits due him; and
to expand and increase the benefits made available to him and his dependents to
the extent permitted by available resources;
WHEREAS, provisions of
existing laws have impeded the efficient and effective discharge by the System
of its functions and have unduly hampered the System from being more responsive
to the dramatic changes of the times and from meeting the increasing needs and
expectations of the Filipino public servant;
WHEREAS, provisions of
existing laws that have prejudiced, rather than benefited, the government
employee; restricted, rather than broadened, his benefits, prolonged, rather
than facilitated the payment of benefits, must now yield to his paramount
welfare;
WHEREAS, the social security
and insurance benefits of government employees must be continuously re-examined
and improved to assure comprehensive and integrated social security and
insurance programs that will provide benefits responsive to their needs and
those of their dependents in the event of sickness, disability, death,
retirement, and other contingencies; and to serve as a fitting reward for
dedicated public service;
WHEREAS, in the light of
existing economic conditions affecting the welfare of government employees,
there is a need to expand and improve the social security and insurance
programs administered by the Government Service Insurance System, specifically,
among others, by increasing pension benefits, expanding disability benefits,
introducing survivorship benefits, introducing sickness and income benefits,
and eventually extending the compulsory coverage of these programs to all
government employees regardless of employment status.
PD 1146 has the following
purposes:
a. to preserve at all times
the actuarial solvency of the funds administered by the System;
b. to guarantee to the
government employee all the benefits due him; and
c. to expand, increase, and
improve the social security and insurance benefits made available to him and
his dependents such as:
·
increasing
pension benefits
·
expanding
disability benefits
·
introducing
survivorship benefits
·
introducing
sickness income benefits
·
extending
compulsory membership to all
government
employees irrespective of status[25]
The law extends
survivorship benefits to the surviving and qualified beneficiaries of the
deceased member or pensioner to cushion the beneficiaries against the adverse
economic effects resulting from the death of the wage earner or pensioner.[26]
Violation of the Equal Protection Clause
The surviving spouse of a
government employee is entitled to receive survivor’s benefits under a pension system. However, statutes sometimes require that the
spouse should have married the employee for a certain period before the
employee’s death to prevent sham marriages contracted for monetary gain. One example is the Illinois Pension Code
which restricts survivor’s annuity benefits to a surviving spouse who was
married to a state employee for at least one year before the employee’s
death. The
A statute based on
reasonable classification does not violate the constitutional guaranty of the
equal protection of the law.[28] The requirements for a valid and reasonable
classification are: (1) it must rest on substantial distinctions; (2) it must
be germane to the purpose of the law; (3) it must not be limited to existing
conditions only; and (4) it must apply equally to all members of the same
class.[29] Thus, the law may treat and regulate one class
differently from another class provided there are real and substantial
differences to distinguish one class from another.[30]
The proviso in question
does not satisfy these requirements. The
proviso discriminates against the dependent spouse who contracts marriage to
the pensioner within three years before the pensioner qualified for the
pension.[31] Under the proviso, even if the dependent
spouse married the pensioner more than three years before the pensioner’s
death, the dependent spouse would still not receive survivorship pension if the
marriage took place within three years before the pensioner qualified for
pension. The object of the prohibition
is vague. There is no reasonable
connection between the means employed and the purpose intended. The law itself does not provide any reason or
purpose for such a prohibition. If the
purpose of the proviso is to prevent “deathbed
marriages,” then we do not
see why the proviso reckons the three-year prohibition from the date the
pensioner qualified for pension and not from the date the pensioner died. The
classification does not rest on substantial distinctions. Worse, the
classification lumps all those marriages contracted within three years before
the pensioner qualified for pension as having been contracted primarily for
financial convenience to avail of pension benefits.
Indeed, the classification
is discriminatory and arbitrary. This is
probably the reason Congress deleted the proviso in Republic Act No. 8291 (“RA
8291”),[32] otherwise known as the “Government Service
Insurance Act of 1997,” the law revising the old charter of GSIS (PD
1146). Under the implementing rules of
RA 8291, the surviving spouse who married the member immediately before the
member’s death is still qualified to receive survivorship pension unless the
GSIS proves that the surviving spouse contracted the marriage solely to receive
the benefit.[33]
Thus, the present GSIS law
does not presume that marriages contracted within three years before retirement
or death of a member are sham marriages contracted to avail of survivorship
benefits. The present GSIS law does not
automatically forfeit the survivorship pension of the surviving spouse who
contracted marriage to a GSIS member within three years before the member’s
retirement or death. The law
acknowledges that whether the surviving spouse contracted the marriage mainly
to receive survivorship benefits is a matter of evidence. The law no longer
prescribes a sweeping classification that unduly prejudices the legitimate
surviving spouse and defeats the purpose for which Congress enacted the social
legislation.
WHEREFORE, the petition is DENIED for want of merit. We
declare VOID for being violative of the constitutional guarantees of due
process and equal protection of the law the proviso in Section 18 of
Presidential Decree No. 1146, which proviso states that “the dependent spouse
shall not be entitled to said pension if his marriage with the pensioner is
contracted within three years before the pensioner qualified for the pension.” The Government Service Insurance System
cannot deny the claim of Milagros O. Montesclaros for survivorship benefits
based on this invalid proviso.
No pronouncement as to
costs.
SO ORDERED.
Davide, Jr., C.J., Puno,
Vitug, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez,
Austria-Martinez, Corona, Carpio-Morales, Callejo, Sr., Azcuna, and Tinga, JJ., concur.
[1] Penned by Associate Justice Ruben T. Reyes, with Associate Justices Mariano M. Umali and Rebecca de Guia-Salvador concurring.
[2] Penned by Judge Peary G. Aleonar.
[3] See Marriage Contract; Records, p. 5.
[4] Records, p. 8.
[5] See Service Record; Records p. 70.
[6] Records, p. 112.
[7] Ibid., pp. 9, 12.
[8] Article 115 of the Family Code reads:
Art. 115. Retirement benefits, pensions, annuities, gratuities, usufructs and similar benefits shall be governed by the rules on gratuitous or onerous acquisitions as may be proper in each case.
[9] Article 117 of the family Code reads:
Art. 117. The following are conjugal partnership properties:
(1) Those acquired by onerous title during the marriage at the expense of the common fund, whether the acquisition be for the partnership, or for only one of the spouses;
(2) Those obtained from the labor, industry, work or profession of either or both of the spouses;
x x x
[10] Rollo, p. 78.
[11] Ibid., p. 84.
[12] Ibid., pp. 14-15.
[13] Sec. 2(g), PD 1146.
[14] Sec. 2(h), PD 1146.
[15] Sec. 2(f), PD 1146.
[16] Section 6, PD 1146.
[17] Ibid.
[18] 60A Am. Jur. 2d Pensions and Retirement Funds § 1620 (1988).
[19] GSIS v. Civil Service Commission, 315 Phil. 159 (1995).
[20] 60A Am. Jur. 2d Pensions and Retirement Funds § 1506 (1988).
[21]
Zucker v.
[22]
Pennie v. Reis, 132
[23]
Stevens v.
[24] 60A Am. Jur. 2d Pensions and Retirement Funds § 1620 (1988).
[25] Information Primer on Presidential Decree 1146 and other Benefits 14.
[26] Section 1, Rule VI of the Implementing Rules and Regulations of PD 1146, Rollo, p. 8.
[27] 388 N.E.2d 229 (1979).
[28]
Fariñas v. The Executive
Secretary, G.R. No. 147387,
[29]
Philippine Rural Electric Cooperatives
Association, Inc. (PHILRECA) v. The Secretary, Department of Interior
and Local Government, G.R. No. 143076,
[30] Fariñas v. The Executive Secretary, G.R. No. 147387, 10 December 2003; Abbas v. Commission on Elections, G.R. No. 89651, 10 November 1989, 179 SCRA 287.
[31] Section 11 of PD 1146 provides for the qualifications to become entitled to retirement benefits:
SEC. 11. Conditions for Old-Age Pension. – (a) Old-age pension shall be paid to a member who:
(1) has at least fifteen years of service;
(2) is at least sixty years of age; and
(3) is separated from the service.
(b) Unless the service is extended by appropriate authorities, retirement shall be compulsory for an employee at sixty-five years of age with at least fifteen years of service: Provided, That if he has less than fifteen years of service, he shall be allowed to continue in the service to complete the fifteen years.
[32] The pertinent provisions of RA 8291 regarding survivorship benefits read:
SEC. 20. Survivorship Benefits. - When a member or pensioner dies, the beneficiaries shall be entitled to survivorship benefits provided in Sections 21 and 22 hereunder subject to the conditions therein provided for. The survivorship pension shall consist of:
(1) the basic survivorship pension which is fifty percent (50%) of the basic monthly pension; and
(2) the dependent children’s pension not exceeding fifty percent (50%) of the basic monthly pension.
SEC. 21. Death of a Member. - (a) Upon the death of a member, the primary beneficiaries shall be entitled to:
(1) survivorship pension: Provided, That the deceased:
(i) was in the service at the time of his death; or
(ii) if separated from the service, has at least three (3) years of service at the time of his death and has paid thirty-six (36) monthly contributions within the five-year period immediately preceding his death; or has paid a total of at least one hundred eighty (180) monthly contributions prior to his death; or
(2) the survivorship pension plus a cash payment equivalent to one hundred percent (100%) of his average monthly compensation for every year of service: Provided, That the deceased was in the service at the time of his death with at least three (3) years of service; or
(3) a cash payment equivalent to one hundred percent (100%)
of his average monthly compensation for each year of service he paid
contributions, but not less than Twelve Thousand Pesos (P12,000.00): Provided, That the deceased has rendered at least three
(3) years of service prior to his death but does not qualify for the benefits
under item (1) or (2) of this paragraph.
(b) The survivorship pension shall be paid as follows:
(1) when the dependent spouse is the only survivor, he/she shall receive the basic survivorship pension for life or until he/she remarries;
(2) when only dependent children are the survivors, they shall be entitled to the basic survivorship pension for as long as they are qualified, plus the dependent children’s pension equivalent to ten percent (10%) of the basic monthly pension for every dependent child not exceeding five (5), counted from the youngest and without substitution;
(3) when the survivors are the dependent spouse and the dependent children, the dependent spouse shall receive the basic survivorship pension for life or until he/she remarries, and the dependent children shall receive the dependent children’s pension mentioned in the immediately preceding paragraph (2) hereof.
(c) In the absence of primary beneficiaries, the secondary beneficiaries shall be entitled to:
(1) the cash payment equivalent to one hundred percent
(100%) of his average monthly compensation for each year of service he paid
contributions, but not less than Twelve Thousand Pesos (P12,000.00): Provided,
That the member is in the service at the
time of his death and has at least three (3) years of service; or
(2) in the absence of secondary beneficiaries, the benefits under this paragraph shall be paid to his legal heirs.
(d) For purposes of the survivorship benefits, legitimate children shall include legally adopted and legitimated children.
SEC. 22. Death of a Pensioner. - Upon the death of an old-age pensioner or a member receiving the monthly income benefit for permanent disability, the qualified beneficiaries shall be entitled to the survivorship pension defined in Section 20 of this Act, subject to the provisions of paragraph (b) of Section 21 hereof. When the pensioner dies within the period covered by the lump sum, the survivorship pension shall be paid only after the expiration of the said period.
[33] Section 10.4.1 of the Implementing Rule and Regulation of R.A. No. 8291 reads:
Section 10.4 Allocation of the Survivorship Pension Among Beneficiaries. – The survivorship pension shall be paid as follows:
10.4.1 – When the dependent spouse is the only survivor, he/she shall receive the basic survivorship pension for life or until he/she remarries. For purposes of this section, the marriage of the surviving spouse immediately prior to the death of the member or pensioner shall be acceptable, unless it is proven that the marriage was solemnized solely for the purpose of receiving the benefit. (Emphasis supplied)