G.R. No. 146494 July 14, 2004 GOVERNMENT SERVICE INSURANCE SYSTEM, Cebu City Branch, Petitioner, MILAGROS O. MONTESCLAROS, Respondent

Download as docx, pdf, or txt
Download as docx, pdf, or txt
You are on page 1of 6

G.R. No.

146494             July 14, 2004

GOVERNMENT SERVICE INSURANCE SYSTEM, Cebu City Branch, petitioner,


vs.
MILAGROS O. MONTESCLAROS, respondent.

DECISION

CARPIO, J.:

The Case

This is a petition for review on certiorari of the Decision dated 13 December 2000 of the Court of

Appeals in CA-G.R. CV No. 48784. The Court of Appeals affirmed the Decision of the Regional Trial

Court, Branch 21, Cebu City ("trial court"), which held that Milagros Orbiso Montesclaros is entitled
to survivorship pension.

The Facts

Sangguniang Bayan member Nicolas Montesclaros ("Nicolas") married Milagros Orbiso ("Milagros")
on 10 July 1983. Nicolas was a 72- year old widower when he married Milagros who was then 43

years old.

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. Nicolas' last day of actual service was

on 17 February 1985. On 31 January 1986, GSIS approved Nicolas' application for retirement

"effective 17 February 1984," granting a lump sum payment of annuity for the first five years and a
monthly annuity thereafter. Nicolas died on 22 April 1992. Milagros filed with GSIS a claim for

survivorship pension under PD 1146. On 8 June 1992, GSIS denied the claim because under
Section 18 of PD 1146, the surviving spouse has no right to survivorship pension if the surviving
spouse contracted the marriage with the pensioner within three years before the pensioner qualified
for the pension. According to GSIS, Nicolas wed Milagros on 10 July 1983, less than one year from

his date of retirement on "17 February 1984."

On 2 October 1992, Milagros filed with the trial court a special civil action for declaratory relief
questioning the validity of Section 18 of PD 1146 disqualifying her from receiving survivorship
pension.

On 9 November 1994, the trial court rendered judgment declaring Milagros eligible for survivorship
pension. The trial court ordered GSIS to pay Milagros the benefits due including interest. Citing
Articles 115 and 117 of the Family Code, the trial court held that retirement benefits, which the
8  9 

pensioner has earned for services rendered and for which the pensioner has contributed through
monthly salary deductions, are onerous acquisitions. Since retirement benefits are property the
pensioner acquired through labor, such benefits are conjugal property. The trial court held that the
prohibition in Section 18 of PD 1146 is deemed repealed for being inconsistent with the Family
Code, a later law. The Family Code has retroactive effect if it does not prejudice or impair vested
rights.

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 10 January 2003, Milagros informed the Court that she has
accepted GSIS' decision disqualifying her from receiving survivorship pension and that she is no
longer interested in pursuing the case. Commenting on Milagros' letter, GSIS asserts that the Court
10 

must decide the case on the merits. 11


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. The secondary beneficiaries are the dependent
13 

parents and legitimate descendants except dependent children. The law defines dependent as "the
14 

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. The government employer must also remit its corresponding share to GSIS. Considering
16  17 

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. The reason for providing retirement benefits is to compensate service to the
18 

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. Retirees enjoy a protected property interest
20 

whenever they acquire a right to immediate payment under pre-existing law. Thus, a pensioner
21 

acquires a vested right to benefits that have become due as provided under the terms of the public
employees' pension statute. No law can deprive such person of his pension rights without due
22 

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 Philippines, administers the laws that
grant to its members social security and insurance benefits;

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


status25

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 Illinois pension system classifies spouses into those married less than one
year before a member's death and those married one year or more. The classification seeks to
prevent conscious adverse risk selection of deathbed marriages where a terminally ill member of the
pension system marries another so that person becomes eligible for benefits. In Sneddon v. The
State Employee's Retirement System of Illinois, the Appellate Court of Illinois held that such
27 

classification was based on difference in situation and circumstance, bore a rational relation to the
purpose of the statute, and was therefore not in violation of constitutional guarantees of due process
and equal protection.

A statute based on reasonable classification does not violate the constitutional guaranty of the equal
protection of the law. The requirements for a valid and reasonable classification are: (1) it must rest
28 

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. Thus, the
29 

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. Under the proviso, even if the dependent spouse married the pensioner
31 

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"), otherwise known as the "Government
32 

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.

You might also like