G.R. No.

98395 October 28, 1994

GOVERNMENT SERVICE INSURANCE SYSTEM, petitioner,

vs.
CIVIL SERVICE COMMISSION and DR. MANUEL BARADERO, respondents.

G.R. No. 102449

GOVERNMENT SERVICE INSURANCE SYSTEM, petitioner,

vs.
CIVIL SERVICE COMMISSION and MATILDE S. BELO, respondents.

Belo, Abiera & Associates for Matilde S. Belo.

QUIASON, J.:

Before us are two petitions docketed as G.R. No. 98395 and G.R. No. 102449. The petitions were
consolidated since they principally involved the same issue and parties.

We grant both petitions.

G.R. No. 98395

This is a petition for certiorari under Rule 65 of the Revised Rules of Court, to reverse and set aside
four orders of the Civil Service Commission (CSC), namely: (1) the Resolution No. 90-642 dated July
16, 1990, which resolved as creditable for retirement purposes the service of private
respondent Manuel Baradero, who served as Sangguniang Bayan member on a per diem basis from
January 1, 1976 to October 20, 1978; (2) the Order dated September 20, 1990 directing the
implementation of CSC Resolution No. 90-642; (3) the Order dated December 7, 1990 directing the
President and General Manager of petitioner Government Service Insurance System (GSIS) to show
cause why they should not be held in contempt for the delay in the implementation of Resolution No.
90-642; and (4) the Resolution No. 91-526 dated April 23, 1991, which dismissed petitioner's Motion
for Reconsideration of the Order dated September 20, 1990.

Dr. Manuel Baradero was a government employee, who occupied the position of Medical Officer IV in
the Philippine Medical Care Commission, until he reached the mandatory age of retirement of 65 years
old.

He served the Philippine Army as an enlisted man from November 17, 1942 until June 30, 1945. He
resumed his government career on January 1, 1976, when he was elected a member of the
Sangguniang Bayan of the Municipality of La Castellana, Negros Occidental. As such, he received per
diem for every session attended. He resigned from the Sangguniang Bayan on October 10, 1976. On
October 20, 1978, he was appointed Medical Officer I at the Philippine Medical Care Commission,
where he served until he reached the compulsory retirement age of 65 years old (Rollo, p. 28).

Prior to turning 65 years old, Dr. Baradero applied for compulsory retirement with petitioner, which
credited in his favor 13 years of government service, excluding his term as a Sangguniang Bayan
member. He requested an extension of service from the CSC to enable him to complete 15 years of
government service. This was necessary so that he may avail of retirement benefits.

The request was denied by the CSC in its Resolution No. 90-642 dated July 16, 1990. Instead, it ruled
that Dr. Baradero's two-year stint as a member of the Sangguniang Bayan be considered as creditable
service, hence completing the mandatory 15-year service and making him eligible for retirement
benefits (Rollo, p. 28).

The GSIS contested the resolution, alleging that:

(1) Per diem was expressly excluded in the definition of compensation in RA 1573 on
June 16, 1956. Prior to this, services paid on per diem basis were considered
creditable.

(2) Per diems were excluded from the definition of compensation because " per diems,
by themselves are usually of minimal amounts which cannot actually support an
insurance coverage" (Office of the General Counsel Opinion 08-85, June 3, 1985). It
had been maintained that "salary is essential to insurance in the System, as it serves
as the basis for the determination of the monthly premiums or contributions"
(Government Corporate Counsel Opinion No. 198, s. 1957).

(3) In the case of the late Commissioner Inocencio V. Ferrer of the Social Security
System, Commissioner Ferrer received per diems not only for attending meetings of
the Commission but also for hearing cases as hearing officer. With the almost daily
hearings of Commissioner Ferrer, he was said to have been performing full-time
service and received substantial amount of per diems such that "the so-called per
diems that
he received were not really per diems but compensation" (OGC Opinion 08-85).
Hence, his services as hearing Commissioner were considered creditable, but his per
diem for attending the board meetings were excluded in the computation of his
retirement benefits (Rollo, p. 32).

The GSIS advised that the CSC extend the services of Dr. Baradero until he completes the required
15 years so that he may avail of retirement benefits.

On September 20, 1990, the CSC issued an order directing the GSIS to implement Resolution No. 90-
642 (Rollo, p. 35).

The GSIS filed a motion for reconsideration of the order (Rollo, p. 37), which was denied by the CSC
in its Resolution No. 91-526 dated April 23, 1991. The resolution further directed the GSIS to comply
with the CSC resolution and order under pain of contempt (Rollo, p. 49).

Hence, this petition where the GSIS charges the CSC with grave abuse of discretion in ruling that: (1)
services rendered on a per diem basis is creditable for purposes of retirement; and (2) it has exclusive
jurisdiction in the determination of services which are creditable.

The Office of the Solicitor General filed a "Manifestation and Motion in Lieu of Comment," which
submitted its position that the law expressly excludes services rendered on per diem basis in
determining creditable government service for retirement purposes.
The Solicitor General is of the opinion that the CSC's resolutions and order crediting such services
were in violation of the law, and encroached on the power of the GSIS to administer and implement
retirement laws. He therefore recommended that the instant petition be given due course (Rollo, p.
100).

G.R. No. 102449

This is a petition for certiorari under Rule 65 of the Revised Rules of Court, to reverse and set aside
three orders of the CSC, namely: (1) the Resolution dated June 7, 1989, which resolved as creditable
for retirement purposes the services rendered by respondent Matilde S. Belo, who served as Vice-
Governor of Capiz in a hold-over capacity from December 31, 1976 to January 1, 1979; (2) the Order
dated July 18, 1991 directing the President and General Manager of petitioner to show cause why
they should not be held in contempt for the delay in the implementation of CSC Resolution No. 89-
368; and (3) the Order dated October 3, 1991, finding the President and General Manager of petitioner
guilty of indirect contempt with penalty of a fine of P1,000.00 per day of defiance until the
implementation of CSC Resolution No. 89-368.

Matilde Belo retired from the government service on February 2, 1988. At the time of her retirement,
Belo was the Vice-Governor of Capiz in a hold-over capacity. She served as Governor of Capiz from
January 25, 1972 until February 1, 1988.

As an elected government official, Belo received a fixed salary of P13,000.00 per annum from January
25, 1976 until December 31, 1976. Thereafter, she held the same position in a hold-over capacity and
was remunerated as follows: (1) from December 31, 1976 until January 1, 1979, she received per
diem for every session attended of the Sangguniang Panlalawigan; and (2) from December 31, 1979
until February 1, 1988, she received a fixed salary ranging from P23,000.00 to P45,000.00 per
annum (Rollo, p. 25).

Belo sought an opinion from the CSC to determine if the services she rendered from December 31,
1976 until January 1, 1979, in which period she was paid on a per diem basis, is creditable for
retirement purposes.

In response to the query, the CSC issued Resolution No. 89-368 dated June 7, 1987, which affirmed
that her services for said period was creditable (Rollo, pp. 25-26).

Belo's application for retirement was referred to the GSIS Committee on Claims, which adopted a
position contrary to that of the CSC.

On August 6, 1991, the GSIS received the Order dated July 18, 1991, which directed its President and
General Manager to show cause why they should not be held in contempt for the delay in the
implementation of CSC Resolution No. 89-368 (Rollo, pp. 28).

The GSIS filed its "Manifestation/Explanation," alleging that it cannot implement the resolution
considering that it has a pending petition for certiorari before this Court in the case of Dr. Baradero
(G.R. No. 98395), where the same issue was raised (Rollo, p. 30).

On October 3, 1991, the CSC issued an order finding the President and General Manager of GSIS
guilty of indirect contempt. Both were meted a penalty of P1,000.00 fine for each day of defiance until
the implementation of Resolution No. 89-368. The CSC noted that the mere pendency of the case of
Dr. Baradero cannot prevent the implementation of its resolution unless this Court issues a temporary
restraining order, and that said case had nothing to do with the case of Belo (Rollo, p. 34).
The GSIS filed the instant petition, charging the CSC with committing the same errors in G.R. No.
98395.

The Office of the Solicitor General manifested that it was adopting its "Manifestation and Motion in
Lieu of Comment" filed in G.R. No. 98395, holding the view that the law excluded services rendered
on a per diem basis, in crediting the length of service for retirement purposes (Rollo, p. 62).

In her comment, Belo insisted that CSC was correct in finding that her services rendered on a per
diem basis are creditable for retirement purposes. She claimed that the case of Commissioner Ferrer
of the Social Security Commission applied to her case by analogy.

She likewise contended that Executive Order No. 292 (Administrative Code of 1987) vests in the CSC
jurisdiction over matters regarding the accreditation of government services. She particularly cites
Section 12, Chapter 3, Book V thereof which enumerates the powers and functions of the CSC, among
which is to:

xxx xxx xxx

17. Administer the retirement program for government employees and accredit
government services and evaluate qualifications for retirement (Emphasis supplied);

xxx xxx xxx

II

The issues to be resolved are: (1) Is government service rendered on a per diem basis creditable for
computing the length of service for retirement purposes; and (2) Is petitioner the proper government
agency in determining what service is creditable for retirement purposes?

Section 35 of P.D. No. 1146 (Government Service Insurance Act of 1987) vests in petitioner the power
to implement the provisions of said law, which includes the guaranty of retirement benefits.

Under the epigraph "Benefits," Section 10 thereof provides for the computation of service, and reads:

xxx xxx xxx

Computation of Service. —

For the purpose of this section, the term service shall include full time service with
compensation: Provided, That part-time and other services with compensation may be
included under such rules and regulations prescribed by the System (Emphasis
supplied).

It is therefore material in the claim of retirement benefits that the employee should have
rendered service with compensation.

"Compensation" is defined by Section 1(c) of R.A. No. 1573, which amended Section 1(c) of C.A. No.
186 (Government Service Insurance Act), thus:

(c) "Salary, pay, or compensation" shall be construed as to exclude all bonuses, per
diems, allowances and overtime pay, or salary, pay or compensation given in addition
 to the base pay of the position or rank as fixed by law or regulations (Emphasis
supplied).

A similar definition is provided in Section 2(i) of P.D. No. 1146:

(i) Compensation — the basic pay or salary received by an employee, pursuant to his
employment/appointments, excluding per diems, bonuses, overtime pay, and
allowances (Emphasis supplied).

The law is very clear in its intent to exclude per diem in the definition of "compensation." Originally, per
diem was not among those excluded in the definition of compensation (See Section 1(c) of C.A. No.
186), not until the passage of the amending laws which redefined it to exclude per diem.

The law not only defines the word "compensation," but it also distinguishes it from other forms of
remunerations. Such distinction is significant not only for purposes of computing the contribution of
the employers and employees to the GSIS but also for computing the employees' service record and
benefits.

The Secretary of Justice, in his Opinion No. 196, s. 1976, opined:

. . . That such receipt of salary is an indispensable requirement for membership,

especially in the Retirement Insurance Fund, is logically inferred from these provisions
of the GSIS Act: Section 5 which requires that to receive the benefits provided for and
described in the GSIS Act, each official or employee who is a member of the System
and his employer shall pay the prescribed monthly rates of contributions or premiums
based on a percentage of the "monthly salary" of the employee or official; Sections 11
and 12, providing that the amount of retirement annuity or gratuity, or death or disability
benefits granted thereunder, shall be based on the monthly "salary"; and Section 13,
providing that the term "service" for purposes of computing the aggregate period of
service which forms the basis for retirement, shall include only service
with "compensation" (Emphasis supplied; G.R. No. 98395, Rollo, p. 67).

In essence, the grant of retirement benefits necessitates an obligation on the part of the employee to
contribute to the insurance fund of petitioner. Such obligation only arises where the employee is
receiving "salary, pay or compensation" and not per diem, which is not capable of paying off the
premium contributions to petitioner.

Also enlightening is the "Joint Civil Service Commission, Department of Budget and Management and
Government Service Insurance System Circular No. 1-89" dated July 13, 1989. It prescribes the
guidelines on the filing and processing of retirement applications, and we quote:

IV. Certification of Services Rendered.

xxx xxx xxx

C. In certifying to services rendered, Heads and Personnel Officers/Administrative

Officers of agencies shall be guided by the existing laws, rules and regulations followed
by GSIS in determining creditable services for retirement purposes which are as
follows:
 1. All previous services rendered by an official/employee pursuant to a duly approved
appointment, including those of Presidential appointees, to a position in the Civil
Service with compensation or salary or pay whether on permanent, provisional,
temporary, emergency, substitute, or casual status, and whether paid monthly, daily,
or hourly, subject to these conditions:

xxx xxx xxx

2. Services of government employees paid on per diem basis up to June 15, 1956
only.

D. All cases not covered by the procedures/guidelines above shall be referred to GSIS
for final determination (G.R. No. 98395, Rollo, pp. 75 and 77; Emphasis supplied).

The circular is clear that services rendered on a per diem bases are not creditable for retirement
purposes. It likewise confirms that it is the GSIS, and not the CSC which is the proper agency in
determining services which are creditable for retirement purposes.

In Profeta v. Drilon, 216 SCRA 777 (1992), we ruled that the GSIS has the original and exclusive
jurisdiction to determine whether a member is qualified or not to avail of the old-age pension benefit
under P.D. No. 1146, based on its computation of a member's years of government service. By
analogy, we reiterate our ruling in the cases at bench.

The case of Commissioner Inocencio V. Ferrer of the Social Security System is unapplicable. While it
is true that Commissioner Ferrer was granted retirement benefits notwithstanding being paid on a per
diem basis, we find merit in the GSIS explanation that the grant was consistent with its policy, since
the service which was creditable in Commissioner Ferrer's favor was his full time service as Hearing
Officer, and not his attendance at board meetings, which was not credited.

Anent the CSC's power to "administer the retirement program . . . and accredit government services .
. . for retirement" (Administrative Code of 1987, Book V, Chapter 3, Section 12), we rule that CSC role
is ministerial. "Accredit" merely means acknowledge. It must not be confused with the power to
determine what service is creditable for retirement purposes. It has been established that such power
belongs to the GSIS (cf. Profeta v. Drilon, 216 SCRA 777 [1992]).

The aforementioned provision relied upon by public respondent is derived from the Administrative
Code of 1987, which is a general law. It cannot prevail over the Revised Government Insurance Act
of 1977, which is a special law (cf. Cena v. Civil Service Commission, 211 SCRA 179 [1992]).

With the passage of the Administrative Code of 1987, members of the Sangguniang Bayan are no
longer paid per diem, but are now receiving compensation. Thus, services rendered after the effectivity
of the law may therefore be considered creditable for retirement purposes.

Private respondents both claim that retirement laws must be liberally interpreted in favor of the retirees.
However, the doctrine of liberal construction cannot be applied in the instant petitions, where the law
invoked is clear, unequivocal and leaves no room for interpretation or construction. Moreover, to
accommodate private respondents' plea will contravene the purpose for which the law was enacted,
and will defeat the ends which it sought to attain (cf. Re: Judge Alex Z. Reyes, 216 SCRA 720 [1992])

WHEREFORE, the petitions are both GRANTED. The CSC resolutions and orders in question are
REVERSED and SET ASIDE. No pronouncement as to costs.
SO ORDERED.

Narvasa, Cruz, Padilla, Bidin, Regalado, Davide, Jr., Romero, Melo, Puno, Vitug and Kapunan, JJ.,
concur.

Bellosillo, J., took no part.

Feliciano, J., is on leave.

G.R. No. 111812 May 31, 1995

DIONISIO M. RABOR, petitioner,

vs.
CIVIL SERVICE COMMISSION, respondent.

FELICIANO, J.:

Petitioner Dionisio M. Rabor is a Utility Worker in the Office of the Mayor, Davao City. He entered the
government service as a Utility worker on 10 April 1978 at the age of 55 years.

Sometime in May 1991,1 Alma, D. Pagatpatan, an official in the Office of the Mayor of Davao City,
advised Dionisio M. Rabor to apply for retirement, considering that he had already reached the age of
sixty-eight (68) years and seven (7) months, with thirteen (13) years and one (1) month of government
service. Rabor responded to this advice by exhibiting a "Certificate of Membership"2 issued by the
Government Service Insurance System ("GSIS") and dated 12 May 1988. At the bottom of this
"Certificate of Membership" is a typewritten statement of the following tenor: "Service extended to
comply 15 years service reqts." This statement is followed by a non-legible initial with the following
date "2/28/91."

Thereupon, the Davao City Government, through Ms. Pagatpatan, wrote to the Regional Director of
the Civil Service Commission, Region XI, Davao City ("CSRO-XI"), informing the latter of the foregoing
and requesting advice "as to what action [should] be taken on this matter."

In a letter dated 26 July 1991, Director Filemon B. Cawad of CSRO-XI advised Davao City Mayor
Rodrigo R. Duterte as follows:

Please be informed that the extension of services of Mr. Rabor is contrary to M.C. No.
65 of the Office of the President, the relevant portion of which is hereunder quoted:

Officials and employees who have reached the compulsory retirement

age of 65 years shall not be retained the service, except for extremely
meritorious reasons in which case the retention shall not exceed six
(6) months.

IN VIEW WHEREFORE, please be advised that the services of Mr. Dominador [M.]
Rabor as Utility Worker in that office, is already non-extend[i]ble.3

Accordingly, on 8 August l991, Mayor Duterte furnished a copy of the 26 July 1991 letter of Director
Cawad to Rabor and advised him "to stop reporting for work effective August 16, 1991."4
Petitioner Rabor then sent to the Regional Director, CSRO-XI, a letter dated 14 August 1991, asking
for extension of his services in the City Government until he "shall have completed the fifteen (15)
years service [requirement] in the Government so that [he] could also avail of the benefits of the
retirement laws given to employees of the Government." The extension he was asking for was about
two (2) years. Asserting that he was "still in good health and very able to perform the duties and
functions of [his] position as Utility Worker," Rabor sought "extension of [his] service as an exception
to Memorandum Circular No. 65 of the Office of the President."5 This request was denied by Director
Cawad on 15 August 1991.

Petitioner Rabor next wrote to the Office of the President on 29 January 1992 seeking reconsideration
of the decision of Director Cawad, CSRO-XI. The Office of the President referred Mr. Rabor's letter to
the Chairman of the Civil Service Commission on 5 March 1992.

In its Resolution No. 92-594, dated 28 April 1992, the Civil Service Commission dismissed the appeal
of Mr. Rabor and affirmed the action of Director Cawad embodied in the latter's letter of 26 July 1991.
This Resolution stated in part:

In his appeal, Rabor requested that he be allowed to continue rendering services as

Utility Worker in order to complete the fifteen (15) year service requirement under P.D.
1146.

CSC Memorandum Circular No. 27, s. 1990 provides, in part:

1. Any request for extension of service of compulsory retirees to

complete the fifteen years service requirement for retirement shall be
allowed only to permanent appointees in the career service who are
regular members of the Government Service Insurance System (GSIS)
and shall be granted for a period of not exceeding one (1) year.

Considering that as early as October 18, 1988, Rabor was already due for retirement,
his request for further extension of service cannot be given due course.6 (Emphasis in
the original)

On 28 October 1992, Mr. Rabor sought reconsideration of Resolution No. 92-594 of the Civil Service
Commission this time invoking the Decision of this Court in Cena v. Civil Service
Commission.7 Petitioner also asked for reinstatement with back salaries and benefits, having been
separated from the government service effective 16 August 1991. Rabor's motion for reconsideration
was denied by the Commission.

Petitioner Rabor sent another letter dated 16 April 1993 to the Office of the Mayor, Davao City, again
requesting that he be allowed to continue rendering service to the Davao City Government as Utility
Worker in order to complete the fifteen (15) years service requirement under P.D. No. 1146. This
request was once more denied by Mayor Duterte in a letter to petitioner dated 19 May 1993. In this
letter, Mayor Duterte pointed out that, under Cena grant of the extension of service was discretionary
on the part of the City Mayor, but that he could not grant the extension requested. Mayor Duterte's
letter, in relevant part, read:

The matter was referred to the City Legal Office and the Chairman of the Civil Service
Commission, in the advent of the decision of the Supreme Court in the Cena vs. CSC,
et al. (G.R. No. 97419 dated July 3, 1992), for legal opinion. Both the City Legal Officer
and the Chairman of the Civil Service Commission are one in these opinion
 that extending you an appointment in order that you may be able to complete the
fifteen-year service requirement is discretionary [on the part of] the City Mayor.

Much as we desire to extend you an appointment but circumstances are that we can
no longer do so. As you are already nearing your 70th birthday may no longer be able
to perform the duties attached to your position. Moreover, the position you had vacated
was already filled up.

We therefore regret to inform you that we cannot act favorably on your

request.8 (Emphases supplied)

At this point, Mr. Rabor decided to come to this Court. He filed a Letter/Petition dated 6 July 1993
appealing from Civil Service Resolution No. 92-594 and from Mayor Duterte's letter of 10 May 1993.

The Court required petitioner Rabor to comply with the formal requirements for instituting a special
civil action of certiorari to review the assailed Resolution of the Civil Service Commission. In turn, the
Commission was required to comment on petitioner's Letter/Petition.9 The Court subsequently noted
petitioner's Letter of 13 September 1993 relating to compliance with the mentioned formal
requirements and directed the Clerk of Court to advise petitioner to engage the services of counsel or
to ask for legal assistance from the Public Attorney's Office (PAO). 10

The Civil Service Commission, through the Office of the Solicitor General, filed its comment on 16
November 1993. The Court then resolved to give due course to the Petition and required the parties
to file memoranda. Both the Commission and Mr. Rabor (the latter through PAO counsel) did so.

In this proceeding, petitioner Rabor contends that his claim falls squarely within the ruling of this Court
in Cena v. Civil Service Commission. 11

Upon the other hand, the Commission seeks to distinguish this case from Cena. The Commission,
through the Solicitor General, stressed that in Cena, this Court had ruled that the employer agency,
the Land Registration Authority of the Department of Justice, was vested with discretion to grant to
Cena the extension requested by him. The Land Registration Authority had chosen not to exercise its
discretion to grant or deny such extension. In contrast, in the instant case, the Davao City Government
did exercise its discretion on the matter and decided to deny the extension sought by petitioner Rabor
for legitimate reasons.

While the Cena decision is barely three (3) years old, the Court considers that it must reexamine the
doctrine of Cena and the theoretical and policy underpinnings thereof. 12

We start by recalling the factual setting of Cena.

Gaudencio Cena was appointed Registrar of the Register of Deeds of Malabon, Metropolitan Manila,
on 16 July 1987. He reached the compulsory retirement age of sixty-five (65) years on 22 January
1991. By the latter date, his government service would have reached a total of eleven (11) years, nine
(9) months and six (6) days. Before reaching his 65th birthday, Cena requested the Secretary of
Justice, through the Administrator of the Land Registration Authority ("LRA") that he be allowed to
extend his service to complete the fifteen-year service requirement to enable him to retire with the full
benefit of an Old-Age Pension under Section 11 (b) of P.D. No. 1146. If Cena's request were granted,
he would complete fifteen (15) years of government service on 15 April 1994, at the age of sixty-eight
(68) years.
The LRA Administrator sought a ruling from the Civil Service Commission on whether or not Cena's
request could be granted considering that Cena was covered by Civil Service Memorandum No. 27,
Series of 1990. On 17 October 1990, the Commission allowed Cena a one (1) year extension of his
service from 22 January 1991 to 22 January 1992 under its Memorandum Circular No. 27. Dissatisfied,
Cena moved for reconsideration, without success. He then came to this Court, claiming that he was
entitled to an extension of three (3) years, three (3) months and twenty-four (24) days to complete the
fifteen-year service requirement for retirement with full benefits under Section 11 (b) of P.D. No. 1146.

This Court granted Cena' s petition in its Decision of 3 July 1992. Speaking through Mr. Justice
Medialdea, the Court held that a government employee who has reached the compulsory retirement
age of sixty-five (65) years, but at the same time has not yet completed fifteen (15) years of
government service required under Section 11 (b) of P.D. No. 1146 to qualify for the Old-Age Pension
Benefit, may be granted an extension of his government service for such period of time as may be
necessary to "fill up" or comply with the fifteen (15)-year service requirement. The Court also held that
the authority to grant the extension was a discretionary one vested in the head of the agency
concerned. Thus the Court concluded:

Accordingly, the Petition is GRANTED. The Land Registration Authority (LRA) and
Department of Justice has the discretion to allow petitioner Gaudencio Cena to extend
his 11 years, 9 months and 6 days of government to complete the fifteen-year
service so that he may retire with full benefits under Section 11, paragraph (b) of P.D.
1146.13 (Emphases supplied)

The Court reached the above conclusion primarily on the basis of the "plain and ordinary meaning" of
Section 11 (b) of P.D. No. 1146. Section 11 may be quoted in its entirety:

Sec. 11 Conditions for Old-Age Pension. — (a) Old-Age Pension shall be paid to a
member who

(1) has at least fifteen (15) years of service;

(2) is at least sixty (60) 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-(65) years of age with at least fifteen (15)
years of service; Provided, that if he has less than fifteen (15) years of service, he shall
he allowed to continue in the service to completed the fifteen (15) years. (Emphases
supplied)

The Court went on to rely upon the canon of liberal construction which has often been invoked in
respect of retirement statutes:

Being remedial in character, a statute granting a pension or establishing [a] retirement

plan should be liberally construed and administered in favor of persons intended to be
benefitted thereby. The liberal approach aims to achieve the humanitarian purposes
of the law in order that efficiency, security and well-being of government employees
may be enhanced.14 (Citations omitted)
While Section 11 (b) appeared cast in verbally unqualified terms, there were (and still are) two (2)
administrative issuances which prescribe limitations on the extension of service that may be granted
to an employee who has reached sixty-five (65) years of age.

The first administrative issuance is Civil Service Commission Circular No. 27, Series of 1990, which
should be quoted in its entirety:

TO : ALL HEADS OF DEPARTMENTS, BUREAUS AND AGENCIES OF THE

NATIONAL/LOCAL GOVERNMENTS INCLUDING GOVERNMENT- OWNED
AND/OR CONTROLLED CORPORATIONS WITH ORIGINAL CHARTERS.

SUBJECT : Extension of Service of Compulsory Retiree to Complete the Fifteen Years

Service Requirement for Retirement Purposes.

Pursuant to CSC Resolution No. 90-454 dated May 21, 1990, the Civil Service
Commission hereby adopts and promulgates the following policies and guidelines in
the extension of services of compulsory retirees to complete the fifteen years service
requirement for retirement purposes:

1. Any request for the extension of service of compulsory retirees to

complete the fifteen (15) years service requirement for retirement shall
be allowed only to permanent appointees in the career service who are
regular members of the Government Service Insurance System
(GSIS), and shall be granted for a period not exceeding one (1) year.

2. Any request for the extension of service of compulsory retiree to

complete the fifteen (15) years service requirement for retirement who
entered the government service at 57 years of age or over upon prior
grant of authority to appoint him or her, shall no longer be granted.

3. Any request for the extension of service to complete the fifteen (15)
years service requirement of retirement shall be filled not later than
three (3) years prior to the date of compulsory retirement.

4. Any request for the extension of service of a compulsory retiree who

meets the minimum number of years of service for retirement purposes
may be granted for six (6) months only with no further extension.

This Memorandum Circular shall take effect immediately. (Emphases supplied)

The second administrative issuance — Memorandum Circular No. 65 of the Office of the President,
dated 14 June 1988 — provides:

xxx xxx xxx

WHEREAS, this Office has been. receiving requests for reinstatement and/or
retention in the service of employees who have reached the compulsory retirement
age of 65 years, despite the strict conditions provided for in Memorandum Circular
No. 163, dated March 5, 1968, as amended.
 WHEREAS, the President has recently adopted a policy to adhere more strictly to the
law providing for compulsory retirement age of 65 years and, in extremely
meritorious cases, to limit the service beyond the age of 65 years to six (6) months
only.

WHEREFORE, the pertinent provision of Memorandum Circular No. 163 or on the

retention in the service of officials or employees who have reached the compulsory
retirement age of 65 years, is hereby amended to read as follows:

Officials or employees who have reached the compulsory retirement

age of 65 years shall not be retained in the service, except for
extremely meritorious reasons in which case the retention shall not
exceed six (6) months.

All heads of departments, bureaus, offices and instrumentalities of the government

including government-owned or controlled corporations, are hereby enjoined to
require their respective offices to strictly comply with this circular.

This Circular shall take effect immediately.

By authority of the President

(Sgd.)

CATALINO MACARAIG, JR.

Executive Secretary

Manila, June 14, 1988.15 (Emphasis supplied)

Medialdea, J. resolved the challenges posed by the above two (2) administrative regulations by, firstly,
considering as invalid Civil Service Memorandum No. 27 and, secondly, by interpreting the Office of
the President's Memorandum Circular No. 65 as inapplicable to the case of Gaudencio T. Cena.

We turn first to the Civil Service Commission's Memorandum Circular No. 27. Medialdea, J. wrote:

The Civil Service Commission Memorandum Circular No. 27 being in the nature of an
administrative regulation, must be governed by the principle that administrative
regulations adopted under legislative authority by a particular department must be in
harmony with the provisions of the law, and should be for the sole purpose of carrying
into effect its general provisions (People v. Maceren, G.R. No. L-32166, October 18,
1977, 79 SCRA 450; Teoxon v. Members of the Board of Administrators, L-25619,
June 30, 1970, 33 SCRA 585; Manuel v. General Auditing Office, L-28952, December
29, 1971, 42 SCRA 660; Deluao v. Casteel, L-21906, August 29, 1969, 29 SCRA 350).
. . . . The rule on limiting to one the year the extension of service of an employee who
has reached the compulsory retirement age of sixty-five (65) years, but has less than
fifteen (15) years of service under Civil Service Memorandum Circular No. 27, S. 1990,
cannot likewise be accorded validity because it has no relationship or connection with
any provision of P.D. 1146 supposed to be carried into effect. The rule was an addition
to or extension of the law, not merely a mode of carrying it into effect. The Civil Service
Commission has no power to supply perceived omissions in P.D. 1146. 16 (Emphasis
supplied)
It will be seen that Cena, in striking down Civil Service Commission Memorandum No. 27, took a very
narrow view on the question of what subordinate rule-making by an administrative agency is
permissible and valid. That restrictive view must be contrasted with this Court's earlier ruling in People
v. Exconde, 17 where Mr. Justice J.B.L. Reyes said:

It is well established in this jurisdiction that, while the making of laws is a non-delegable
activity that corresponds exclusively to Congress, nevertheless, the latter may
constitutionally delegate authority and promulgate rules and regulations to implement
a given legislation and effectuate its policies, for the reason that the legislature often
finds it impracticable (if not impossible) to anticipate and provide for the multifarious
and complex situations that may be met in carrying the law into effect. All that is
required is that the regulation should be germane to the objects and purposes of the
law; that the regulation be not in contradiction with it, but conform to standards that the
law prescribes.18 (Emphasis supplied)

In Tablarin v. Gutierrez, 19 the Court, in sustaining the validity of a MECS Order which established
passing a uniform admission test called the National Medical Admission Test (NMAT) as a prerequisite
for eligibility for admission into medical schools in the Philippines, said:

The standards set for subordinate legislation in the exercise of rule making authority
by an administrative agency like the Board of Medical Education are necessarily broad
and highly abstract. As explained by then Mr. Justice Fernando in Edu v. Ericta (35
SCRA 481 [1970]) —

The standards may be either expressed or implied. If the former, the

non-delegation objection is easily met. The Standard though does not
have to be spelled out specifically. It could be implied from the policy
and purpose of the act considered as a whole. In the Reflector Law,
clearly the legislative objective is public safety. What is sought to be
attained in Calalang v. William is "safe transit upon the roads."

We believe and so hold that the necessary standards are set forth in Section 1 of the
1959 Medical Act: "the standardization and regulation of medical education" and in
Section 5 (a) and 7 of the same Act, the body of the statute itself, and that these
considered together are sufficient compliance with the requirements of the non-
delegation principle.20 (Citations omitted; emphasis partly in the original and partly
supplied)

In Edu v. Ericta, 21 then Mr. Justice Fernando stressed the abstract and very general nature of the
standards which our Court has in prior case law upheld as sufficient for purposes of compliance with
the requirements for validity of subordinate or administrative rule-making:

This Court has considered as sufficient standards, "public welfare," (Municipality of

Cardona v. Municipality of Binangonan, 36 Phil. 547 [1917]); "necessary in the interest
of law and order," (Rubi v. Provincial Board, 39 Phil. 660 [1919]); "public
interest," (People v. Rosenthal, 68 Phil. 328 [1939]); and "justice and equity and
substantial merits of the case," (International Hardwood v. Pangil Federation of Labor,
17 Phil. 602 [1940]). 22 (Emphasis supplied)

Clearly, therefore, Cena when it required a considerably higher degree of detail in the statute to be
implemented, went against prevailing doctrine. It seems clear that if the governing or enabling statute
is quite detailed and specific to begin with, there would be very little need (or occasion) for
implementing administrative regulations. It is, however, precisely the inability of legislative bodies to
anticipate all (or many) possible detailed situations in respect of any relatively complex subject matter,
that makes subordinate, delegated rule-making by administrative agencies so important and
unavoidable. All that may be reasonably; demanded is a showing that the delegated legislation
consisting of administrative regulations are germane to the general purposes projected by the
governing or enabling statute. This is the test that is appropriately applied in respect of Civil Service
Memorandum Circular No. 27, Series of 1990, and to this test we now turn.

We consider that the enabling statute that should appropriately be examined is the present Civil
Service law — found in Book V, Title I, Subtitle A, of Executive Order No. 292 dated 25 July 1987,
otherwise known as the Administrative Code of 1987 — and not alone P.D. No. 1146, otherwise known
as the "Revised Government Service Insurance Act of 1977." For the matter of extension of service of
retirees who have reached sixty-five (65) years of age is an area that is covered by both statutes and
not alone by Section 11 (b) of P.D. 1146. This is crystal clear from examination of many provisions of
the present civil service law.

Section 12 of the present Civil Service law set out in the 1987 Administrative Code provides, in relevant
part, as follows:

Sec. 12 Powers and Functions. — The [Civil Service] Commission shall have the
following powers and functions:

xxx xxx xxx

(2) Prescribe, amend and enforce rules and regulations for carrying into effect the
provisions of the Civil Service Law and other pertinent laws;

(3) Promulgate policies, standards and guidelines for the Civil Service and adopt plans
and programsto promote economical, efficient and effective personnel
administration in the government;

xxx xxx xxx

(10) Formulate, administer and evaluate programs relative to the development and
retention of aqualified and competent work force in the public service;

xxx xxx xxx

(14) Take appropriate action on all appointments and other personnel matters in the
Civil Service including extension of service beyond retirement age;

xxx xxx xxx

(17) Administer the retirement program for government officials and employees, and
accredit government services and evaluate qualifications for retirement;

xxx xxx xxx

(19) Perform all functions properly belonging to a central personnel agency and such
other functions as may be provided by law. (Emphasis supplied)
It was on the bases of the above quoted provisions of the 1987 Administrative Code that the Civil
Service Commission promulgated its Memorandum Circular No. 27. In doing so, the Commission was
acting as "the central personnel agency of the government empowered to promulgate policies,
standards and guidelines for efficient, responsive and effective personnel administration in the
government." 23 It was also discharging its function of "administering the retirement program for
government officials and employees" and of "evaluat[ing] qualifications for retirement."

In addition, the Civil Service Commission is charged by the 1987 Administrative Code with providing
leadership and assistance "in the development and retention of qualified and efficient work force in the
Civil Service" (Section 16 [10]) and with the "enforcement of the constitutional and statutory provisions,
relative to retirement and the regulation for the effective implementation of the retirement of
government officials and employees" (Section 16 [14]).

We find it very difficult to suppose that the limitation of permissible extensions of service after an
employee has reached sixty-five (65) years of age has no reasonable relationship or is not germane
to the foregoing provisions of the present Civil Service Law. The physiological and psychological
processes associated with ageing in human beings are in fact related to the efficiency and quality of
the service that may be expected from individual persons. The policy considerations which guided the
Civil Service Commission in limiting the maximum extension of service allowable for compulsory
retirees, were summarized by Griño-Aquino, J. in her dissenting opinion in Cena:

Worth pondering also are the points raised by the Civil Service Commission that
extending the service of compulsory retirees for longer than one (1) year would: (1)
give a premium to late-comers in the government service and in effect discriminate
against those who enter the service at a younger age; (2) delay the promotion of the
latter and of next-in-rank employees; and (3) prejudice the chances for employment of
qualified young civil service applicants who have already passed the various
government examination but must wait for jobs to be vacated by "extendees" who have
long passed the mandatory retirement age but are enjoying extension of their
government service to complete 15 years so they may qualify for old-age
pension. 24 (Emphasis supplied).

Cena laid heavy stress on the interest of retirees or would be retirees, something that is, in itself, quite
appropriate. At the same time, however, we are bound to note that there should be countervailing
stress on the interests of the employer agency and of other government employees as a whole. The
results flowing from the striking down of the limitation established in Civil Service Memorandum
Circular No. 27 may well be "absurd and inequitable," as suggested by Mme. Justice Griño-Aquino in
her dissenting opinion. An employee who has rendered only three (3) years of government service at
age sixty-five (65) can have his service extended for twelve (12) years and finally retire at the age of
seventy-seven (77). This reduces the significance of the general principle of compulsory retirement at
age sixty-five (65) very close to the vanishing point.

The very real difficulties posed by the Cena doctrine for rational personnel administration and
management in the Civil Service, are aggravated when Cena is considered together with the case
of Toledo v. Civil Service Commission. 25 Toledo involved the provisions of Rule III, Section 22, of the
Civil Service Rules on Personnel Action and Policies (CSRPAP) which prohibited the appointment of
persons fifty-seven (57) years old or above in government service without prior approval of the Civil
Service Commission. Civil Service Memorandum Circular No. 5, Series of 1983 provided that a person
fifty-seven (57) years of age may be appointed to the Civil Service provided that the exigencies of the
government service so required and provided that the appointee possesses special qualifications not
possessed by other officers or employees in the Civil Service and that the vacancy cannot be filled by
promotion of qualified officers or employees of the Civil Service. Petitioner Toledo was appointed
Manager of the Education and Information Division of the Commission on Elections when he was
almost fifty-nine (59) years old. No authority for such appointment had been obtained either from the
President of the Philippines or from the Civil Service Commission and the Commission found that the
other conditions laid down in Section 22 of Rule III, CSRPAP, did not exist. The Court nevertheless
struck down Section 22, Rule III on the same exceedingly restrictive view of permissible administrative
legislation that Cena relied on.26

When one combines the doctrine of Toledo with the ruling in Cena, very strange results follow. Under
these combined doctrines, a person sixty-four (64) years of age may be appointed to the government
service and one (1) year later may demand extension of his service for the next fourteen (14) years; he
would retire at age seventy-nine (79). The net effect is thus that the general statutory policy of
compulsory retirement at sixty-five (65) years is heavily eroded and effectively becomes
unenforceable. That general statutory policy may be seen to embody the notion that there should be
a certain minimum turn-over in the government service and that opportunities for government service
should be distributed as broadly as possible, specially to younger people, considering that the bulk of
our population is below thirty (30) years of age. That same general policy also reflects the life
expectancy of our people which is still significantly lower than the life expectancy of, e.g., people in
Northern and Western Europe, North America and Japan.

Our conclusion is that the doctrine of Cena should be and is hereby modified to this extent: that Civil
Service Memorandum Circular No. 27, Series of 1990, more specifically paragraph (1) thereof, is
hereby declared valid and effective. Section 11 (b) of P.D. No. 1146 must, accordingly, be read
together with Memorandum Circular No. 27. We reiterate, however, the holding in Cena that the head
of the government agency concerned is vested with discretionary authority to allow or disallow
extension of the service of an official or employee who has reached sixty-five (65) years of age without
completing fifteen (15) years of government service; this discretion is, nevertheless, to be exercised
conformably with the provisions of Civil Service Memorandum Circular No. 27, Series of 1990.

We do not believe it necessary to deal specifically with Memorandum Circular No. 65 of the Office of
the President dated 14 June 1988. It will be noted from the text quoted supra (pp. 11-12) that the text
itself of Memorandum Circular No. 65 (and for that matter, that of Memorandum Circular No. 163, also
of the Office of the President, dated 5 March 1968) 27 does not purport to apply only to officers or
employees who have reached the age of sixty-five (65) years and who have at least fifteen (l5) years
of government service. We noted earlier that Cena interpreted Memorandum Circular No. 65 as
referring only to officers and employees who have both reached the compulsory retirement age of
sixty-five (65) and completed the fifteen (15) years of government service. Cena so interpreted this
Memorandum Circular precisely because Cena had reached the conclusion that employees who have
reached sixty-five (65) years of age, but who have less than fifteen (15) years of government service,
may be allowed such extension of service as may be needed to complete fifteen (15) years of service.
In other words, Cena read Memorandum Circular No. 65 in such a way as to comfort with Cena's own
conclusion reached without regard to that Memorandum Circular. In view of the conclusion that we
today reached in the instant case, this last ruling of Cena is properly regarded as merely orbiter.

We also do not believe it necessary to determine whether Civil Service Memorandum Circular No. 27
is fully compatible with Office of the President's Memorandum Circular No. 65; this question must be
reserved for detailed analysis in some future justiciable case.

Applying now the results of our reexamination of Cena to the instant case, we believe and so hold that
Civil Service Resolution No. 92-594 dated 28 April 1992 dismissing the appeal of petitioner Rabor and
affirming the action of CSRO-XI Director Cawad dated 26 July 1991, must be upheld and affirmed.
ACCORDINGLY, for all the foregoing, the Petition for Certiorari is hereby DISMISSED for lack of merit.
No pronouncement as to costs.

SO ORDERED.

Narvasa, C.J., Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza and
Francisco, JJ., concur.

Quiason, J., is on leave.

Separate Opinions

PADILLA, J., concurring:

I vote to grant the petition for the same reasons stated in my concurring opinion in Cena vs. CSC
reported in 211 SCRA 192.

G.R. No. L-21723 November 26, 1970

HILARION BERONILLA, petitioner,

vs.
GOVERNMENT SERVICE INSURANCE SYSTEM, its BOARD OF TRUSTEES, ET
AL., respondents.

Hilarion Beronilla in his own behalf.

L. Monasterial and L. A. Diokno, Jr. for respondents GSIS, etc., et al.

T. Besa and J. Jimenez for respondent Rafael S. Recto.

Office of the Solicitor General for respondent Auditor General.

BARREDO, J.:

A special civil action for prohibition seeking to declare Resolution No. 1497 of the Board of Trustees
of the respondent Government Service Insurance System of August 9, 1963 to the effect that petitioner
"Mr. (Hilarion) Beronilla be considered compulsorily retired from the service (as Auditor of the
Philippine National Bank) effective January 14, 1963" as null and void for having been issued, in the
words of the petition, "in excess of the powers granted to it by law, a wanton abuse of discretion,
violation of contracts, removal or forced retirement without due process of law and to declare all acts
heretofore taken in implementation thereof also void, and to prohibit said respondent and its
representatives from carrying out or implementing the aforesaid resolution." Acting on petitioner's
prayer for preliminary injunction, on August 26, 1963, this Court issued the writ prayed for upon
petitioner's filing an injunction bond in the amount of P1,000.00.

At the time of the filing of the present petition on August 23, 1963, petitioner was acting as and
performing the duties of Auditor of the Philippine National Bank. Before that, he had occupied many
other positions in the government and had been a member of the GSIS during all times required by
law.
In his application for employment, his applications for life and retirement insurance as well as his
application to be allowed to take civil service examinations, ten times from 1917 to 1925, petitioner
uniformly indicated that his date of birth is January 14, 1898. He also indicated the same date of birth
in his Member's Service Record which he submitted to the GSIS on October 29, 1954 pursuant to the
provisions of Section 13-A, Republic Act No. 660.

On September 29, 1959, he requested the Commissioner of Civil Service, thru the Auditor General,
that his date of birth indicated in the records be changed to January 14, 1900. According to the petition,
it was only in 1955, before the demise of his mother that petitioner discovered that his true date of
birth is January 14, 1900; that his mother told him that in 1916, his uncle, Alvaro Beronilla, purchased
a cedula for him showing in the same that he was already 18 years old for the reason that his uncle
wanted to take advantage of his being able to vote for him in La Paz, Abra in 1919, when he would be
already twenty-one years of age and the uncle a candidate for vice-president of the municipality; that
since then he had been looking for people who could attest to his true date of birth and it was only in
September, 1959 that he came upon two old persons of their town, Felix Alberne and Ricardo Lalin
who could do so; that the former had been a member of the provincial board and the latter is a retired
justice of the peace; and that his letter to the Civil Service Commissioner was supported by the
affidavits of these two persons. This letter was endorsed by the Commission to the GSIS for action
"without the intervention of the Civil Service Commission."

In the GSIS, petitioner's letter-request was referred to the Legal Counsel who, on October 22, 1959,
denied the same since "all official records point to January 14, 1898 as the birthday of Mr. Hilarion
Beronilla." Upon learning of this denial, petitioner submitted additional evidence to support his request.
This evidence consisted of photostat copies of the yearbooks of the Philippine Institute of Accountants
in 1954 and 1958 wherein his date of birth is shown as January 14, 1900. This additional evidence
notwithstanding, on March 21, 1960 the Legal Counsel reiterated his former denial. Whereupon, on
May 21, 1960 petitioner appealed to the General Manager of the System who at that time was Mr.
Rodolfo Andal. Upon favorable recommendation of the 2nd Assistant General Manager, Mr. F. G.
Araña in a memorandum dated May 30, 1960, on June 2, 1960, Mr. Andal placed "OK." at the foot
thereof over his initials, thus indicating approval of the requested change.

Based on this action of the General Manager, notes of the adjustment of the date of birth of petitioner
to January 14, 1900 were sent to the Auditor General and the Commissioner of Civil Service and the
proceeds of petitioner's policy was re-computed. The Legal Counsel whose title and rank had been
meanwhile changed to Assistant General Manager for Legal Affairs later communicated the aforesaid
decision of the General manager to the Philippine National Bank on November 2, 1962 and the Deputy
Auditor General on November 12, 1962, by letter and indorsement, respectively. As emphasized by
petitioner, in the letter to the Philippine National Bank, it is stated that "his date of birth has been
adjusted by this office, after careful study and deliberation." On the other hand, in the 2nd indorsement
to the Deputy Auditor General, it was made clear that relative to petitioner's life insurance policy No.
N-2065 which had matured on November 30, 1957, corresponding adjustment or recomputation of the
maturity value had been effected on the basis of his changed date of birth. In the meantime, upon
application of petitioner, on October 1, 1960, he was issued a new life policy No. 335778 indicating
his date of birth as January 14, 1900. Regarding his above-mentioned policy No. N-2065, on July 7,
1960, demand was made upon petitioner to pay the System additionally the sum of P131.09, due to
the adjustment of his date of birth, which demand, petitioner promptly complied with.

Almost three years after Mr. Andal approved the change of petitioner's date of birth, more specifically,
on May 6, 1963, Mr. Ismael Mathay, then Auditor of the Central Bank detailed to the Philippine National
Bank, wrote the Board of Trustees of the GSIS about the service of petitioner and stated that "in the
course of the audit of the transactions of the Philippine National Bank, it was found that Mr. Hilarion
Beronilla has been continuously paid since January 15, 1963, his salary allowances and other fringe
benefits as Auditor of said Bank notwithstanding the fact that Mr. Beronilla has attained his sixty-fifth
(65th) birthday last January 14, 1963, the date of his automatic and compulsory retirement from the
government service as fixed under Republic Act No. 3096 approved June 16, 1961." Acting on this
letter, the Board referred the same to Assistant General Manager and Actuary, Dr. Manuel Hizon, then
in charge of the Claims Department. The latter submitted a memorandum on August 6, 1963 stating
the facts and evidence in the GSIS records concerning the determination of the date of birth of
petitioner, including the actions aforementioned taken thereon by Mr. Andal and the Legal Counsel.
On August 9, 1963, the Board adopted the disputed resolution without even notifying petitioner of Mr.
Mathay's letter and without giving him any opportunity to be heard regarding the same.

Upon these facts, it is the theory of petitioner that the approval by General Manager Andal of his
request for the change of the date of his birth in the official records of the GSIS from January 14, 1898
to January 14, 1900, after the same had been previously denied by the Legal Counsel, could not be
legally altered or modified by the Board of Trustees, not only because the power to decide such matter
finally is legally lodged in the General Manager and not in the Legal Counsel, nor in the Board, but
also because even if the Board were assumed to have authority to review the acts of the General
Manager, it was either guilty of laches or estopped from revising the same; and, furthermore, in
approving the resolution in dispute, the Board of Trustees had denied due process to petitioner and
impaired the obligations of the contract between petitioner and the GSIS regarding his retirement. In
other words, the main issue before Us in this case is one of power and does not call for Our
determination of whether petitioner's real date of birth is January 14, 1898 or January 14, 1900.
Accordingly, all We have to decide is whether or not the GSIS Board of Trustees acted within its
powers when it reversed the approval by General Manager Andal of petitioner's request for the change
of his date of birth, taking all circumstances into account including petitioner's allegations of res
adjudicata, laches, estoppel, denial of due process and unconstitutional impairment of contractual
obligations. After carefully going over the facts on record and considering all pertinent legal principles
and statutory provisions, particularly Commonwealth Act 186, the Charter of the GSIS, as amended,
together with the relevant resolutions of the Board of Trustees, We have decided to uphold the superior
authority of the Board over the General Manager and to dismiss this petition.

We do not deem it necessary to pass upon petitioner's initial proposition, pressed vigorously, to be
sure, to the effect that as between the previous denial by the Legal Counsel and the subsequent
approval by General Manager Andal of his request for the change of his date of birth in the records,
the latter, which was precisely the action on his appeal from the Legal Counsel's denial, should prevail.
Even granting it to be true that, pursuant to what is generally the practice and the rule, applications for
retirement annuities in the GSIS are subject to final approval by the General Manager after its being
approved by one of the Assistant General Managers and/or one or two Department Managers,1 it is
clear to Us that under the GSIS charter, the General Manager's approval is not beyond review and
reprobation by the Board of Trustees. It must be borne in mind that under Section 16 of said charter,
the System "shall be managed by the Board of Trustees ... " and Section 17 adds that the Board "shall
have the following powers and authority: (a) to adopt by-laws, rules and regulations for the
administration of the System and the transaction of its business." On the other hand, the extent of the
functions and powers of the General Manager are defined in Section 18 as follows:

SEC. 18. Personnel. — The Board shall have the power to appoint a general manager,
who shall be a person of recognized experience and capacity in the subject of life and
social insurance, and who shall be the chief executive officer of the System, one or
more assistant general managers, one or more managers, a medical director, and an
actuary, and fix their compensation. The general manager shall, subject to the
approval of the Board, appoint additional personnel whenever and wherever they may
be necessary to the effective execution of the provisions of this Act, fix their
compensation, remove, suspend, or otherwise discipline them, for cause. He shall
have the power to prescribe their duties, grant leave, prescribe certain qualifications
to the end that only competent persons may be employed, and appoint committees:
 Provided, however, That said additional personnel shall be subject to existing Civil
Service laws, rules and regulations.

xxx xxx xxx

It is thus obvious that by express statutory authority, the Board of Trustees directly manages the
System and the General Manager is only the chief executive officer of the Board. In the exercise of its
power to adopt rules and regulations for the administration of the System and the transaction of its
business, the Board may lodge in the General Manager the authority to act on any matter the Board
may deem proper, but in no wise can such conferment of authority be considered as a full and
complete delegation resulting in the diminution, much less exhaustion, of the Board's own statutorily-
based prerogative and responsibility to manage the affairs of the System and, accordingly, to decide
with finality any matter affecting its transactions or business. In other words, even if the Board may
entrust to the General Manager the power to give final approval to applications for retirement annuities,
the finality of such approval cannot be understood to divest the Board, in appropriate cases and upon
its attention being called to a flaw, mistake or irregularity in the General Manager's action, of the
authority to exercise its power of supervision and control which flows naturally from the ultimate and
final responsibility for the proper management of the System imposed upon it by the charter.
Incidentally, it may be added that the force of this principle is even more true insofar as the GSIS is
concerned, for the fiduciary character of the management of the System is rendered more strict by the
fact that the funds under its administration are partly contributed by the thousands upon thousands of
employees and workers in all the branches and instrumentalities of the government. It is indeed well
to remember at all times that the System and, particularly, its funds do not belong to the government,
much less to any administration which may happen to be temporarily on the saddle, and that the
interests of the mass of its members can only be duly safeguarded if the administrators of the System
act with utmost fidelity and care. Not for nothing is its controlling and managing board called the Board
of Trustees. It results, therefore, that the first contention of petitioner cannot be sustained and We hold
that any authority conferred upon the General Manager by the Board of Trustees notwithstanding, the
said Board may in appropriate cases and in the exercise of its own sound discretion review the actions
and decisions of the General Manager. The mere fact that the resolution granting the authority
expressly gives the character of finality to the General Manager's acts does not constitute such a
representation to third persons dealing with the System that such finality is definite even vis-a-vis the
Board as to create any estoppel, for the simple reason that it is not legally possible for the Board to
divest itself of an authority which the charter of the System places under its direct responsibility. From
another point of view, since the law clearly vests the management in the Board and makes the General
Manager only its chief executive officer, all parties dealing with the System must be deemed to be on
guard regarding the ultimate authority of the Board to modify or reverse any action of the General
Manager and they cannot complain should the Board exercise its powers in the premises.

Petitioner posits, however, that even assuming that the Board may have the power to reverse or modify
any action of the General Manager in the exercise of his authority, because of the failure of the Board
to act from June 2, 1960, when General Manager Andal acted favorably on his request to August 9,
1963, when the Board approved the herein impugned Resolution No. 1497, or for more than three
years, during which time corresponding adjustments were made in his GSIS records, payment and life
insurance policies and due notices were served by the GSIS itself on all parties concerned on the
basis of his changed date of birth, respondent should be considered as guilty of laches or held in
estoppel to change or alter the action of Mr. Andal. While petitioner's posture is not entirely without
logic, it falls short of the requirements for the successful invocation of the pleas of laches and estoppel.
We have carefully considered the lengthy and rather impressive discussion by petitioner of these
points in his petition, memorandum and reply to respondent's memorandum as well as the equally
detailed and authority-supported contrary arguments in the answer and memorandum of the
respondent, and We have arrived at the conclusion that petitioner's position cannot be sustained.
It may be stated at the outset that petitioner's twin points of laches and estoppel actually boil down in
this particular case to nothing more than estoppel by silence. With this clarification, it is meet to recall
that "mere innocent silence will not work estoppel. There must also be some element of turpitude or
negligence connected with the silence by which another is misled to his injury" (Civil Code of the
Philippines by Tolentino, Vol. IV, p. 600) and that "the doctrine of estoppel having its origin in equity
and therefore being based on moral and natural justice, its applicability to any particular case depends,
to a very large extent, upon the special circumstances of the case." (Mirasol v. Municipality of Tabaco,
43 Phil. 610, 614.) Important also it is not to overlook that as regards the actuations of government
officials, the general rule is that their mistakes and omissions do not create estoppel. (Republic vs.
Philippine Long Distance Telephone Co., L-18841, January 27, 1969, citing Pineda vs. Court of First
Instance of Tayabas, 52 Phil. 803, 807; and Benguet Consolidated Mining Co. vs. Pineda, 98 Phil.
711, 724. See also: Republic vs. Philippine Rabbit Bus Lines, Inc., L-26862, March 30, 1970, and the
cases therein cited.)

Moreover, in computing the period of alleged silence or inaction of the Board, what is relevant is not
the actual or, what petitioner calls, imputable knowledge of said Board of the favorable action of Mr.
Andal. Even if such knowledge had come earlier than May 6, 1963, the date of Mr. Mathay's letter,
what is decisive is that it was only thru Mr. Mathay's letter that the Board got notice of the error in Mr.
Andal's action. Precisely because it was not incumbent upon the Board, as petitioner himself alleges,
to spontaneously or in the ordinary course review the action of the General Manager, any knowledge
thereof by the Board, whether actual or imputable, could not, in logic and conscience, have placed the
Board on notice of any error or irregularity therein. Consequently, the immediate steps taken by the
Board to have the facts alleged in Mr. Mathay's letter verified are inconsistent with the charge of
unreasonable delay, much more of laches.

The compulsory retirement of government officials and employees upon their reaching the age of 65
years is founded on public policy which aims by it to maintain efficiency in the government service and
at the same time give to the retiring public servants the opportunity to enjoy during the remainder of
their lives the recompense, inadequate perhaps for their long service and devotion to. the government,
in the form of a comparatively easier life, freed from the rigors of civil service discipline and the exacting
demands that the nature of their work and their relations with their superiors as well as the public
would impose upon them. Needless to say, therefore, the officials charged with the duty of
implementing this policy cannot be too careful in insuring and safeguarding the correctness and
integrity of the records they prepare and keep. In this case, all that the Board has done is to set aside
what it found to be an erroneous decision of the General Manager in approving the change of date of
petitioner's birth, because from the evidence before it, the Board was convinced that the originally
recorded date of birth should not be disturbed. We cannot see where the charged inequity of such
action of the Board could lie.

Above all, it is a must consideration whenever principles of equity are invoked that for such invocation
to succeed, it must appear that if the plea is not heeded the party making the plea will suffer, in truth
and in fact, inequity and injury, whether pecuniary or moral or, at least, in a juridical sense. Such is not
the case with petitioner. Examining the circumstances of this case, We see nothing inequitous to
petitioner in the questioned resolution of the Board of Trustees. For decades back, repeatedly and
uniformly, petitioner made it appear in all material government and public records and in all his
representations to respondent System that his date of birth is January 14, 1898. His rather belated
request for a change of said date to January 14, 1900 which would unquestionably favor his interests,
pecuniarily or otherwise, and correspondingly adversely affect those of the System and, of course, its
members, was duly investigated and found not to be sufficiently grounded to merit favorable action by
the Legal Counsel in whom is lodged the authority to evaluate such request. True this negative action
was reversed by the General Manager, albeit by virtue of a procedure not strictly in accordance with
the established one as outlined in footnote 1 of this opinion, but on the other hand, the favorable action
of the General Manager was in turn reversed by the Board of Trustees, the final legal authority in the
System, upon its being informed of the error thereof. It is to be noted that, after all, it was always the
petitioner who made representations to the respondent System as to his date of birth, and not the
other way around. All that the System did was to take his representations for what they were worth.
He was not believed by the Legal Counsel, but the General Manager did; on the other hand, the
authority higher than the General Manager found the action of the General Manager erroneous. Under
these circumstances, how could the System be in estoppel where the conflicting representations are
of the petitioner rather than of the System?

Anent petitioner's contention that he was denied due process when the Board of Trustees acted on
the letter of Mr. Mathay, without notifying him thereof or hearing him thereon, suffice it to say that since
there is no showing that under the procedure established in the GSIS, such notice and hearing are
required, considering that the System operates as a business corporation and generally notice and
hearing are not indispensable for due process in corporations, and in any event, inasmuch as what
was considered by the Board was nothing more than petitioner's own conflicting representations, and
if petitioner really believed he should have been heard, he could have filed a motion for reconsideration
or reopening, it cannot be said that indeed he had not had due opportunity to present his side.

Finally, as regards petitioner's argument that the Board's resolution in question constitutes an
impairment of the obligations of his contract of insurance, it is obvious that the constitutional injunction
that is evidently the basis of such argument refers to the legislature and not to resolutions even of
government corporations. Besides, petitioner's life insurance policy, apart from not having any real
relevance in this case, what is involved being his retirement, contains specific provisions contemplating
the correction of any error or mistake in the date of birth of the insured. On the other hand, the
retirement of government employees is imposed by law and is not the result of any contractual
stipulation.

WHEREFORE, the petition in this case is dismissed, with costs against petitioner, and the writ of
preliminary injunction issued herein is hereby dissolved.

Reyes, J.B.L., Makalintal, Zaldivar, Teehankee and Villamor, JJ., concur.

Concepcion, C.J., and Fernando, J., concur in the result.

Castro, J., reserves his vote.

Dizon and Makasiar, JJ., are on leave.

G.R. No. 97419 July 3, 1992

GAUDENCIO T. CENA, petitioner,

vs.
THE CIVIL SERVICE COMMISSION, and THE HON. PATRICIA A. STO. TOMAS, in her capacity
as Chairman of the Civil Service Commission, respondents.

MEDIALDEA, J.:

May a government employee who has reached the compulsory retirement age of 65 years, but who
has rendered 11 years, 9 months and 6 days of government service, be allowed to continue in the
service to complete the 15-year service requirement to enable him to retire with the benefits of an
old-age pension under Section 11 par. (b) of the Revised Government Service Insurance Act of 1977?
This is the issue raised before this Court by petitioner Gaudencio T. Cena, a Registrar of the Register
of Deeds of Malabon, Metro Manila.

The facts are not disputed.

Petitioner Gaudencio T. Cena entered the government service on November 16, 1978 as Legal Officer
II of the Law Department of Caloocan City where he stayed for seven (7) years until his transfer on
November 16, 1986 to the Office of the Congressman of the First District of Caloocan City where he
worked for only three (3) months, or until February 15, 1987, as Supervising Staff Officer.

On July 16, 1987, he was appointed as Registrar of the Register of Deeds of Malabon, Metro Manila,
the position he held at the time he reached the compulsory retirement age of 65 years on January 22,
1991. By then, he would have rendered a total government service of 11 years, 9 months and 6 days.
Before reaching his 65th birthday, he requested the Secretary of Justice, through Administrator
Teodoro G. Bonifacio of the Land Registration Authority (LRA), that he be allowed to extend his service
to complete the 15-year service requirement to enable him to retire with full benefits of old-age pension
under Section 11, par. (b) of P.D. 1146.

The LRA Administrator, for his part, sought a ruling from the Civil Service Commission whether or not
to allow the extension of service of petitioner Cena as he is covered by Civil Service Memorandum
No. 27, series 1990. In his 2nd Indorsement dated August 6, 1990, the LRA Administrator observed
that if petitioner's service as of January 22, 1991 of 10 years, 6 months and 6 days (should be 11
years, 9 months and 6 days) would be extended to 15 years, he would have to retire on April 15, 1994
at the age of 68 years.

On July 31, 1990, the Civil Service Commission denied petitioner Cena's request for extension of
service in its CSC Resolution No. 90-681, declaring therein, that Mr. Cena shall be considered retired
from the service on January 22, 1991, the date when he shall reach the compulsory retirement age of
sixty-five (65) years, unless his retention for another year is sought by the head of office under Civil
Service Memorandum Circular No. 27, s. 1990.

Petitioner Cena filed a motion for reconsideration. On October 17, 1990, the Civil Service Commission
set aside its CSC Resolution No. 90-681 and allowed Gaudencio Cena a one-year extension of his
service from January 22, 1991 to January 22, 1992, citing CSC Memorandum Circular No. 27, series
of 1990, the pertinent of which reads:

1. Any request for the extension of service of compulsory retirees to complete the
fifteen (15) years service requirement for retirement shall be allowed only to permanent
appointees in the career service who are regular members of the Government Service
Insurance System (GSIS), and shall be granted for a period not exceeding one (1)
year.

On January 22, 1991, petitioner's second motion for reconsideration was denied in its CSC Resolution
No. 91-101.

Hence, the instant petition for review on certiorari alleging that the Civil Service Commission
committed a grave abuse of discretion when it granted the extension of petitioner's service as Registrar
of Deeds of Malabon, Metro Manila, for a period of only one (1) year pursuant to CSC Memorandum
Circular No. 27, Series of 1990, instead of three (3) years and three (3) months to complete the 15-
year service requirement for his retirement with full benefits as provided under Section 11, par. (b) of
Presidential Degree No. 1146, otherwise known as the Revised Government Service Insurance Act of
1977.
Petitioner contends that reliance of the Commission on par. (1) of Memorandum Circular No. 27
allowing an extension of service of a compulsory retiree for a period not exceeding one (1) year is both
erroneous and contrary to the "benevolent and munificent intentions" of Section 11 of P.D. 1146.
Petitioner points out that par. (b), Section 11 of P.D. No. 1146 does not limit nor specify the maximum
number of years the retiree may avail of to complete the 15 years of service.

The Solicitor-General agrees with petitioner Cena. He argues that the questioned provision being
generally worded, Section 11 par. (b), P.D. 1146 has general application, thus respondent CSC has
no authority to limit through CSC Memorandum Circular No. 27 the privilege under said section to
government employees who lack just one year to complete the 15-year service requirement.

The Civil Service Commission, however, contends that since public respondent CSC is the central
personnel agency of the government, it is vested with the power and authority, among others, to grant
or allow extension of service beyond retirement age pursuant to Section 14 par. (14), Chapter 3,
Subtitle A, Title I, Book V of Executive Order No. 292 (Administrative Code of 1987). In interpreting
Section 11 par. (b) of P.D. 1146, public respondent CSC contends that the phrase "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", is qualified by the clause: "Unless the service is extended by appropriate authorities,"
which means that the extension of service must be first authorized by the Commission, as the
appropriate authority referred to in Section 11, par. (b), P.D. 1146, before the service of a compulsory
retiree (one who has already reached age of 65 years with at least 15 years of service) can be
extended.

We grant the petition.

Section 12, par. (14), Chapter 3, Subtitle A, Title I, Book V of the Administrative Code of 1987
(November 24, 1987) cannot be interpreted to authorize the Civil Service Commission to limit to only
one (1) year the extension of service of an employee who has reached the compulsory retirement age
of 65 without having completed 15 years of service, when said limitation his no relation to or connection
with the provision of the law supposed to be carried into effect.

Section 12, par. (14), Chapter 3, Subtitle A, Title I, Book V of the Administrative Code of 1987 provides
thus:

Sec. 12. Powers and Functions. — The Commission shall have the following powers
and functions:

xxx xxx xxx

(14) Take appropriate action on all appointments and other personnel matters in the
Civil Service including extension of service beyond retirement age;

As a law of general application, the Administrative Code of 1987 cannot authorize the modification of
an express provision of a special law (Revised Government Service Insurance of 1977). Otherwise,
the intent and purpose of the provisions on retirement and pension of the Revised Government Service
Insurance Act of 1977 (P.D. 1146) would be rendered nugatory and meaningless.

Section 11 paragraph (b) of the Revised Government Service Insurance Act of 1977 expressly
provides, thus:
 Sec. 11. Conditions for Old-Age Pension. — (a) Old-age pension shall be paid to a
member who:

xxx xxx xxx

(b) Unless the service is extended by appropriate authorities, retirement shall be

compulsory for an employee of 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. (Emphasis supplied)

Being remedial in character, a statute creating a pension or establishing retirement plan should be
liberally construed and administered in favor of the persons intended to be benefited thereby. The
liberal approach aims to achieve the humanitarian purposes of the law in order that the efficiency,
security and well-being of government employees may be enhanced (Bautista vs. Auditor General,
104 Phil 428; Ortiz vs. Commission on Elections, G.R. No. L-78957, June 28, 1988, 162 SCRA 812).

The Court stated in Abad Santos vs. Auditor General, 79 Phil. 176, that a pension partakes of the
nature of "retained wages" of the retiree for a double purpose: (1) to entice competent men and women
to enter the government service, and (2) permit them to retire from the service with relative security,
not only for those who have retained their vigor, but more so for those who have been incapacitated
by illness or accident.

We have applied the liberal approach in interpreting statutes creating pension or establishing
retirement plans in cases involving officials of the Judiciary who lacked the age and service
requirement for retirement. We see no cogent reason to rule otherwise in the case of ordinary
employees of the Executive Branch, as in the case of petitioner Cena, who has reached 65 but opted
to avail of the statutory privilege under Section 11 par. (b) of P.D. 1146 to continue in the service to
complete the 15-year service requirement in order to avail of old-age pension.

In Re: Application for Gratuity Benefits of Associate Justice Efren I. Plana, Adm. Matter No. 5460, En
Banc Resolution, March 24, 1988, the Court, applying the liberal approach, ruled that Justice Plana,
who at the time of his courtesy resignation on March 25, 1986 lacked a few months to meet the age
requirement for retirement under the law, is entitled to full retirement benefits under R.A. 910 because
his accrued leave credits would have entitled him to go on leave until beyond the age requirement for
retirement.

The above ruling of the Court was reiterated in Re: Application for Retirement under Rep. Act No. 910
of Associate Justice Ramon B. Britanico of the Intermediate Appellate Court, Adm. Matter No. 6484
— Ret., May 15, 1989. By liberally interpreting Section 3 of R.A. 910, as amended, in favor of the
persons intended to be benefited by them, the Court also allowed the conversion of the application for
disability retirement of Justice Ruperto Martin under said Section 3 of R.A. 910, as amended (10-year
lump sum without the lifetime annuity) into an application for voluntary retirement under Section 1
(5-year lump sum with lifetime annuity) eleven years after his disability retirement was approved on
January 10, 1978 (In Re: Application for Life Pension under Rep. Act 910. Ruperto G. Martin, applicant,
187 SCRA 477). The ten-year lump sum which he had received was considered by the Court as
payment under Section 1 of the five-year lump sum, to which he was entitled, and of his monthly
pensions for the next five years.

However, the Court pointed out in Re: Gregorio G. Pineda, Adm. Matter No. 2076-RET., July 13, 1990,
and its six (6) companion cases, 187 SCRA 469, that when the Court allows seeming exceptions to
fixed rules for certain retired Judges or Justices, there are ample reasons behind each grant of an
exception. The crediting of accumulated leaves to make up for lack of required age or length of service
is not done indiscriminately. It is always on case to case basis.

There is thus no justifiable reason in not allowing ordinary employees in the Executive Branch on a
case to case basis, to continue in the service to complete the 15-year service requirement to avail of
the old-age pension under Section 11 of P.D. 1146. By limiting the extension of service to only one (1)
year would defeat the beneficial intendment of the retirement provisions of P.D. 1146.

In resolving the question whether or not to allow a compulsory retiree to continue in the service to
complete the 15-year service, there must be present an essential factor before an application under
Section 11 par. (b) of P.D. 1146 may be granted by the employer or government office concerned. In
the case of officials of the Judiciary, the Court allows a making up or compensating for lack of required
age or service only if satisfied that the career of the retiree was marked by competence, integrity, and
dedication to the public service (Re: Gregorio Pineda, supra). It must be so in the instant case.

It is interesting to note that the phrase "he shall be allowed to continue in the service to complete the
fifteen years" found in Section 11 (b) of P.D. 1146 is a reproduction of the phrase in the original text
found in Section 12 (e) of Commonwealth Act 186, as amended, otherwise known as the "Government
Service Insurance Act" approved on November 14, 1936. There is nothing in the original text as well
as in the revised version which would serve as the basis for providing the allowable extension period
to only one (1) year. There is likewise no indication that Section 11 par. (b) of P.D. 1146 contemplates
a borderline situation where a compulsory retiree on his 65th birthday has completed more than 14,
but less than 15 years of government service., i.e. only a few months short of the 15-year requirement
which would enable him to collect an old-age pension.

While it is true that the Administrative Code of 1987 has given the Civil Service Commission the
authority "to take appropriate action on all appointments and other personnel matters in the Civil
Service including extension of service beyond retirement age", the said provision cannot be extended
to embrace matters not covered by the Revised Government Service Insurance Act of 1977 (Sto.
Tomas vs. Board of Tax Appeals, 93 Phil. 376, 382, "citing 12 C.J. 845-46). The authority referred to
therein is limited only to carrying into effect what the special law, Revised Government Insurance Act
of 1977, or any other retirement law being invoked provides. It cannot go beyond the terms and
provisions of the basic law.

The Civil Service Commission Memorandum Circular No. 27 being in the nature of an administrative
regulation, must be governed by the principle that administrative regulations adopted under legislative
authority by a particular department must be in harmony with the provisions of the law, and should be
for the sole purpose of carrying into effect its general provisions (People vs. Maceren, G.R. No. L-
32166, October 18, 1977, 79 SCRA 450; Teoxon v. Members of the Board of Administrators, L-25619,
June 30, 1970, 33 SCRA 585; Manuel v. General Auditing Office, L-28952, December 29, 1971, 42
SCRA 660; Deluao v. Casteel, L-21906, August 29, 1969, 29 SCRA 350).

The pronouncement of the Court in the case of Augusta Toledo vs. Civil Service Commission, et al.,
G.R. No. 92646-47, October 4, 1991, squarely applies in the instant case. We declared in the case of
Toledo that the rule prohibiting 57-year old persons from employment, reinstatement, or
re-employment in the government service provided under Section 22, Rule III of the Civil Service Rules
on Personnel Actions and Policies (CSRPAP) cannot be accorded validity, because it is entirely a
creation of the Civil Service Commission, having no basis in the law itself which it was meant to
implement and it cannot be related to or connected with any specific provision of the law which it is
meant to carry into effect. The Court, speaking thru Justice Edgardo L. Paras, stated, thus:
 The power vested in the Civil Service Commission was to implement the law or put it
into effect, not to add to it; to carry the law into effect or execution, not to supply
perceived omissions in it. "By its administrative regulations, of course, the law itself
can not be extended; said regulations cannot amend an act of Congress." (Teoxon v.
Members of the Board of Administrators, Philippine Veterans Administration, 33 SCRA
585, 589 [1970], citing Santos v. Estenzo, 109 Phil. 419 [1960]; see also, Animos v.
Philippine Veterans Affairs Office, 174 SCRA 214, 223-224 [1989] in turn citing
Teoxon).

The considerations just expounded also conduce to the conclusion of the invalidity of
Section 22, Rule III of the CSRPAP. The enactment of said section, relative to 57-year
old persons, was also an act of supererogation on the part of the Civil Service
Commission since the rule has no relation to or connection with any provision of the
law supposed to be carried into effect. The section was an addition to or extension of
the law, not merely a mode of carrying it into effect. (Emphasis supplied)

The governing retirement law in the instant case is P.D. 1146 otherwise known as the "Revised
Government Service Insurance Act of 1977." The rule on limiting to only one (1) year the extension of
service of an employee who has reached the compulsory retirement age of 65 years, but has less than
15 years of service under Civil Service Memorandum Circular No. 27 s. 1990, cannot likewise be
accorded validity because it has no relation to or connection with any provision of P.D. 1146 supposed
to be carried into effect. The rule was an addition to or extension of the law, not merely a mode of
carrying it into effect. The Civil Service Commission has no power to supply perceived omissions in
P.D. 1146.

As a matter of fact, We have liberally applied Section 11 par. (b) of P.D. 1146 in two (2) recent cases
where We allowed two employees in the Judiciary who have reached the age of 65 to continue in the
government service to complete the 15-year service requirement to be entitled to the benefits under
P.D. 1146.

In a resolution dated January 23, 1990 in A.M. No. 87-7-1329-MTC, We allowed Mrs. Florentina J.
Bocade, Clerk of Court, Municipal Trial Court, Dagami, Leyte, who at the time she reached the age of
65 years on October 16, 1987 had only 10 years of government service, to continue her services until
October 10, 1992. Thus, she was given a period of 5 years, to complete the
15-year service requirement to be entitled to the retirement benefits under Section 11 par. (b) of P.D.
1146. The Court observed that Mrs. Bocade is still performing her duties without any adverse
complaints from her superior and that she is physically fit for work per report of the Medical Clinic.

The Court, in a resolution dated April 18, 1991, in A.M. No. 91-3-003-SC.-Re: Request for the
extension of service of Mrs. Crisanta T. Tiangco, allowed Mrs. Crisanta T. Tiangco, Budget Officer V,
Budget Division, Fiscal Management and Budget Office of the Supreme Court to continue her services
until February 10, 1995. She was granted a period of 3 years, 10 months and 13 days because she
has to her credit only 11 years, 1 month and 17 days of government service at the time she reached
the age of 65 years on March 29, 1991 in order that she be entitled to the retirement benefits under
P.D. No. 1146.

It is erroneous to apply to petitioner Cena who has rendered 11 years, 9 months and 6 days of
government service, Section 12, par. (b) of P.D. 1146 which provides that "a member who has
rendered at least three (3) years but less than 15 years of service at the time of separation shall, . . .
upon separation after age sixty, receive a cash equivalent to 100% of his average monthly
compensation for every year of service."
The applicable law should be Section 11 par. (b) of P.D. 1146 which allows him to extend his 11 years,
9 months and 6 days to complete the 15-year of service consistent with the beneficial intendment of
P.D. 1146 and which right is subject to the discretion of the government office concerned.

Section 12 par. (b) of P.D. 1146 does not apply to the case of herein Cena, because he opted to
continue in the service to complete the 15-year service requirement pursuant to Section 11 par. (b) of
P.D. 1146. The completion of the 15-year service requirement under Section 11 par. (b) partakes the
nature of a privilege given to an employee who has reached the compulsory retirement age of 65
years, but has less than 15 years of service. If said employee opted to avail of said privilege, he is
entitled to the benefits of the old-age pension. On the other hand, if the said employee opted to retire
upon reaching the compulsory retirement age of 65 years although he has less than 15 years of
service, he is entitled to the benefits provided for under Section 12 of P.D. 1146 i.e. a cash equivalent
to 100% of his average monthly compensation for every year of service.

The right under Section 11, par. (b) is open to all employees similarly situated, so it does not offend
the constitutional guarantee of equal protection of the law. There is nothing absurd or inequitable in
rewarding an employee for completion of the 15-year service beyond the retirement age. If he would
be better off than the one who has served for 14 years but who is separated from the service at the
age of 64, it would be only just and proper as he would have worked for the whole period of 15 years
as required by law for entitlement of the old-age pension. Indeed, a longer service should merit a
greater reward. Besides, his entitlement to the old-age pension is conditioned upon such completion.
Thus, if the service is not completed due to death or incapacity, he would be entitled to the benefit
under Section 12, par. (b), i.e. cash equivalent to 100% of his average monthly compensation for every
year of service.

Finally, in view of the aforesaid right accorded under Section 11, par. (b) of P.D. 1146, petitioner Cena
should not be covered by Memorandum Circular No. 65 issued by then Executive Secretary Catalino
Macaraig on June 14, 1988. Memorandum Circular No. 65 allowing retention of service for only six (6)
months for "extremely meritorious reasons" should apply only to employees or officials who have
reached the compulsory retirement age of 65 years but who, at the same time, have completed the
15-year service requirement for retirement purposes. It should not apply to employees or officials who
have reached the compulsory retirement age of 65 years, but who opted to avail of the old-age pension
under par. (b), Section 11 of P.D. 1146, in which case, they are allowed, at the discretion of the agency
concerned, to complete the 15-year service requirement.

ACCORDINGLY, the petition is granted. The Land Registration Authority (LRA) of the Department of
Justice has the discretion to allow petitioner Gaudencio Cena to extend his 11 years, 9 months and 6
days of government service to complete the 15-year service so that he may retire with full benefits
under Section 11 par. (b) of P.D. 1146.

SO ORDERED.

Narvasa, C.J., Gutierrez, Jr., Cruz, Paras, Feliciano, Bidin, Regalado, Davide, Jr., Nocon and
Bellosillo, JJ., concur.

Separate Opinions

PADILLA, J.: concurring:

I concur in the majority opinion written by Mr. Justice Leo D. Medialdea, with a slight modification. The
majority opinion would vest upon the Land Registration Authority "the discretion to allow petitioner
Gaudencio Cena to extend his eleven (11) years, nine (9) months and six (6) days of government
service to complete the fifteen (15) years service so that he may retire with full benefits under Section
11 par. (b) of P.D. 1146" (decision, p. 16). A reading of the cited provision of law which reads as
follows:

Sec. 11. Conditions for Old-Age Pension.

xxx xxx xxx

(b) Unless the service is extended by appropriate authorities, retirement shall be

compulsory for an employee of 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.

would indicate, in my opinion, that the government employee who has reached sixty-five (65) years of
age but has rendered less than fifteen (15) years of service, has THE RIGHT to continue in the service
to complete fifteen (15) years, and that the government office or agency where he is employed cannot
but allow the exercise of such right of the subject employee. In short, the employing government office
or agency must allow the government employee who has reached sixty-five (65) years of age, but has
rendered less than fifteen (15) years of service, the opportunity to complete the fifteen (15) years of
service in order to enjoy the benefits of old-age pension. It follows from this that if such government
employee is no longer fit to complete the remainder of the fifteen (15) year service (after reaching age
65), he should be terminated for cause, after appropriate proceedings, otherwise, he has the right to
continue in the service for purposes of completing his fifteen (15) years of service.

GRIÑO-AQUINO, J.: dissenting:

The issue raised in this petition for review of the Resolution No. 90-935 dated October 17, 1990 of the
Civil Service Commission, is whether the government service of petitioner Gaudencio Cena as
Registrar of Deeds for Malabon, Metro Manila, may be extended for a period of one (1) year only (from
January 22, 1991 up to January 22, 1992) and not for as long as necessary to enable him to complete
15 years service so that he may retire with full benefits.

After a careful consideration of related provisions of the retirement laws, I submit that inasmuch as
P.D. No. 1146 is silent on the matter, the Civil Service Commission, pursuant to the authority granted
to it in the Administrative Code of 1987, "to take appropriate action on . . . all personnel matters in the
Civil Service, including extension of service beyond retirement age" (paragraph 14, Section 12,
Chapter 3, Subtitle A, Title I, Book V), appropriately promulgated Memorandum Circular No. 27, Series
of 1990, limiting the extension of service to "not exceeding one year." The pertinent provisions of the
circular are quoted below:

1. Any request for the extension of service of compulsory retirees to complete the
fifteen (15) years service requirement for retirement shall be allowed only to permanent
appointees in the career service who are regular members of the Government Service
Insurance System (GSIS), and shall be granted for a period not exceeding one (1)
year.

2. Any request for the extension of service of compulsory retiree to complete the fifteen
(15) years service requirement for retirement who entered the government service at
 57 years of age or over upon prior grant of authority to appoint him or her, shall no
longer be granted.

3. Any request for the extension of service to complete the fifteen (15) years service
requirement for retirement shall be filed not later than three (3) years prior to the date
of compulsory retirement.

4. Any request for the extension of service of a compulsory retiree who meets the
minimum number of years of service for retirement purposes may be granted for six
(6) months only with no further extension. (pp. 64-65, Rollo; emphasis supplied.)

The maximum allowable extension of "not exceeding one year" fixed in paragraph 1 of CSC
Memorandum Circular No. 27 is reasonable, just, and consistent with the general rule that "retirement
shall be automatic and compulsory at the age of 65 years" (Sec. 12[e], Com. Act 186).

I believe that Section 11, paragraph (b) of P.D. 1146 contemplates a borderline situation where a
compulsory retiree on his 65th birthday has completed more than 14, but less than 15, years of
government service, or a few months short of the 15-year requirement which would enable him to
collect an old-age pension. Pursuant to the beneficent objectives of our retirement laws, said retiree
may be granted an extension of not more than one year to enable him to complete 15 years of
government service and receive full retirement benefits including old-age pension which, otherwise,
he would not be entitled to receive. Such extension will enable him to retire after his 65th birthday,
but before he attains 66 years of age, hence, still within the mandatory retirement age of 65 years
fixed by law, for as a matter of fact, one is 65 years old upon reaching his 65th birthday until the eve
of his 66th.

Since Cena, on his 65th birthday, had rendered service to the government for a total of only 11 years,
9 months and 6 days, he is not entitled to an extension of his service to complete 15 years for it would
illegally and unreasonably stretch his retirement age beyond his 68th birthday, or long after he shall
have ceased to be 65 years old.

As Cena would not be able to complete 15 years of government service even if he were given a one-
year extension of service, paragraph 1 of CSC Memorandum Circular No. 27 may not be availed of by
him. The applicable legal provision to him would be paragraph (b), Section 12 of P.D. 1146 which
provides that "a member who has rendered at least three (3) years but less than 15 years of service at
the time of separation shall, . . . upon separation after age sixty, ** receive a cash payment equivalent
to 100% of his average monthly compensation for every year of service." He is not entitled to an old-
age pension, length of service being the determinant of whether or not a retired employee would be
entitled to such pension.

The petitioner's theory that a compulsory retiree (one who is 65 years old) should be allowed an
extension of his service for any number of years to complete the 15-year-service requirement under
Section 11(b), P.D. 1146, can produce absurd and inequitable results. An employee who has rendered
only 3 years of government service at the age of 65 can have his service extended for 12 years and
finally retire at the age of 77 and receive a life pension, while one who has served for 14 years, but
whose service is terminated by death or incapacity at the age of 64, will only receive a cash gratuity
equivalent to one month pay for every year of service in the government, without a life pension, under
"Section 12, paragraph (b), P.D. No. 1146.

Worth pondering also are the points raised by the Civil Service Commission that extending the service
of compulsory retirees for longer than one (1) year would: (1) give a premium to late-comers in the
government service and in effect discriminate against those who enter the service at a younger age;
(2) delay the promotion of the latter and of next-in-rank employees; and (3) prejudice the chances for
employment of qualified young civil service applicants who have already passed the various
government examinations but must wait for jobs to be vacated by "extendees" who have long passed
the mandatory retirement age but are enjoying extension of their government service to complete 15
years so they may qualify for old-age pension.

While I agree with the stand of the Civil Service Commission that an extension of service may not
exceed one year, I do not agree with the grant to Cena of a service extension of one (1) year from
January 23, 1991, or until January 22, 1992 under paragraph 1 of Memorandum Circular No. 27 for
that paragraph should apply to a compulsory retiree who needs an extension of "not exceeding one
year" (Cena needs more than 3 years) to complete the 15-year-service requirement for old-age
pension benefits. There is no point in granting to a 65-year-old retiree a one-year extension of service,
if, anyway, as in Cena's case, the extension will not enable him to complete 15 years of government
service. Applicable to Cena is paragraph (b), Section 12 of P.D. 1146 which provides that "a member
who has rendered . . . less than 15 years of service upon separation after age sixty, (shall) receive a
cash payment equivalent to 100% of his average monthly compensation for every year of service."

I therefore vote to dismiss the petition for certiorari.

ROMERO, J.: dissenting:

I adopt the arguments in the dissenting opinion of my esteemed colleague, J. Carolina Griño-Aquino,
which are at once logical and reasonable even as it takes into account the sociological implications of
a contrary ruling. At the same time, I add my own.

J. Aquino's interpretation is in consonance with the spirit of practically all existing retirement laws fixing
the compulsory retirement age of government employees at sixty-five. The precursor of Presidential
Decree No. 1146, Commonwealth Act No. 186, explicitly provided that retirement should be "automatic
and compulsory at the age of sixty-five years." The phrase "automatic and compulsory" with reference
to the retirement age of sixty-five years had been retained in subsequent amendatory laws, specifically
Republic Act Nos. 660, 728 and 3096.

The word "compulsory" should be understood in its legal signification: involuntary or forced in
contradistinction to voluntary. 1 Considering the use of the word "compulsory" in connection with age
sixty-five, the same word in Sec. 11 (b) of P.D. No. 1146 should refer only to the specified retirement
age and not to the fifteen-year service mentioned therein. This paragraph merely cites one class of
prospective retirees which would be eligible to receive old-age pension and that is, those who have
reached the age of sixty-five years while at the same time having to their credit "at least fifteen years
of service." That this is the intendment of the law is borne out by the succeeding proviso that
contemplates the possibility that the same sixty-five year old may have served "less than fifteen years
of service."

Moreover, to interpret the law as meaning that the age limit and the fifteen-year length of service
should concur before a government employee is allowed the old-age pension may well give rise to a
situation wherein a person who enters government service a year before reaching age sixty-five would
have to wait until he is seventy-nine years old to be entitled to the old-age pension provided for in P.D.
No. 1146, which is an absurdity. Hence, to give substance to the real signification of the law, the
proviso in Sec. 11 (b) which states that a government employee who has "less than fifteen years of
service, . . . shall be allowed to continue in the service to complete the fifteen years," should
contemplate a situation wherein the employee has only a minimal period of time left to complete the
fifteen-year period. What this minimal period is, the Civil Service Commission has correctly declared
to be "not exceeding one year." Otherwise, the government may well be saddled with a corps of civil
servants that may be regarded graphically as liabilities instead of assets.

Moreover, encouraging the retention of employees well beyond the age of sixty-five years would, in
effect, swell the numbers of the qualified but unemployed many who, even now, face the bleak
prospect of being edged out of the labor market by those who can but offer to the government and the
people their diminishing physical and mental vitality.

Attention should be called to the fact that the dissenting opinion is in consonance with the present
policy on retirement as well as trends being laid down by the other branches of the government on the
matter.

For instance, there are bills now pending in Congress that seek to lower the compulsory retirement
age of the bureaucracy. House Bill No. 33769 sponsored by Congressman Roco and other
Congressmen would lower it from sixty-five to sixty. 2

Its counterpart bill in the Senate, S. No. 561 whose author is Senator Tamano, likewise would amend
the present law by lowering the compulsory age of retirement to sixty. 3

House Bill No. 25903 earlier authored by Congressmen Monfort and Estrella would further reduce the
compulsory retirement age to fifty-six in order to give the young retirees the opportunity to engage in
gainful employment or otherwise utilize their skills and experiences while they are still relatively strong.

Along the same line of thinking, the proposed Civil Service Code would set the compulsory age of
retirement at sixty.

On the specific issue of whether a compulsory retiree who has not served fifteen years should be
allowed an extension for as long as necessary to enable him to complete the fifteen years of service
required for entitlement to a life pension (which is the position of the petitioner) or just a maximum
period of "not exceeding one year" as fixed in CSC Memorandum Circular No. 27 which is supported
by the dissenting opinion, it is worthwhile calling attention to Memorandum Circular No. 65 4 issued by
Executive Secretary Catalino Macaraig, Jr. Amending Memorandum Circular No. 163 dated March 5,
1968, it categorically states:

Officials or employees who have reached the compulsory retirement age of 65

years shall not be retained in the service, except for extremely meritorious reasons in
which case the retention shall not exceed six (6) months.

According to the ponencia, this Circular "should apply only to employees or officials who have reached
the compulsory retirement age of 65 years but who, at the same time, have completed the 15-year
service requirement for retirement purposes." A close reading of the title of Memorandum Circular No.
65, as well as the relevant provision quoted above, leaves no room for ambiguity or interpretation
inasmuch as there is no phrase that qualifies the scope of the law to those employees who have
reached the compulsory retirement age of 65 years "but who, at the same time, have completed the
15-year service requirement for retirement purposes." To read into the Memorandum Circular this
qualifying phrase is to unduly expand the coverage of the law to cases not intended by the Office of
the Executive Secretary.

The ponencia proffers the argument that since the Court has allowed the officials and employees of
the Judiciary who have reached the compulsory age of retirement but lacked the fifteen-year service
requirement to continue working until they complete said period, there is "no cogent reason to rule
otherwise in the case of ordinary employees of the Executive Branch as in the case of petitioner Cena".
But there is a cogent reason Petitioner Gaudencio T. Cena, being an employee of the Land
Registration Authority under the Department of Justice, falls under the Executive Department.
Accordingly, Memorandum Circular No. 65 quoted in the above preceding paragraph which allows a
retention or extension of only six months and this, only for "extremely meritorious reasons" should be
applicable to his case.

Needless to say, it would conduce to sound management practice in the government if this rule could
be rationalized and applied uniformly to all government employees, with the exceptions provided by
law.

G.R. No. 104139 December 22, 1992

LYDIA M. PROFETA, petitioner,

vs.
HON. FRANKLIN M. DRILON, in his capacity as Executive Secretary, Office of the President of
the Philippines, respondent.

PADILLA, J.:

This is a petition for review on certiorari assailing a portion of the decision of the Office of the President,
dated 23 October 1991, declaring petitioner as compulsorily retired as of 15 October 1991 and the
resolution dated 31 January 1992 denying petitioner's motion for reconsideration of said decision.

The antecedents are the following:

Petitioner, Dr. Lydia M. Profeta, served as Executive Dean of the Rizal Technological Colleges from
24 October 1974 to 15 October 1978. From 16 October 1978 to 30 April 1979, petitioner was the
appointed Acting President of said College until her promotion to President of the same college on 1
May 1979.

After the 1986 EDSA revolution or on 5 March 1986, petitioner filed her courtesy resignation as
President of the Rizal Technological Colleges and the same was accepted on 21 March 1986. A day
before the acceptance of her courtesy resignation, petitioner applied for sick leave.

On 4 November 1988, petitioner was appointed Acting President of Eulogio "Amang" Rodriguez
Institute of Science and Technology (hereinafter referred to as EARIST) and was thereafter appointed
its President on 29 March 1989.

After reaching the age of sixty-five (65) years on 16 June 1989, petitioner inquired from the
Government Service Insurance System (GSIS) as to whether she may be allowed to extend her
services with the government as President of EARIST beyond the age of sixty-five (65) years, to
enable her to avail of the old-age pension retirement benefits under PD 1146 (Revised Government
Service Insurance Act of 1977). In answer to her query, petitioner was advised by the GSIS to return
to the service until she shall have fulfilled the fifteen (15) years service requirement pursuant of Section
11 of PD 1146, to qualify for the old-age pension retirement plan. The GSIS declared that petitioner
was not yet eligible to retire under PD 1146, as she had not rendered the sufficient number of years
of service on the date of her supposed retirement on 16 June 1989 and that her creditable service was
only twelve (12) years and two (2) months. As things stood, she could only claim one hundred percent
(100%) of her average monthly compensation for every year of creditable service or to a refund of her
premium contributions with the GSIS. 1
On 6 October 1989, as recommended by the Department of Education, Culture and Sports (DECS)
Secretary and the Board of Trustees of EARIST, President Aquino, through Deputy Executive
Secretary Magdangal B. Elma, extended the term of petitioner as President of EARIST until she shall
have completed the required fifteen (15) years of service after reaching the age of sixty five (65) years
on the date of her normal retirement on 16 June 1989 or for an additional period of two (2) years,
seven (7) months and twelve (12) days. 2

In March 1990, the EARIST Faculty and Employees Union filed an administrative complaint against
petitioner before the Office of the President, for her alleged irregular appointment and for graft and
corrupt practices. In a memorandum, dated 16 August 1990, the Office of the President furnished
petitioner a copy of the complaint with a directive to file an answer thereto with the DECS Secretary,
who was duly authorized to conduct a formal investigation of the charges against petitioner. Pending
investigation of the complaint, petitioner was placed under preventive suspension for a period of ninety
(90) days. 3 After serving the period of suspension, petitioner re-assumed her duties and functions as
President of EARIST.

In a letter dated 20 July 1990, DECS Secretary Cariño recommended the compulsory retirement of
petitioner. 4

For the purpose of investigating the administrative charges against petitioner, 5 an Ad-Hoc Committee
was created by President Aquino on 12 February 1991. The parties filed their respective pleadings
and hearings in the case were conducted by the committee.

Pending resolution of the administrative charges against her, petitioner was detailed with the DECS
Central Office pursuant to a memorandum dated 13 February 1991 signed by Deputy Executive
Secretary Sarmiento III. Petitioner filed a petition for certiorari, prohibition and mandamus before the
Regional Trial Court of Manila, Branch 40, seeking her reinstatement as EARIST President. After trial,
said petition was dismissed. On appeal, the Court of Appeals denied the petition for certiorari on 2
April 1991. 6

Petitioner likewise assailed her reassignment with the DECS Central Office, before the Civil Service
Commission (CSC). On 30 July 1991, the CSC denied petitioner's complaint. She moved for
reconsideration of said resolution but the same was denied on 3 December 1991, which prompted
petitioner to file a petition for certiorari before this Court docketed as G.R. No. 103271. On 3 March
1992, this Court dismissed said petition.

After evaluating the evidence presented before the Ad-Hoc Committee, in a decision 7 dated 23
October 1991, the Office of the President dismissed the administrative complaint against petitioner for
lack of substantial evidence. In the same decision, the Office of the President also declared petitioner
as compulsory retired from government service as of 15 October 1991, holding that:

... (I)f the aforesaid sick leave of 62 working days (approximately 3 months) were to be
added to the respondent's creditable service, together with the period of two (2) weeks
which the respondent's counsel admits in his Memorandum the respondent had served
as Professorial Lecturer, the respondent should be considered as compulsorily retired
as of Oct. 15, 1991, having completed the required 15 years in the service on or about
the said date after reaching the age of 65.

Accordingly, the administrative charges against Dr. Lydia M. Profeta for her alleged
"irregular appointment and graft and corrupt practices" are hereby dismissed.
However, Dr. Profeta is hereby considered as now compulsorily retired from the
service as of October 15, 1991, in accordance with the provisions of Section 11 (b) of
 Presidential Decree No. 1146, having completed fifteen (15) years in the government
service on or about he said date after reaching the age of sixty-five (65) on June 16,
1989. 8

In a letter dated 23 October 1991, petitioner requested the GSIS to determine the exact date of her retirement. On 5 November 1991, petitioner
was advised by the GSIS that the exact date of her retirement falls on 14 August 1992. 9

A motion for reconsideration was then filed by petitioner with the Office of the President, assailing the
portion of its decision declaring her as compulsorily retired from the service as of 15 October 1991,
alleging that the said office has no jurisdiction over the issue of her compulsory retirement from the
government service.

In a resolution 10 dated 31 January 1992, petitioner's motion for reconsideration was denied by the
Office of the President. In the same resolution, the Office of the President clarified that there was an
over extension of petitioner's period of service with the government by failure to reckon with the sixty-
two (62) working days during which petitioner went on sick leave (from 20 March to 17 June 1986)
and the period of two (2) weeks during which petitioner served as Professorial Lecturer. In considering
petitioner as compulsory retired as of 15 October 1991, the Office of the President held that it merely
resolved motu proprio to shorten by three-and-a-half (3-1/2) months the extension granted to petitioner
to complete the required fifteen (15) years of service for purposes of retirement. It further declared that
it is for the President to determine whether or not petitioner could still continue as EARIST President
despite her exoneration from the administrative charges filed against her.

Under Presidential Decree No. 1146 (Revised Government Insurance Act of 1977), one of the benefits
provided for qualified members of the GSIS is the old-age pension benefit. A member who has
rendered at least fifteen (15) years of service and is at least sixty (60) years old when separated from
the service, is entitled to a basic monthly pension for life but for not less than five (5) years. On the
other hand, a member who has rendered less than fifteen (15) years of service but with at least three
(3) years of service and is sixty (60) years of age when separated from the service is entitled to a cash
payment equivalent to one hundred percent (100%) of the average monthly compensation for every
year of service.

However, retirement is compulsory for a member who has reached the age of sixty-five (65) years with
at least fifteen (15) years of service. If he has less than fifteen (15) years of service, he shall be allowed
to continue in the service to complete the fifteen (15) years, 11 to avail of the old-age pension benefit.

To a public servant, a pension is not a gratuity but rather a form of deferred compensation for services
performed and his right to it commences to vest upon his entry into the retirement system and becomes
an enforceable obligation in court upon fulfillment of all conditions under which it is to be paid. Similarly,
retirement benefits receivable by public employees are valuable parts of the consideration for entrance
into and continuation in public office or employment. They serve a public purpose and a primary
objective in establishing them is to induce competent persons to enter and remain in public
employment and render faithful and efficient service while so employed. 12 Retirement laws are liberally
interpreted in favor of the retiree because their intention is to provide for his sustenance and hopefully
even comfort, when he no longer has the stamina to continue earning his livelihood. 13The liberal
approach aims to achieve the humanitarian purposes of the law in order that the efficiency, security
and well-being of government employees maybe enhanced. 14

In the case at bar, at the time petitioner reached the compulsory retirement age of sixty-five (65) years,
she had rendered less than the required fifteen (15) years of service under Section 11 of P.D. 1146.
Thus, to enable her to avail of the old-age pension benefit, she was allowed to continue in the service
and her term as President of EARIST was extended until she shall have completed the fifteen (15)
years service requirement, or for an additional two (2) years, seven (7) months, and twelve (12) days,
as determined by the Office of the President.

This period of extended service granted to petitioner was amended by the Office of the President. In
resolving the administrative complaint against petitioner, the Office of the President, ruled not only on
the issues of alleged irregular appointment of petitioner and of graft and corrupt practices, but went
further by, in effect, reducing the period of extension of service granted to petitioner on the ground that
the latter had already completed the fifteen (15) years service requirement under P.D. 1146, and
declared petitioner as compulsorily retired as of 15 October 1991.

In other words, the extension of service of petitioner was until January 1992. However, the Office of
the President made a new computation of petitioner's period of service with the government, the Office
of the President included as part of her service the sixty-two (62) days sick leave applied for by
petitioner covering the period between 20 March to 17 June 1988 and her service as a lecturer of
approximately two (2) weeks, or a total of three-and-a-half (3 1/2) months. As a result of this new
computation, petitioner's extension of service which was supposed to end in January 1992 was
reduced by the Office of the President by three-and-a-half (3 1/2) months or until 15 October 1991.

On the other hand, the computation made by the GSIS as to the exact date of retirement of petitioner
fell on 14 August 1992. 15 Thus, the extension of service granted to petitioner by the Office of the
President for two (2) years, seven (7) months and twelve (12) days which brought her services only
up to January 1992, would not enable herein petitioner to complete the fifteen (15) years service
requirement for purposes of retirement. To allow the Office of the President to shorten the extension
of service of petitioner by three-and-a-half (3 1/2) months which consist of petitioner's sick leave and
service as lecturer, would further reduce petitioner's service with the government. Such reduction from
petitioner's service would deprive her of the opportunity of availing of the old-age pension plan, based
on the computation of the GSIS.

We hold that it is the GSIS which has the original and exclusive jurisdiction to determine whether a
member is qualified or not to avail of the old-age pension benefit under P.D. 1146, based on its
computation of a member's years of service with the government. 16 The computation of a member's
service includes not only full time but also part time and other services with compensation as may be
included under the rules and regulations prescribed by the System. 17

The sixty-two (62) days leave of absence of petitioner between 20 March to 17 June 1986 and her
part-time service as a lecturer f approximately two (2) weeks, or a total of three-and-a-half (3 1/2)
months is not reflected in her service record. Said period should be considered as part of her service
with the government and it is only but proper that her service record be amended to reflect said period
of service.

We have observed that the computation made by the GSIS of petitioner's date of retirement failed to
take into account the three-and-a-half (3 1/2) months service of petitioner which was not reflected in
her service record. If we deduct this unrecorded three-and-a-half (3 1/2) months service of petitioner
from 14 August 1992, petitioner is to be considered retired on 30 April 1992.

The order of the Office of the President declaring petitioner as compulsorily retired as of 15 October
1991 defeats the purpose for allowing petitioner to remain in the service until she has completed the
fifteen (15) years service requirement. Between the period of 16 October 1991 to 30 April 1992,
petitioner should have been allowed to continue in the service to be able to complete the fifteen (15)
years service requirement; she was prepared to render services for said period but was not allowed
to do so; she should, therefore, the entitled to all her salaries, benefits and other emoluments during
said period (16 October 1991 - 30 April 1992). However, petitioner's claim for reinstatement to her
former position to enable her to complete the fifteen (15) year service requirement for retirement
purposes is no longer possible, considering that she is deemed to have completed the said service
requirement as of 30 April 1992.

WHEREFORE, the portion of the decision of the Office of the President dated 23 October 1991
declaring petitioner as compulsorily retired as of 15 October 1991 is SET ASIDE. Petitioner is hereby
declared to have been in the service as President of EARIST from 16 October 1991 until 30 April 1992
and therefore entitled to all salaries, benefits and other emoluments of said office from 16 October
1991 to 30 April 1992. In addition, she is declared as entitled to her old-age pension benefits for having
reached age 65 years while in the service with 15 years of service to her credit, subject to her
compliance with all applicable regulations and requirements of the GSIS.

SO ORDERED.

Narvasa, C.J., Gutierrez, Jr., Cruz, Feliciano, Bidin, Griño-Aquino, Regalado, Davide, Jr., Romero,
Nocon, Bellosillo, Melo and Campos, Jr., JJ., concur.

G.R. No. 92284 July 12, 1991

TEODORO J. SANTIAGO, petitioner,

vs.
THE COMMISSION ON AUDIT, and the GOVERNMENT SERVICE INSURANCE
SYSTEM, respondents.

Leven S. Puno for petitioner.

Cesar R. Vidal for respondent GSIS.

CRUZ, J.:

The basic issue presented in this case is the correct interpretation of Executive Order No. 966, Section
9, providing as follows:

Sec. 9. Highest Basic Salary Rate. — The compensation of salary or pay which may be used
in computing the retirement benefits shall be limited to the highest salary rate actually received
by an official/employee as fixed by law and/or indicated in his duly approved appointment. This
shall include salary adjustments duly authorized and implemented by the presidential
issuance(s) and budget circular(s), additional basic compensation or salary indicated in an
appointment duly approved as an exception to the prohibition on additional or double
compensation, merit increases, and compensation for substitutionary services or in an acting
capacity. For this purpose, all other compensation and/or fringe benefits such as per diems,
allowances, bonuses, overtime pay, honoraria hazard pay, flying time fees, consultancy or
contractual fees, or fees in correcting and/or releasing examination papers shall not be
considered in the computation of the retirement benefits of an official/employee.

The question was raised by the petitioner in connection with the computation of his retirement benefits
which he claims was not made in conformity to the above-quoted requirement.

The petitioner was employed in the Commission on Audit as State Auditor IV with a monthly salary of
P7,219.00. In 1988, he was assigned to the COA Auditing Unit at the Department of Transportation
and Communications and detailed to the Manila International Airport Authority. On July 1, 1988, the
board of directors of the MIAA passed the following resolution:1
 RESOLUTION NO. 88-70

RESOLVED, that, as recommended by Management, the designation of Mr. Teodoro J.

Santiago, Jr., as Assistant General Manager for Finance and Administration, effective 15
August 1988, be approved, as it is hereby approved, subject to the following conditions:

1. He will retain his plantilla position in COA;

2. His compensation from MIAA, shall be the difference between the salary of AGM for Finance
and Administration (MIAA) and that of State Auditor IV (COA); and

3. His retirement benefits shall be chargeable against COA.

This resolution was duly communicated to the COA on July 11, 1988, with a request for the petitioner's
indefinite detail to the MIAA. In reply, Chairman Eufemio C. Domingo wrote MIAA on July 14, 1988,
as follows:2

. . . please be informed that we are authorizing such detail through appropriate office order up
to February 15, 1989. The order includes authority to collect representation and transportation
allowances (RATA) of P1,200.00 each month and other allowances attendant to the position
chargeable against the funds of the NAIAA.

As regards your proposal that Mr. Santiago be allowed to collect the difference in salary of his
position in the COA as State Auditor IV and his designated position as Assistant General
Manager thereat, likewise chargeable against the funds of that office, this Commission
interposes no objection to the proposal to pay him the difference between his present monthly
salary of P7,219.00 and that of Assistant General Manager which reportedly amounts to
P13,068.00 a month or a monthly difference of P5,849.00, provided that he is formally
designated (not appointed) Assistant General Manager by the Board of Directors, NAIAA, and
that payment of his salary differential is approved by the same office.

xxx xxx xxx

On August 10, 1988, Secretary Reinerio O. Reyes, concurrently chairman of the MIAA board of
directors, issued an office order formally designating the petitioner as Acting Assistant General
Manager for Finance and Administration, effective August 16, 1988.3

The petitioner served in this capacity and collected the differential salary of P5,849.00 plus his salary
of P7,219.00 for a total compensation of P13,068.00. He received this compensation until December
5, 1988, when he was transferred to the Presidential Management Staff under COA Office Order No.
8811448 dated December 6, 1988.

On March 1, 1989, the petitioner retired after working in the government for 44 years.

In computing his retirement benefits, the Government Service Insurance System used as basis the
amount of P13,068.00, considering this the highest basic salary rate received by the petitioner in the
course of his employment.4 The COA disagreed, however, and paid his retirement benefits on the
basis of only his monthly salary of P7,219.00 as State Auditor IV.5

The petitioner requested recomputation based on what he claimed as his highest basic salary rate of
P13,068.00. This was denied on December 8, 1989, and he was so notified on February 5, 1990. On
March 7, 1990, he came to this Court to seek reversal of the decision of the COA on the ground of
grave abuse of discretion.

We note at the outset that there is no dispute regarding the legality of the petitioner's occupying the
second position in the MIAA and receiving additional compensation for his services therein. As the
Solicitor General observed. "What the petitioner was receiving from the MIAA was the additional
compensation allowed under Section 17 of Act No. 4187 which, in turn, is allowed under Section 8,
Paragraph B, Article IX of the Constitution."6

In Quimzon v. Ozaeta,7 this Court held that double appointments are not prohibited as long as the
positions involved are not incompatible, except that the officer or employee appointed cannot receive
additional or double compensation unless specifically authorized by law. The additional compensation
received by the petitioner is not an issue in the case at bar because of its express approval by the
COA and the admission of the Solicitor General that it is allowed under the cited provision.

More specifically, Section 17 of Act No. 4187 provides:

Any existing act, rule or order to the contrary notwithstanding, no full time officer or employee
of the government shall hereafter receive directly or indirectly any kind of additional or extra
compensation or salary including per diems and bonuses from any fund of the government, its
dependencies, and semi-government entities or boards created by law except:

(1) Officers serving as chairman or members of entities and enterprise organized,

operated, owned or controlled by the government, who may be paid per them for each
meeting actually attended or when an official travel;

(2) Auditors and accountants;

(3) Provincial and municipal treasurers and their employees;

(4) Employees serving as observers of the Weather Bureau; and

(5) Those authorized to receive extra or additional compensation by virtue of the

provision of this Act. (Emphasis supplied)

The Solicitor General argues, albeit not too strongly, that the additional compensation received by the
petitioner was merely an honorarium and not a salary. As a mere honorarium, it would not fall under
the provision of Section 9 and so should not be added to his salary in computing his retirement benefits.

We cannot accept this contention. An honorarium is defined as something given not as a matter of
obligation but in appreciation for services rendered, a voluntary donation in consideration of services
which admit of no compensation in money.8 The additional compensation given to the petitioner was
in the nature of a salary because it was receive by him as a matter of right in recompense for services
rendered by him as Acting Assistant General Manager for Finance and Administration. In fact, even
Chairman Domingo referred to it in his letter dated July 14, 1988, as the petitioner's "salary differential."

The Solicitor General's main argument is that the petitioner cannot invoke Section 9 because he was
not appointed to the second position in the MIAA but only designated thereto. It is stressed that under
the said provision, "the compensation of salary or pay which may be used in computing the retirement
benefits shall be received by an official employee as fixed by law and/or indicated in his duly approved
appointment." The petitioner's additional salary was fixed not in a duly approved appointment but only
in a designation.

Belittling this argument, the petitioner maintains that there is no substantial distinction between
appointment and designation. He cites Mechem, who defines appointment as "the act of designation
by the executive officer, board or body, to whom that power has been delegated, of the individual, who
is to exercise the functions of a given office."9He also invokes Borromeo v. Mariano,10 where this Court
said that "the term "appoint," whether regarded in its legal or in its ordinary acceptation, is applied to
the nomination or designation of an individual."

Strictly speaking, there is an accepted legal distinction between appointment and designation. While
appointment is the selection by the proper authority of an individual who is to exercise the functions of
a given office, designation, on the other hand, connotes merely the imposition of additional duties,
usually by law, upon a person already in the public service by virtue of an earlier appointment (or
election).11 Thus, the appointed Secretary of Trade and Industry is, by statutory designation, a member
of the National Economic and Development Authority.12 A person may also be designated in an acting
capacity, as when he is called upon to fill a vacancy pending the selection of a permanent appointee
thereto or, more usually, the return of the regular incumbent. In the absence of the permanent
Secretary for example, an undersecretary is designated acting head of the department.13

As the Court said in Binamira v. Garrucho:14

Appointment may be defined as the selection, by the authority vested with the power, of an
individual who is to exercise the functions of a given office. When completed, usually with its
confirmation, the appointment results in security of tenure for the person chosen unless he is
replaceable at pleasure because of the nature of his office. Designation, on the other hand,
connotes merely the imposition by law of additional duties on an incumbent official, as where,
in the case before us, the Secretary of Tourism is designated Chairman of the Board of
Directors of the Philippine Tourism Authority, or where, under the Constitution, three Justices
of the Supreme Court are designated by the Chief Justice to sit in the Electoral Tribunal of the
Senate or the House of Representatives. It is said that appointment is essentially executive
while designation is legislative in nature.

Nevertheless, we agree with the petitioner that in the law in question, the term "appointment" was used
in a general sense to include the term "designation." In other words, no distinction was intended
between the two terms in Section 9 of Executive Order No. 966. We think this to be the more
reasonable interpretation, especially considering that the provision includes in the highest salary rate
"compensation for substitutionary services or in an acting capacity." This need not always be conferred
by a permanent appointment. A contrary reading would, in our view, militate against the letter of the
law, not to mention its spirit as we perceive it. That spirit seeks to extend the maximum benefits to the
retiree as an additional if belated recognition of his many years of loyal and efficient service in the
government.

As thus interpreted, Section 9 clearly covers the petitioner, who was designated Acting Assistant
General Manager for Finance and Administration in the office order issued by Secretary Reyes on
August 10, 1988. The position was then vacant and could be filled either by permanent appointment
or by temporary designation. It cannot be said that the second position was only an extension of the
petitioner's office as State Auditor IV in the Commission on Audit as otherwise there would have been
no need for his designation thereto. The second office was distinct and separate from his position in
the Commission on Audit. For the additional services he rendered for the MIAA, he was entitled to
additional compensation which, following the letter and spirit of Section 9, should be included in his
highest basic salary rate.
It is noteworthy that the petitioner occupied the second office not only for a few days or weeks but for
more than three months. His designation as Acting Assistant General Manager for Finance and
1âwphi1

Administration was not a mere accommodation by the MIAA. On the contrary, in his letter to Chairman
Domingo requesting the petitioner's services. MIAA General Manager Evergisto C. Macatulad said,
"Considering his qualifications and work experience, we believe that a finance man of his stature and
caliber can be of great help in the efficient and effective performance of the Airport's functions."

Retirement laws should be interpreted liberally in favor of the retiree because their intention is to
provide for his sustenance, and hopefully even comfort, when he no longer has the stamina to continue
earning his livelihood. After devoting the best years of his life to the public service, he deserves the
appreciation of a grateful government as best concretely expressed in a generous retirement gratuity
commensurate with the value and length of his services. That generosity is the least he should expect
now that his work is done and his youth is gone. Even as he feels the weariness in his bones and
glimpses the approach of the lengthening shadows, he should be able to luxuriate in the thought that
he did his task well, and was rewarded for it.

WHEREFORE, the petition is GRANTED. The challenged resolution is SET ASIDE and judgment is
hereby rendered DIRECTING the computation of the petitioner's retirement benefits on the basis of
his Highest Basic Salary Rate of P13,068.00, It is so ordered.

Fernan, C.J., Narvasa, Melencio-Herrera, Gutierrez, Jr., Paras, Feliciano, Padilla, Bidin, Sarmiento,
Griño-Aquino, Medialdea, Regalado and Davide, Jr., JJ., concur.
Gancayco, J., is on leave.

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 Decision1 dated 13 December 2000 of the Court of
Appeals in CA-G.R. CV No. 48784. The Court of Appeals affirmed the Decision2 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 1983.3 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.4 Nicolas' last day of actual service was on
17 February 1985.5 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.6 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.7 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
1158 and 1179 of the Family Code, the trial court held that retirement benefits, which the 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.10 Commenting on Milagros' letter, GSIS asserts that the Court 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.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 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,27 the Appellate Court of Illinois held that such
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.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.31Under 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.

G.R. No. L-28093 January 30, 1971

BASILIA BERDIN VDA. DE CONSUEGRA; JULIANA, PACITA, MARIA LOURDES, JOSE, JR.,
RODRIGO, LINEDA and LUIS, all surnamed CONSUEGRA, petitioners-appellants,
vs.
GOVERNMENT SERVICE INSURANCE SYSTEM, COMMISSIONER OF PUBLIC HIGHWAYS,
HIGHWAY DISTRICT ENGINEER OF SURIGAO DEL NORTE, COMMISSIONER OF CIVIL
SERVICE, and ROSARIO DIAZ, respondents-appellees.
Bernardino O. Almeda for petitioners-appellants.

Binag and Arevalo, Jr. for respondent-appellee Government Service Insurance System.

Office of the Solicitor General for other respondents-appellees.

ZALDIVAR, J.:

Appeal on purely questions of law from the decision of the Court of First Instance of Surigao del Norte,
dated March 7, 1967, in its Special Proceeding No. 1720.

The pertinent facts, culled from the stipulation of facts submitted by the parties, are the following:

The late Jose Consuegra, at the time of his death, was employed as a shop foreman of the office of
the District Engineer in the province of Surigao del Norte. In his lifetime, Consuegra contracted two
marriages, the first with herein respondent Rosario Diaz, solemnized in the parish church of San
Nicolas de Tolentino, Surigao, Surigao, on July 15, 1937, out of which marriage were born two
children, namely, Jose Consuegra, Jr. and Pedro Consuegra, but both predeceased their father; and
the second, which was contracted in good faith while the first marriage was subsisting, with herein
petitioner Basilia Berdin, on May 1, 1957 in the same parish and municipality, out of which marriage
were born seven children, namely, Juliana, Pacita, Maria Lourdes, Jose, Rodrigo, Lenida and Luz, all
surnamed Consuegra.

Being a member of the Government Service Insurance System (GSIS, for short) when Consuegra
died on September 26, 1965, the proceeds of his life insurance under policy No. 601801 were paid by
the GSIS to petitioner Basilia Berdin and her children who were the beneficiaries named in the policy.
Having been in the service of the government for 22.5028 years, Consuegra was entitled to retirement
insurance benefits in the sum of P6,304.47 pursuant to Section 12(c) of Commonwealth Act 186 as
amended by Republic Acts 1616 and 3836. Consuegra did not designate any beneficiary who would
receive the retirement insurance benefits due to him. Respondent Rosario Diaz, the widow by the first
marriage, filed a claim with the GSIS asking that the retirement insurance benefits be paid to her as
the only legal heir of Consuegra, considering that the deceased did not designate any beneficiary with
respect to his retirement insurance benefits. Petitioner Basilia Berdin and her children, likewise, filed
a similar claim with the GSIS, asserting that being the beneficiaries named in the life insurance policy
of Consuegra, they are the only ones entitled to receive the retirement insurance benefits due the
deceased Consuegra. Resolving the conflicting claims, the GSIS ruled that the legal heirs of the late
Jose Consuegra were Rosario Diaz, his widow by his first marriage who is entitled to one-half, or 8/16,
of the retirement insurance benefits, on the one hand; and Basilia Berdin, his widow by the second
marriage and their seven children, on the other hand, who are entitled to the remaining one-half, or
8/16, each of them to receive an equal share of 1/16.

Dissatisfied with the foregoing ruling and apportionment made by the GSIS, Basilia Berdin and her
children1 filed on October 10, 1966 a petition for mandamus with preliminary injunction in the Court of First
Instance of Surigao, naming as respondents the GSIS, the Commissioner of Public Highways, the Highway
District Engineer of Surigao del Norte, the Commissioner of Civil Service, and Rosario Diaz, praying that
they (petitioners therein) be declared the legal heirs and exclusive beneficiaries of the retirement insurance
of the late Jose Consuegra, and that a writ of preliminary injunction be issued restraining the implementation
of the adjudication made by the GSIS. On October 26, 1966, the trial court issued an order requiring therein
respondents to file their respective answers, but refrained from issuing the writ of preliminary injunction
prayed for. On February 11, 1967, the parties submitted a stipulation of facts, prayed that the same be
admitted and approved and that judgment be rendered on the basis of the stipulation of facts. On March 7,
1967, the court below rendered judgment, the pertinent portions of which are quoted hereunder:
 This Court, in conformity with the foregoing stipulation of facts, likewise is in full accord
with the parties with respect to the authority cited by them in support of said stipulation
and which is herein-below cited for purposes of this judgment, to wit:

"When two women innocently and in good faith are legally united in holy matrimony to
the same man, they and their children, born of said wedlock, will be regarded as
legitimate children and each family be entitled to one half of the estate. Lao & Lao vs.
Dee Tim, 45 Phil. 739; Estrella vs. Laong Masa, Inc., (CA) 39 OG 79; Pisalbon vs.
Bejec, 74 Phil. 88.

WHEREFORE, in view of the above premises, this Court is of the opinion that the
foregoing stipulation of facts is in order and in accordance with law and the same is
hereby approved. Judgment, therefore, is hereby rendered declaring the petitioner
Basilia Berdin Vda. de Consuegra and her co-petitioners Juliana, Pacita, Maria
Lourdes, Jose, Jr., Rodrigo, Lenida and Luis, all surnamed Consuegra, beneficiary
and entitled to one-half (1/2) of the retirement benefit in the amount of Six Thousand
Three Hundred Four Pesos and Fourty-Seven Centavos (P6,304.47) due to the
deceased Jose Consuegra from the Government Service Insurance System or the
amount of P3,152.235 to be divided equally among them in the proportional amount of
1/16 each. Likewise, the respondent Rosario Diaz Vda. de Consuegra is hereby
declared beneficiary and entitled to the other half of the retirement benefit of the late
Jose Consuegra or the amount of P3,152.235. The case with respect to the Highway
District Engineer of Surigao del Norte is hereby ordered dismissed.

Hence the present appeal by herein petitioners-appellants, Basilia Berdin and her children.

It is the contention of appellants that the lower court erred in not holding that the designated
beneficiaries in the life insurance of the late Jose Consuegra are also the exclusive beneficiaries in
the retirement insurance of said deceased. In other words, it is the submission of appellants that
because the deceased Jose Consuegra failed to designate the beneficiaries in his retirement
insurance, the appellants who were the beneficiaries named in the life insurance should automatically
be considered the beneficiaries to receive the retirement insurance benefits, to the exclusion of
respondent Rosario Diaz. From the arguments adduced by appellants in their brief We gather that it
is their stand that the system of life insurance and the system of retirement insurance, that are provided
for in Commonwealth Act 186 as amended, are simply complementary to each other, or that one is a
part or an extension of the other, such that whoever is named the beneficiary in the life insurance is
also the beneficiary in the retirement insurance when no such beneficiary is named in the retirement
insurance.

The contention of appellants is untenable.

It should be noted that the law creating the Government Service Insurance System is Commonwealth
Act 186 which was enacted by the National Assembly on November 14, 1936. As originally approved,
Commonwealth Act 186 provided for the compulsory membership in the Government Service
Insurance System of all regularly and permanently appointed officials and employees of the
government, considering as automatically insured on life all such officials and employees, and issuing
to them the corresponding membership policy under the terms and conditions as provided in the Act.2

Originally, Commonwealth Act 186 provided for life insurance only. Commonwealth Act 186 was
amended by Republic Act 660 which was enacted by the Congress of the Philippines on June 16,
1951, and, among others, the amendatory Act provided that aside from the system of life insurance
under the Government Service Insurance System there was also established the system of retirement
insurance. Thus, We will note in Republic Act 660 that there is a chapter on life insurance and another
chapter on retirement insurance. 3 Under the chapter on life insurance are sections 8, 9 and 10 of
Commonwealth Act 186, as amended; and under the chapter on retirement insurance are sections 11,
12, 13 and 13-A. On May 31, 1957, Republic Act 1616 was enacted by Congress, amending section
12 of Commonwealth Act 186 as amended by Republic Act 660, by adding thereto two new
subsections, designated as subsections (b) and (c). This subsection (c) of section 12 of
Commonwealth Act 186, as amended by Republic Acts 660, 1616 and 3096, was again amended by
Republic Act 3836 which was enacted on June 22, 1963. The pertinent provisions of subsection (c)
lâwphî1.ñèt

of Section 12 of Commonwealth Act 186, as thus amended and reamended, read as follows:

(c) Retirement is likewise allowed to a member, regardless of age, who has rendered
at least twenty years of service. The benefit shall, in addition to the return of his
personal contributions plus interest and the payment of the corresponding employer's
premiums described in subsection (a) of Section 5 hereof, without interest, be only a
gratuity equivalent to one month's salary for every year of service, based on the highest
rate received, but not to exceed twenty-four months; Provided, That the retiring officer
or employee has been in the service of the said employer or office for at least four
years, immediately preceding his retirement.

xxx xxx xxx

The gratuity is payable by the employer or office concerned which is hereby authorized
to provide the necessary appropriation to pay the same from any unexpended items
of appropriations.

Elective or appointive officials and employees paid gratuity under this subsection shall
be entitled to the commutation of the unused vacation and sick leave, based on the
highest rate received, which they may have to their credit at the time of retirement.

Jose Consuegra died on September 26, 1965, and so at the time of his death he had acquired rights
under the above-quoted provisions of subsection (c) of Section 12 of Com. Act 186, as finally amended
by Rep. Act 3836 on June 22, 1963. When Consuegra died on September 26, 1965, he had to his
credit 22.5028 years of service in the government, and pursuant to the above-quoted provisions of
subsection (c) of Section 12 of Com. Act 186, as amended, on the basis of the highest rate of salary
received by him which was P282.83 per month, he was entitled to receive retirement insurance
benefits in the amount of P6,304.47. This is the retirement benefits that are the subject of dispute
between the appellants, on the one hand, and the appellee Rosario Diaz, on the other, in the present
case. The question posed is: to whom should this retirement insurance benefits of Jose Consuegra
be paid, because he did not, or failed to, designate the beneficiary of his retirement insurance?

If Consuegra had 22.5028 years of service in the government when he died on September 26, 1965,
it follows that he started in the government service sometime during the early part of 1943, or before
1943. In 1943 Com. Act 186 was not yet amended, and the only benefits then provided for in said
Com. Act 186 were those that proceed from a life insurance. Upon entering the government service
Consuegra became a compulsory member of the GSIS, being automatically insured on his life,
pursuant to the provisions of Com. Act 186 which was in force at the time. During 1943 the operation
of the Government Service Insurance System was suspended because of the war, and the operation
was resumed sometime in 1946. When Consuegra designated his beneficiaries in his life insurance
he could not have intended those beneficiaries of his life insurance as also the beneficiaries of his
retirement insurance because the provisions on retirement insurance under the GSIS came about only
when Com. Act 186 was amended by Rep. Act 660 on June 16, 1951. Hence, it cannot be said that
because herein appellants were designated beneficiaries in Consuegra's life insurance they
automatically became the beneficiaries also of his retirement insurance. Rep. Act 660 added to Com.
Act 186 provisions regarding retirement insurance, which are Sections 11, 12, and 13 of Com. Act
186, as amended. Subsection (b) of Section 11 of Com. Act 186, as amended by Rep. Act 660,
provides as follows:

(b) Survivors benefit. — Upon death before he becomes eligible for retirement, his
beneficiaries as recorded in the application for retirement annuity filed with the System
shall be paid his own premiums with interest of three per centum per annum,
compounded monthly. If on his death he is eligible for retirement, then the automatic
retirement annuity or the annuity chosen by him previously shall be paid accordingly.

The above-quoted provisions of subsection (b) of Section 11 of Commonwealth Act 186, as amended
by Rep. Act 660, clearly indicate that there is need for the employee to file an application for retirement
insurance benefits when he becomes a member of the GSIS, and he should state in his application
the beneficiary of his retirement insurance. Hence, the beneficiary named in the life insurance does
not automatically become the beneficiary in the retirement insurance unless the same beneficiary in
the life insurance is so designated in the application for retirement insurance.

Section 24 of Commonwealth Act 186, as amended by Rep. Act 660, provides for a life insurance fund
and for a retirement insurance fund. There was no such provision in Com. Act 186 before it was
amended by Rep. Act 660. Thus, subsections (a) and (b) of Section 24 of Commonwealth Act 186, as
amended by Rep. Act 660, partly read as follows:

(a) Life insurance fund. — This shall consist of all premiums for life insurance benefit
and/or earnings and savings therefrom. It shall meet death claims as they may arise
or such equities as any member may be entitled to, under the conditions of his policy,
and shall maintain the required reserves to the end of guaranteeing the fulfillment of
the life insurance contracts issued by the System ...

(b) Retirement insurance fund. — This shall consist of all contributions for retirement
insurance benefit and of earnings and savings therefrom. It shall meet annuity
payments and establish the required reserves to the end of guaranteeing the fulfillment
of the contracts issued by the System. ...

Thus, We see that the GSIS offers two separate and distinct systems of benefits to its members —
one is the life insurance and the other is the retirement insurance. These two distinct systems of
benefits are paid out from two distinct and separate funds that are maintained by the GSIS.

In the case of the proceeds of a life insurance, the same are paid to whoever is named the beneficiary
in the life insurance policy. As in the case of a life insurance provided for in the Insurance Act (Act
2427, as amended), the beneficiary in a life insurance under the GSIS may not necessarily be a heir
of the insured. The insured in a life insurance may designate any person as beneficiary unless
disqualified to be so under the provisions of the Civil Code.4 And in the absence of any beneficiary named
in the life insurance policy, the proceeds of the insurance will go to the estate of the insured.

Retirement insurance is primarily intended for the benefit of the employee — to provide for his old age,
or incapacity, after rendering service in the government for a required number of years. If the employee
reaches the age of retirement, he gets the retirement benefits even to the exclusion of the beneficiary
or beneficiaries named in his application for retirement insurance. The beneficiary of the retirement
insurance can only claim the proceeds of the retirement insurance if the employee dies before
retirement. If the employee failed or overlooked to state the beneficiary of his retirement insurance,
the retirement benefits will accrue to his estate and will be given to his legal heirs in accordance with
law, as in the case of a life insurance if no beneficiary is named in the insurance policy.

It is Our view, therefore, that the respondent GSIS had correctly acted when it ruled that the proceeds
of the retirement insurance of the late Jose Consuegra should be divided equally between his first
living wife Rosario Diaz, on the one hand, and his second wife Basilia Berdin and his children by her,
on the other; and the lower court did not commit error when it confirmed the action of the GSIS, it
being accepted as a fact that the second marriage of Jose Consuegra to Basilia Berdin was contracted
in good faith. The lower court has correctly applied the ruling of this Court in the case of Lao, et al. vs.
Dee Tim, et al., 45 Phil. 739 as cited in the stipulation of facts and in the decision appealed from. 5 In
the recent case of Gomez vs. Lipana, L-23214, June 30, 1970,6 this Court, in construing the rights of two
women who were married to the same man — a situation more or less similar to the case of appellant
Basilia Berdin and appellee Rosario Diaz — held "that since the defendant's first marriage has not been
dissolved or declared void the conjugal partnership established by that marriage has not ceased. Nor has
the first wife lost or relinquished her status as putative heir of her husband under the new Civil Code, entitled
to share in his estate upon his death should she survive him. Consequently, whether as conjugal partner in
a still subsisting marriage or as such putative heir she has an interest in the husband's share in the property
here in dispute.... " And with respect to the right of the second wife, this Court observed that although the
second marriage can be presumed to be void ab initio as it was celebrated while the first marriage was still
subsisting, still there is need for judicial declaration of such nullity. And inasmuch as the conjugal
partnership formed by the second marriage was dissolved before judicial declaration of its nullity, "[t]he only
lust and equitable solution in this case would be to recognize the right of the second wife to her share of
one-half in the property acquired by her and her husband and consider the other half as pertaining to the
conjugal partnership of the first marriage."

WHEREFORE, the decision appealed from is affirmed, with costs against petitioners-appellants. It is
so ordered.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Castro, Fernando, Teehankee, Barredo, Villamor
and Makasiar, JJ., concur.