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Republic Act No.

8291

May 30, 1997

AN ACT AMENDING PRESIDENTIAL DECREE NO. 1146, AS AMENDED, EXPANDING AND INCREASING
THE COVERAGE AND BENEFITS OF THE GOVERNMENT SERVICE INSURANCE SYSTEM, INSTITUTING
REFORMS THEREIN AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled::
Section 1. Presidential Decree No. 1146, as amended, otherwise known as the "Revised Government
Service Insurance Act of 1977", is hereby further amended to read as follows:
"SECTION 1. Title. - The title of this Act shall be: "The Government Service Insurance System Act of
1997."
"A. DEFINITIONS
"SEC. 2. Definition of terms.- Unless the context otherwise indicates, the following terms shall mean:
"(a) GSIS- The Government Service Insurance System created by Commonwealth Act No. 186;
"(b) Board- The Board of Trustees of the Government Service Insurance System;
"(c) Employer- The national government, its political subdivisions, branches, agencies or
instrumentalities, including government-owned or controlled corporations, and financial institutions with
original charters, the constitutional commissions and the judiciary;
"(d) Employee or Member- Any person receiving compensation while in the service of an employer as
defined herein, whether by election or appointment, irrespective of status of appointment, including
barangay and Sanggunian officials;
"(e) Active Member- A member who is not separated from the service;
"(f) Dependents- Dependents shall be the following: (a) the legitimate spouse dependent for support
upon the member or pensioner; (b) the legitimate, legitimated, legally adopted child, including the
illegitimate child, who is unmarried, not gainfully employed, not over the age of majority, or is over the
age of majority but incapacitated and incapable of self-support due to a mental or physical defect
acquired prior to age of majority; and (c) the parents dependent upon the member for support;
"(g) Primary beneficiaries- The legal dependent spouse until he/she remarries and the dependent
children;
"(h) Secondary beneficiaries- The dependent parents and, subject to the restrictions on dependent
children, the legitimate descendants;
"(i) Compensation- The basic pay or salary received by an employee, pursuant to his
election/appointment, excluding per diems, bonuses, overtime pay, honoraria, allowances and any
other emoluments received in addition to the basic pay which are not integrated into the basic pay
under existing laws;
"(j) Contribution- The amount payable to the GSIS by the member and the employer in accordance
with Section 5 of this Act;

"(k) Current Daily Compensation- The actual daily compensation or the actual monthly compensation
divided by the number of working days in the month of contingency but not to exceed twenty-two (22)
days;
"(l) Average Monthly Compensation (AMC)- The quotient arrived at after dividing the aggregate
compensation received by the member during his last thirty-six (36) months of service preceding his
separation/retirement/ disability/death by thirty-six (36), or by the number of months he received such
compensation if he has less than thirty-six (36) months of service: Provided, That the average monthly
compensation shall in no case exceed the amount and rate as may be respectively set by the Board
under the rules and regulations implementing this Act as determined by the actuary of the
GSIS: Provided, further,That initially the average monthly compensation shall not exceed Ten
thousand pesos (P10,000.00), and premium shall be nine percent (9%) and twelve percent (12%) for
employee and employer covering the AMC limit and below and two percent (2%) and twelve percent
(12%) for employee and employer covering the compensation above the AMC limit;
"(m) Revalued average monthly compensation- An amount equal to one hundred seventy percent
(170%) of the first One thousand pesos (P1,000.00) of the average monthly compensation plus one
hundred percent (100%) of the average monthly compensation in excess of One thousand pesos
(P1,000.00);
"(n) Lump sum- The basic monthly pension multiplied by sixty (60);
"(o) Pensioner- Any person receiving old-age permanent total disability pension or any person who has
received the lump sum excluding one receiving survivorship pension benefits as defined in Section 20
of this Act;
"(p) Gainful Occupation- Any productive activity that provided the member with income at least equal
to the minimum compensation of government employees;
"(q) Disability- Any loss or impairment of the normal functions of the physical and/or mental faculty of a
member which reduces or eliminates his/her capacity to continue with his/her current gainful
occupation or engage in any other gainful occupation;
"(r) Total Disability- Complete incapacity to continue with his present employment or engage in any
gainful occupation due to the loss or impairment of the normal functions of the physical and/or mental
faculties of the member;
"(s) Permanent Total Disability- Accrues or arises when recovery from the impairment mentioned in
Section 2 (Q) is medically remote;
"(t) Temporary Total Disability- Accrues or arises when the impaired physical and/or mental faculties
can be rehabilitated and/or restored to their normal functions;
"(u) Permanent Partial Disability- Accrues or arises upon the irrevocable loss or impairment of certain
portion/s of the physical faculties, despite which the member is able to pursue a gainful occupation.
"B. MEMBERSHIP IN THE GSIS
"SEC. 3. Compulsory Membership. - Membership in the GSIS shall be compulsory for all employees
receiving compensation who have not reached the compulsory retirement age, irrespective of
employment status, except members of the Armed Forces of the Philippines and the Philippine
National Police, subject to the condition that they must settle first their financial obligation with the
GSIS, and contractuals who have no employer and employee relationship with the agencies they
serve.

"Except for the members of the judiciary and constitutional commissions who shall have life insurance
only, all members of the GSIS shall have life insurance, retirement, and all other social security
protections such as disability, survivorship, separation, and unemployment benefits.
"SEC. 4. Effect of Separation from the Service. - A member separated from the service shall continue
to be a member, and shall be entitled to whatever benefits he has qualified to in the event of any
contingency compensable under this Act.
"C. SOURCES OF FUNDS
"SEC. 5. Contributions. - (a) It shall be mandatory for the member and employer to pay the monthly
contributions specified in the following schedule:
"Monthly Compensation

Percentage of
MonthlyCompensation Payable by
Member

I.

II.

Maximum Average
Monthly Compensation
(AMC) Limit and Below

9.0%

Employer

12.0%

Over the Maximum AMC Limit


-Up to the Maximum AMC Limit

9.0%

12.0%

-In Excess of the AMC Limit

2.0%

12.0%

"Members of the judiciary and constitutional commissioners shall pay three percent (3%) of their
monthly compensation as personal share and their employers a corresponding three percent (3%)
share for their life insurance coverage.
"(b) The employer shall include in its annual appropriation the necessary amounts for its share of the
contributions indicated above, plus any additional premiums that may be required on account of the
hazards or risks of its employees occupation.
"(c) It shall be mandatory and compulsory for all employers to include the payment of contributions in
their annual appropriations. Penal sanctions shall be imposed upon employers who fail to include the
payment of contributions in their annual appropriations or otherwise fail to remit the accurate/exact
amount of contributions on time, or delay the remittance of premium contributions to the GSIS. The
heads of offices and agencies shall be administratively liable for non-remittance or delayed remittance
of premium contributions to the GSIS.
"SEC. 6. Collection and Remittance of Contributions. - (a) The employer shall report to the GSIS the
names of all its employees, their corresponding employment status, positions, salaries and such other
pertinent information, including subsequent changes therein, if any, as may be required by the GSIS;
the employer shall deduct each month from the monthly salary or compensation of each employee the
contribution payable by him in accordance with the schedule prescribed in the rules and regulations
implementing this Act.
"(b) Each employer shall remit directly to the GSIS the employees and employers contributions within
the first ten (10) days of the calendar month following the month to which the contributions apply. The
remittance by the employer of the contribution to the GSIS shall take priority over and above the
payment of any and all obligations, except salaries and wages of its employees.
"SEC. 7. Interest on Delayed Remittances. - Agencies which delay the remittance of any and all
monies due the GSIS shall be charged interests as may be prescribed by the Board but not less than
two percent (2%) simple interest per month. Such interest shall be paid by the employers concerned.

"SEC. 8. Government Guarantee. - The government of the Republic of the Philippines hereby
guarantees the fulfillment of the obligations of the GSIS to its members as and when they fall due.
"D. BENEFITS
"SEC. 9. Computation of the Basic Monthly Pension. - (a) The basic monthly pension is equal to:
"1) thirty-seven and one-half percent (37.5%) of the revalued average monthly compensation; plus
"2) two and one-half percent (2.5%) of said revalued average monthly compensation for each year of
service in excess of (15) years: Provided, That the basic monthly pension shall not exceed ninety
percent (90%) of the average monthly compensation.
"(b) The basic monthly pension may be adjusted upon the recommendation of the President and
General Manager of the GSIS and approved by the President of the Philippines in accordance with the
rules and regulations prescribed by the GSIS: Provided, however, that the basic monthly pension shall
not be less than One thousand and three hundred pesos (P1,300.00): Provided, further, that the basic
monthly pension for those who have rendered at least twenty (20) years of service after the effectivity
of this Act shall not be less than Two thousand four hundred pesos (P2,400.00) a month.
"SEC. 10. Computation of Service. - (a) The computation of service for the purpose of determining the
amount of benefits payable under this Act shall be from the date of original appointment/election,
including periods of service at different times under one or more employers, those performed overseas
under the authority of the Republic of the Philippines, and those that may be prescribed by the GSIS in
coordination with the Civil Service Commission.
"(b) All service credited for retirement, resignation or separation for which corresponding benefits have
been awarded under this Act or other laws shall be excluded in the computation of service in case of
reinstatement in the service of an employer and subsequent retirement or separation which is
compensable under this Act.
"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 as may be prescribed by the GSIS.
"SEPARATION BENEFITS
"SEC. 11. Separation Benefits. - The separation benefits shall consist of: (a) a cash payment
equivalent to one hundred percent (100%) of his average monthly compensation for each year of
service he paid contributions, but not less than Twelve thousand pesos (P12,000) payable upon
reaching sixty (60) years of age upon separation, whichever comes later: Provided, that the member
resigns or separates from the service after he has rendered at least three (3) years of service but less
than fifteen (15) years; or
"(b) a cash payment equivalent to eighteen (18) times his basic monthly pension at the time of
resignation or separation, plus an old-age pension benefit equal to the basic monthly pension payable
monthly for life upon reaching the age of sixty (60): Provided, that the member resigns or separates
from the service after he has rendered at least fifteen (15) years of service and is below sixty (60)
years of age at the time of resignation or separation.
"SEC. 12. Unemployment or Involuntary Separation Benefits. - Unemployment benefits in the form of
monthly cash payments equivalent to fifty percent (50%) of the average monthly compensation shall
be paid to a permanent employee who is involuntarily separated from the service due to the abolition
of his office or position usually resulting from reorganization: Provided, That he has been paying

integrated contributions for at least one (1) year prior to separation. Unemployment benefits shall be
paid in accordance with the following schedules:
"Contributions Made Benefit Duration
1 year but less than 3 years 2 months
3 or more years but less than 6 years 3 months
6 or more years but less than 9 years 4 months
9 or more years but less than 11 years 5 months
11 or more years but less than 15 years 6 months
"The first payment shall be equivalent to two (2) monthly benefits. A seven-day (7) waiting period shall
be imposed on succeeding monthly payments.
"All accumulated unemployment benefits paid to the employee during his entire membership with the
GSIS shall be deducted from voluntary separation benefits.
"The GSIS shall prescribe the detailed guidelines in the operationalization of this section in the rules
and regulations implementing this Act.
"RETIREMENT BENEFITS
"SEC. 13. Retirement Benefits. - (a) Retirement benefits shall be:
"(1) the lump sum payment as defined in this Act payable at the time of retirement plus an oldage pension benefit equal to the basic monthly pension payable monthly for life, starting upon
expiration of the five-year (5) guaranteed period covered by the lump sum; or
"(2) cash payment equivalent to eighteen (18) months of his basic monthly pension plus
monthly pension for life payable immediately with no five-year (5) guarantee.
"(b) Unless the service is extended by appropriate authorities, retirement shall be compulsory for an
employee of 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 may be allowed to continue in the service in accordance
with existing civil service rules and regulations.
"SEC. 13-A. Conditions for Entitlement. - A member who retires from the service shall be entitled to the
retirement benefits enumerated in paragraph (a) of Section 13 hereof: Provided, That:
(1) he has rendered at least fifteen years of service;
(2) he is at least sixty (60) years of age at the time of retirement; and
(3) he is not receiving a monthly pension benefit from permanent total disability.
"SEC. 14. Periodic Pension Adjustment. - The monthly pension of all pensioners including all those
receiving survivorship pension benefits shall be periodically adjusted as may be recommended by the
GSIS actuary and approved by the Board in accordance with the rules and regulations prescribed by
the GSIS.

"PERMANENT DISABILITY BENEFITS


"SEC. 15. General Conditions for Entitlement. - A member who suffers permanent disability for
reasons not due to his grave misconduct, notorious negligence, habitual intoxication, or willful intention
to kill himself or another, shall be entitled to the benefits provided for under Sections 16 and 17
immediately following, subject to the corresponding conditions thereof.
"SEC. 16. Permanent Total Disability Benefits. - (a) If the permanent disability is total, he shall receive
a monthly income benefit for life equal to the basic monthly pension effective from the date of
disability:Provided, That:
(1) he is in the service at the time of disability; or
(2) if separated from the service, he has paid at least thirty-six (36) monthly contributions
within the five (5) year period immediately preceding disability, or has paid a total of at least
one hundred eighty (180) monthly contributions, prior to his disability: Provided, further, That if
at the time of disability, he was in the service and has paid a total of at least one hundred
eighty (180) monthly contributions, in addition to the monthly income benefit, he shall receive
a cash payment equivalent to eighteen (18) times his basic monthly pension: Provided,
finally, That a member cannot enjoy the monthly income benefit for permanent disability and
the old-age retirement simultaneously.
"(b) If a member who suffers permanent total disability does not satisfy conditions (1) and (2) in
paragraph (a) of this section but has rendered at least three (3) years of service at the time of his
disability, he shall be advanced the cash payment equivalent to one hundred percent (100%) of his
average monthly compensation for each year of service he paid contributions, but not less than Twelve
thousand pesos (P12,000.00) which should have been his separation benefit.
"(c) Unless the member has reached the minimum retirement age, disability benefit shall be
suspended when:
"(1) he is reemployed; or
"(2) he recovers from his disability as determined by the GSIS, whose decision shall be final
and binding; or
"(3) he fails to present himself for medical examination when required by the GSIS.
"(d) The following disabilities shall be deemed total and permanent:
"(1) complete loss of sight of both eyes;
"(2) loss of two (2) limbs at or above the ankle or wrist;
"(3) permanent complete paralysis of two (2) limbs;
"(4) brain injury resulting in incurable imbecility or insanity; and
"(5) such other cases as may be determined by the GSIS.
"SEC. 17. Permanent Partial Disability Benefits. - (a) If the disability is partial, he shall receive a cash
payment in accordance with a schedule of disabilities to be prescribed by the GSIS: Provided, That he
satisfies either conditions (1) or (2) of Section 16 (a);

"(b) The following disabilities shall be deemed permanent partial:


"(1) complete and permanent loss of the use of:
(i) any finger
(ii) any toe
(iii) one arm
(iv) one hand
(v) one foot
(vi) one leg
(vii) one or both ears
(viii) hearing of one or both ears
(ix) sight of both eyes
"(2) such other cases as my be determined by the GSIS.
"TEMPORARY DISABILITY BENEFITS
"SEC. 18. Temporary Total Disability Benefits. - (a) A member who suffers temporary total disability for
reasons not due to any of the conditions enumerated in Section 15 hereof shall be entitled to seventyfive percent (75%) of his current daily compensation for each day or fraction thereof of temporary
disability benefit not exceeding one hundred twenty (120) days in one calendar year after exhausting
all his sick leave credits and collective bargaining agreement sick leave benefits, if any, but not earlier
than the fourth day of his temporary total disability: Provided, That:
"(1) he is in the service at the time of his disability; or
"(2) if separated, he has rendered at least three (3) years of service and has paid at least six
(6) monthly contributions in the twelve-month period immediately preceding his disability.
"Provided, however, That a member cannot enjoy the temporary total disability benefit and sick leave
pay simultaneously: Provided, further, That if the disability requires more extensive treatment that lasts
beyond one hundred twenty (120) days, the payment of the temporary total disability benefit may be
extended by the GSIS but not to exceed a total of two hundred forty (240) days.
"(b) The temporary total disability benefit shall in no case be less than Seventy pesos (P70.00) a day.
"(c) The notices required of the member and the employer, the mode of payment, and the other
requirements for entitlement to temporary total disability benefits shall be provided in the rules and
regulations to be prescribed by the GSIS.
"SEC. 19. Non-scheduled Disability. - For injuries or illnesses resulting in a disability not listed in the
schedule of partial/total disability provided herein, the GSIS shall determined the nature of the disability
and the corresponding benefits therefor.

"SURVIVORSHIP BENEFITS
"SEC. 20. Survivorship Benefits. - When a member or pensioner dies, the beneficiaries shall be
entitled to survivorship benefits provided in Sections 21 and 22 hereunder subject to the conditions
therein provided for. The survivorship pension shall consist of:
(1) the basic survivorship pension which is fifty percent (50%) of the basic monthly pension;
and
(2) the dependent childrens pension not exceeding fifty percent (50%) of the basic monthly
pension
"SEC. 21. Death of a Member. - (a) Upon the death of a member, the primary beneficiaries shall be
entitled to:
(1) survivorship pension: Provided, That the deceased:
(i) was in the service at the time of his death; or
(ii) if separated from the service, has at least three (3) years of service at the time of
his death and has paid thirty-six (36) monthly contributions within the five-year period
immediately preceding his death; or has paid a total of at least one hundred eighty
(180) monthly contributions prior to his death; or
(2) the survivorship pension plus a cash payment equivalent to one hundred percent (100%)
of his average monthly compensation for every year of service: Provided, That the deceased
was in the service at the time of his death with at least three (3) years of service; or
(3) a cash payment equivalent to one hundred percent (100%) of his average monthly
compensation for each year of service he paid contributions, but not less than Twelve
thousand pesos (P12,000.00): Provided, That the deceased has rendered at least three (3)
years of service prior to his death but does not qualify for the benefits under item (1) or (2) of
this paragraph.
(b) The survivorship pension shall be paid as follows:
(1) when the dependent spouse is the only survivor, he/she shall receive the basic
survivorship pension for life or until he/she remarries;
(2) when only dependent children are the survivors, they shall be entitled to the basic
survivorship pension for as long as they are qualified, plus the dependent childrens pension
equivalent to ten percent (10%) of the basic monthly pension for every dependent child not
exceeding five (5), counted from the youngest and without substitution;
(3) when the survivors are the dependent spouse and the dependent children, the dependent
spouse shall receive the basic survivorship pension for life or until he/she remarries, and the
dependent children shall receive the dependent childrens pension mentioned in the
immediately preceding paragraph (2) hereof.
(c) In the absence of primary beneficiaries, the secondary beneficiaries shall be entitled to:
(1) the cash payment equivalent to one hundred percent (100%) of his average monthly
compensation for each year of service he paid contributions, but not less than Twelve
thousand pesos (P12,000.00): Provided, That the member is in the service at the time of his
death and has at least three (3) years of service; or

(2) in the absence of secondary beneficiaries, the benefits under this paragraph shall be paid
to his legal heirs.
(d) For purposes of the survivorship benefits, legitimate children shall include legally adopted and
legitimated children.
"SEC. 22. Death of a Pensioner. - Upon the death of an old-age pensioner or a member receiving the
monthly income benefit for permanent disability, the qualified beneficiaries shall be entitled to the
survivorship pension defined in Section 20 of this Act, subject to the provisions of paragraph (b) of
Section 21 hereof. When the pensioner dies within the period covered by the lump sum, the
survivorship pension shall be paid only after the expiration of the said period.
"FUNERAL BENEFITS
"SEC. 23. Funeral Benefits. - The amount of the funeral benefits shall be determined and specified by
the GSIS in the rules and regulations but shall not be less than Twelve thousand pesos
(P12,000.00): Provided,That it shall be increased to at least Eighteen thousand pesos (P18,000.00)
after five (5) years and shall be paid upon the death of:
(a) an active member as defined under Section 2 (e) of this Act; or
(b) a member who has been separated from the service, but who may be entitled to future
benefit pursuant to Section 4 of this Act; or
(c) a pensioner, as defined in Section 2 (o) of this Act; or
(d) a retiree who at the time of his retirement was of pensionable age under this Act but who
opted to retire under Republic Act No. 1616.
"LIFE INSURANCE BENEFITS
"SEC. 24. Compulsory Life Insurance. - All employees except for Members of the Armed Forces of the
Philippines (AFP) and the Philippine National Police (PNP) shall, under such terms and conditions as
may be promulgated by the GSIS, be compulsorily covered with life insurance, which shall
automatically take effect as follows:
(1) for those employed after the effectivity of this Act, their insurance shall take effect on the
date of their employment;
(2) for those whose insurance will mature after the effectivity of this Act, their insurance shall
be deemed renewed on the day following the maturity or expiry date of their insurance;
(3) for those without any life insurance as of the effectivity of this Act, their insurance shall
take effect following said effectivity.
"SEC. 25. Dividends. - An annual dividend may be granted to all members of the GSIS whose life
insurance is in force for at least one (1) year in accordance with a dividends allocation formula to be
determined by the GSIS.
"SEC. 26. Optional Insurance. - Subject to the rules and regulations prescribed by the GSIS, a
member may apply for insurance and/or pre-need coverage embracing life, health, hospitalization,
education, memorial plans, and such other plans as may be designed by the GSIS, for himself and/or
his dependents. Any employer may likewise apply for group insurance coverage for its employees. The
payment of the premiums/installments for optional insurance and pre-need products may be made by
the insured or his employer and/or any person acceptable to the GSIS.

"SEC. 27. Reinsurance. - The GSIS may reinsure any of its interests or part thereof with any private
company or reinsurer whether domestic of foreign: Provided, That the GSIS shall submit an annual
report on its reinsurance operations to the Insurance Commission.
"E. ADJUDICATION OF CLAIMS AND DISPUTES
"SEC. 28. Prescription. - Claims for benefits under this Act except for life and retirement shall prescribe
after four (4) years from the date of contingency.
"SEC. 29. Facility of Payment. - The GSIS shall prescribe rules and regulations to facilitate payment of
benefits, proceeds, and claims under this Act and any other laws administered by the GSIS. Payments
made by the GSIS prior to its receipt of an adverse claim, to a beneficiary or claimant subsequently
found not entitled thereto, shall not bar the legal and eligible recipient to his right to demand the
payment of benefits, proceeds, and claims from the GSIS, who shall, however, have a right to institute
the appropriate action in a court of law against the ineligible recipient.
"SEC. 30. Settlement of Disputes. - The GSIS shall have original and exclusive jurisdiction to settle
any disputes arising under this Act and any other laws administered by the GSIS.
The Board may designate any member of the Board, or official of the GSIS who is a lawyer, to act as
hearing officer to receive evidence, make findings of fact and submit recommendations, together with
all documentary and testimonial evidence to the Board within thirty (30) working days from the time the
parties have closed their respective evidence and filed their last pleading. The Board shall decide the
case within thirty (30) days from the receipt of the hearing officers findings and recommendations. The
cases heard directly by the Board shall be decided within thirty (30) working days from the time they
are submitted by the parties for decision.
"SEC. 31. Appeals. - Appeals from any decision or award of the Board shall be governed by Rules 43
and 45 of the 1997 Rules of Civil Procedure adopted by the Supreme Court on April 8, 1997 which will
take effect on July 1, 1997: Provided, That pending cases and those filed prior to July 1, 1997 shall be
governed by the applicable rules of procedure: Provided, further, That the appeal shall take
precedence over all other cases except criminal cases when the penalty of life imprisonment or death
or reclusion perpetua is imposable.
The appeal shall not stay the execution of the order or award unless ordered by the Board, by the
Court of Appeals or by the Supreme Court and the appeal shall be without prejudice to the special civil
action of certiorari when proper.
"SEC. 32. Execution of Decision. - When no appeal is perfected and there is no order to stay by the
Board, by the Court of Appeals or by the Supreme Court, any decision or award of the Board shall be
enforced and executed in the same manner as decisions of the Regional Trial Court. For this purpose,
the Board shall have the power to issue to the city or provincial sheriff or its appointed sheriff such
writs of execution as may be necessary for the enforcement of such decision or award, and any person
who shall fail or refuse to comply with such decision, award, writ or process after being required to do
so shall, upon application by the GSIS, be punished for contempt.
"SEC. 33. Oaths, Witnesses, and Production of Records. - When authorized by the Board, an official
or employee of the GSIS shall have the power to administer oath and affirmation, take deposition,
certify to official acts, and issue subpoena ad testificandum and subpoena duces tecum to compel the
attendance of witnesses and the production of books, papers, correspondences, and other records
deemed necessary as evidence in connection with any question arising under this Act. Any case of
contumacy shall be dealt with in accordance with the provisions of Section 580 of the Revised
Administrative Code.
"F. FUNDS OF THE GSIS

"SEC. 34. Funds. - All contributions payable under Section 5 of this Act together with the earnings and
accruals thereon shall constitute the GSIS Social Insurance Fund. The said fund shall be used to
finance the benefits administered by the GSIS under this Act. In addition, the GSIS shall administer the
optional insurance fund for the insurance coverage described in Section 26 hereof, the Employees
Compensation Insurance Fund created under P.D. 626, as amended, General Insurance Fund created
under Act No. 656, as amended, and such other special funds existing or that may be created for
special groups or persons rendering services to the government. The GSIS shall maintain the required
reserves to guarantee the fulfillment of its obligations under this Act.
The funds of the GSIS shall not be used for purposes other than what are provided for under this Act.
Moreover, no portion of the funds of the GSIS or income thereof shall accrue to the General Fund of
the national government and its political subdivisions, instrumentalities and other agencies including
government-owned and controlled corporations except as may be allowed under this Act.
"SEC. 35. Deposits and Disbursements. - All revenues collected and all accruals thereto shall be
deposited, administered and disbursed in accordance with the law. A maximum expense loading of
twelve percent (12%) of the yearly revenues from all sources may be disbursed for administrative and
operational expenses except as may be otherwise approved by the President of the Philippines on the
basis of actuarial and management studies.
"SEC. 36. Investment of Funds. - The funds of the GSIS which are not needed to meet the current
obligations may be invested under such terms and conditions and rules and regulations as may be
prescribed by the Board: Provided, That investments shall satisfy the requirements of liquidity,
safety/security and yield in order to ensure the actuarial solvency of the funds of the GSIS: Provided,
further, That the GSIS shall submit an annual report on all investments made to both Houses of
Congress of the Philippines, to wit:
(a) in interest-bearing bonds or securities or other evidence of indebtedness of the
Government of the Philippines;
(b) in interest-bearing deposits or securities in any domestic bank doing business in the
Philippines:Provided, That in the case of such deposits, there shall not exceed at any time the
unimpaired capital and surplus or total private deposits of the depository bank, whichever is
smaller: Provided, further,That the said bank has prior designation as a depository for the
purpose by the Monetary Board of the Central Monetary Authority;
(c) in direct housing loans to members and group housing projects secured by first mortgage,
giving priority to the low income groups and in short and medium term loans to members such
as salary, policy, educational, emergency stock purchase plan and other similar
loans: Provided, That no less than forty percent (40%) of the investible fund of the GSIS
Social Insurance Fund shall be invested for these purposes;
(d) in bonds, securities, promissory notes or other evidence of indebtedness of educational or
medical institutions to finance the construction, improvement and maintenance of schools and
hospitals;
(e) in real estate property including shares of stocks involving real state property and
investments secured by first mortgages on real estate or other collaterals acceptable to the
GSIS: Provided, That such investment shall, in the determination of the Board, redound to the
benefit of the GSIS, its members as well as the general public;
(f) in debt instruments and other securities traded in the secondary markets;
(g) in loans to, or in bonds, debentures, promissory notes or other evidence of indebtedness
of any solvent corporation created or existing under the laws of the Philippines;

(h) in common and preferred stocks of any solvent corporation or financial institution created
or existing under the laws of the Philippines listed in the stock exchange with proven track
record of profitability over the last three (3) years and payment of dividends at least once over
the same period;
(i) in domestic mutual funds including investments related to the operations of mutual funds;
and
(j) in foreign mutual funds and in foreign currency deposits or foreign currency-denominated
debts, non-speculative equities and other financial instruments or other assets issued in
accordance with existing laws of the countries where such financial instruments are
issued: Provided, That these instruments or assets are listed in bourses of the respective
countries where these instruments or assets are issued: Provided, further, That the issuing
company has proven track record of profitability over the last three (3) years and payment of
dividends at least once over the same period.
"SEC. 37. Records and Reports. - The GSIS shall keep and cause to keep such records as may be
necessary for the purpose of making actuarial studies, calculations and valuations of the funds of the
GSIS including such data needed in the computation of rates of disability, mortality, morbidity,
separation and retirement among the members and any other information useful for the adjustment of
the benefits of the members. The GSIS shall maintain appropriate books of accounts to record its
assets, liabilities, income, expenses, receipts and disbursement of funds and other financial
transactions and operations.
"SEC. 38. Examination and Valuation of the Funds. - The GSIS shall make a periodic actuarial
examination and valuation of its funds in accordance with accepted actuarial principles.
"SEC. 39. Exemption from Tax, Legal Process and Lien. - It is hereby declared to be the policy of the
State that the actuarial solvency of the funds of the GSIS shall be preserved and maintained at all
times and that contribution rates necessary to sustain the benefits under this Act shall be kept as low
as possible in order not to burden the members of the GSIS and their employers. Taxes imposed on
the GSIS tend to impair the actuarial solvency of its funds and increase the contribution rate necessary
to sustain the benefits of this Act. Accordingly, notwithstanding any laws to the contrary, the GSIS, its
assets, revenues including all accruals thereto, and benefits paid, shall be exempt from all taxes,
assessments, fees, charges, or duties of all kinds. These exemptions shall continue unless expressly
and specifically revoked and any assessment against the GSIS as of the approval of this Act are
hereby considered paid. Consequently, all laws, ordinances, regulations, issuances, opinions or
jurisprudence contrary to or in derogation of this provision are hereby deemed repealed, superseded
and rendered ineffective and without legal force and effect.
"Moreover, these exemptions shall not be affected by subsequent laws to the contrary unless this
section is expressly, specifically and categorically revoked or repealed by law and a provision is
enacted to substitute or replace the exemption referred to herein as an essential factor to maintain or
protect the solvency of the fund, notwithstanding and independently of the guaranty of the national
government to secure such solvency or liability.
"The funds and/or the properties referred to herein as well as the benefits, sums or monies
corresponding to the benefits under this Act shall be exempt from attachment, garnishment, execution,
levy or other processes issued by the courts, quasi-judicial agencies or administrative bodies including
Commission on Audit (COA) disallowances and from all financial obligations of the members, including
his pecuniary accountability arising from or caused or occasioned by his exercise or performance of
his official functions or duties, or incurred relative to or in connection with his position or work except
when his monetary liability, contractual or otherwise, is in favor of the GSIS.
"G. ADMINISTRATION

"SEC. 40. Implementing Body. - The Government Service Insurance System as created under
Commonwealth Act No. 186 shall implement the provisions of this Act.
"SEC. 41. Powers and Functions of the GSIS. - The GSIS shall exercise the following powers and
functions:
(a) to formulate, adopt, amend and/or rescind such rules and regulations as may be
necessary to carry out the provisions and purposes of this Act, as well as the effective
exercise of the powers and functions, and the discharge of duties and responsibilities of the
GSIS, its officers and employees;
(b) to adopt or approve the annual and supplemental budget of receipts and expenditures
including salaries and allowances of the GSIS personnel; to authorize such capital and
operating expenditures and disbursements of the GSIS as may be necessary and proper for
the effective management and operation of the GSIS;
(c) to invest the funds of the GSIS, directly or indirectly, in accordance with the provisions of
this Act;
(d) to acquire, utilize or dispose of, in any manner recognized by law, real or personal property
in the Philippines or elsewhere necessary to carry out the purposes of this Act;
(e) to conduct continuing actuarial and statistical studies and valuations to determine the
financial condition of the GSIS and taking into consideration such studies and valuations and
the limitations herein provided, re-adjust the benefits, contributions, premium rates, interest
rates or the allocation or re-allocation of the funds to the contingencies covered;
(f) to have the power of succession;
(g) to sue and be sued;
(h) to enter into, make, perform and carry out contracts of every kind and description with any
person, firm or association or corporation, domestic or foreign;
(i) to carry on any other lawful business whatsoever in pursuance of, or in connection with the
provisions of this Act;
(j) to have one or more offices in and outside of the Philippines, and to conduct its business
and exercise its powers throughout and in any part of the Republic of the Philippines and/or in
any or all foreign countries, states and territories: Provided, That the GSIS shall maintain a
branch office in every province where there exists a minimum of fifteen thousand (15,000)
membership;
(k) to borrow funds from any source, private or government, foreign or domestic, only as an
incident in the securitization of housing mortgages of the GSIS and on account of its
receivables from any government or private entity;
(l) to invest, own or otherwise participate in equity in any establishment, firm or entity;
(m) to approve appointments in the GSIS except appointments to positions which are policy
determining, primarily confidential or highly technical in nature according to the Civil Service
rules and regulations: Provided, That all positions in the GSIS shall be governed by the
compensation and position classification system and qualifications standards approved by the
GSIS Board of Trustees based on a comprehensive job analysis and audit of actual duties
and responsibilities: Provided, further, That the compensation plan shall be comparable with

the prevailing compensation plans in the private sector and shall be subject to the periodic
review by the Board no more than once every four (4) years without prejudice to yearly merit
reviews or increases based on productivity and profitability;
(n) to design and adopt an Early Retirement Incentives Plan (ERIP) and/or financial
assistance for the purpose of retirement for its own personnel;
(o) to fix and periodically review and adjust the rates of interest and other terms and
conditions for loans and credits extended to members or other persons, whether natural or
juridical;
(p) to enter into agreement with the Social Security System or any other entity, enterprise,
corporation or partnership for the benefit of members transferring from one system to another
subject to the provisions of Republic Act No. 7699, otherwise known as the Portability Law;
(q) to be able to float proper instrument to liquefy long-term maturity by pooling funds for
short-term secondary market;
(r) to submit annually, not later than June 30, a public report to the President of the Philippines
and the Congress of the Philippines regarding its activities in the administration and
enforcement of this Act during the preceding year including information and recommendations
on board policies for the development and perfection of the programs of the GSIS;
(s) to maintain a provident fund, which consists of contributions made by both the GSIS and
its officials and employees and their earnings, for the payments of benefits to such officials
and employees or their heirs under such terms and conditions as it may prescribe;
(t) to approve and adopt guidelines affecting investments, insurance coverage of government
properties, settlement of claims, disposition of acquired assets, privatization or expansion of
subsidiaries, development of housing projects, increased benefit and loan packages to
members, and the enforcement of the provision of this Act;
(u) any provision of law to the contrary notwithstanding, to authorize the payment of extra
remuneration to the officials and employees directly involved in the collection and/or
remittances of contributions, loan repayments, and other monies due to the GSIS at such
rates and under such conditions as it may adopt: Provided, That the best interest of the GSIS
shall be observed thereby;
(v) to determine, fix and impose interest upon unpaid premiums due from employers and
employees;
(w) to ensure the collection or recovery of all indebtedness, liabilities and/or accountabilities,
including unpaid premiums or contributions in favor of the GSIS arising from any cause or
source whatsoever, due from obligors, whether public or private. The Board shall demand
payment or settlement of the obligations referred to herein within thirty (30) days from the date
the obligation becomes due, and in the event of failure or refusal of the obligor or debtor to
comply with the demand, to initiate or institute the necessary or proper actions or suits,
criminal, civil or administrative or otherwise, before the courts, tribunals, commissions, boards,
or bodies of proper jurisdiction within thirty (30) days reckoned from the expiry date of the
period fixed in the demand within which to pay or settle the account;
(x) to design and implement programs that will promote and mobilize savings and provide
additional resources for social security expansion and at the same time afford individual
members appropriate returns on their savings/investments. The programs shall be so
designed as to spur socio-economic take-off and maintain continued growth; and

(y) to exercise such powers and perform such other acts as may be necessary, useful,
incidental or auxiliary to carry out the provisions of this Act, or to attain the purposes and
objectives of this Act.
"SEC. 42. The Board of Trustees; its Composition; Tenure and Compensation. - The corporate powers
and functions of the GSIS shall be vested in and exercised by the Board of Trustees composed of the
President and General Manager of the GSIS and eight (8) other members to be appointed by the
President of the Philippines, one (1) of whom shall be either the President of the Philippine Public
School Teachers Association (PPSTA) or the President of the Philippine Association of School
Superintendents (PASS), another two (2) shall represent the leading organizations or associations of
government employees/retirees, another four (4) from the banking, finance, investment, and insurance
sectors, and one (1) recognized member of the legal profession who at the time of appointment is also
a member of the GSIS. The Trustees shall elect from among themselves a Chairman while the
President and General Manager of the GSIS shall automatically be the vice-chairman.
The Trustees, except the President and General Manager who shall cease as trustee upon his
separation, shall hold office for six (6) years without reappointment, or until their successors are duly
appointed and qualified. Vacancy, other than through the expiration of the term, shall be filled for the
unexpired term only. The members of the Board shall be entitled to a per diem of Two thousand five
hundred pesos (P2,500.00) for each board meeting actually attended by them, but not to exceed Ten
thousand pesos (P10,000.00) a month and reasonable transportation and representation allowances
as may be fixed by the Board.
"SEC. 43. Powers and Functions of the Board of Trustees. - The Board of Trustees shall have the
following powers and functions:
"(a) to formulate the policies, guidelines and programs to effectively carry out the purposes of
this Act;
"(b) to promulgate such rules and regulations as may be necessary or proper for the effective
exercise of the powers and functions as well as the discharge of the duties and
responsibilities of the GSIS, its officers and employees;
"(c) upon the recommendation of the President and General Manager, to approve the annual
and supplemental budget of receipts and expenditures of the GSIS, and to authorize such
operating and capital expenditures and disbursements of the GSIS as may be necessary or
proper for the effective management, operation and administration of the GSIS;
"(d) upon the recommendation of the President and General Manager, to approve the GSIS
organizational and administrative structure and staffing pattern, and to establish, fix, review,
revise and adjust the appropriate compensation packages for the officers and employees of
the GSIS and reasonable allowances, incentives, bonuses, privileges and other benefits as
may be necessary or proper for the effective management, operation and administration of the
GSIS, which shall be exempt from Republic Act No. 6758, otherwise known as the Attrition
Law;
"(e) to fix and periodically review and adjust the rates of interest and other terms and
conditions for loans and credits extended to its members or other persons, whether natural or
juridical;
"(f) the provision of any law to the contrary notwithstanding, to compromise or release, in
whole or in part, any claim or settle liability to the GSIS, regardless of the amount involved,
under such terms and conditions as it may impose for the best interest of the GSIS;
"(g) to approve and adopt guidelines affecting investments, insurance coverage of
government properties, settlement of claims, disposition of acquired assets, development of

housing projects, increased benefit and loan packages to members, and the enforcement of
the provisions of this Act;
"(h) to determine, fix, and impose interest upon unpaid or unremitted premiums and/or
contributions; and
"(i) to do and perform any and all acts necessary, proper or incidental to the attainment of the
purposes and objectives of this Act.
"SEC. 44. Appointment, Qualifications, and Compensation of the President and General Manager and
of other Personnel. - The President and General Manager of the GSIS shall be its Chief Executive
Officer and shall be appointed by the President of the Philippines. He shall be a person with
management and investments expertise necessary for the effective performance of his duties and
functions under this Act.
"The GSIS President and General Manager shall be assisted by one or more executive vicepresidents, senior vice-presidents and managers in addition to the usual supervisory and rank-and-file
positions who shall be appointed and removed by the President and General Manager with the
approval of the Board, in accordance with the existing Civil Service rules and regulations.
"SEC. 45. Powers and Duties of the President and General Manager. - The President and General
Manager of the GSIS shall, among others, execute and administer the policies and resolutions
approved by the Board and direct and supervise the administration and operations of the GSIS. The
President and General Manager, subject to the approval of the Board, shall appoint the personnel of
the GSIS, remove, suspend or otherwise discipline them for cause, in accordance with the existing
Civil Service rules and regulations, and prescribe their duties and qualifications to the end that only
competent persons may be employed.
"SEC. 46. Auditor. - (a) The Chairman of the Commission on Audit shall be the ex officio auditor of the
GSIS, and the necessary personnel to assist said representative in the performance of his duties.
"(b) The Chairman of the Commission on Audit or his authorized representatives, shall submit to the
Board soon after the close of each calendar year, an audited statement showing the financial condition
and progress of the GSIS for the calendar year just ended.
"SEC. 47. Legal Counsel. - The Government Corporate Counsel shall be the legal adviser and
consultant of the GSIS, but the GSIS may assign to the Office of the Government Corporate Counsel
(OGCC) cases for legal action or trial, issues for legal opinions, preparation and review of
contracts/agreements and others, as the GSIS may decide or determine from time to time: Provided,
however, That the present legal services group in the GSIS shall serve as its in-house legal counsel.
"The GSIS may, subject to approval by the proper court, deputize any personnel of the legal service
group to act as special sheriff in the enforcement of writs and processes issued by the court, quasijudicial agencies or administrative bodies in cases involving the GSIS.
"SEC. 48. Powers of the Insurance Commission. - The Insurance Commissioner or his authorized
representatives shall make an examination of financial condition and methods of transacting business
of the GSIS at least once every three (3) years and the report of said examination shall be submitted to
the Board of Trustees and copies thereof be furnished the Office of the President of the Philippines
and the two houses of the Congress of the Philippines within five (5) days after the close of
examination: Provided, however, That for each examination, the GSIS shall pay the office of the
Insurance Commissioner an amount equal to the actual expenses incurred by the said office in the
conduct of examination, including the salaries of the examiners and of the actuary of such examination
for the actual time spent.
"H. GENERAL PROVISION

"SEC. 49. Dispensation of Social Insurance Benefits. - (a) The GSIS shall pay the retirement benefits
to the employee on his last day of service in the government: Provided, That all requirements are
submitted to the GSIS within a reasonable period prior to the effective date of the retirement;
"(b) The GSIS shall discontinue the processing and adjudication of retirement claims under R.A. No.
1616 except refund of retirement premium under R. A. No. 910. Instead, all agencies concerned shall
process and pay the gratuities of their employees. The Board shall adopt the proper rules and
procedures for the implementation of this provision.
"SEC. 50. Development and Disposition of Acquired Assets. - The GSIS shall have the right to develop
and dispose of its acquired assets obtained in the ordinary course of its business. To add value to,
improve profitability on, and/or enhance the marketability of an acquired asset, the GSIS may further
develop/renovate the same either with its own capital or through a joint venture arrangement with
private companies or individuals.
"The GSIS may sell its acquired assets in accordance with existing Commission on Audit (COA) rules
and regulations for an amount not lower than the current market value of the property. For this
purpose, the GSIS shall conduct an annual appraisal of its property or acquired assets to determine its
current market value. All notices of sale shall be published in newspapers of general circulation.
"No injunction or restraining order issued by any court, commission, tribunal or office shall bar, impede
or delay the sale and disposition by the GSIS of its acquired assets except on questions of ownership
and national or public interest.
"SEC. 51. Government Assistance to the GSIS. - The GSIS may call upon any employer for such
assistance as may be necessary in the discharge of its duties and functions.
"I. PENAL PROVISIONS
"SEC. 52. Penalty. - (a) Any person found to have participated directly or indirectly in the commission
of fraud, collusion, falsification, or misrepresentation in any transaction with the GSIS, whether for him
or for some other persons, shall suffer the penalties provided for in Article 172 of the Revised Penal
Code.
"(b) Whoever shall obtain or receive any money or check invoking any provision of this Act or any
agreement thereunder, without being entitled thereto with the intent to defraud any member, any
employer, the GSIS, or any third party, shall be punished by a fine of not less than Five thousand
pesos (P5,000.00) nor more than Twenty thousand pesos (P20,000.00) or by imprisonment of not less
than six (6) years and one (1) day to twelve (12) years, or both, at the discretion of the court.
"(c) Whoever fails or refuses to comply with the provisions of this Act or with the rules and regulations
adopted by the GSIS, shall be punished by a fine of not less than Five thousand pesos (P5,000.00)
nor more than Twenty thousand pesos (P20,000.00) or imprisonment of not less than six (6) years and
one (1) day to twelve (12) years, or both, at the discretion of the court.
"(d) The treasurer, finance officer, cashier, disbursing officer, budget officer or other official or
employee who fails to include in the annual budget the amount corresponding to the employer and
employee contributions, or who fails or refuses or delays by more than thirty (30) days from the time
such amount becomes due and demandable, or to deduct the monthly contributions of the employee
shall, upon conviction by final judgment, suffer the penalties of imprisonment from six (6) months and
one (1) day to six (6) years, and a fine of not less than Three thousand pesos (P3,000.00) but not
more than Six thousand pesos (P6,000.00), and in addition, shall suffer absolute perpetual
disqualification from holding public office and from practicing any profession or calling licensed by the
government.

"(e) Any employee or member who receives or keeps fund or property belonging, payable or
deliverable to the GSIS and appropriates the same, or takes or misappropriates or uses the same for
any purpose other than authorized by this Act, or permits another person to take, misappropriate or
use said fund or property by expressly consenting thereto, or through abandonment or negligence, or
is otherwise guilty of the misappropriation of said fund or property, in whole or in part, shall suffer the
penalties provided in Article 217 of the Revised Penal Code, and in addition, shall suffer absolute
perpetual disqualification from holding public office and from practicing any profession or calling
licensed by the government.
"(f) Any employee who, after deducting the monthly contribution or loan amortization from a members
compensation, fails to remit the same to the GSIS within thirty (30) days from the date they should
have been remitted under Section 6(a), shall be presumed to have misappropriated such contribution
or loan amortization and shall suffer the penalties provided in Article 315 of the Revised Penal Code,
and in addition, shall suffer absolute perpetual disqualification from holding public office and from
practicing any profession or calling licensed by the government.
"(g) The heads of the offices of the national government, its political subdivisions, branches, agencies
and instrumentalities, including government-owned or controlled corporations and government
financial institutions, and the personnel of such offices who are involved in the collection of premium
contributions, loan amortization and other accounts due the GSIS who shall fail, refuse or delay the
payment, turnover, remittance or delivery of such accounts to the GSIS within thirty (30) days from the
time that the same shall have been due and demandable shall, upon conviction by final judgment,
suffer the penalties of imprisonment of not less than one (1) year nor more than five (5) years and a
fine of not less than Ten thousand pesos (P10,000.00) nor more than Twenty thousand pesos
(P20,000.00), and in addition, shall suffer absolute perpetual disqualification from holding public office
and from practicing any profession or calling licensed by the government.
"(h) The officers and/or personnel referred to in paragraph (g) of this section shall be liable not only
criminally but also civilly to the GSIS or to the employee or member concerned in the form of damages,
including surcharges and interests.
"(i) For the charges or complaints referred to in paragraph (g) of this section, the liabilities therein set
forth shall be construed as waiver of the State of its immunity from suit, hence, the above-mentioned
officials and/or personnel may not invoke the defense of non-suability of the State.
"(j) Failure of the Members of the GSIS Board, including the chairman and the vice-chairman, to
comply with the provisions of paragraph (w) of Section 41 hereof, shall subject them to imprisonment
of not less than six (6) months nor more than one (1) year or a fine of not less than Five thousand
pesos (P5,000.00) nor more than Ten thousand pesos (P10,000.00) without prejudice to any civil or
administrative liability which may also arise therefrom.
"(k) Criminal actions arising from violations of the provisions of this Act may be commenced by the
GSIS or by the aggrieved member, either under this Act or, in appropriate cases, under the Revised
Penal Code.
"SEC. 53. Implementing Rules and Regulations. - The implementing rules and regulations to carry out
the provisions of this Act shall be adopted and promulgated by the GSIS not later than ninety (90) days
after the approval of this Act.
"SEC. 54. Non-impairment of Benefits, Powers, Jurisdiction, Rights, Privileges, Functions and
Activities. -Nothing in this Act shall be construed to repeal, amend or limit any provision of existing
laws, Presidential Decrees and Letters of Instructions, not otherwise specifically inconsistent with the
provisions of this Act.
"SEC. 55. Exclusiveness of Benefits. - Whenever other laws provide similar benefits for the same
contingencies covered by this Act, the member who qualifies to the benefits shall have the option to

choose which benefits will be paid to him. However, if the benefits provided by the law chosen are less
than the benefits provided under this Act, the GSIS shall pay only the difference.
"SEC. 56. Appropriations. - The amount necessary to carry out the provisions of this Act shall be
included in the respective budgets of the agencies in the national government obligation program of
the year following its enactment into law and thereafter."
Section 2. Separability Clause. - Should any provision of this Act or any part thereof be declared invalid, the
other provisions, so far as they are separable from the invalid ones, shall remain in force and effect.
Section 3. Repealing Clause. - All laws and any other law or parts of law specifically inconsistent herewith are
hereby repealed or modified accordingly: Provided, That the rights under the existing laws, rules and
regulations vested upon or acquired by an employee who is already in the service as of the effectivity of this
Act shall remain in force and effect: Provided, further, That subsequent to the effectivity of this Act, a new
employee or an employee who has previously retired or separated and is reemployed in the service shall be
covered by the provisions of this Act.
Section 4. Effectivity. - This Act shall take effect fifteen (15) days after its publication in the Official Gazette or
in at least two (2) newspapers of general circulation.
This Act, which is a consolidation of Senate Bill No. 2013 and House Bill No. 8561, was finally passed by the
Senate and the House of Representatives on May 29, 1997 and May 28, 1997, respectively.
Approved: May 30, 1997.

G.R. No. 162372

October 19, 2011

GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), HERMOGENES D. CONCEPCION, JR.,


WINSTON F. GARCIA, REYNALDO P. PALMIERY, LEOVIGILDO P. ARRELLANO, ELMER T. BAUTISTA,
LEONORA V. DE JESUS, FULGENCIO S. FACTORAN, FLORINO O. IBAEZ, AIDA C. NOCETE, AURORA
P. MATHAY, ENRIQUETA DISUANCO, AMALIO MALLARI, LOURDES PATAG, RICHARD M. MARTINEZ,
ASUNCION C. SINDAC, GLORIA D. CAEDO, ROMEO C. QUILATAN, ESPERANZA FALLORINA, LOLITA
BACANI, ARNULFO MADRIAGA, LEOCADIA S. FAJARDO, BENIGNO BULAONG, SHIRLEY D.
FLORENTINO, and LEA M. MENDIOLA, Petitioners,
vs.
COMMISSION ON AUDIT (COA), AMORSONIA B. ESCARDA, MA. CRISTINA D. DIMAGIBA, and
REYNALDO P. VENTURA, Respondents.
DECISION
LEONARDO-DE CASTRO, J.:
This is a petition for review on certiorari under Rule 64 in relation to Rule 65 of the 1997 Rules of Court to annul
and set aside the Commission on Audits Decision Nos. 2003-062 and 2004-004 dated March 18, 2003 and
January 27, 2004, respectively, for having been made without or in excess of jurisdiction, or with grave abuse
of discretion amounting to lack or excess of jurisdiction.
The Government Service Insurance System (GSIS) is joined by its Board of Trustees and officials, namely:
Chairman Hermogenes D. Concepcion, Jr.; Vice-Chairman and President and General Manager Winston F.
Garcia (Garcia); Executive Vice President and Chief Operating Officer Reynaldo P. Palmiery; Trustees
Leovigildo P. Arrellano, Elmer T. Bautista, Leonora V. de Jesus, Fulgencio S. Factoran, Florino O. Ibaez, and
Aida C. Nocete; Senior Vice Presidents Aurora Mathay, Enriqueta Disuangco, Amalio Mallari, Lourdes Patag,
and Asuncion C. Sindac; Vice Presidents Richard Martinez, Romeo C. Quilatan, and Gloria D. Caedo; and
Managers Esperanza Fallorina, Lolita Bacani, Arnulfo Madriaga, Leocadia S. Fajardo, Benigno Bulaong,
Shirley D. Florentino, and Lea M. Mendiola, together with all other officials and employees held liable by the
Commission on Audit (COA) as petitioners in this case.1
The respondents in this petition are: the COA; its Director of Corporate Audit Office (CAO) I, Amorsonia B.
Escarda (Escarda), who rendered CAO I Decision No. 2002-009 dated May 27, 2002; the former Corporate
Auditor of GSIS, Ma. Cristina D. Dimagiba (Dimagiba), who issued the Notices of Disallowance subject of CAO
I Decision No. 2002-009; and the incumbent GSIS Corporate Auditor Reynaldo P. Ventura (Ventura).2
The facts are as follows:
On May 30, 1997, Republic Act No. 8291, otherwise known as "The Government Service Insurance System
Act of 1997" (the GSIS Act) was enacted and approved, amending Presidential Decree No. 1146, as amended,
expanding and increasing the coverage and benefits of the GSIS, and instituting reforms therein.
On October 17, 2000, pursuant to the powers granted to it under Section 41(n) of the said law, the GSIS Board
of Trustees, upon the recommendation of the Management-Employee Relations Committee (MERCOM),
approved Board Resolution No. 326 wherein they adopted the GSIS Employees Loyalty Incentive Plan
(ELIP),3 to wit:
GSIS EMPLOYEES LOYALTY INCENTIVE PLAN
(Pursuant to Sec. 41(n) of R.A. No. 8291)
I OBJECTIVE : To motivate and reward employees for meritorious, faithful and satisfactory service

II COVERAGE : The GSIS Employees Loyalty Incentive Plan shall cover all present permanent employees and
members of the Board and those who may hereafter be appointed.
III SPECIFIC BENEFIT : LI = TGS* MULTIPLIED BY HS MINUS 5yLS/BPRCP
Where : LI = loyalty incentive
TGS = total government service
HS = highest monthly salary/benefit received
5yLS = 5 year lump sum under RA 660, RA 910, PD 1146 or RA 8291
BPRCP = retirement benefit previously received plus cash payment for employees no longer qualified
to 5yLS
*Determined as follows:
**For positions salary grade 1-26 For positions SG 27 up
1 - 20 yrs x 1.5 1 - 20 yrs x 1.25
21 - 30 yrs x 2.0 21 - 30 yrs x 1.75
31 yrs above x 2.5 31 yrs above x 2.00
**Subject to review. Applicable only to present salary structure.
IV IMPLEMENTING POLICIES:
1. To be entitled to the plan, the employee must be qualified to retire with 5 year lump sum under RA
660 or RA 8291 or had previously retired under applicable retirement laws
2. The loyalty incentive benefit shall be computed based on both total government service and highest
monthly salary/benefit received from GSIS
3. Employees with pending administrative and/or criminal case may apply but processing and payment
of loyalty incentive shall be held in abeyance until final decision on their cases
4. GSIS loyalty incentive plan can only be availed once and employees who retired under GERSIP97
are no longer qualified
5. There shall be no refund of retirement premiums in all cases
6. Application is subject to approval by the President and General Manager
PROCEDURE:
1. Employees availing of the Employee Loyalty Incentive Plan must file his/her application under RA
6604 or RA 8291 for the five (5) year lump sum, with HRS for indorsement to SIG
2. Option 2 under RA 8291 may be allowed but the loyalty incentive shall be computed based on 5
year lump sum

3. The loyalty incentive shall only be paid after deducting the lump sum under RA 660, RA 910,5 PD
11466 or RA 8291 or retirement benefit previously received plus cash payment
4. Government service of previously retired employees shall be considered in computing the loyalty
incentive
5. For expediency, the processing of the plan shall be done by the Social Insurance Group
EFFECTIVITY DATE: The Plan shall take effect August, 2000. (Emphases supplied.)
On November 21, 2000, Board Resolution No. 326 was amended by Board Resolution No. 360,7which provided
for a single rate for all positions, regardless of salary grade, in the computation of creditable service, viz:
1-20 years x 1.5
21-30 years x 2.0
31 years above x 2.5
Except as herein amended, Resolution No. 326 dated October 17, 2000 shall remain to have full force and
effect.
Dimagiba, the corporate auditor of GSIS, communicated to the President and General Manager of GSIS that
the GSIS RFP was contrary to law. However, the GSIS Legal Services Group opined that the GSIS Board was
legally authorized to adopt the plan since Section 28(b) of Commonwealth Act No. 186 as amended by
Republic Act No. 4968 has been repealed by Sections 3 and 41(n) of Republic Act No. 8291.8
On January 16, 2001, Board Resolution No. 69 was approved, wherein ELIP was renamed GSIS
Retirement/Financial Plan (RFP) to conform strictly to the wordings of Section 41(n) of Republic Act No. 8291.
Upon Garcias assumption of office as President and General Manager, Dimagiba requested to again review
the GSIS RFP. This was denied by Garcia.10 Believing that the GSIS RFP was "morally
indefensible,"11 Dimagiba sought the assistance of COA "in determining the legality and/or morality of the said
Plan in so far as it has adopted the best features of the two retirement schemes, the 5-year lump sum payment
under [Republic Act No.] 1616 and the monthly pension of [Republic Act No.] 660 based on the creditable
service computed at 150%."12
On August 7, 2001, COAs General Counsel Santos M. Alquizalas (Alquizalas) issued a Memorandum to COA
Commissioner Raul C. Flores regarding the GSIS RFP. Alquizalas opined that the GSIS RFP is a
supplementary retirement plan, which is prohibited under Republic Act No. 4968, or the "Teves Retirement
Law." He also said that since there is no provision in the new Republic Act No. 8291 expressly repealing the
Teves Retirement Law, the two laws must be harmonized absent an irreconcilable inconsistency. Alquizalas
pronounced that Board Resolution Nos. 360 and 6 are null and void for being violative of Section 28(b) of
Commonwealth Act No. 186 as amended by Republic Act No. 4968, which bars the creation of a supplemental
retirement scheme; and Section 41(n) of Republic Act No. 8291, which speaks of an early retirement plan or
financial assistance.13
On August 14, 2001,14 Commissioner Flores forwarded this Memorandum to Dimagiba, who in turn forwarded it
to Garcia on August 23, 2001. Dimagiba, in her letter attached to Alquizalass Memorandum, added that for
lack of legal basis, her office was disallowing in audit the portion of retirement benefits granted under the GSIS
RFP, or the excess of the benefits due the retirees. She also said that GSIS could avail of the appeal process
provided for under Sections 48 to 50 of Presidential Decree No. 1445 and Section 37.1 of the Manual on
Certificate of Settlement and Balances.15

On August 27, 2001, Garcia responded16to Dimagiba, taking exception to the notice of disallowance for being
"highly irregular and precipitate" as it was based on a mere opinion of COAs counsel who had no authority to
declare the resolution of the GSIS Board of Trustees as null and void. Moreover, Garcia asseverated that COA
had neither power nor authority to declare as null and void certain resolutions approved by the Board of
Government Corporations, as the power to do so was exclusively lodged before the courts. He also argued that
the notice of disallowance was premature, and was tantamount to a pre-audit activity, as it should refer only to
a particular or specific disbursement of public funds and not against a general activity or transaction. Garcia
averred that the GSIS RFP was part and parcel of the compensation package that GSIS may provide for its
personnel, by virtue of the powers granted to its Board of Trustees under Section 41(m) and (n) of Republic Act
No. 8291. Garcia said that the appeal process would commence only upon GSISs receipt of the particulars of
the disallowances.17 Finally, Garcia requested Dimagiba to withdraw the notices of disallowance "in the interest
of industrial peace in the GSIS."18
Without responding to Garcias August 27, 2001 Memorandum, Dimagiba issued the following Notices of
Disallowance on the grounds that:
Pursuant to legal opinion of the General Counsel dated August 7, 2001, Board Resolution No. 360 dated Nov.
21, 2000 as amended by No. 6 dated Jan. 16, 2001 approving the Employees Loyalty Incentive Plan (ELIP) is
null and void for being directly in conflict with Section 28(b) of CA No. 186 as amended by RA 4968 which bars
the creation of supplemental retirement scheme and of Section 41 (n) of RA 8291 which speaks of an early
retirement plan or financial assistance.19
On January 30, 2002, GSIS, together with some of the petitioners herein, gave notice25 to the COA CAO I that it
was appealing the 21 Notices of Disallowance it had received from Dimagiba on various dates. It
amended26 this Notice of Appeal the following day, to include all GSIS officials and employees held liable and
accountable under the said disallowances.27
In their Memorandum of Appeal,28 the petitioners mainly argued that GSIS had the power, under its charter, to
adopt and implement the GSIS RFP. They alleged that their plan was not unique to GSIS as other government
agencies also have their own retirement or financial assistance plans. They claimed that to then disallow their
retirement plan would be tantamount to a violation of their constitutional right to be equally protected by our
laws.29 The petitioners also argued that Republic Act No. 8291 had modified or repealed all provisions of the
Teves Retirement Law that were inconsistent with it and that GSISs officials could not be held liable or
accountable for implementing the GSIS RFP since this was done in the performance of their duties.30
On May 27, 2002, the COA, through Escarda, in CAO I Decision No. 2002-009,31 affirmed the disallowances
made by Dimagiba. Escarda sustained the COA general counsels opinion and said that while the GSIS may
have the power to adopt an early retirement or a financial assistance plan under its charter, it cannot
supplement a retirement plan already existing under the law. Escarda said that the purpose of an early
retirement plan is generally to streamline the organization by encouraging those who would not be qualified for
compulsory retirement to retire early under the plan. However, Escarda claimed, the availees of the plan were
employees whose supposed monthly pensions under the GSIS RFP included services they had already earned
in other government agencies. Thus, Escarda held that the GSIS RFP was in reality a supplementary
retirement plan for these GSIS employees. Finally, Escarda disagreed with GSISs assertion that the Teves
Retirement Law had been modified or repealed as the repealing clause in Republic Act No. 8291 is a general
repealing clause, which is frowned upon and is generally not effective to repeal a specific law like the Teves
Retirement Law.32
Undaunted, the petitioners filed before the COA a Petition for Review33 of CAO Is decision, raising the exact
same issues it raised in its Memorandum of Appeal dated February 14, 2002, to wit:
I
Whether or not petitioners/appellants GSIS and GSIS Board of Trustees have the power and authority
to design and adopt the questioned GSIS Retirement Financial Plan.

II
Whether or not petitioners/appellant GSIS officials who are merely implementing the GSIS Act of 1997
and duly adopted Board Resolutions must be held responsible and accountable for the implementation
of the GSIS Retirement Financial Plan.
III
Whether or not the adoption of the GSIS Retirement Financial Plan violated Section 28 (b) of CA No.
186 as amended by Republic Act No. 4968, and Section 41(n) of Republic Act No. 8291, otherwise
known as the GSIS Act of 1997.
IV
Whether or not the COA disallowance of the GSIS Retirement Financial Plan is lawful, and the CAO I
Decision No. 2002-009 and the Notices of Disallowance issued by GSIS Corporate Auditor Dimagiba
are proper.34
On March 18, 2003, COA issued Decision No. 2003-062,35 wherein the issue was narrowed down to "whether
or not the GSIS Board can reward themselves with unusually large benefits in the face of an unusually large
actuarial deficit which will result in the denial of benefits of future retirees in other government agencies for
whom the fund is principally intended."36
COA zeroed in on the fact that to be entitled to the GSIS RFP, the employee "must be qualified to retire with 5year lump sum under R.A. No. 660 or R.A. No. 8291 or [must have] previously retired under the applicable
retirement laws."37 They affirmed Escardas ruling and contended that what the "still valid"38 Teves Retirement
Law permits is the creation of an early retirement or financial assistance plan, and the above requirement
imposed under the GSIS RFP does not apply to either plans. COA added:
Unmistakably, the Plan being a supplementary pension/retirement plan, it contravenes the Teves law. Not even
the renaming of [the] Employees Loyalty Incentive Plan (ELIP) to Retirement Financial Plan (RFP), purportedly
to conform with the wording of the law, could conceal its true nature or character as a supplementary
pension/retirement plan which incorporates the best features of R.A. Nos. 660 and 8291, creating in effect a
third retirement plan for GSIS personnel only. This is all the more made manifest by the fact that even Board
members who are not qualified at all to retire under any existing retirement laws could retire under the RFP.
Strikingly, by promulgating another regular retirement scheme, the GSIS Board enlarged the field of its
authority and regulation as provided in the statute it is supposed to administer.39
COA said that the power of GSIS in applying the law must not be abused. COA averred that GSIS was found to
be deficient actuarially by Fifteen Billion Pesos, and for it to reward its employees, who were already enjoying
salaries higher than their counterparts in other government agencies, meant that it would have to dip into its
principal fund to the prejudice of its members, who were the very raison detre for its establishment.40
Addressing petitioners claim of discrimination, COA said that each of the government agencies that had
adopted its own retirement plans did so pursuant to a valid law and under factual circumstances that were not
present in the case of GSIS. COA also affirmed the liability of the petitioners who were held accountable under
the disallowances as they had failed to exercise the diligence of a good father of a family in the performance of
their functions.41 Finally, COA averred that while its general counsels opinion boosted its position, such was not
the basis of the disallowance.42
The petitioners sought reconsideration43 of this decision and even asked to be heard in oral arguments,44 but
COA, in its Decision No. 2004-004 dated January 27, 2004,45 denied both motions and affirmed its Decision No.
2003-062 dated March 18, 2003 with finality.

The petitioners are now before us, asking us to nullify COAs March 18, 2003 and January 27, 2004 decisions,
on the ground that they were made with grave abuse of discretion amounting to lack or excess of jurisdiction.46
The petitioners posit the following arguments to support their cause:
RESPONDENTS ACTED WITHOUT OR IN EXCESS OF JURISDICTION, OR WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION, WHEN IN THE FOLLOWING
MANNER:
I
Respondents sought to interpret clear provisions of Republic Act No. 8291, otherwise known as the
GSIS Act of 1997, and declare null and void duly adopted resolutions of petitioner GSIS which has the
power and authority to design and adopt the questioned GSIS Retirement Financial Plan (RFP).
II
Respondents ruled that petitioners GSIS officials who are merely implementing the GSIS Act of 1997
and duly adopted Board Resolutions could be held responsible and accountable for the
implementation of the GSIS Retirement Financial Plan (RFP).
III
Respondents held that the adoption of the GSIS Retirement Financial Plan (RFP) violated Section 28
(b) of CA No. 186, as amended by Republic Act No. 4968, and Section 41(n) of Republic Act No. 8291,
otherwise known as the GSIS Act of 1997.
IV
Respondent[s] disallowed the GSIS Retirement Financial Plan (RFP), and erroneously affirmed the
Notices of Disallowance issued by then GSIS Corporate Auditor Dimagiba.
V
Respondents touched on new and irrelevant matters which were not raised in the disallowances and/or
pleadings below, and which were never validated.47
The crux of the present case boils down to the legality of Board Resolution Nos. 360, 326, and 6, which we
shall refer to simply as "the GSIS RFP," in light of Republic Act No. 8291 or the GSIS Act of 1997, and
Commonwealth Act No. 186 or the Government Service Insurance Act as amended by Republic Act No. 4968
(the Teves Retirement Law).
Below are the pertinent provisions of the foregoing laws:
Republic Act No. 8291
SECTION 41. Powers and Functions of the GSIS. The GSIS shall exercise the following powers and
functions:
xxxx
(n) to design and adopt an Early Retirement Incentive Plan (ERIP) and/or financial assistance for the purpose
of retirement for its own personnel; x x x.

Commonwealth Act No. 186 as amended by the Teves Retirement Law:


SEC. 28. Miscellaneous Provisions x x x
(b) Hereafter no insurance or retirement plan for officers or employees shall be created by any employer. All
supplementary retirement or pension plans heretofore in force in any government office, agency, or
instrumentality or corporation owned or controlled by the government, are hereby declared inoperative or
abolished. x x x. 48
Republic Act No. 4968 or the
Teves Retirement Law
Is Still Good Law
The petitioners insist that under Section 3 of Republic Act No. 8291, which provides that "all laws or any law or
parts of law specifically inconsistent herewith are hereby repealed or modified accordingly," all provisions of the
Teves Retirement Law that are inconsistent with Republic Act No. 8291 are deemed repealed or modified.49
We do not subscribe to petitioners interpretation of this law. This is because, unless the intention to revoke is
clear and manifest, the abrogation or repeal of a law cannot be assumed.50 The repealing clause contained in
Republic Act No. 8291 is not an express repealing clause because it fails to identify or designate the statutes
that are intended to be repealed. It is actually a clause, which predicated the intended repeal upon the
condition that a substantial conflict must be found in existing and prior laws.51
Since Republic Act No. 8291 made no express repeal or abrogation of the provisions of Commonwealth Act
No. 186 as amended by the Teves Retirement Law, the reliance of the petitioners on its general repealing
clause is erroneous. The failure to add a specific repealing clause in Republic Act No. 8291 indicates that the
intent was not to repeal any existing law, unless an irreconcilable inconsistency and repugnancy exists in the
terms of the new and old laws.52
We are likewise not convinced by petitioners claim of repeal by implication. It is a well-settled rule that to bring
about an implied repeal, the two laws must be absolutely incompatible and clearly repugnant that the later law
cannot exist without nullifying the prior law.53 As this Court held in Recaa, Jr. v. Court of Appeals54:
Repeal of laws should be made clear and expressed. Repeals by implication are not favored as laws are
presumed to be passed with deliberation and full knowledge of all laws existing on the subject. Such repeals
are not favored for a law cannot be deemed repealed unless it is clearly manifest that the legislature so
intended it. x x x.55
This Court sees no incompatibility between the two laws being discussed here. In reconciling Section 41(n) of
Republic Act No. 8291 with the Teves Retirement Law, we are guided by this Courts pronouncement in
Philippine International Trading Corporation v. Commission on Audit56:
In reconciling Section 6 of Executive Order No. 756 with Section 28, Subsection (b) of Commonwealth Act No.
186, as amended, uppermost in the mind of the Court is the fact that the best method of interpretation is that
which makes laws consistent with other laws which are to be harmonized rather than having one considered
repealed in favor of the other. Time and again, it has been held that every statute must be so interpreted and
brought in accord with other laws as to form a uniform system of jurisprudence interpretere et concordare
legibus est optimus interpretendi. Thus, if diverse statutes relate to the same thing, they ought to be taken into
consideration in construing any one of them, as it is an established rule of law that all acts in pari materia are to
be taken together, as if they were one law. x x x.57
While Republic Act No. 8291 speaks of an early retirement incentive plan or financial assistance for the GSIS
employees, Commonwealth Act No. 186 as amended by the Teves Retirement Law talks about insurance or
retirement plans other than our existing retirement laws. In other words, what the Teves Retirement Law
contemplates and prohibits are separate retirement or insurance plans. In fact, the very same provision
declared inoperative or abolished all supplementary retirement or pension plans.

The GSIS Retirement/Financial


Plan is Null and Void
It is true that under Section 41(n) of Republic Act No. 8291, GSIS is expressly granted the power to adopt a
retirement plan and/or financial assistance for its employees, but a closer look at the provision readily shows
that this power is not absolute. It is qualified by the words "early," "incentive," and "for the purpose of
retirement." The retirement plan must be an early retirement incentive plan and such early retirement incentive
plan or financial assistance must be for the purpose of retirement.
According to Websters Third New International Dictionary, "early" means "occurring before the expected or
usual time," while "incentive" means "serving to encourage, rouse, or move to action," or "something that
constitutes a motive or spur."58
It is clear from the foregoing that Section 41(n) of Republic Act No. 8291 contemplates a situation wherein
GSIS, due to a reorganization, a streamlining of its organization, or some other circumstance, which calls for
the termination of some of its employees, must design a plan to encourage, induce, or motivate these
employees, who are not yet qualified for either optional or compulsory retirement under our laws, to instead
voluntarily retire. This is the very reason why under the law, the retirement plan to be adopted is in reality an
incentive scheme to encourage the employees to retire before their retirement age.
The above interpretation applies equally to the phrase "financial assistance," which, contrary to the petitioners
assertion, should not be read independently of the purpose of an early retirement incentive plan. Under the
doctrine of noscitur a sociis, the construction of a particular word or phrase, which is in itself ambiguous, or is
equally susceptible of various meanings, may be made clear and specific by considering the company of words
in which it is found or with which it is associated. In other words, the obscurity or doubt of the word or phrase
may be reviewed by reference to associated words.59 Thus, the phrase "financial assistance," in light of the
preceding words with which it is associated, should also be construed as an incentive scheme to induce
employees to retire early or as an assistance plan to be given to employees retiring earlier than their retirement
age.
Such is not the case with the GSIS RFP. Its very objective, "[t]o motivate and reward employees for
meritorious, faithful, and satisfactory service,"60 contradicts the nature of an early retirement incentive plan, or a
financial assistance plan, which involves a substantial amount that is given to motivate employees to retire
early. Instead, it falls exactly within the purpose of a retirement benefit, which is a form of reward for an
employees loyalty and lengthy service,61 in order to help him or her enjoy the remaining years of his life.
Furthermore, to be able to apply for the GSIS RFP, one must be qualified to retire under Republic Act No. 660
or Republic Act No. 8291, or must have previously retired under our existing retirement laws. This only means
that the employees covered by the GSIS RFP were those who were already eligible to retire or had already
retired. Certainly, this is not included in the scope of "an early retirement incentive plan or financial assistance
for the purpose of retirement."
The fact that GSIS changed the name from "Employees Loyalty Incentive Plan" to "Retirement/Financial Plan"
does not change its essential nature. A perusal of the plan shows that its purpose is not to encourage GSISs
employees to retire before their retirement age, but to augment the retirement benefits they would receive
under our present laws. 62 Without a doubt, the GSIS RFP is a supplementary retirement plan, which is
prohibited by the Teves Retirement Law.
Conte v. Commission on Audit63 squarely applies in this case. In that case, the Social Security System (SSS)
issued Resolution No. 56, which provided financial incentive and inducement to SSS employees who were
qualified to retire, to avail of retirement benefits under Republic Act No. 660, as amended (which GSIS would
have to pay), rather than the retirement benefits under Republic Act No. 1616, as amended (which SSS would
have to pay). Under SSS Resolution No. 56, those who retire under Republic Act No. 660 would be given a
"financial assistance" equivalent in amount to the difference between what a retiree would have received under
Republic Act No. 1616, less what he was entitled to under Republic Act No. 660. COA disallowed in audit all
claims for financial assistance under SSS Resolution No. 56 for being similar to those separate retirement
plans or incentive/separation pay plans adopted by other government corporate agencies, which resulted in the

increase of benefits beyond what was allowed under existing retirement laws. This Court sustained COAs
disallowance and held that SSS Resolution No. 56 constituted a supplementary retirement plan proscribed by
Section 28(b) of Commonwealth Act No. 186, as amended by Republic Act No. 4968. 64
The petitioners argue that Conte finds no application in this case, since SSS had no authority under its charter
to adopt such a resolution, unlike the GSIS, which was cloaked with authority to issue the questioned
resolutions. Furthermore, petitioners argue that Republic Act No. 8291 became effective in 1997, which was
after this Court had already decided the Conte case.
We find no merit in the petitioners arguments. The laws have not changed, and the doctrine in Conte has not
been overturned or abandoned. The fact that Republic Act No. 8291 was approved and enacted after Conte is
of no moment, as what was interpreted in Conte was the provision in the Teves Retirement Law in issue here.
Moreover, we have already discussed above how such provision has neither been repealed nor modified by
Section 41(n) of Republic Act No. 8291. Thus, it is just fitting that we find guidance in the application and
interpretation of Section 28(b) of Commonwealth Act No. 186, as amended by Republic Act No. 4968, from the
Conte case.
As we have held in that case:
Section 28(b) [of C.A. No. 186] as amended by R.A. No. 4968 in no uncertain terms bars the creation of any
insurance or retirement plan other than the GSIS for government officers and employees, in order to
prevent the undue and inequitous proliferation of such plans. x x x.65
The petitioners asseverate that many laws such as Republic Act Nos. 8291, 1161, 8282, 6683, and 7641, were
validly enacted after the Teves Retirement Law; thus, the evil that it seeks to avoid is the proliferation of those
retirement plans that are not so authorized by law.66 The petitioners even go so far as comparing themselves to
other government agencies, which have adopted their own retirement schemes at one time or another such as
the Development Bank of the Philippines, the Securities and Exchange Commission, the National Power
Corporation, the COA, the Court of Appeals, and even this Court.67
The petitioners themselves admit that those retirement schemes were adopted as a "[one-time] grant [by]
reason of reorganization"68 pursuant to Republic Act No. 668369 or the Early Retirement Law. As for the
additional benefits extended to retiring justices or commissioners, suffice it to say that they were also given
pursuant to laws passed by Congress. Moreover, those retirement plans enjoy the presumption of validity and
regularity.
In stark contrast, the GSIS RFP was not created because of a valid company reorganization. Its purpose did
not include the granting of benefits for early retirement. Neither did it provide benefits for either voluntary or
involuntary separation from GSIS. It was intended for employees who were already eligible to retire under
existing retirement laws. While the GSIS may have been clothed with authority to adopt an early retirement or
financial assistance plan, such authority was limited by the very law it was seeking to implement.
Borrowing this Courts words in the Conte case, "it is beyond cavil that [the GSIS Retirement/Financial Plan]
contravenes [Section 28(b) of C.A. No. 186 as amended by R.A. No. 4968 or the Teves Retirement Law], and
is therefore invalid, void, and of no effect. To ignore this and rule otherwise would be tantamount to permitting
every other government office or agency to put up its own supplementary retirement benefit plan under the
guise of such financial assistance."70
Another compelling reason to nullify the GSIS RFP is that it allows, and in fact mandates, the inclusion of the
years in government service of previously retired employees, to wit:
PROCEDURE:
xxxx

4. Government service of previously retired employees shall be considered in computing the loyalty incentive.71
In Santos v. Court of Appeals,72 we affirmed the Court of Appeals and the Civil Service Commissions ruling
that for the purpose of computing or determining Santos separation pay, his years of service in his previous
government office should be excluded and his separation pay should be solely confined to his services in his
new government position. We gave the rationale for this as follows:
Such would run counter to the policy of this Court against double compensation for exactly the same services.
More important, it would be in violation of the first paragraph of Section 8 of Article IX-B of the Constitution,
which proscribes additional, double, or indirect compensation. Said provision reads:
No elective or appointive public officer or employee shall receive additional, double, or indirect compensation,
unless specifically authorized by law .73
Our ruling therein is likewise applicable in this case. To credit the years of service of GSIS retirees in their
previous government office into the computation of their retirement benefits under the GSIS RFP,
notwithstanding the fact that they had received or had been receiving the retirement benefits under the
applicable retirement law they retired in, would be to countenance double compensation for exactly the same
services.74
To emphasize COAs "distaste"75 for the huge retirement benefits of GSISs board members, officers, and
employees, who are already receiving significantly higher salaries than their counterparts in other government
agencies, COA illustrated the glaring discrepancy between what a GSIS employee would get under the GSIS
RFP, and what a mere GSIS member would get under applicable retirement laws:
GSIS EMPLOYEE vs GSIS MEMBER not covered by [GSIS RFP]
GSIS EMPLOYEE

SALARY GRADE

GSIS Vice-President

27

GSIS MEMBER

Director III

46.36895

Length of Service

46.36895

P 110,775.00

Basic Salary

P 25,223.00

65 years old

Age at Retirement

65 years old

August 21, 2001

Date of Retirement

August 21, 2001

April 8, 1954

First Day in Govt Service

April 8, 1954

April 8, 1954

First Day in GSIS/Other office

April 8, 1954

BENEFITS UNDER DIFFERENT MODES OF RETIREMENT


[GSIS Employee]

[GSIS Member]

[GSIS RFP]

RA 1616

RA 660

90.92238

67.7379

46.36895

CGS

10,071,926.00

7,503,665.87

NONE

GA

[GSIS RFP]

RA 1616

RA 660

N/A

67.7379

46.36895

1,708,553.05

NONE

NONE

with refund

3,176,380.80

5YLS

1,210,704.00

52,939.68

BMP

20,178.40

NONE

RRP

with refund

NONE

*[GSIS RFP] less 5YLS = FINANCIAL ASSISTANCE plus MP of P 52,939.68 after five years
= P 6,895,545.20 Financial Assistance + Monthly Pension after five years
* CGS - Creditable Government Service
* GA - Gratuity Amount Payable by Employer
* 5YLS - Five (5) Year Lump Sum Payable by GSIS
* BMP - Basic Monthly Pension
* RRP - Refund of Retirement Premiums76
With the above illustration, it can be readily seen and understood why the Teves Retirement Law prohibits the
proliferation of additional retirement plans in our government offices. While it is true that a better compensation
package will not only attract more competent and capable individuals to work in GSIS, but will also ensure that
they remain loyal and faithful therein, this has already been addressed by the GSIS employees exemption from
Republic Act No. 678 or the Salary Standardization Law (SSL), under Sec. 43(d) of Republic Act No. 8291. As
shown in the above tables, the salary of a GSIS employee is much higher compared to his counterpart in
another government agency. This remains to be true even with the recent increase of the salaries in the SSL.
The petitioners also question COAs authority to nullify the resolutions involved in this case. It must be
remembered that none of the COA decisions nullified the Board Resolutions adopted by GSISs Board of
Trustees. What the COA decisions affirmed were the disallowances made by GSISs own Corporate Auditor,
Dimagiba. It is irrelevant that COA, in its decisions, touched upon issues not brought before it, or that it referred
to its general counsels opinion on the GSIS RFP, as these were done only to reinforce COAs position. They
have no bearing upon the weight of COAs decisions, which are based upon our existing laws and
jurisprudence.
As for Dimagiba, while she may have relied on the opinion of COAs legal counsel to support the disallowances
she had made, it is worthy to note that she had already informed Garcia of the GSIS RFPs illegality even
before she sought COAs opinion on the matter. Moreover, neither Dimagibas nor COAs confidence in the
opinion of COAs general counsel could be faulted, as under Presidential Decree No. 1445, or the Government
Auditing Code of the Philippines, one of the responsibilities of COAs legal office is to interpret pertinent laws
and auditing rules and regulations, to wit:
SECTION 11. The Legal Office. The Legal Office shall be charged with the following responsibilities:
(1) Perform advisory and consultative functions and render legal services with respect to the performance of
the functions of the Commission and the interpretation of pertinent laws and auditing rules and regulations; x x
x.
In view of the above, we can hardly impute grave abuse of discretion amounting to lack or excess of jurisdiction
on the part of respondents COA, Escarda, and Dimagiba, for disallowing in audit the portion of retirement
benefits in excess of what is allowed under our existing retirement laws. On the contrary, they acted with
caution, diligence, and vigilance in the exercise of their duties, especially since what was involved were huge
amounts of money imbued with public interest, since GSISs funds come from the contributions of its members.

Thus, GSISs business is to keep in trust the money belonging to its members,77 who are not limited to its own
employees.
The Payees are Liable for the
Return of the Disallowed Benefits
Under the GSIS RFP
The petitioners claim that GSISs Board of Trustees cannot be held liable as they were acting pursuant to a
valid law when they adopted the GSIS RFP. The petitioners also argue that the implementation of the GSIS
RFP was merely ministerial, thus the GSIS officers held accountable under the Notices of Disallowance should
not be held responsible and accountable for the allocation and release of the benefits under the GSIS RFP.
This Court agrees that only the payees should be held liable for the return of the disallowed amounts under the
GSIS RFP.
Although it is true that as early as December 2000,78 Dimagiba already questioned the legality of the GSIS
RFP, it was only in August 2001 when GSIS received COAs opinion on the matter. Moreover, COA first
decided the issue only in 2002.
While the Board of Trustees believed they had the authority and power to adopt the GSIS RFP, the officers on
the other hand believed that they were implementing a valid resolution. As we said in Buscaino v. Commission
on Audit,79 the resolution of the Board of Trustees was sufficient basis for the disbursement, and it is beyond
these officers competence to pass upon the validity of such board resolutions.80
On account of the GSIS RFPs doubtful validity, the petitioners should have exercised prudence and held in
abeyance the disbursement of the portion of retirement benefits under the GSIS RFP until the issue of its
legality had been resolved.
However, the Board of Trustees and the officers held accountable under the Notices of Disallowance should
not be held liable as they are entitled to the presumption of having exercised their functions with regularity and
in good faith.
WHEREFORE, the petition is PARTIALLY GRANTED. The assailed Decisions of the Commission on Audit
Nos. 2003-062 and 2004-004 dated March 18, 2003 and January 27, 2004, are AFFIRMED with the
MODIFICATION that only the payees of the disbursements made under the GSIS RFP in the Notices of
Disallowance are liable for such disbursements. Board Resolution Nos. 326, 360, and 6 are declared ILLEGAL,
VOID, and OF NO EFFECT.
SO ORDERED.
TERESITA J. LEONARDO-DE CASTRO
Associate Justice
WE CONCUR:
GSIS; retirement plan. Section 41(n) of Republic Act No. 8291 contemplates a situation wherein GSIS, due to
a reorganization, a streamlining of its organization, or some other circumstance, which calls for the termination
of some of its employees, must design a plan to encourage, induce, or motivate these employees, who are not
yet qualified for either optional or compulsory retirement under our laws, to instead voluntarily retire. Such is
not the case with the GSIS RFP. Its very objective, to motivate and reward employees for meritorious, faithful,
and satisfactory service, contradicts the nature of an early retirement incentive plan, or a financial assistance
plan, which involves a substantial amount that is given to motivate employees to retire early. Instead, it falls
exactly within the purpose of a retirement benefit, which is a form of reward for an employees loyalty
and lengthy service, in order to help him or her enjoy the remaining years of his life. Without a doubt, the GSIS

RFP is a supplementary retirement plan, which is prohibited by the Teves Retirement Law. Government
Service Insurance System (GSIS), et al. vs. Commission on Audit, et al.,G.R. No. 162372. October 19, 2011.

Republic of the Philippines


SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 186560

November 17, 2010

GOVERNMENT SERVICE INSURANCE SYSTEM, Petitioner,


vs.
FERNANDO P. DE LEON, Respondent.
DECISION
NACHURA, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court. Petitioner
Government Service Insurance System (GSIS) seeks the nullification of the Decision1 dated October 28, 2008
and the Resolution2 dated February 18, 2009 of the Court of Appeals (CA) in CA-G.R. SP No. 101811.
Respondent Fernando P. de Leon retired as Chief State Prosecutor of the Department of Justice (DOJ) in
1992, after 44 years of service to the government. He applied for retirement under Republic Act (R.A.) No. 910,
invoking R.A. No. 3783, as amended by R.A. No. 4140, which provides that chief state prosecutors hold the
same rank as judges. The application was approved by GSIS. Thereafter, and for more than nine years,
respondent continuously received his retirement benefits, until 2001, when he failed to receive his monthly
pension.3
Respondent learned that GSIS cancelled the payment of his pension because the Department of Budget and
Management (DBM) informed GSIS that respondent was not qualified to retire under R.A. No. 910; that the law
was meant to apply only to justices and judges; and that having the same rank and qualification as a judge did
not entitle respondent to the retirement benefits provided thereunder. Thus, GSIS stopped the payment of
respondents monthly pension.4
Respondent wrote GSIS several letters but he received no response until November 9, 2007, when respondent
received the following letter from GSIS:
Dear Atty. De Leon:
This is in response to your request for resumption of pension benefit.
It appears that you retired under Republic Act No. 910 in 1992 from your position as Chief State Prosecutor in
the Department of Justice. From 1992 to 2001, you were receiving pension benefits under the said law.
Beginning the year 2002, the Department of Budget and Management through then Secretary Emilia T.
Boncodin already refused to release the funds for your pension benefit on the ground that Chief State
Prosecutors are not covered by R.A. 910. This conclusion was later on affirmed by Secretary Rolando G.
Andaya, Jr. in a letter dated 6 June 2006.
In view of these, you now seek to secure benefits under Republic Act No. 660 or any other applicable GSIS
law.

We regret, however, that we cannot accede to your request because you have chosen to retire and in fact have
already retired under a different law, Republic Act No. 910, more than fifteen (15) years ago. There is nothing in
the GSIS law which sanctions double retirement unless the retiree is first re-employed and qualifies once again
to retire under GSIS law. In fact, Section 55 of Republic Act No. 8291 provides for exclusivity of benefits which
means that a retiree may choose only one retirement scheme available to him to the exclusion of all others.
Nonetheless, we believe that the peculiarities of your case is a matter that may be jointly addressed or
threshed out by your agency, the Department of Justice, and the Department of Budget and Management.
Very truly yours,
(signed)
CECIL L. FELEO
Senior Vice President
Social Insurance Group5
Respondent then filed a petition for mandamus before the CA, praying that petitioner be compelled to continue
paying his monthly pension and to pay his unpaid monthly benefits from 2001. He also asked that GSIS and
the DBM be ordered to pay him damages.6
In the assailed October 28, 2008 Decision, the CA resolved to grant the petition, to wit:
WHEREFORE, the petition is GRANTED. The GSIS is hereby ordered to pay without delay petitioner Atty.
Fernando de Leon, his monthly adjusted pension in accordance with other applicable law not under RA 910. It
is also ordered to pay the back pensions which should also be adjusted to conform to the applicable law from
the time his pension was withheld.
SO ORDERED.7
The CA found that GSIS allowed respondent to retire under R.A. No. 910, following precedents which allowed
non-judges to retire under the said law. The CA said that it was not respondents fault that he was allowed to
avail of the benefits under R.A. No. 910; and that, even if his retirement under that law was erroneous,
respondent was, nonetheless, entitled to a monthly pension under the GSIS Act. The CA held that this was not
a case of double retirement, but merely a continuation of the payment of respondents pension benefit to which
he was clearly entitled. Since the error in the award of retirement benefits under R.A. 910 was not attributable
to respondent, it was incumbent upon GSIS to continue defraying his pension in accordance with the
appropriate law which might apply to him. It was unjust for GSIS to entirely stop the payment of respondents
monthly pension without providing any alternative sustenance to him.8
The CA further held that, under R.A. No. 660, R.A. No. 8291, and Presidential Decree (P.D.) No. 1146,
respondent is entitled to a monthly pension for life. He cannot be penalized for the error committed by GSIS
itself. Thus, although respondent may not be qualified to receive the retirement benefits under R.A. No. 910, he
is still entitled to a monthly pension under R.A. No. 660, P.D. No. 1146, and R.A. No. 8291.9
Petitioner GSIS is now before this Court, assailing the Decision of the CA and the Resolution denying its
motion for reconsideration.
GSIS admits that respondent received monthly pensions from August 1997 until December 2001. Thereafter,
the DBM refused to remit the funds for respondents pension on the ground that he was not entitled to retire
under R.A. No. 910 and should have retired under another law, without however specifying which law it was. 10 It
appears that the DBM discontinued the payment of respondents pension on the basis of the memorandum of
the Chief Presidential Legal Counsel that Chief Prosecutors of the DOJ are not entitled to the retirement
package under R.A. No. 910.

Because of the discontinuance of his pension, respondent sought to convert his retirement under R.A. No. 910
to one under another law administered by GSIS.11 However, this conversion was not allowed because, as GSIS
avers, R.A. No. 8291 provides that conversion of ones retirement mode on whatever ground and for whatever
reason is not allowed beyond one year from the date of retirement.
GSIS assails the CAs Decision for not specifying under which law respondents retirement benefits should be
paid, thus making it legally impossible for GSIS to comply with the directive.12 It then raises several arguments
that challenge the validity of the appellate courts decision.
GSIS argues, first, that the CA erred in issuing a writ of mandamus despite the absence of any specific and
clear right on the part of respondent, since he could not even specify the benefits to which he is entitled and the
law under which he is making the claim.13
Second, GSIS alleges that it had refunded respondents premium payments because he opted to retire under
R.A. No. 910, which it does not administer. Thus, GSIS posits that the nexus between itself and respondent
had been severed and, therefore, the latter cannot claim benefits from GSIS anymore.14
Third, GSIS contends that the CA erred in concluding that respondent would not be unjustly enriched by the
continuation of his monthly pension because he had already benefited from having erroneously retired under
R.A. No. 910. GSIS points out that it had refunded respondents premium contributions. When the Chief
Presidential Legal Counsel concluded that respondent was not entitled to retire under R.A. No. 910, it was
implicit recognition that respondent was actually not entitled to the P1.2 million lump sum payment he received,
which he never refunded.15
Fourth, GSIS points out that the CA erred in concluding that respondent was not seeking conversion from one
retirement mode to another. It reiterates that R.A. No. 8291 expressly prohibits conversion beyond one year
from retirement. To compel GSIS to release respondents retirement benefits despite the fact that he is
disqualified to receive retirement benefits violates R.A. No. 8291, and would subject its officials to possible
charges under R.A. No. 3019, the Anti-Graft and Corrupt Practices Act.
Fifth, GSIS contends that respondent is not entitled to the retirement benefits under R.A. No. 8291 because,
when he retired in 1992, the law had not yet been enacted. The retirement laws administered by GSIS at that
time were R.A. No. 660, R.A. No. 1616, and P.D. No. 1146.
Lastly, GSIS argues that the writ of mandamus issued by the CA is not proper because it compels petitioner to
perform an act that is contrary to law.
Respondent traverses these allegations, and insists that he has a clear legal right to receive retirement benefits
under either R.A. No. 660 or P.D. No. 1146.16 He claims that he has met all the conditions for entitlement to the
benefits under either of the two laws.17 Respondent contends that the return of his contributions does not bar
him from pursuing his claims because GSIS can require him to refund the premium contributions, or even
deduct the amount returned to him from the retirement benefits he will receive.18 He also argues that
resumption of his monthly pension will not constitute unjust enrichment because he is entitled to the same as a
matter of right for the rest of his natural life.19
Respondent accepts that, contrary to the pronouncement of the CA, he is not covered by R.A. No. 8291. He,
therefore, asks this Court to modify the CA Decision, such that instead of Section 13 of R.A. No. 8291, it should
be Section 12 of P.D. No. 1146 or Section 11 of R.A. No. 660 to be used as the basis of his right to receive,
and the adjustment of, his monthly pension.
Furthermore, respondent argues that allowing him to retire under another law does not constitute "conversion"
as contemplated in the GSIS law. He avers that his application for retirement under R.A. No. 910 was duly
approved by GSIS, endorsed by the DOJ, and implemented by the DBM for almost a decade. Thus, he should
not be made to suffer any adverse consequences owing to the change in the interpretation of the provisions of
R.A. No. 910. Moreover, he could not have applied for conversion of his chosen retirement mode to one under
a different law within one year from approval of his retirement application, because of his firm belief that his

retirement under R.A. No. 910 was proper a belief amply supported by its approval by GSIS, the favorable
endorsement of the DOJ, and its implementation by the DBM.20
The petition is without merit.
Initially, we resolve the procedural issue.
GSIS contends that respondents petition for mandamus filed before the CA was procedurally improper
because respondent could not show a clear legal right to the relief sought.
The Court disagrees with petitioner. The CA itself acknowledged that it would not indulge in technicalities to
resolve the case, but focus instead on the substantive issues rather than on procedural
questions.21 Furthermore, courts have the discretion to relax the rules of procedure in order to protect
substantive rights and prevent manifest injustice to a party.
The Court has allowed numerous meritorious cases to proceed despite inherent procedural defects and lapses.
Rules of procedure are mere tools designed to facilitate the attainment of justice. Strict and rigid application of
rules which would result in technicalities that tend to frustrate rather than to promote substantial justice must
always be avoided.22
Besides, as will be discussed hereunder, contrary to petitioners posture, respondent has a clear legal right to
the relief prayed for. Thus, the CA acted correctly when it gave due course to respondents petition for
mandamus.
This case involves a former government official who, after honorably serving office for 44 years, was
comfortably enjoying his retirement in the relative security of a regular monthly pension, but found himself
abruptly denied the benefit and left without means of sustenance. This is a situation that obviously cries out for
the proper application of retirement laws, which are in the class of social legislation.
The inflexible rule in our jurisdiction is that social legislation must be liberally construed in favor of the
beneficiaries.23 Retirement laws, in particular, are liberally construed in favor of the retiree24 because their
objective is to provide for the retirees sustenance and, hopefully, even comfort, when he no longer has the
capability to earn a livelihood. 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.25 Indeed, retirement
laws are liberally construed and administered in favor of the persons intended to be benefited, and all doubts
are resolved in favor of the retiree to achieve their humanitarian purpose.26
In this case, as adverted to above, respondent was able to establish that he has a clear legal right to the
reinstatement of his retirement benefits.
In stopping the payment of respondents monthly pension, GSIS relied on the memorandum of the DBM, which,
in turn, was based on the Chief Presidential Legal Counsels opinion that respondent, not being a judge, was
not entitled to retire under R.A. No. 910. And because respondent had been mistakenly allowed to receive
retirement benefits under R.A. No. 910, GSIS erroneously concluded that respondent was not entitled to any
retirement benefits at all, not even under any other extant retirement law. This is flawed logic.
Respondents disqualification from receiving retirement benefits under R.A. No. 910 does not mean that he is
disqualified from receiving any retirement benefit under any other existing retirement law.
The CA, however, incorrectly held that respondent was covered by R.A. No. 8291. R.A. No. 8291 became a
law after respondent retired from government service. Hence, petitioner and even respondent agree that it does
not apply to respondent, because the law took effect after respondents retirement.

Prior to the effectivity of R.A. No. 8291, retiring government employees who were not entitled to the benefits
under R.A. No. 910 had the option to retire under either of two laws: Commonwealth Act No. 186, as amended
by R.A. No. 660, or P.D. No. 1146.
In his Comment, respondent implicitly indicated his preference to retire under P.D. No. 1146, since this law
provides for higher benefits, and because the same was the latest law at the time of his retirement in 1992.27
Under P.D. No. 1146, to be eligible for retirement benefits, one must satisfy the following requisites:
Section 11. Conditions for Old-Age Pension.
(a) Old-age pension shall be paid to a member who:
(1) has at least fifteen years of service;
(2) is at least sixty years of age; and
(3) is separated from the service.
Respondent had complied with these requirements at the time of his retirement. GSIS does not dispute this.
Accordingly, respondent is entitled to receive the benefits provided under Section 12 of the same law, to wit:
Section 12. Old-Age Pension.
(a) A member entitled to old-age pension shall receive the basic monthly pension for life but in no case for a
period less than five years: Provided, That, the member shall have the option to convert the basic monthly
pensions for the first five years into a lump sum as defined in this Act: Provided, further, That, in case the
pensioner dies before the expiration of the five-year period, his primary beneficiaries shall be entitled to the
balance of the amount still due to him. In default of primary beneficiaries, the amount shall be paid to his legal
heirs.
To grant respondent these benefits does not equate to double retirement, as GSIS mistakenly claims. Since
respondent has been declared ineligible to retire under R.A. No. 910, GSIS should simply apply the proper
retirement law to respondents claim, in substitution of R.A. No. 910. In this way, GSIS would be faithful to its
mandate to administer retirement laws in the spirit in which they have been enacted, i.e., to provide retirees the
wherewithal to live a life of relative comfort and security after years of service to the government. Respondent
will not receive --- and GSIS is under no obligation to give him --- more than what is due him under the proper
retirement law.
It must be emphasized that P.D. No. 1146 specifically mandates that a retiree is entitled to monthly pension for
life. As this Court previously held:
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. 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.
Thus, where the employee retires and meets the eligibility requirements, he acquires a vested right to benefits
that is protected by the due process clause. Retirees enjoy a protected property interest whenever they acquire
a right to immediate payment under pre-existing law. Thus, a pensioner acquires a vested right to benefits that

have become due as provided under the terms of the public employees pension statute. No law can deprive
such person of his pension rights without due process of law, that is, without notice and opportunity to be
heard.28
It must also be underscored that GSIS itself allowed respondent to retire under R.A. No. 910, following
jurisprudence laid down by this Court.
One could hardly fault respondent, though a seasoned lawyer, for relying on petitioners interpretation of the
pertinent retirement laws, considering that the latter is tasked to administer the governments retirement
system. He had the right to assume that GSIS personnel knew what they were doing.
Since the change in circumstances was through no fault of respondent, he cannot be prejudiced by the
same. His right to receive monthly pension from the government cannot be jeopardized by a new
interpretation of the law.
1avvphi1

GSIS argument that respondent has already been enormously benefited under R.A. No. 910 misses the point.
Retirement benefits are a form of reward for an employees loyalty and service to the employer, and are
intended to help the employee enjoy the remaining years of his life, lessening the burden of having to worry
about his financial support or upkeep. A pension partakes of the nature of "retained wages" of the retiree for a
dual purpose: to entice competent people to enter the government service; and to 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.29
Surely, giving respondent what is due him under the law is not unjust enrichment.
As to GSIS contention that what respondent seeks is conversion of his retirement mode, which is prohibited
under R.A. No. 8291, the Court agrees with the CA that this is not a case of conversion within the
contemplation of the law. The conversion under the law is one that is voluntary, a choice to be made by the
retiree. Here, respondent had no choice but to look for another law under which to claim his pension benefits
because the DBM had decided not to release the funds needed to continue payment of his monthly pension.
Respondent himself admitted that, if the DBM had not suspended the payment of his pension, he would not
have sought any other law under which to receive his benefits. The necessity to "convert" was not a voluntary
choice of respondent but a circumstance forced upon him by the government itself.
Finally, GSIS would like this Court to believe that because it has returned respondents premium contributions,
it is now legally impossible for it to comply with the CAs directive.
Given the fact that respondent is ineligible to retire under R.A. No. 910, the refund by GSIS of respondents
premium payments was erroneous. Hence, GSIS can demand the return of the erroneous payment or it may
opt to deduct the amount earlier received by respondent from the benefits which he will receive in the future.
Considering its expertise on the matter, GSIS can device a scheme that will facilitate either the reimbursement
or the deduction in the most cost-efficient and beneficial manner.
The foregoing disquisition draws even greater force from subsequent developments. While this case was
pending, the Congress enacted Republic Act No. 10071,30 the Prosecution Service Act of 2010. On April 8,
2010, it lapsed into law without the signature of the President,31 pursuant to Article VI, Section 27(1) of the
Constitution.32
Section 24 of R.A. No. 10071 provides:
Section 24. Retroactivity. - The benefits mentioned in Sections 14 and 16 hereof shall be granted to all those
who retired prior to the effectivity of this Act.

By virtue of this express provision, respondent is covered by R.A. No. 10071. In addition, he is now entitled to
avail of the benefits provided by Section 23, that "all pension benefits of retired prosecutors of the National
Prosecution Service shall be automatically increased whenever there is an increase in the salary and
allowance of the same position from which he retired."
Respondent, as former Chief State Prosecutor, albeit the position has been renamed "Prosecutor
General,"33should enjoy the same retirement benefits as the Presiding Justice of the CA, pursuant to Section 14
of R.A. No. 10071, to wit:
Section 14. Qualifications, Rank and Appointment of the Prosecutor General. - The Prosecutor General shall
have the same qualifications for appointment, rank, category, prerogatives, salary grade and salaries,
allowances, emoluments, and other privileges, shall be subject to the same inhibitions and disqualifications,
and shall enjoy the same retirement and other benefits as those of the Presiding Justice of the Court of
Appeals and shall be appointed by the President.34
Furthermore, respondent should also benefit from the application of Section 16 of the law, which states:
Section 16. Qualifications, Ranks, and Appointments of Prosecutors, and other Prosecution Officers. x x x.
Any increase after the approval of this Act in the salaries, allowances or retirement benefits or any upgrading of
the grades or levels thereof of any or all of the Justices or Judges referred to herein to whom said emoluments
are assimilated shall apply to the corresponding prosecutors.
Lastly, and most importantly, by explicit fiat of R.A. No. 10071, members of the National Prosecution Service
have been granted the retirement benefits under R.A. No. 910, to wit:
Section 25. Applicability. - All benefits heretofore extended under Republic Act No. 910, as amended, and all
other benefits that may be extended by the way of amendment thereto shall likewise be given to the
prosecutors covered by this Act.
Hence, from the time of the effectivity of R.A. No. 10071, respondent should be entitled to receive retirement
benefits granted under R.A. No. 910.
Consequently, GSIS should compute respondents retirement benefits from the time the same were withheld
until April 7, 2010 in accordance with P.D. No. 1146; and his retirement benefits from April 8, 2010 onwards in
accordance with R.A. No. 910.
A final note. The Court is dismayed at the cavalier manner in which GSIS handled respondents claims,
keeping respondent in the dark as to the real status of his retirement benefits for so long. That the agency
tasked with administering the benefits of retired government employees could so unreasonably treat one of its
beneficiaries, one who faithfully served our people for over 40 years, is appalling. It is well to remind GSIS of its
mandate to promote the efficiency and welfare of the employees of our government, and to perform its tasks
not only with competence and proficiency but with genuine compassion and concern.
WHEREFORE, the foregoing premises considered, the Decision dated October 28, 2008 and the Resolution
dated February 18, 2009 of the Court of Appeals in CA-G.R. SP No. 101811 are hereby AFFIRMED WITH
MODIFICATION. Government Service Insurance System is ORDERED to (1) pay respondents retirement
benefits in accordance with P.D. No. 1146, subject to deductions, if any, computed from the time the same
were withheld until April 7, 2010; and (2) pay respondents retirement benefits in accordance with R.A. No. 910,
computed from April 8, 2010 onwards.
In order that respondent may not be further deprived of his monthly pension benefits, this Decision is
IMMEDIATELY EXECUTORY.
SO ORDERED.

GOVERNMENT SERVICE
INSURANCE SYSTEM,
Petitioner,

G.R. No. 157038

Present:
CARPIO, J., Chairperson
,
- versus

LEONARDO-DE
CASTRO,
BRION,
DEL CASTILLO, and
ABAD, JJ.

JEAN E. RAOET,
Respondent.

Promulgated:

December 23, 2009


x ---------------------------------------------------------------------------------------- x

DECISION
BRION, J.:
In this Petition for Review on Certiorari,[1] petitioner Government Service
Insurance System (GSIS) seeks to set aside the Court of Appeals (CA)
Decision[2] datedFebruary 3, 2003 in CA-G.R. SP. No. 72820, which overturned
and set aside the July 24, 2002 decision[3] of the Employees Compensation
Commission (ECC) in ECC Case No. GM-13079-302, and granted respondent
Jean Raoets (respondent) claim for income benefits arising from her husbands
death.
BACKGROUND FACTS
The respondents husband, Francisco M. Raoet (Francisco), entered
government service on July 16, 1974 as an Engineer Trainee at the National

Irrigation Administration (NIA). On July 5, 1978, he was appointed as Junior Civil


Engineer, and on April 22, 1981, he rose to the rank of Irrigation Engineer
B. On August 1, 1998, he was promoted to the position of Engineer A the
position he held until his death on May 5, 2001. As Engineer A, Francisco
supervised the implementation of construction activities of Lateral E and E-1. He
was also tasked to review and check the structural plan and the facilities. [4]
In 2000, Francisco was diagnosed with Hypertension, Severe, Stage III,
Coronary Artery Disease, and he was confined at the Region I Medical Center
from July 16 to July 25, 2000.[5] As the GSIS considered this a work-related
condition, Francisco was awarded 30 days Temporary Total Disability benefits,
plus reimbursement of medical expenses incurred during treatment.
On May 5, 2001, Francisco was rushed to the Dr. Marcelo M. Chan
Memorial Hospital because he was vomiting blood. [6] He was pronounced dead
on arrival at the hospital. His death certificate listed the causes of his death as
follows:
CAUSES OF DEATH
Immediate cause: Cardiac Arrest
Antecedent cause: Acute Massive Hemorrhage
Underlying cause: T/C Bleeding Peptic Ulcer Disease[7]

The respondent, as widow, filed with the GSIS on May 24, 2001 a claim for
income benefits accruing from the death of her husband, pursuant to Presidential
Decree No. 626 (P.D. 626), as amended. On August 31, 2001, the GSIS denied the
claim on the ground that the respondent did not submit any supporting documents
to show that Franciscos death was due to peptic ulcer.
On appeal, the ECC affirmed the findings of the GSIS in its decision of July
24, 2002. According to the ECC, it could not determine if Franciscos death was
compensable due to the absence of documents supporting the respondents
claim. Since Francisco had no prior history of consultation relating to peptic ulcer
and no autopsy was performed to ascertain the cause of his death, the ECC could
not conclude that Bleeding Peptic Ulcer Disease was the reason for his demise.

The respondent elevated the case to the CA through a Petition for


Review. She cited the following supporting grounds:
1. Employees Compensation Commission failed to consider that peptic
ulcer is an on and off disease which does not need confinement in a
hospital or clinic or submission to a Doctor of Medicine because it
can be cured by self-medication.
2. The Employees Compensation Commission failed to consider also
that there were medical treatment of Francisco Raoet of occupational
and compensable diseases other than peptic ulcer as shown by the
medical findings of certificates, Xerox copies of which are attached
to this petition.

The CA reversed[8] the ECC decision. The appellate court held that while the
Amended Rules on Employees Compensation does not list peptic ulcer as an
occupational disease, Franciscos death should be compensable since its immediate
cause was cardiac arrest. Thus, the CA ordered the GSIS to pay the respondents
claim for death benefits under P.D. 626, as amended.
The GSIS, this time, appealed through the present petition, raising the
following issues:
I. Whether or not the CA was correct in reversing the decision of the
ECC and the GSIS denying the respondents claim for income
benefit under P.D. 626, as amended, for the death of her husband,
Francisco.
II. Whether or not the ailment Acute Massive Hemorrhage t/c
Bleeding Peptic Ulcer Disease, which caused the death of the late
Francisco, is work-connected or whether there was any proof to
show that the risk of contracting the same was increased by factors
attendant to his employment.
The GSIS reasons out that since the cause of Franciscos death was peptic
ulcer, a disease not included in the occupational diseases listed in Annex A of
the Amended Rules on Employees Compensation, proof must be shown that the
risk of contracting the disease was increased by his working conditions. The
respondent failed to present any such evidence to support her claim apart from her
bare allegations. In fact, Franciscos medical records disclose that he did not

consult his doctors regarding peptic ulcer. Since no autopsy was performed to
ascertain the cause of death, no assurance exists that Bleeding Peptic Ulcer was
indeed the cause of his death.
The GSIS further argues that Franciscos other ailments, i.e., his
hypertension and coronary artery disease, had already been awarded the maximum
benefits commensurate to the degree of his disability when he was granted 30 days
Temporary Total Disability benefits, plus reimbursement of medical expenses
incurred in the treatment of these illnesses. Thus, no death benefit for the same
diseases can be claimed.
The GSIS also points out that the employees compensation trust fund is
presently empty, and claims on this fund are being paid by the GSIS from advances
coming from its other funds. Accordingly, the GSIS argues that the trust fund
would suffer if benefits are paid to claimants who are not entitled under the law.
In contrast, the respondent claims that the issues the GSIS raised are
essentially questions of fact which the Court is now barred from resolving in a
petition for review oncertiorari. Thus, she posits that the petition should be denied.
THE COURTS RULING
We deny the petition for lack of merit.
The Procedural issue
A petition for review under Rule 45 of the Rules of Court opens a case for
review only on questions of law, not questions of fact. A question of law exists
when the doubt centers on what the law is on a certain set of facts. A question of
fact exists when the doubt is on the truth or falsity of the alleged facts. [9]
In raising questions regarding Franciscos cause of death and its
compensability, the GSIS, at first blush, appears to be raising a basic question of
fact the actual cause of Franciscos death. Its question, however, is not on the
truth or falsity of the claimed cause of death, but on whether evidence exists
supporting the claimed cause of death. Posed in this manner, the question is not
purely a factual one as it involves the appreciation of how evidence is to be
viewed, and whether such evidence supports or rejects the claimed cause of
death. Thus, it is a question we can rule upon in this petition.

From the perspective of the CA decision, the issue is not so much the actual
cause of death, but a reading of the cause of death from the point of view of
compensability. This is essentially a legal issue, touching as it does on the issue of
compensability. Hence, it is likewise within the power of this Court to review in
this Rule 45 petition.
Factors determining
compensability of death

P.D. 626, as amended, defines compensable sickness as "any illness


definitely accepted as an occupational disease listed by the Commission, or any
illness caused by employment subject to proof by the employee that the risk of
contracting the same is increased by the working conditions."
Section 1 (b), Rule III of the Amended Rules on Employees' Compensation
implements P.D. 626 and requires that for sickness and the resulting disability or
death to be compensable, it must be an "occupational disease" included in the list
provided (Annex "A"), with the conditions attached to the listed sickness duly
satisfied; otherwise, the claimant must show proof that the risk of contracting the
illness is increased by his working conditions. In plainer terms, to be entitled to
compensation, a claimant must show that the sickness is either: (1) a result of
an occupational disease listed under Annex "A" of the Amended Rules on
Employees' Compensation under the conditions Annex A sets forth; or (2) if
not so listed, that the risk of contracting the disease is increased by the working
conditions.[10]
Based on Franciscos death certificate, the immediate cause of his death was
cardiac arrest; the antecedent cause was acute massive hemorrhage, and the
underlying cause was bleeding peptic ulcer disease.
The GSIS maintains that the respondents claim for income benefits should
be denied because she failed to present any proof, documentary or otherwise, that
peptic ulcer was the underlying cause for Franciscos death.
We disagree with this position, as we find that the respondent submitted
sufficient proof of the cause of her husbands death when she presented his death
certificate. InPhilippine American Life Insurance Company v. CA,[11] we held
that death certificates and the notes by a municipal health officer prepared in the

regular performance of his duties are prima facie evidence of facts therein
stated. A duly-registered death certificate is considered a public document
and the entries found therein are presumed correct, unless the party who
contests its accuracy can produce positive evidence establishing a contrary
conclusion. We also ruled in People v. Datun[12] that adeath certificate establishes
the fact of death and its immediate, antecedent, and underlying causes.
Since neither the GSIS nor the ECC presented any evidence to refute that
cardiac arrest was the immediate cause, and peptic ulcer was the underlying cause
of Franciscos death, we accept as established, in accordance with the death
certificate, that the underlying cause of Franciscos demise was peptic ulcer.
The CA decision and Peptic Ulcer
as Compensable Illness
In the assailed decision, the CA focused on Franciscos immediate cause of
death cardiac arrest and ignored the underlying cause of death peptic
ulcer. According to the CA, Franciscos death is compensable even if peptic ulcer
is not a listed occupational disease, since Francisco died due to a listed cause
cardiac arrest.
The CA is apparently wrong in its conclusion as it viewed in isolation the
immediate cause of death (cardiac arrest), disregarding that what brought about the
cardiac arrest was the ultimate underlying cause peptic ulcer. This error,
however, does not signify that Franciscos death is not compensable because peptic
ulcer itself, under specific conditions, is a compensable illness.
Contrary to the CAs conclusion, peptic ulcer is a compensable cause of
death, pursuant to ECC Resolution No. 1676 dated January 29, 1981, which
unmistakably provides that peptic ulcer is a compensable disease listed under
Annex A, provided the claimant is in an occupation that involves prolonged
emotional or physical stress, as among professional people, transport workers
and the like.[13]
Peptic Ulcer is defined as:
[A]n ulceration of the mucous membrane of the esophagus, stomach or
duodenum, caused by the action of the acid gastric juice.

Peptic ulcer is most common among persons who are chronically


anxious or irritated, or who otherwise suffer from mental tension. It
occurs about three times as often in men as in women. Symptoms
include a pain or gnawing sensation in the epigastric region. The pain
occurs from 1 to 3 hours after eating, and is usually relieved by eating or
taking an antacid drug. Vomiting, sometimes preceded by nausea,
usually follows a severe bout of pain.
COMPLICATIONS. If ulcers are untreated, bleeding can occur, leading
to anemia and therefore weakness and impaired health. Blood may be
vomited, and appears brownish and like coffee groundsbecause of the
digestive effect of gastric secretions on the hemoglobin. There may be
blood in the stools, giving them a tarry black color. In acute cases
sudden hemorrhage can occur and may be fatal if not treated
properly.
xxxx
Worry and anxiety can contribute to the development of an ulcer
and prevent it from healing. If emotional tensions persist, an ulcer that
has been healed by medical treatment can return. Therefore, every effort
is made to help the patient relax. Sometimes counseling or
psychotherapy is helpful in relieving emotional strain.[14] [Emphasis
supplied.]

Based on the Annex A list and the accompanying requisite condition for
compensability, the question that really confronts us is: did Franciscos
occupation involve prolonged emotional or physical stress to make his death
due to peptic ulcer compensable?
A significant point to appreciate in considering this question is that based on
the GSIS own records,[15] Francisco was diagnosed with Hypertension, Severe,
Stage III, Coronary Artery Disease, and confined at the Region I Medical Center in
July 2000. The GSIS found this ailment work-connected and awarded Francisco 30
days Temporary Total Disability benefits. This finding assumes importance in the
present case because the established underlying causes of the combination of these
diseases are, among others,the stressful nature and pressures inherent in an
occupation.[16] This was what the GSIS acknowledged in recognizing
Franciscos total temporary disability.

As already mentioned, Francisco worked as Engineer A with the NIA, a job


with enormous responsibilities. He had to supervise the construction activities of
Lateral E and E-1, and review the structural plan and facilities. [17] The stresses
these responsibilities carried did not abate for Francisco when he returned from his
Temporary Total Disability; he occupied the same position without change of
responsibilities until his death on May 5, 2001. Thus, Francisco had continuous
exposure to prolonged emotional stress that would qualify his peptic ulcer a
stress-driven ailment as a compensable cause of death.
In arriving at this conclusion, we stress that in determining the
compensability of an illness, we do not require that the employment be the sole
factor in the growth, development, or acceleration of a claimants illness to entitle
him to the benefits provided for. It is enough that his employment contributed,
even if only in a small degree, to the development of the disease. [18] In the recent
case of GSIS v. Vicencio, we said:[19]
It is well-settled that the degree of proof required under P.D. No.
626 is merely substantial evidence, which means, such relevant
evidence as a reasonable mind might accept as adequate to support a
conclusion. What the law requires is a reasonable work-connection
and not a direct causal relation. It is enough that the hypothesis on
which the workmans claim is based is probable. Medical opinion to the
contrary can be disregarded especially where there is some basis in the
facts for inferring a work-connection. Probability, not certainty, is the
touchstone. It is not required that the employment be the sole factor
in the growth, development or acceleration of a claimants illness to
entitle him to the benefits provided for. It is enough that his
employment contributed, even if to a small degree, to the
development of the disease. [Emphasis supplied.]

In this case, the chain of causation that led to the peptic ulcer is too obvious to be
disregarded. The pressures of Franciscos work constant, continuing and
consistent at his level of responsibility inevitably manifested their physical
effects on Franciscos health and body; the initial and most obvious were the
hypertension and coronary artery disease that the GSIS itself recognized. Less
obvious, but nevertheless arising from the same pressures and stresses, were the
silent killers, like peptic ulcer, that might not have attracted Franciscos attention
to the point of driving him to seek immediate and active medical
intervention. Ultimately, when the ulcer-producing stresses did not end, his ulcer

bled profusely, affecting his heart and causing its arrest. In this manner, Francisco
died. That his widow should now be granted benefits for Franciscos death is a
conclusion we cannot avoid and is, in fact, one that we should gladly make as a
matter of law and social justice.
Purpose of P.D. 626
Understandably, the GSIS may accuse us of leniency in the grant of
compensation benefits in light of the jurisprudential trends in this area of law. Our
leniency, however, is not due to our individual predilections or liberal leanings; it
proceeds mainly from the character of P.D. 626 as a social legislation whose
primordial purpose is to provide meaningful protection to the working class against
the hazards of disability, illness, and other contingencies resulting in loss of
income. In employee compensation, persons charged by law to carry out the
Constitutions social justice objectives should adopt a liberal attitude in deciding
compensability claims and should not hesitate to grant compensability where a
reasonable measure of work-connection can be inferred. Only this kind of
interpretation can give meaning and substance to the laws compassionate spirit as
expressed in Article 4 of the Labor Code that all doubts in the implementation
and interpretation of the provisions of the Labor Code, including their
implementing rules and regulations, should be resolved in favor of labor. [20] When
the implementors fail to reach up to these standards, this Court, as guardian of the
Constitution, necessarily has to take up the slack and order what we must, to
ensure that the constitutional objectives are achieved. This is simply what we are
doing in this case.
Acting on this same role, we remind the GSIS that when it is called upon to
determine the compensability of an employees disease or death, the present state
of the State Insurance Fund cannot be an excuse to avoid the payment of
compensation. If the State Insurance Fund lacks the financial capacity, it is not the
responsibility of the insured civil servant, but rather of the State to fill in the
deficiency and ensure the solvency of the State Insurance Fund. This is the clear
mandate of Article 184 of the Labor Code, which reads:
Article 184. Government guarantee. The Republic of
the Philippines guarantees the benefits prescribed under this Title, and
accepts general responsibility for the solvency of the State Insurance
Fund. In case of deficiency, the same shall be covered by supplemental
appropriations from the national government.

In Biscarra v. Republic, we explicitly said:[21]


The fear that this humane, liberal and progressive view will swamp the
Government with claims for continuing medical, hospital and surgical
services and as a consequence unduly drain the National Treasury, is no
argument against it; because the Republic of the Philippines as a
welfare State, in providing for the social justice guarantee in our
Constitution, assumes such risk. This assumption of such a noble
responsibility is, as heretofore stated, only just and equitable since the
employees to be benefited thereby precisely became permanently injured
or sick while invariably devoting the greater portion of their lives to the
service of our country and people. Human beings constitute the most
valuable natural resources of the nation and therefore should merit
the highest solicitude and the greatest protection from the State to
relieve them from unbearable agony. They have a right to entertain the
hope that during the few remaining years of their life some dedicated
institution or gifted individual may produce a remedy or cure to relieve
them from the painful or crippling or debilitating or humiliating effects
of their injury or ailment, to fully and completely rehabilitate them and
develop their "mental, vocational and social potential," so that they will
remain useful and productive citizens. [Emphasis supplied]

The GSIS, therefore, cannot use the excuse of the State Insurance Funds
present lack of capital to refuse paying income benefits to the respondent, whose
husband devoted 27 years of his life to government service and whose death was
caused by an ailment aggravated by the emotional stresses and pressures of his
work.
WHEREFORE, premises considered, we hereby DENY the petition for
lack of merit. No costs.
SO ORDERED.

Compensability of death; requirements. To be entitled to compensation, a claimant must show that the sickness is
either: (1) a result of an occupational disease listed under Annex A of the Amended Rules on Employees
Compensation under the conditions Annex A sets forth; or (2) if not so listed, that the risk of contracting the
disease is increased by the working conditions.

Based on Franciscos death certificate, the immediate cause of his death was cardiac arrest; the antecedent
cause was acute massive hemorrhage, and the underlying cause was bleeding peptic ulcer disease.
In determining the compensability of an illness, the workers employment need not be the sole factor in the
growth, development, or acceleration of a claimants illness to entitle him to the benefits provided for. It is
enough that his employment contributed, even if only in a small degree, to the development of the disease.
P.D. 626 is a social legislation whose primordial purpose is to provide meaningful protection to the working
class against the hazards of disability, illness, and other contingencies resulting in loss of income. In employee
compensation, persons charged by law to carry out the Constitutions social justice objectives should adopt a
liberal attitude in deciding compensability claims and should not hesitate to grant compensability where a
reasonable measure of work-connection can be inferred. Only this kind of interpretation can give meaning and
substance to the laws compassionate spirit as expressed in Article 4 of the Labor Code that all doubts in the
implementation and interpretation of the provisions of the Labor Code, including their implementing rules and
regulations, should be resolved in favor of labor. Government Service Insurance System vs. Jean E. Raoet, G.R. No.
157038, December 23, 2009.

GOVERNMENT SERVICE
INSURANCE SYSTEM,
Petitioner,

- versus

G.R. No. 185035


Present:
QUISUMBING, J., Chairperson,
CARPIO-MORALES,
*
CHICO-NAZARIO,
**
LEONARDO-DE CASTRO, and
BRION, JJ.

SALVADOR A. DE CASTRO,
Respondent.

Promulgated:
July 15, 2009

x-------------------------------------------------------------------------------------- x
DECISION
BRION, J.:

Before the Court is the petition for review on certiorari[1] filed by the Government
Service Insurance System (GSIS) to seek the reversal of the decision[2] and the
resolution[3]of the Court of Appeals (CA) in CA-G.R. SP No. 100375 entitled Salvador
A. De Castro v. Government Service Insurance System and Employees' Compensation
Commission.
THE ANTECEDENTS
Respondent Salvador De Castro (De Castro) rendered service in the Philippine Air
Force (PAF) from April 1, 1974 until his retirement on March 2, 2006.
On December 22, 2004, De Castro was admitted at the V. Luna General
Hospital, AFP Medical Center due to chest pains. He underwent on January 21, 2005 a
2-D echocardiography which revealed that he had dilated left atrium eccentric left
ventricular hyperthropy and left ventricular dysfunction. His full diagnosis consisted of
hypertensive cardiovascular disease, dilated atrium, eccentric left ventricular
hypertrophy and left ventricular dysfunction, and old anterior wall myocardial
infarction. He also underwent coronary angiogram procedure which showed that he had
significant simple vessel coronary artery disease (CAD).
On August 15, 2005, De Castro was confined in the same hospital and was
diagnosed to be suffering from (1) 41X-D21 Coronary artery disease and (2) 400-533
Hypertensive cardiovascular disease.
De Castro retired from the service on March 2, 2006 with a Certificate of
Disability Discharge.[4] On this basis, he filed a claim for permanent total disability
benefits with the GSIS.
In a decision dated June 20, 2006, the GSIS denied De Castros claim based on the
finding that De Castro's illnesses were non-occupational. De Castro appealed to the
Employees Compensation Commission (ECC).

THE ECC DECISION


At its meeting on June 11, 2007, the ECC Board affirmed the GSIS ruling and
dismissed De Castro's claim for lack of merit. [5] The ECC, however, also held that,
contrary to the ruling of the GSIS, CAD is a form of cardiovascular disease included in
the list of occupational diseases. The ECC still denied the claim despite this observation
because of the presence of factors which are not work-related, such as smoking and
alcohol consumption.[6] It likewise noted that manifestations of Cardiomyopathy in De
Castros 2-D echocardiography examination results could be related to his drinking
habits.
De Castro sought relief from the CA through a petition for review under Rule 43 of
the Rules of Court. Relying on Dominga A. Salmone v. ECC,[7] De Castro argued that
the causal relation between his illness and the resultant disability, on the one hand, and
his work, on the other, is not that essential; it is enough that his illness is listed as an
occupational disease. He disputed the findings of the ECC that hypertension or high
blood pressure (which causes CAD) may have been caused by his cigarette smoking and
drinking habits. He posited that other factors, such as stress brought about by the nature
of his work, could have caused his illness. He claimed that the positions he held in the
PAF, the last being First Sergeant, were comparable to a managerial position in the
civilian business community because it served as an extension of the office of his
commanding officer in the management, administration, and supervision of his fellow
enlisted personnel within the unit.
In response to the petition, the GSIS maintained that hypertensive cardiovascular
disease and CAD are not inherent occupational hazards, nor are they concomitant effects
of De Castros employment with the PAF. It argued that there was no significant causal
or contributory relationship between De Castros duties as a soldier and his ailments.

THE CA DECISION

The CA granted the petition.[8] It noted that, as found by the ECC itself, De
Castros illnesses are listed as occupational diseases in Annex A of the Amended
Rules of the Employees Compensation Commission (Amended ECC Rules). It
explained that under the same rules, the sickness must be the result of an occupational
disease under Annex A in order for the illness and the resulting disability or death to
be compensable.[9]
The CA further explained that it is not necessary that there be proof of causal
relation between the work and the illness which resulted in De Castros
disability. Citing GSIS v. Baul,[10] it held that in general, a covered claimant suffering
from an occupational disease is automatically paid benefits. While it noted that the exact
etiology of hypertension which led to De Castros cardiovascular ailments cannot be
accurately traced, it stressed that medical experiments tracing the etiology of essential
hypertension show a relationship between this illness and the nature and conditions of
work. The CA found significant the statement in De Castros Certificate of Disability
Discharge that his CAD and hypertensive cardiovascular diseases were aggravated
during active service; were not incurred while on AWOL; did not exist prior to entry into
service; were incident to service; were not incurred by private avocation; were not due to
misconduct; and, were incurred while in line of duty. The appellate court, therefore,
brushed aside the findings a quo that De Castros illnesses might have been caused by
his smoking and drinking habits.
THE PETITION
GSIS present petition presents the following issues: (1) whether the CA erred in
reversing the decisions of the ECC and the GSIS that denied De Castros claim for
disability benefits; and (2) whether De Castro proved that his heart ailments are workrelated and/or have been precipitated by his duties with the Armed Forces of the
Philippines (AFP).
The GSIS asks for a reversal of the CAs July 16, 2008 decision,[11] arguing that it
is not enough that a disease or illness is listed as compensable under Annex A of the
Amended ECC Rules.[12] Other than the listing, the conditions/requisites specified in No.

18, Annex A of the rules must be complied with for De Castros heart ailment to be
compensable. These conditions/requisites are:
1. If the heart disease was known to have been present during employment, there
must be proof that an acute exacerbation was clearly precipitated by the
unusual strain by reasons of the nature of his work.
2. The strain of work that brings about an acute attack must be of sufficient
severity and must be followed within 24 hours by the clinical signs of a cardiac
insult to constitute causal relationship.
3. If a person who was apparently asymptomatic before being subject to strain at
work showed signs and symptoms of cardiac injury during the performance of
his work and such symptoms and signs persisted, it is reasonable to claim a
causal relationship.
Given the above conditions, the GSIS posits that it is incumbent on De
Castro to prove that there was an unusual and extraordinary strain in his work when his
chest pain developed, or that there was causal connection between his working condition
and heart ailments. The GSIS then submits that De Castro failed to discharge the burden
of presenting evidence that his heart ailments were caused by his work. It brushes aside
De Castros reliance on his certificate of disability discharge, [13] contending that it was
issued relative to his separation from the AFP; the tests and findings on which the
certificate was based are not conclusive or binding in the determination by the GSIS and
the ECC of the compensability of De Castros illness under the law Presidential
Decree No. 626, as amended, and the ECC Rules of Procedure for the Filing and
Disposition of Employees Compensation claims. It maintains that under Rule 2,
Section 1 of these rules, the GSIS (in the public sector), and the Social Security
System (in the private sector) have original and exclusive jurisdiction, and the ECC, the
appellate jurisdiction, to settle any dispute with respect to coverage, entitlement to
benefits, collection, and payment of contributions and penalties.
The GSIS further argues, relying on GSIS v. CA,[14] that the proceedings in the
AFP and the administrative machinery tasked by law to handle the governments
employees compensation program are separate and distinct from one another; thus, the
AFPs conclusions may not be used as basis in the determination of the compensability

of De Castros ailments. It thus objects to the CAs rejection of the ECC's findings of
fact on the nature of the heart ailments of De Castro, stressing that the decision of the
ECC clearly elaborated on what CAD is and why De Castro is not entitled to the
employees compensation. The ECC decision, it explains, was based on well-respected
and often quoted medical references;[15]its medical evaluations revealed that De Castros
heart illnesses were related to his drinking and smoking habits. Finding further support
in the declarations of the American Heart Association, [16] it maintains that the ECC is
correct in taking into consideration De Castros lifestyle, particularly his smoking and
drinking habits, in denying his claim for compensation. The GSIS concludes that based
on the findings of the ECC, De Castros ailments were not acquired by reason of his
employment with the PAF and were, therefore, not work-connected.

THE CASE FOR DE CASTRO


In his March 9, 2009 Comment,[17] De Castro asks the Court to deny the petition
for lack of merit. He presents the following arguments:
1.

No further proof of work connection is necessary since his illnesses are listed
as occupational diseases.
2. There is substantial evidence to prove the work connection of his illnesses.
3. The factual findings of the CA are not subject to review.
De Castro submits that under Annex A of the Amended ECC Rules, CAD and
essential hypertension are listed as occupational diseases;[18] once an ailment is so listed,
the causal relation between the ailment and the resultant disability and his work is not
essential to declare his disability compensable, citing in this regard the Courts ruling
in Dominga A. Salmore v. ECC.[19]
Further, De Castro contends that the GSIS theory that his drinking and smoking
habits must have caused his hypertension is unwarranted; this theory conveniently and
arbitrarily disregarded other factors or causes that might have contributed to his illnesses,
such as the stress brought about by the nature of his work. De Castro posits that as the
Court held inGSIS v. Baul,[20] the presence of other factors that are work-related makes

his ailments compensable; what is required is reasonable work connection and not direct
causal relation.
De Castro stresses that the conditions laid down under Item No. 18 of Annex A
of the Amended ECC Rules, are alternative, not concurrent, pointing out that the caption
of the rule states: Any of the following conditions, meaning, any one of the conditions
mentioned in the rule. He argues that the diagnosed ailments that resulted in his
separation from the service never existed prior to his entry into the service (as indicated
in his certificate of disability discharge),[21] and were, therefore, incurred while he was in
the military service; the same document also states that his illnesses were incident to and
aggravated by the service. He claims that the circumstances under which he incurred his
illnesses satisfy the requirements under No. 18a of the cited rule.
De Castro posits that substantial evidence exists to prove that his ailments were
caused by his employment with the PAF. He reiterates that the duties he performed at
the PAF as non-commissioned officer-in-charge for operational security, Asst. First
Sergeant, and ultimately, as First Sergeant, contributed to the progress of his ailments
and, eventually, led to his separation from the service. He contends that the CA upheld
his position when it ruled that he contracted CAD and hypertensive cardiovascular
diseases in the course of his employment with the PAF, and these were brought about by
the stress and the nature of his work.
While De Castro does not dispute that the GSIS has original and exclusive
jurisdiction and the ECC has appellate jurisdiction over disputes on compensation
benefits,[22] he stresses that neither the GSIS nor the ECC subjected him to any separate
medical examination. He argues that the GSIS and the ECC only made a paper
evaluation of his condition, based on the medical findings and diagnoses of the V. Luna
General Hospital, AFPMC. These hospital findings underwent review by the AFP
Disability and Separation Board (DSB) before his discharge for disability was
approved. The GSIS and ECC did not take into account his service with the AFP and the
nature of his assignments which greatly contributed to the development of his ailments.

Finally, De Castro argues that, procedurally, the CAs findings that his ailments are
service-connected are no longer reviewable. Rule 45 of the Rules of Court the
petitioners chosen mode of review, only allows a review of legal issues. [23]
THE COURTS RULING
We first resolve the procedural question De Castro raised on whether the present
petition is appropriate; De Castro alleges that a Rule 45 petition should involve only
questions of law, while the present petition places in issue the CAs factual findings. In
effect, De Castro claims that the present petition should be dismissed outright under the
terms of Rule 45 of the Rules of Court.
De Castros procedural objection has no merit. A question of law is involved when
a doubt or controversy exists on what the law is or how it applies to a given set of facts;
a question of fact exists when the doubt or difference arises on the truth or falsehood of
given facts, or on the existence or non-existence of claimed facts.[24]
In this case, the set of facts on which the CA decision is anchored is largely
undisputed. De Castro experienced chest pains while on duty; he was medically
examined and diagnosed to be afflicted with CAD and hypertensive cardiovascular
disease. For this reason, he was separated from the service and given a certificate of
disability. The findings and evaluation of the military physicians, while indicating that
De Castro smoked and drank, showed a work connection with De Castro's
ailments. These findings were affirmed by the AFP's DSB. [25] The GSIS and the ECC
refused to be bound by the findings of the military physicians, invoking in this regard
their exclusive jurisdiction over employees compensation cases. They ruled out
compensation for De Castro on the ground that his ailments were not work-related
because of De Castros drinking and smoking; the CA held otherwise.
The issue before us is whether, under our present laws and jurisprudence, the
conclusions of the CA on compensability are correct, based on the facts before it. In
other words, the facts of the case are given and laid out; our task is to determine the
validity of the conclusions drawn from the given facts from the point of view of

compensability. This task involves a determination of a question of law and is


appropriate for a petition under Rule 45 of the Rules of Court.
We find no merit in the petition.
Other than the given facts, another undisputed aspect of the case is the status
of the ailments that precipitated De Castros separation from the military service CAD
and hypertensive cardiovascular disease. These are occupational diseases.[26] No less
than the ECC itself confirmed the status of these ailments when it declared
that Contrary to the ruling of the System, CAD is a form of cardiovascular disease
which is included in the list of Occupational Diseases.[27] Essential hypertension is also
listed under Item 29 in Annex A of the Amended ECC Rules as an occupational
disease.
Despite the compensable character of his ailments, both the GSIS and the ECC
found De Castros CAD to be non-work related and, therefore, non-compensable. To
use the wording of the ECC decision, it denied De Castros claim due to the presence of
factors which are not work-related, such as smoking and alcohol consumption.[28] De
Castros own military records triggered this conclusion as his Admitting Notes, [29] made
when he entered the V. Luna General Hospital due to chest pains and hypertension, were
that he was a smoker and a drinker.
As the CA did, we cannot accept the validity of this conclusion at face value
because it considers only one side the purely medical side of De Castros case and
even then may not be completely correct. The ECC itself, in its decision,[30] recites that
CAD is caused, among others, by atherosclerosis of the coronary arteries that in turn, and
lists the followingmajor causes: increasing age; male gender; cigarette smoking; lipid
disorder due to accumulation of too much fats in the body; hypertension or high blood
pressure; insulin resistance due to diabetes; family history of CAD. The minor factors
are: obesity; physical inactivity; stress; menopausal estrogen deficiency; high
carbohydrate intake; and alcohol.
We find it strange that both the ECC and the GSIS singled out the presence of
smoking and drinking as the factors that rendered De Castros ailments, otherwise listed

as occupational, to be non-compensable. To be sure, the causes of CAD and


hypertension that the ECC listed and explained in its decision cannot be denied; smoking
and drinking are undeniably among these causes. However, they are not the sole
causes of CAD and hypertension and, at least, not under the circumstances of the present
case. For this reason, we fear for the implication of the ECC ruling if it will prevail and
be read as definitive on the effects of smoking and drinking on compensability issues,
even on diseases that are listed as occupational in character. The ruling raises the
possible reading that smoking and drinking, by themselves, are factors that can bar
compensability.
We ask the question of whether these factors can be sole determinants of
compensability as the ECC has apparently failed to consider other factors such as age
and gender from among those that the ECC itself listed as major and minor causes of
atherosclerosis and, ultimately, of CAD. While age and gender are characteristics
inherent in the person (and thereby may be considered non-work related factors), they
also do affect a workers job performance and may in this sense, together with stresses of
the job, significantly contribute to illnesses such as CAD and hypertension. To cite an
example, some workplace activities are appropriate only for the young (such as the
lifting of heavy objects although these may simply be office files), and when repeatedly
undertaken by older workers, may lead to ailments and disability. Thus, age coupled
with an age-affected work activity may lead to compensability. From this perspective,
none of the ECCs listed factors should be disregarded to the exclusion of others in
determining compensability.
In any determination of compensability, the nature and characteristics of the job
are as important as raw medical findings and a claimants personal and social history.
This is a basic legal reality in workers compensation law. [31] We are therefore surprised
that the ECC and the GSIS simply brushed aside the disability certification that the
military issued with respect to De Castros disability, based mainly on their primacy as
the agencies with expertise on workers compensation and disability issues.
While ECC and GSIS are admittedly the government entities with jurisdiction
over the administration of workers disability compensation and can thus claim primacy

in these areas, they cannot however claim infallibility, particularly when they use wrong
or limited considerations in determining compensability.
In the present case, they should at least have considered the very same standards
that they stated in their own decisions, and should not have simply brushed aside as
incorrect the basis for disability that the AFP, as home agency, used in passing upon De
Castros separation from the service and discharge for disability. In saying this, we are
not unmindful that neither the GSIS nor the ECC conducted a medical examination of
De Castro on their own; they merely relied on the results of De Castro's medical
examination conducted at the V. Luna General Hospital, a government military
hospital. It was from these same medical findings that the GSIS and ECC derived their
conclusion that De Castro's drinking and smoking habits and personal lifestyle caused
his ailments. We are aware, too, that De Castros discharge based on disability was not
the sole result of the AFP medical findings; the medical findings were further reviewed
and deliberated upon by the AFPs DSB which certified on the causes of De Castros
separation from the service and his disability.
The militarys disability certification clearly states that De Castros ailments were:
(1) aggravated by active service, (2) incident to service, (3) not incurred while on
AWOL, (4) never existed prior to entry to military service, (5) not due to misconduct, (6)
not incurred by private avocation and, (7) in line of duty. De Castro further stated in the
course of this case that the positions he occupied as the PAF-Non-Commissioned
Officer-in-Charge for Operational Security, Asst. First Sergeant and First Sergeant of the
577th CS, 570th CTW stationed at Puerto Princesa, Palawan were positions comparable to
managerial positions in the private business sector; he served as the extension of his
commanding officer in the management, administration, and supervision of the activities
of his fellow enlisted soldiers within the unit tasks whose urgency and sensitivity
resulted in job stress. While the task before the GSIS and the ECC was to determine
compensability, not merely the fact of disability that justifies a separation from the
service, still, these agencies should not have simply glossed over the findings of the
military on the matters they certified to, as these are the same facts that are material to
compensability. The health of De Castro upon entry into the service and how his work
affected his health are very relevant facts that should not have been disregarded in favor
of singled out facts that the GSIS and the ECC considered as conclusive indicators of

incompensability. The ECC and the GSIS, in short, did not seriously look at all the
relevant factors determinative of compensability and thereby decided De Castros case
based on incomplete, if not wrong, considerations. This is a reversible error that
requires rectification.
In contrast, the assailed CA ruling was sensitive to all these concerns and found
reasonable work connection between De Castros ailments and his duties as a soldier for
32 years without at all disregarding De Castros drinking and smoking habits that could
have contributed to his afflictions. On the latter concerns, we quote with approval the
following CA observations:
Intoxication which does not incapacitate the employee from following his
occupation is not sufficient to defeat the recovery of compensation, although intoxication
may be a contributory cause to his injury. While smoking may contribute to the
development of a heart ailment, heart ailment may be cause by other factors such as
working and living under stressful conditions. Thus, the peremptory presumption that
petitioners habit of smoking heavily was the wilfull act which causes his illness and
resulting disability, without more, cannot suffice to bar petitioners claim for disability
[32]
benefits.

We consider it significant that De Castro entered military service as a fit and


healthy new soldier. We note, too, De Castros service record and the medals, awards,
and commendations he earned,[33] all attesting to 32 years of very active and productive
service in the military. Thus, the CAD and the hypertension came while he was engaged
in these endeavors. To say, as the GSIS and the ECC did, that his ailments are
conclusively non-work related because he smoked and drank, is to close our eyes to the
rigors of military service and to the demands of De Castros specific positions in the
military service, and to single out factors that would deny the respondents claim. This is
far from the balancing that the GSIS invokes between sympathy for the workingman and
the equally vital interest of denying underserving claims.[34] Thus, based on the totality
of the circumstances surrounding De Castros case, we are convinced that his long years
of military service, with its attendant stresses and pressures, contributed in no small
measure to the ailments that led to his disability retirement. We, therefore, agree with
the CA when it concluded that De Castro's illness was contracted during and by reason
of his employment, and any non-work related factor that contributed to its aggravation is
immaterial.

We close by reiterating that what the law requires is a reasonable work connection
and not direct causal relation.[35] Probability, not the ultimate degree of certainty, is the
test of proof in compensation proceedings.[36] For, in interpreting and carrying out the
provisions of
the Labor Code and its Implementing Rules and
Regulations, the primordial and paramount consideration is the employee's welfare. To
safeguard the worker's rights, any doubt on the proper interpretation and application
must be resolved in favor of labor.[37]
We reiterate these same principles in the present case. Accordingly, we hold that
De Castro's ailments CAD and hypertensive cardiovascular disease are workconnected under the circumstances of the present case and are, therefore, compensable.
WHEREFORE, premises considered, the petition for review on certiorari filed by
the Government Service Insurance System (GSIS) is hereby DENIED for lack of
merit. The challenged decision and resolution of the Court of Appeals in CA-G.R. SP
No. 100375 are hereby AFFIRMED.
SO ORDERED.
GOVERNMENT
INSURANCE SYSTEM,
Petitioner,

SERVICE

G.R. No. 172925


Present:
QUISUMBING, *
CARPIO, J.,
Chairperson,
CHICO-NAZARIO,

- versus -

PERALTA, and
ABAD,** JJ.

Promulgated:

JAIME K. IBARRA,

October 30, 2009

Respondent.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

RESOLUTION

CHICO-NAZARIO, J.:

This is to address further incidents in the instant case proceeding from the
Resolution of this Court dated 18 June 2009 ordering petitioner Government
Service Insurance System (GSIS) (1) to pay respondent Jaime K. Ibarra permanent
partial disability benefits for the maximum period of twenty-five (25) months,
subject only to the deduction of previous partial payments of said benefits and
the set-off of Ibarras outstanding and unpaid loans with the GSIS; and (2) to
submit to this Court, within ninety (90) days from its receipt of this Resolution,
proof of compliance with the above directive.

On 24 July 2009, petitioner filed its Manifestation claiming that it had


already complied with the directive to pay respondent permanent partial
disability benefits for themaximum period of twenty-five (25) months when it
remitted to respondent the amount of P77,274.50. According to petitioner, this

amount is the equivalent of 25 multiplied the monthly income benefit


of P3,090.98 to which respondent is entitled. This amount was computed on the
basis of Rule VI of the Amended Rules on Employees' Compensation, as follows:

SECTION 9. Monthly income benefit.


(a) x x x
(b) In the case of the GSIS, the monthly income benefit shall be
the basic monthly pension as defined in PD 1146 plus
twenty percent thereof, but shall not be less than P250, nor
more than the actual salary at the time of contingency. (ECC
Resolution No. 2799, July 25, 1984). (Emphasis supplied.)

Under Presidential Decree No. 1146, the basic monthly pension is


computed as follows:

Section 9. Computation of Basic Monthly Pension.


(a)

(b)

The basic monthly pension is equal to:


(1)

thirty-seven and one-half percent of the revalued average


monthly compensation; plus

(2)

two and one-half percent of said revalued average


monthly compensation for each year of service in excess
of fifteen years: Provided, That, the basic monthly pension
shall not exceed ninety percent of the average monthly
compensation.

The basic monthly pension may be adjusted upon the


recommendation of the President and General Manager of the
System
and
approved
by
the
President
of
the Philippines accordance with the rules and regulations
prescribed by the System. (Emphases supplied.)

In computing the revalued average monthly compensation referred to


above, petitioner relied on the definition in Section 2 of Presidential Decree No.
1146, whichpreviously provided:

Section 2. Definition of Terms. - Unless the context otherwise indicates,


the following terms shall mean:
xxxx
(k) Average monthly compensation the quotient after
dividing the aggregate compensations received by the member for
the
last
three
years
immediately
preceding
his
death/separation/disability/ retirement, by the number of months
he received said compensation, or three thousand pesos, which
ever is smaller;
(l) Revalued average monthly compensation an amount
equal to one hundred seventy percent of the first two hundred
pesos of the average monthly compensation plus one hundred
percent of the average monthly compensation in excess of two
hundred pesos. (Emphasis supplied.)

Applying the above provisions, particularly the ceiling of P3,000.00 stated in


Section 2(k) of Presidential Decree No. 1146, respondents revalued average
monthly compensation was computed to be only P3,140.00, despite the fact that
his basic salary according to the records was already P33,773.36.

Petitioners reliance on the said erstwhile provisions of Presidential Decree


No. 1146 is erroneous, if not made in utter bad faith. Petitioner could not have
possibly been unaware of Republic Act No. 8291, otherwise known as The
Government Service Insurance System Act of 1997, which amended Presidential
Decree No. 1146, Section 2 of which provides for a definition of the Average
Monthly Compensation which does not carry with it the P3,000.00 ceiling under
the old provision:

(l) Average Monthly Compensation (AMC) The quotient arrived at after


dividing the aggregate compensation received by the member during his last thirty-six
(36) months of service preceding his separation/retirement/disability/death by thirty-six
(36), or by the number of months he received such compensation if he has less than
thirty-six (36) months of service: provided, that the average monthly compensation shall
in no case exceed the amount and rate as may be respectively set by the Board under
the rules and regulations implementing this Act as determined by the actuary of the
GSIS: Provided, further, That initially the average monthly compensation shall not
exceed Ten thousand pesos (P10,000.00), and premium shall be nine percent (9%) and
twelve percent (12%) for employee and employer covering the AMC limit and below and
two percent (2%) and twelve percent (12%) for employee and employer covering the
compensation above the AMC limit;

(m) Revalued average monthly compensation An amount equal to one


hundred seventy percent (170%) of the first One thousand pesos (P1,000.00) of the
average monthly compensation plus one hundred percent (100%) of the average
monthly compensation in excess of One thousand pesos (P1,000.00).

Accordingly, this Court reiterates its order for petitioner to pay respondent
permanent partial disability benefits for the maximum period of twenty-five (25)
months, computed on the basis of Section 2 of Republic Act No. 8291.

IN VIEW OF THE FOREGOING, the Court hereby resolves to: (1) ORDER the
GSIS to PAY Ibarra permanent partial disability benefits for the maximum period
of twenty-five (25) months, computed on the basis of Section 2 of Republic Act
No. 8291, subject to deductions of amounts already paid; and (2)
further ORDER the GSIS toSUBMIT to this Court, within ninety (90) days from its
receipt of this Resolution, proof of compliance with the directives herein.

SO ORDERED.
G.R. No. 162374

June 18, 2009

RODOLFO B. ARCEO, Petitioner,


vs.
GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), Respondent.
DECISION
PERALTA, J.:
This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court, praying that the
Decision1dated June 30, 2003 and Resolution2 dated February 9, 2004 of the Court of Appeals (CA) in CA-G.R.
SP No. 69255, denying petitioner's motion for reconsideration, be reversed and set aside.
The antecedent facts are as follows.
Petitioner rendered services to the government as a lawyer beginning April 23, 1971, first as a Legal
Researcher in the then Court of First Instance of Capiz, then as Deputy Clerk of Court from 1976 to March 15,
1979. On March 16, 1979, he transferred to the Office of the Provincial Fiscal of Capiz, Roxas City and, after
several promotions, he eventually held the position of Provincial Prosecutor from March 16, 1998 up to his
retirement on August 31, 1999.
During the course of his government service, specifically on August 28, 1992, petitioner suffered respiratory
arrest or failure, hypertension and cardiac malfunction, as a result of which, he was hospitalized and confined
until September 19, 1992. During said hospitalization, he was also found to be suffering from adrenal adenoma,
a benign tumor of the adrenal gland. Thus, after his hypertension was stabilized, he had an operation for
removal of the tumor on November 18, 1992. Although the operation was successful, he was able to return to
work only in April 1993.
Upon his return to work, he had to act as Trial Prosecutor for two branches of the Regional Trial Court of Roxas
City and, in 1998, when he became the Provincial Prosecutor, he allegedly had to take on additional work load
due to the resignations of four of their prosecutors.
On April 19, 1999, petitioner again suffered respiratory arrest while working in his office at the Justice Hall of
Roxas City. On the same day, a 2-D echocardiogram was conducted on petitioner and Dr. Matias T. Apistar,
his attending physician, made the following findings:
1. Dilated Aortic Root
2. Aortic Regurgitation Severe
3. Concentric Left Ventricular Hypertrophy
4. Paradoxical Motion of the Mid Anterior Septum3
Petitioner was then advised by the physician to retire on a total permanent disability as his work as Provincial
Prosecutor would endanger his life.
On July 9, 1999, petitioner filed a total and permanent disability claim with respondent Government Service
Insurance System (GSIS). Subsequently, or on July 26, 1999, he also applied for retirement effective August
31, 1999.
Petitioner's claim for income benefits under Presidential Decree No. 626, as amended, was denied by the GSIS
in its letter dated June 29, 2001. In a letter dated July 23, 2001, petitioner moved for reconsideration of said
denial. It was never mentioned in his motion for reconsideration that his claim for disability benefits is based on
cardiovascular disease; instead, he insisted that his adenoma was caused by the stress he suffered from being

a Prosecutor. On July 26, 2001, the GSIS denied petitioner's motion for reconsideration, reiterating that the
claimed ailment, "Adenoma, Adrenal Gland; Hypokalemia, HCVD sec.,"4 is a non-compensable disease.
Upon request of petitioner, the GSIS then elevated the records of his case to the Employees' Compensation
Commission (ECC) for the latter's review. In a Decision5 dated December 14, 2001, the ECC upheld the GSIS's
denial of petitioner's claim for compensation benefits.
Petitioner then filed a petition for review with the CA. For the very first time, petitioner put forth the allegation
that his claimed ailment was not only adrenal adenoma, but also cardiovascular disease. On June 30, 2003,
the appellate court promulgated its Decision dismissing the petition. The CA ruled that the evidence or
certifications and medical records submitted by petitioner "do not convincingly prove a reasonable nexus
between the ailment [adrenal adenoma] of Arceo and his work."6 Petitioner's motion for reconsideration of the
Decision was likewise denied per Resolution7 dated February 9, 2004.
Hence, this petition where petitioner argues that the CA erred in not ruling squarely on the issue raised in the
petition for review; that is, whether petitioner's claim for benefits should be approved, since his illness is not
onlyadrenal adenoma but also cardiovascular disease, which is clearly compensable since it is included in
Annex "A" of the Implementing Regulations on Occupational Diseases.
The petition is doomed to fail.
Indeed, the CA made no categorical ruling on whether the GSIS should have granted petitioner's disability
claim based on cardiovascular disease, and not on the illness of adrenal adenoma alone. However, the CA
could not be faulted for this altogether because all throughout the proceedings before the GSIS and the ECC,
petitioner's claim was apparently based on the illness adrenal adenoma. It was only in his petition for review
filed with the CA where petitioner advanced the argument that since he was also suffering from cardiovascular
disease, he should be awarded disability benefits based on said illness. In fact, when the GSIS denied his
claim, petitioner never even mentioned in his motion for reconsideration thereof that his claim for disability
benefits was based on cardiovascular disease; instead, he was insisting that his adrenal adenoma was workrelated as it was caused by the stress he suffered as a Prosecutor. His letter8 dated July 23, 2001 stated thus:
This is a motion for consideration of your order/decision denying my claim for reimbursement and other benefits
under PD 626, as amended, which was issued by your department on June 29, 2001, but received by the
undersigned on July 14, 2001, based on the following grounds:
1. The Certification issued by Dr. Benjamin Mombay, dated July 17, 2001, who is my doctor and who
diagnosed my adenoma stated that in his opinion my ailment could have been caused by stress or
have been aggravated by it x x x.
2. I believe that as Trial Prosecutor I have been exposed to stress over an extended period of time.
This is a modern accepted theory that stress was based on the idea that excessive demands in a
person's life produces high levels of hormones. These hormones lower the body's resistance to
disease and cause damage. The life of a Trial Prosecutor is one of the most stressful jobs in the
government service for the reason that trial advocacy is adversarial. x x x Overtime, the daily hazzles
(sic) day in and day out will take its toll.
xxxx
In the early eighties as Trial Prosecutor, I had the belief that in order to deserve my pay, as Trial Prosecutor, I
must be exposed to all kinds of stressful situations as possible. x x x.
This is my explanation why I believe that my adenoma had been caused by stress.
It cannot be any clearer that the illness upon which petitioner was basing his claim was adrenal adenoma. As a
matter of fact, what may be gleaned from Dr. Mombay's Certification9 dated July 17, 2001, attached to the

motion for reconsideration, is that petitioner's adrenal adenoma was the cause of his hypertension, heart
disease and respiratory failure. Pertinent portions of the Certification are reproduced hereunder:
This is to certify that Fiscal Rodolfo B. Arceo has been a patient since September 1, 1992 at Iloilo Mission
Hospital, Iloilo City. He was brought to Iloilo Mission Hospital at about 8:30 in the evening of August 31, 1992,
suffering from hypertension, heart disease and respiratory failure.
In my interview with patient, he informed me that he had oftentimes weakness of both arms and legs starting in
the early eighties. x x x At first, the patient dismissed the weakness as just a sign of advancing age, but as the
years went by the weakness in both his arms and legs became more frequent and lasted longer, until he
suffered respiratory arrest on August 31, 1992 at [the] Capiz Emmanuel Hospital, Roxas City.
Having suspected that patient had the growth of tumor somewhere in his body I ordered a C-T. Scan. The
result showed that patient had adenoma (tumor) on the left adrenal gland of the size of 4.5 cm. x 3.5 x 4.2 cm.
xxxx
The operation having proved a resounding success, I left the management and follow up of patient to my
partner, Dr. Henry Gonzales.
The size of the adenoma and complaint of the patient that he had weakness or numbness of both his arms and
legs whenever he is subjected to stress made me conclude that tension and stress have caused or aggravated
his condition for it is common knowledge that the job of a trial prosecutor is one of the most stressful jobs in the
government service.
Wherefore, it is recommended that the removal of the adenoma on the left adrenal gland of Fiscal
Arceo had caused permanent partial disability and he should be compensated or reimbursed of all his
expenses and given other benefits consistent with law and equity.
Thus, it appears that petitioner's present insistence that he is also suffering from cardiovascular disease
resulting from his work as Prosecutor is a mere afterthought after the GSIS denied his claim based on adrenal
adenoma.
Verily, therefore, the CA was correct in not addressing the issue of whether petitioner should be compensated
for his alleged cardiovascular disease, as it is hornbook principle that new issues cannot be raised for the
first time on appeal. The Court emphasized this rule in Tan v. Commission on Elections,10 explaining that the
rule is based on principles of fairness and due process, and is applicable to appealed decisions originating from
regular courts, administrative agencies or quasi-judicial bodies, whether rendered in a civil case, a special
proceeding, or a criminal case.11 Thus, in Otilia Sta. Ana v. Spouses Leon and Aurora Carpo,12 it was stated
that courts must refrain from entertaining an issue raised by a petitioner for the first time on appeal.
Clearly, petitioner's failure to emphasize before the GSIS and the ECC the issue of whether he may be
compensated for his alleged cardiovascular disease is fatal to his case, for by this omission, he is deemed to
have waived such issue.13
Although the Court commiserates with petitioner's sufferings, the Court cannot close its eyes to the need to
ensure that the workmen's trust fund is protected from depletion due to claims for illnesses which may not be
truly work-related. Thus, the Court emphasizes once again its admonition in Government Service Insurance
System v. Cuntapay,14 to wit:
x x x with prudence and judicial restraint, a tribunals zeal in bestowing compassion should yield to the precept
in administrative law that absent a showing of grave abuse of discretion, courts are loathe to interfere
with and should respect the findings of quasi-judicial agencies in fields where they are deemed and
held to be experts due to their special technical knowledge and training. Compassion for the victims of
diseases not covered by the law ignores the need to show a greater concern for the trust fund to which the tens

and millions of workers and their families look for compensation whenever covered accidents, diseases and
deaths occur.15
IN VIEW OF THE FOREGOING, the petition is DENIED for lack of merit. The Decision dated June 30, 2003
and the Resolution dated February 9, 2004 of the Court of Appeals in CA-G.R. SP No. 69255 are
hereby AFFIRMED. No costs.
SO ORDERED.

GOVERNMENT SERVICE
INSURANCE SYSTEM,
Petitioner,

G.R. No. 176832

Present:

PUNO, C.J., Chairperson,


- versus -

CARPIO,
CORONA,
LEONARDO-DE CASTRO, and
BERSAMIN, JJ.

MARIAN T. VICENCIO,
Respondent.

Promulgated:
May 21, 2009

x------------------------------------------------x

DECISION

PUNO, C.J.:
This is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of
Court seeking to reverse and set aside the Decision[2] of the Court of Appeals (CA)
in CA-GR SP No. 74790 which set aside the Decision[3] of the Employees
Compensation Commission (ECC) in ECC Case No. GM-14245-702. The ECC denied
respondent Marian T. Vicencios (Mrs. Vicencios) claim for the death benefits of
her husband, the late Judge Honorato S. Vicencio (Judge Vicencio).

The facts are established.

Judge Vicencio entered government service in 1964 as a Legal Researcher of


the Development Bank of the Philippines (DBP). In 1966, after passing the bar
examinations, he became an Assistant Attorney. He rose from the ranks until he
was promoted to Senior Bank Attorney, which position he held until his
retirement from DBP in 1985.

In 1987, Judge Vicencio re-entered government service as Assistant Fiscal


for the City of Manila. In 1992, he was appointed as Judge of Branch 27,
Metropolitan Trial Court of Manila. In 1999, he was appointed as Regional Trial
Court (RTC) Judge of Branch 17, Manila and served as such until his death in
2001.

Records[4] show that on November 30, 2000, Judge Vicencio suffered loss of
consciousness due to pericardial effusion. He was admitted at
the Makati Medical Centerwhere he was diagnosed with Adenocarcinoma of the
Left Lung with Metastases to Pedicardium. He underwent intravenous
chemotherapy. He was confined from November 30, 2000 to May 7, 2001.

On May 31, 2001, Judge Vicencio died. Per his Death Certificate,[5] the
immediate cause of his death was Cardiopulmonary Arrest, and the antecedent

cause was T/C Fatal Arrythmia. No underlying cause of death was indicated in his
Death Certificate. He was survived by his wife, respondent Mrs. Vicencio, and
daughter, Mary Joy Celine Vicencio.

Respondent Mrs. Vicencio applied for the death benefits of her late husband
with petitioner Government Service Insurance System (GSIS) but her application
was denied by Mr. Marcelino S. Alejo, Manager of the GSIS Employees
Compensation Department, on the ground that the illness which caused Judge
Vicencios death is not considered an occupational disease and there is no
showing that his work as RTC Judge has increased his risk of contracting said
ailment.[6] Respondent Mrs. Vicencio filed a motion for reconsideration, but the
same was denied.[7]

On June 17, 2002, respondent Mrs. Vicencio appealed to the ECC but the
same was dismissed.[8]

Respondent Mrs. Vicencio filed a petition for review under Rule 43 of the
Rules of Court with the CA. The CA reversed and set aside the Decision of the ECC
as follows:

WHEREFORE, premises
considered,
this
Petition
is GRANTED. The Decision of the Employees Compensation
Commission, dated November 6, 2002, in ECC Case No. GM-14245-702
is hereby REVERSED and SET ASIDE. The GSIS is ORDERED to grant the
claim for the death benefits of Judge Honorato S. Vicencio under
the Employees Compensation Act. No costs.[9]

Petitioner GSIS filed a motion for reconsideration, but the same was denied
by the CA in its Resolution dated February 26, 2007.[10]

Hence, this Petition.

The sole issue is whether or not respondent Mrs. Vicencios claim for death
benefits under Presidential Decree No. 626 (P.D. No. 626), as amended, is
compensable.

Petitioner GSIS argues that based on the medical records in this case, Judge
Vicencios underlying cause of death was Adenocarcinoma of the Lungs with
Metastases. According to petitioner GSIS, the cause of death stated in his Death
Certificate, Cardiopulmonary Arrest T/C Fatal Arrythmia, was a mere complication
of his lung cancer. However, the attending physician did not fill up the portion on
the Death Certificate to indicate that the underlying cause (which was left in
blank) was Adenocarcinoma of the Lungs with Metastases. Adenocarcinoma of
the Lungs is not an occupational disease listed under the law. Pursuant to Annex
A of the Amended Rules on Employees Compensation, lung cancer is
occupational only with respect to vinyl chloride workers and plastic
workers. According to petitioner GSIS, respondent Mrs. Vicencio failed to show
by substantial evidence that the risk of contracting the same was increased by his
working
conditions.

On the one hand, respondent Mrs. Vicencio contends that per the Death
Certificate of her husband, the cause of his death was Cardiopulmonary Arrest
T/C Fatal Arrythmia. According to respondent Mrs. Vicencio, the CA correctly
found that the requisites for cardiovascular disease to be compensable under
paragraph (r) of ECC Resolution No. 432[11] were satisfied; hence, the death of her
husband is compensable.

Respondent Mrs. Vicencio adds that assuming only lung cancer was the
cause of death of her husband, the same is still compensable. She argues that the
CA correctly held that the nature of work and the corresponding difficulties

brought about by Judge Vicencios duties and work contributed to the


development of his illness.

We affirm the decision of the CA.

P.D. No. 626, as amended, defines compensable sickness as "any illness


definitely accepted as an occupational disease listed by the Commission, or any
illness caused by employment subject to proof by the employee that the risk of
contracting the same is increased by the working conditions." Under Section 1
(b), Rule III, of the Amended Rules on Employees' Compensation, for the sickness
and the resulting disability or death to be compensable, the same must be an
"occupational disease" included in the list provided (Annex "A"), with the
conditions set therein satisfied; otherwise, the claimant must show proof that the
risk of contracting it is increased by the working conditions. Otherwise stated, for
sickness and the resulting death of an employee to be compensable, the claimant
must show either: (1) that it is a result of an occupational disease listed under
Annex "A" of the Amended Rules on Employees' Compensation with the
conditions set therein satisfied; or (2) if not so listed, that the risk of contracting
the disease is increased by the working conditions.

First, we hold that the CA correctly considered Cardiopulmonary Arrest T/C


Fatal Arrythmia in this case a cardiovascular disease a listed disease under
Annex A of the Amended Rules on Employees Compensation.

The Death Certificate of Judge Vicencio clearly indicates that the cause of
his death is Cardiopulmonary Arrest T/C Fatal Arrythmia. Whether, however, the
same was a mere complication of his lung cancer as contended by petitioner GSIS
or related to an underlying cardiovascular disease is not established by the
records of this case and, thus, remains uncertain.
It must be remembered that P.D. No. 626, as amended, is a social
legislation whose primordial purpose is to provide meaningful protection to the
working class against the hazards of disability, illness and other contingencies

resulting in the loss of income. Thus, the official agents charged by law to
implement social justice guaranteed by the Constitution should adopt a liberal
attitude in favor of the employee in deciding claims for compensability especially
where there is some basis in the facts for inferring a work-connection with the
illness or injury, as the case may be. It is only this kind of interpretation that can
give meaning and substance to the compassionate spirit of the law as embodied
in Article 4 of the New Labor Code which states that all doubts in the
implementation and interpretation of the provisions of the Labor Code including
their implementing rules and regulations should be resolved in favor of labor. [12]

Guided by this policy, we therefore hold that Cardiopulmonary Arrest T/C


Fatal Arrythmia, the cause of death stated in Judge Vicencios Death Certificate,
should be considered as a cardiovascular disease - a listed disease under Annex
A of the Amended Rules on Employees Compensation.

Considering the stress and pressures of work inherent in the duties of a


judge and it was established that Judge Vicencio was doing work in his office a
few days immediately before the moment of his cardiac arrest,[13] we sustain the
findings of the CA that the requisites for cardiovascular disease to be
compensable under paragraph (r) of ECC Resolution No. 432 are satisfied in the
case at bar.

Granting, however, that the only cause of Judge Vicencios death is lung
cancer, we are still one with the CA in its finding that the working conditions of
the late Judge Vicencio contributed to the development of his lung cancer.
It is true that under Annex A of the Amended Rules on Employees
Compensation, lung cancer is occupational only with respect to vinyl chloride
workers and plastic workers. However, this will not bar a claim for benefits under
the law if the complainant can adduce substantial evidence that the risk of
contracting the illness is increased or aggravated by the working conditions to
which the employee is exposed to.

It is well-settled that the degree of proof required under P.D. No. 626 is
merely substantial evidence, which means, "such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion." What the
law requires is a reasonable work-connection and not a direct causal relation. It is
enough that the hypothesis on which the workman's claim is based is probable.
Medical opinion to the contrary can be disregarded especially where there is
some basis in the facts for inferring a work-connection. Probability, not certainty,
is the touchstone.[14] It is not required that the employment be the sole factor in
the growth, development or acceleration of a claimants illness to entitle him to
the benefits provided for. It is enough that his employment contributed, even if
to a small degree, to the development of the disease.[15]

The late Judge Vicencio was a frontline officer in the administration of


justice, being the most visible living representation of this country's legal and
judicial system.[16] It is undisputed that throughout his noble career from Fiscal to
Metropolitan Trial Court Judge, and, finally, to RTC Judge, his work dealt with
stressful daily work hours, and constant and long-term contact with voluminous
and dusty records. We also take judicial notice that Judge Vicencios workplace
at the Manila City Hall had long been a place with sub-standard offices of judges
and prosecutors overflowing with records of cases covered up in dust and are
poorly ventilated. All these, taken together, necessarily contributed to the
development of his lung illness.

The case of Dator v. Employees Compensation Commission[17] should be


instructive:
Until now the cause of cancer is not known. Despite this fact,
however, the Employees' Compensation Commission has listed some
kinds of cancer as compensable. There is no reason why cancer of the
lungs should not be considered as a compensable disease. The
deceased worked as a librarian for about 15 years. During all that
period she was exposed to dusty books and other deleterious
substances in the library under unsanitary conditions. (eiomphasis
added)

On a final note, it bears stressing that the late Judge Vicencio worked in the
government for a total of 37 years.[18] He is survived by his wife, respondent Mrs.
Vicencio, and a daughter. Their claim for death benefits has been pending since
2001. As the public agency charged by law in implementing P.D. No. 626,
petitioner GSIS should not lose sight of the fact that the constitutional guarantee
of social justice towards labor demands a liberal attitude in favor of the employee
in deciding claims for compensability.

IN VIEW WHEREOF, the petition is DENIED. The decision of the Court of


Appeals is affirmed. No costs.

SO ORDERED.
GOVERNMENT
SYSTEM (GSIS),

SERVICE

INSURANCE

G.R. No. 173049

Petitioner,
Present:
PUNO, C.J., Chairperson,
CARPIO,
CORONA,
- versus -

LEONARDO-DE CASTRO, and


BERSAMIN, JJ.

Promulgated:

TERESITA
GUZMAN,

S.

DE

May 21, 2009

Respondent.

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION
PUNO, C.J.:

For resolution is a petition for review on certiorari under Rule 45 seeking to


reverse and set aside the Decision[1] of the Court of Appeals in CA-G.R. SP No.
91046, which overturned the Decision[2] of the Employees Compensation
Commission (ECC) in ECC Case No. GM-16855-0214-05 affirming the denial by the
GSIS of respondents claim under Presidential Decree (P.D.) No. 626, as amended,
for reimbursement of her medical expenses incurred in the operation of her left
eye due to cataract.

Respondent Teresita S. De Guzman, 53 years old, joined the Public


Attorneys Office (PAO) as Citizens Attorney I in April 1988. [3] After three months,
she was promoted to Citizens Attorney II, and in November 1997, she was
promoted to Public Attorney III.[4] A year thereafter, respondent was promoted to
the position of Section Chief/supervisor of section C at the Special and
Appealed Cases Division.[5] In May 2004, she transferred to the Field Services and
Statistics Division of the PAO.[6]

Respondents medical history reveals that she was diagnosed with


hyperthyroidism in 1992, and in 1997, with hypertension. In 1999, respondent
was diagnosed with diabetes mellitus, type 2.

During a routine visit to her nephrologist/endocrinologist, Dr. Romulo


Ramos, at the University of the East-Ramon Magsaysay Medical Center,
respondent was referred to ophtalmologist Dr. Rizalino Jose Felarca for an eye
check-up. Upon examination on June 15, 2002, it was discovered that respondent
had near mature cataract OD and an immature cataract OS.[7]

After further examination, respondent decided to undergo a cataract


extraction procedure to be performed by Dr. Harvey S. Uy of the Asian Eye
Institute in Makati City. In preparation for said procedure, Dr. Uy asked
respondents endocrinologist, Dr. Romulo Ramos, and cardiologist, Dr. Norbert
Uy, for endocrine and cardio-pulmonary clearance, respectively.[8] His referral
letter to Dr. Ramos read:
Dear Dr. Ramos:
Ms. De Guzman has mature cataract, left eye from diabetes. She wants
to undergo cataract extraction left eye under local with sedation.
I am referring her back to you for endocrine clearance. Thank you.

(signed)
Harvey S. Uy, M.D.[9]

On the other hand, Dr. Uys referral letter to respondents cardiologist read:
Dear Dr. Uy:

We are refererring Ms. Teresita Guzman for cardiopulmonary clearance.


She wishes to undergo cataract extraction, left eye under local with
sedation. Thank you.
(signed)
Harvey S. Uy, M.D.[10]

After the necessary medical clearances were given, respondent's cataract


was successfully extracted on August 22, 2004 at the Asian Eye Institute.

On October 27, 2004, respondent filed with petitioner a claim for medical
reimbursement in the amount of P40,000.000 under the Employees'
Compensation Law (P.D. No. 626, as amended). In her letter to petitioner,
respondent insisted that [my] ailment was work-related although some doctors
say it was caused by [my] diabetes.[11] She pointed out that inasmuch as her eye
developed a cataract due to decades of use and abuse from reading voluminous
law books, commentaries, transcripts of stenographic notes and pleadings, she
should be entitled to her claim for reimbursement.[12]

On December 14, 2004, petitioner denied respondent's claim, reasoning


that cataract is associated with aging, diabetes mellitus, genetic abnormalities
and trauma in the eyes, but not with decades of reading. Moreover, petitioner
found no concrete and substantial proof that the illness was directly caused by
respondent's performance of her daily duties.

On appeal, the ECC affirmed the findings of petitioner denying respondent's


claim. Per the decision, respondents ailment was not included in the exclusive list
of compensable occupational diseases under the Amended Rules on Employees
Compensation.[13] Likewise, the ECC found that respondent's ailment could not be
categorically attributed to her working conditions because of the presence of
another major causative factor respondent's diabetes.[14] Dissatisfied with the

decision of the ECC, respondent filed a petition for review before the Court of
Appeals.

In its decision promulgated on June 7, 2006, the Court of Appeals reversed


the ECC, reasoning that petitioner had clearly demonstrated and explained
through substantial evidence how her cataract was effectively affected because of
the readings she had to do in relation to her work. [15] Further, it noted that
notwithstanding the abandonment of the presumption of compensability
established by the old law, the present law has not ceased to be a social
legislation, and that therefore, all doubts must be resolved in favor of the
claimant.

Dissatisfied, petitioner comes before us arguing that the Court of Appeals


erred in granting respondent's claim in the face of evidence that the latter's
cataract was caused, not by her work but, by her diabetes.

We deny the petition.

Respondent is claiming reimbursement under Articles 185, 189 and 190[16] of


P.D. No. 626, as amended, for expenses incurred in her cataract extraction
procedure.[17]According to the Amended Rules on Employees Compensation
implementing P.D. No. 626, as amended, [f]or the sickness and the resulting
disability or death to be compensable, the sickness must be the result of an
occupational disease listed under Annex A of these Rules with the conditions set
therein satisfied, otherwise, proof must be shown that the risk of contracting the
disease is increased by the working conditions.[18] Stated otherwise, in order for
a sickness to be compensable, it must have resulted from any illness which is (a)
definitely accepted as an occupational disease or (b) caused by employment,
subject to proof that the risk of contracting the same is increased by working
conditions.[19]

The List of Occupational and Compensable Diseases provided under P.D. No.
626 only allows for the compensation of a specific kind of cataract, viz.:
[20]

Occupational Diseases
xxx xxx xxx
Cataract produced by exposure to the glare of,
or rays from molten glass or molten or red hot
metal.
xxx xxx xxx

Nature of Employment
xxx xxx xxx
Frequent and prolonged exposure to the glare of
or rays from molten glass or red hot metal.

xxx xxx xxx

As the ECC explained, the cataract compensable under the law is limited to what
is known as glass blowers cataract common among furnace men, glass blowers,
bakers, blacksmiths, foundry workers, and other workers exposed to infrared
rays.[21] However, inasmuch as respondents illness does not squarely fall within
the abovementioned category, respondent is still not precluded from claiming
reimbursement as she has proven the merit of her claim by showing that her risk
of contracting cataracts was increased by her working conditions.
The degree of proof required under P.D. No. 626 is merely substantial
evidence, or "such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion.[22]
We have repeatedly held that to prove
compensability, the claimant must adequately show that the development of the
disease is brought largely by the conditions present in the nature of the
job.[23] What the law requires is a reasonable work-connection and not a direct
causal relation.[24] It is enough that the hypothesis on which the workmen's claim
is based is probable.[25] Medical opinion to the contrary can be disregarded
especially where there is some basis in the facts for inferring a workconnection.[26] Probability, not certainty, is the touchstone. [27]
Respondent's theory hinges on her contention that her cataract was a result
of decades of use and abuse to which her eyes were subjected in
connection with her job as a public attorney. In support thereof, respondent cites
Healthy Women, Healthy Lives, A Guide to Preventing Diseases from the
Landmark Nurse's Health Study, thus:

A cataract is the gradual clouding of the eye's lens. The rigid disc of protein sits near the
front of the eye, right behind the pupil. Its job is to focus light onto the retina, the light
sensitive tissue that lines the back of the eye. In a child, the lens is crystal clear.
Unfortunately, decades of use and abuse can change that. Sunlight, cigarette smoke,
and other noxious agents can damage the proteins in the lens, often by generating free
radicals. These are highly reactive particles that damage many of our tissues.[28]

Respondents hypothesis that her years of reading thick appellate pleadings


and documents can serve as basis for inferring a probable nexus between
respondents illness and the nature of respondents work as a causative factor.
Hence, we find the said work-connection herein reasonable despite findings that
respondents cataract was caused by her diabetes.
Moreover, we are well to be reminded that P.D. No. 626 still stands as a
social legislation. As we expressed in Salalima v. ECC:
P.D. 626, as amended, is said to have abandoned the presumption of
compensability and the theory of aggravation prevalent under the Workmens
Compensation Act. Despite such abandonment, however, the present law has not
ceased to be an employees compensation law or a social legislation; hence, the
liberality of the law in favor of the working man and woman still prevails, and the
official agency charged by law to implement the constitutional guarantee of social
justice should adopt a liberal attitude in favor of the employee in deciding claims
for compensability, especially in light of the compassionate policy towards labor
which the 1987 Constitution vivifies and enhances.[29]

Therefore, considering the reasonable work-connection herein proven and


respondents plight as a government lawyer who has dedicated the best years of
her life to public service, we deem it proper to give full effect to the humanitarian
spirit of the law.

of

IN VIEW WHEREOF, the instant petition is DENIED. The decision of the Court
Appeals dated June 7, 2006 is hereby AFFIRMED. No costs

SO ORDERED.
JOSE SANTOS,

G.R. No. 158071


Petitioner,
Present:
PUNO, C.J., Chairperson
YNARES-SANTIAGO,*
CARPIO,
CORONA, and
LEONARDO-DE CASTRO, JJ.

-versus-

COMMITTEE ON CLAIMS
SETTLEMENT, andGOVERNMENT
SERVICE INSURANCE SYSTEM
(GSIS),
Respondents.

Promulgated:
April 2, 2009

x-----------------------------------------------------------------------------------------x

DECISION
LEONARDO-DE CASTRO, J.:
Before us is a petition for review on certiorari assailing the Decision[1] dated
January 6, 2003, and Resolution[2] dated April 22, 2003 of the Court of Appeals
(CA) in CA-G.R. SP No. 65163, entitled Jose Santos v. Committee on Claims
Settlement and Government Service Insurance System (GSIS).
The facts are as follows:
On August 16, 1986, petitioner Jose S. Santos retired from the Department
of Agrarian Reform (DAR) pursuant to Republic Act (R.A.) 1616 [3] after rendering
almost 21 years of service.
On January 2, 1989, petitioner was re-employed in the Office of the Deputy
Ombudsman for Luzon.

In 1997, petitioner initiated moves to avail of early retirement under R.A.


660. He requested and received from the Government Service Insurance System
(GSIS) Operating Unit a tentative computation of retirement benefits under R.A.
660 amounting to P667,937.40. Petitioner formally applied for retirement under
R.A. 660 in January 1998.
[4]

However, in a Letter[5] dated May 4, 1998, the GSIS Operating Unit


informed petitioner that he could no longer retire under R.A. 660 but he could do
so under R.A. 8291,[6] under which petitioner is entitled to a reduced benefit
of P81,557.20. This computation did not consider petitioners 20.91553 years of
service with the DAR prior to his previous retirement.
Petitioner appealed to respondent GSIS Committee on Claims.
Unfortunately, respondent affirmed the GSIS Operating Units computation under
R.A. 8291.
On August 25, 1999, petitioner filed with the GSIS Board of Trustees a
complaint against respondent docketed as GSIS Case No. 002-99.
On February 15, 2000, the GSIS Board of Trustees rendered a
decision[7] denying petitioners complaint, thus:
WHEREFORE, judgment is hereby rendered denying Petitioner
Jose S. Santos Petition to be allowed to retire under the pension plan
under RA 660, and modifying the Resolution of the Government Service
Insurance Systems Committee on Claims Settlement adopted in its
Committee Meeting No. 158 held on September 23, 1996, insofar as it
limits Petitioners mode of retirement to that provided in RA 8291. The
Operating Unit concerned is ordered to process Petitioners retirement
effective March 21, 2000 under the gratuity retirement of RA 1616 or the
pension retirement under RA 8291 after he formally indicates which
mode he would like to avail of.
SO ORDERED.

In the meantime, on March 20, 2000, petitioner was compulsorily retired for
reaching the age of sixty-five.
Petitioner filed a motion for reconsideration of the February 15,
2000 decision of the Board of Trustees. He attached documentary evidence to his
motion which showed several retirees who were later on reemployed after their

first retirement and were allowed to choose the law under which they can again
retire. Thus, like them, he should also be allowed to retire under the law of his
choice. The GSIS Board of Trustees denied his motion for reconsideration on
March 27, 2001.
Aggrieved, petitioner filed with the CA a petition for review under Rule 43
of the 1997 Rules of Civil Procedure.
On January 6, 2003, the CA rendered the herein challenged decision
dismissing the petition for lack of jurisdiction. It ruled as follows:[8]
This Court is of the belief, however, that the focal issue raised
herein, i.e., whether or not the petitioner can choose to retire under
either Republic Act 8291 or Republic Act 660, is a pure question of
law. As such, this Court is not vested with jurisdiction to take
cognizance of this case since there is no dispute with respect to the fact
that when an appeal raised only pure question of law, it is only the
Supreme Court which has jurisdiction to entertain the same (Article
VIII, Section 5 (2) (e), 1987 Constitution; Rule 45, Rules of Court; see
also Santos, Jr. vs. Court of Appeals, 152 SCRA [1987]).
xx xxx xxx
As can be seen from both parties['] arguments, the instant
case calls for the determination of what the law is on the particular
situation of herein petitioner, i.e., whether RA 660 is applicable in
his case or only that of RA 8291, or both. Such question does not call
for an examination of the probative value of the evidence presented by
the parties because there is no dispute as to the truth or falsity of the
facts obtaining in the case.
Hence, the procedure adopted by the petitioner in this case is
improper. The proper procedure that should have been followed
was to file a petition for review on certiorari under Rule 45 of the
Rules of Court within 15 days from notice of judgment pointing out
errors of law that will warrant a reversal or modification of the
decision or judgment sought to be reviewed.
xxx xxx xxx

WHEREFORE, the instant petition is hereby DISMISSED


for lack of jurisdiction. (emphasis ours)

Petitioner filed a motion for reconsideration but the CA denied the same in
its Resolution dated April 22, 2003.
Hence, this petition for review on certiorari with the following assignment
of errors:
1. The Honorable Court of Appeals committed an error of law in holding
that CA-G.R. SP No. 65163 entitled Jose S. Santos vs. Committee on
Claims Settlement, GSIS raises only questions of law, hence the proper
remedy for petitioner is a petition for review on certiorari under Rule 45;
2. The Honorable Court of Appeals committed an error in not giving due
course to the petition as it raises questions of law only; a reading thereof
shows that factual issues are raised therein. The said dismissal left
unresolved the questions of law and facts raised in CA-G.R. SP No.
65163;
3. The Honorable Court of Appeals erred in not reversing the decision of
the GSIS of February 15, 2000, it being contrary to law.
4. The Honorable Court of Appeals erred in dismissing CA-G.R. SP No.
65163, allegedly for lack of jurisdiction.

Petitioner avers that the CA erred in dismissing his petition which raised
both questions of law and fact which are well within its jurisdiction pursuant to
Rule 43 of the 1997 Rules of Civil Procedure. According to petitioner the petition
raised factual issues which necessitated the review of the records of the reemployed retirees who were allowed by the GSIS to retire under the law of their
choice. Petitioner further avers that even if CA-G.R. SP No. 65163 raises only
questions of law, the same is still within the jurisdiction of the CA pursuant to
Section 31 of Republic Act No. 8291, which provides that appeals from any
decision or award by the Board of Trustees shall be governed by Rules 43 and 45
of the 1997 Rules of Civil Procedure.
Respondent, on the other hand, maintains that the proper remedy of
petitioner is to file a petition for review under Rule 45 and not under Rule 43, there
being only pure questions of law involved in the case. Hence, the CA correctly
dismissed the petition before it.

We deal first with the procedural issue raised by petitioner.


Rule 43 of the 1997 Rules of Civil Procedure clearly states:
Section 1. Scope. This Rule shall apply to appeals
from judgments or final orders of the Court of Tax Appeals and
from awards, judgments, final orders or resolutions of or authorized
by any quasi-judicial agency in the exercise of its quasi-judicial
functions. Among these agencies are the Civil Service Commission,
Central Board of Assessment Appeals, Securities and Exchange
Commission, Office of the President, Land Registration Authority,
Social Security Commission, Civil Aeronautics Board, Bureau of
Patents, Trademarks and Technology Transfer, National Electrification
Administration,
Energy
Regulatory
Board,
National
Telecommunications Commission, Department of Agrarian Reform
under Republic Act 6657, Government Service Insurance System,
Employees Compensation Commission, Agricultural Inventions Board,
Insurance Commission, Philippine Atomic Energy Commission, Board
of Investments, Construction Industry Arbitration Commission, and
voluntary arbitrators authorized by law.
xxx
Section 3. Where to appeal. An appeal under this Rule may
be taken to the Court of Appeals within the period and in the manner
herein provided, whether the appeal involves questions of fact, of law,
or mixed questions of fact and law. (emphasis ours)

In Posadas-Moya and Associates Construction Co., Inc. v. Greenfield


Development Corporation, et al.,[9] the Court distinguished a question of law from
one of fact, thus:
A question of law exists when there is doubt or controversy on
what the law is on a certain state of facts. There is a question of
fact when the doubt or difference arises from the truth or the falsity of
the allegations of facts.
Explained the Court:

A question of law exists when the doubt or


controversy concerns the correct application of law or
jurisprudence to a certain set of facts; or when the issue
does not call for an examination of the probative value of
the evidence presented, the truth or falsehood of facts being
admitted. A question of fact exists when the doubt or
difference arises as to the truth or falsehood of facts or
when the query invites calibration of the whole evidence
considering mainly the credibility of the witnesses, the
existence and relevancy of specific surrounding
circumstances as well as their relation to each other and to
the whole, and the probability of the situation.

Thus, the question on whether petitioner can retire under RA 660 or RA


8291 is undoubtedly a question of law because it centers on what law to apply in
his case considering that he has previously retired from the government under a
particular statute and that he was re-employed by the government. These facts are
admitted and there is no need for an examination of the probative value of the
evidence presented.
As a general rule, appeals on pure questions of law are brought to this Court
since Sec. 5 (2) (e), Art. VIII of the Constitution includes in the enumeration of
cases within its jurisdiction all cases in which only an error or question of law is
involved.[10] It should not be overlooked, however, that the same provision
vesting jurisdiction in this Court of the cases enumerated therein is prefaced by the
statement that it may review, revise, reverse, modify, or affirm on appeal or
certiorari as the law or the Rules of Court may provide, the judgments or final
orders of lower courts in the cases therein enumerated.[11] Rule 43 of the 1997
Rules of Civil Procedure constitutes an exception to the aforesaid general rule on
appeals. Rule 43 provides for an instance where an appellate review solely on a
question of law may be sought in the CA instead of this Court.
Undeniably, an appeal to the CA may be taken within the reglementary
period to appeal whether the appeal involves questions of fact, law, or mixed
questions of fact and law. As such, a question of fact or question of law alone or
a mix question of fact and law may be appealed to the CA via Rule 43. Thus,
in Carpio v. Sulu Resources Development Corporation,[12] we held:
According to Section 3 of Rule 43, [a]n appeal under this Rule
may be taken to the Court of Appeals within the period and in the

manner herein provided whether the appeal involves questions of fact, of


law, or mixed questions of fact and law. Hence, appeals from quasijudicial agencies even only on questions of law may be brought to
the CA. (emphasis ours)

However, a remand of the case to the CA would serve no useful purpose,


since the core issue in this case, i.e., under which law petitioner can retire, can
already be resolved based on the records of the proceedings before the GSIS. A
remand would unnecessarily impose on the parties the concomitant difficulties and
expenses of another proceeding where they would have to present the same
evidence and arguments again. This clearly runs counter to the Rules of Court,
which mandates liberal construction of the Rules to attain just, speedy and
inexpensive disposition of any action or proceeding. [13]
We now discuss petitioners arguments on the merits.
It is well settled that the construction given to a statute by an administrative
agency charged with the interpretation and application of that statute is entitled to
great respect and should be accorded great weight by the courts. [14] In the case at
bar, this Court finds that the GSIS ruling as to which retirement law is applicable
to petitioner deserves full faith and credit. Petitioner fails to convince us that there
are justifiable reasons to depart from the GSIS decision in his case.
As pertinently discussed by the GSIS Board of Trustees, the grant of the
right to choose a mode of retirement in Presidential Decree (P.D.) No. 1146 is
found in Section 13. It was reproduced in Section 11 (c), Rule IV of the
Implementing Rules and Regulations on the Revised GSIS Act of 1977, adopted by
the Systems Board of Trustees pursuant to Board Resolution 223-78, stating that:
(c) Employees who were in the government service at the time of the
effectivity of Presidential Decree No. 1146 shall, at the time of their retirement, have
the option to retire under said Decree or under Commonwealth Act No. 186, as
previously amended.

On August 28, 1980, the GSIS Board of Trustees, in Board Resolution No.
583-80, adopted the following amendment to Section 11 (c), Rule IV of the
Implementing Rules for PD 1146, upon the recommendation of the Committee on
Gray Areas:
(c) Employees who were in the government service at the time of the
effectivity of PD 1146 shall at the time of their retirement have the option to

retire under said Decree or under CA 186 as previously amended Provided, that
in the event the member is reinstated in the service after having exercised the
option to retire under RA 1616 he shall subsequently be retireable under PD 1146
only.

On July 19, 1985, P.D. No. 1981 was promulgated amending Section 13 of
PD 1146 as follows:
Sec. 13. Retirement Option. Employees who are in the government
service upon the effectivity of this Act shall, at the time of their retirement, have
the option to retire under this Act or under Commonwealth Act No. 186, as
amended, and their benefits and entitlement thereto shall be determined in
accordance with the provisions of the law so opted: Provided, however, That in
the event of re-employment, the employees subsequent retirement shall be
governed by the provisions of this Act: Provided further, That the member may
change the mode of his retirement within one year from the date of his retirement
in accordance with such rules and regulations as may be prescribed by the
System. x x x (emphasis ours)

Clearly, the option to retire is preserved under PD 1146 for those who were
in the government service upon its effectivity in view of the rule on nonimpairment of benefits. There is an apparent gray area when an employee who was
in the government service upon the effectivity PD 1146 but opted to retire under
one of the previous retirement laws. Once reinstated, are they still entitled, upon
reinstatement, to exercise the option to again retire under the old law?
The GSIS Board of Trustees, in agreement with the Committee on Claims
Settlement concluded that Mr. Santos right to choose the law under which he
would retire and be covered by R.A. 660 is no longer available to him because he
had already exercised said right when he availed of it during his previous
retirement in 1986. In 1986, he chose to forego the benefits of R.A. 660 and
retired under R.A. 1616.
When petitioner first retired in 1986, the applicable law to his situation was
P.D. 1146 as amended by P.D. 1981. Section 13 of that law (upon which petitioner
himself bases his right to choose the law to govern his retirement) expressly states
that in the event of re-employment the subsequent retirement shall be governed by
P.D. 1146.
Even the Government Corporate Counsel supported such view through its
Opinion No. 100, Series of 1981, stating that in the event the member is reinstated

in the service after having exercised the option to retire under RA 1616, he shall
subsequently be retireable under PD 1146 only.
All employees of the government are covered by PD 1146 upon its
effectivity. Only employees who are in the government service upon the
effectivity of the said law who shall have, at the time of retirement, the option to
retire under the old law or CA 186 (otherwise known as the Government Service
Insurance Act, or the GSIS Charter) are exempt from the coverage of PD 1146.
The foregoing applies notwithstanding the rule in Section 44 on nonimpairment of benefits that have become vested under the old law. Pursuant to the
rule on prospectivity of laws, employees who have previously retired under CA
186 and were reinstated after the effectivity of the new law are already covered by
the new law, not because they are deemed new or original employees, but by mere
prospective operation of the new law in force at the time they reentered the service.
The same view was shared by the Government Corporate Counsel, in its
Opinion No. 154, Series of 1997, dated July 14, 1997, when it ruled that the
legislature intended to withhold the availability of retirement option from those
who have been re-employed and are retiring for the second time. If the intent was
otherwise, then the said proviso should have also expressly stated so and/or said
proviso should not have been included at all. It stated, thus:
One of the purposes for the passage of P.D. 1981 is to clarify the
parties to whom the retirement option in Section 13 of P.D. 1146 is
available, thus:
WHEREAS, there have been conflicting interpretations of
certain provisions of Presidential Decree No. 1146, particularly as for
whether or not elective public officials are covered by the GSIS for the
duration of their term of office; whether or not a public officer or
employee who is separated for cause or considered resigned
automatically forfeits his retirement benefits; andwhether or not public
officers and employees in the government service at the time Presidential
Decree No. 1146 took effect have the option of retiring under the said
Decree or Commonwealth Act No. 186, as amended:
WHEREAS, conflicting claims for benefits have invariably been
filed under the different laws administered by the GSIS, which have
oftentimes resulted in unnecessary litigation, delay and inconvenience on
the part of the rightful claimants.
xxx

WHEREAS, it has thus become necessary to amend Presidential


Decree No. 1146 to clarify some of its provisions to make it more
responsive to the needs of the members of the GSIS and to assure the
actuarial solvency of the Funds administered by the GSIS during these
times of grave economic crisis affecting the country. (Underscoring
ours)

With this legislative purpose in mind, the amendment of Section


13 of P.D. 1981, to include a proviso that in the event of re-employment
of a member his subsequent retirement shall be governed by P.D. 1146,
shows the clear legislative intent to withhold the availability of
retirement option from those who have been re-employed and are
retiring for the second time. If the intent was otherwise, then the said
proviso should have also expressly stated so and/or said proviso should
not have been included at all.
Thus, the last proviso in Section 13 of P.D. 1146, as amended,
granting the right to change the mode of retirement within one year, may
not be considered as referring to the immediately preceding section,
which is the proviso stating that subsequent retirements shall be
governed by P.D. 1146. Such interpretation would only render both
provisos inconsistent and conflicting with one another and effectively
meaningless because even if the first proviso removes the option, the
second proviso prescribes the period by which the option may be
exercised. It has been held that statutes must be interpreted in such a
way as to give a sensible meaning to the language of the statutes and
thus avoid non-sensical or absurd results (People vs. Duque, 212 SCRA
607; Automatic Parts and Equipment vs. Lingad, 30 SCRA 247, as cited
in Agpalo, op. Cit., pp. 114-115). Thus, a better and more sensible
interpretation of Section 13 of P.D. 1146 as amended is that the last
proviso refers to the first part of the section which states to whom the
option is given. In other words, government employees who are in the
service at the time of the effectivity of P.D. 1146 have the option to
retire under CA 186 or P.D. 1146 and if said option is exercised, they
may change the mode of retirement chosen or opted within one year
from date of retirement. Once the retired employees are however reemployed, they shall subsequently retire only under P.D. 1146.

Further, this Court notes that when petitioner formally applied for retirement
in 1998 R.A. 8291 which amended P.D. 1146 was already in force and it was
indubitably the law applicable to his second retirement. In contrast, the examples

of subsequent retirements of re-employed government employees cited by


petitioner were all prior to the effectivity of R.A. 8291.
Significantly, Section 3 of R.A. 8291 provides:
SEC. 3. Repealing Clause. - All laws and any other law or parts of law
specifically inconsistent herewith are hereby repealed or modified
accordingly: Provided, That the rights under the existing laws, rules and
regulations vested upon or acquired by an employee who is already in
the service as of the effectivity of this Act shall remain in force and
effect: Provided, further, That subsequent to the effectivity of this
Act, a new employee or an employee who has previously retired or
separated and is reemployed in the service shall be covered by the
provisions of this Act. (emphasis ours)

In addition, Section 10 (b) of P.D. 1146, as amended by R.A. 8291, states:


(b) All service credited for retirement, resignation or separation
for which corresponding benefits have been awarded under this Act or
other laws shall be excluded in the computation of service in case of
reinstatement in the service of an employer and subsequent
retirement or separation which is compensable under this Act.
As such, we find nothing objectionable in the following provisions of the
GSIS the Rules and Regulations Implementing R.A. 8291 which provides:
Section 8.6. Effect of Re-employment. When a retiree is reemployed, his/her previous services credited at the time of his/her
retirement shall be excluded in the computation of future benefits. In
effect, he/she shall be considered a new entrant. (emphasis ours)

Additionally, Section 5.2 of the same implementing rules states that all
service credited for retirement, resignation or separation for which corresponding
benefits have been awarded shall be excluded in the computation of service in case
of re-employment.
As a re-employed member of the government service who is retiring during
the effectivity of RA 8291, petitioner cannot have his previous government service
with the DAR credited in the computation of his retirement benefit. Neither can he
choose a mode of retirement except that provided under R.A. 8291.

All told, even if we find that the CA committed reversible error when it
dismissed for lack of jurisdiction the petition filed before it, we see no reason to
deviate from the findings of the GSIS. Hence, the instant petition must necessarily
fail.
WHEREFORE, the petition is hereby DENIED.
SO ORDERED.
GOVERNMENT SERVICE INSURANCE
SYSTEM (GSIS),
Petitioner,

G.R. No. 171378

Present:

QUISUMBING, J., Chairperson,


- versus -

CARPIO MORALES,
VELASCO, JR.,
LEONARDO-DE CASTRO,and

MARIA TERESA S.A. CORDERO,

BRION, JJ.

Respondent.
x------------------------x

EMPLOYEES
COMMISSION,

COMPENSATION

Petitioner,

G.R. No. 171388

- versus -

Promulgated:
MARIA TERESA S.A. CORDERO,
Respondent.

March 17, 2009

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION
QUISUMBING, J.:
These consolidated petitions for review on certiorari assail the
Decision[1] dated February 3, 2006 of the Court of Appeals in CA-G.R. SP No.
74399, which reversed and set aside the Decision[2] dated September 6, 2002 of
the Employees Compensation Commission (ECC) in ECC Case No. GM-12987-202
and granted respondent Maria Teresa S.A. Corderos claim for compensation
benefits under Presidential Decree No. 626 (P.D. No. 626),[3] as amended.
The antecedent facts are as follows:
From October 1987, Cordero occupied several contractual and casual
positions in the Government Service Insurance System (GSIS) until she was extended
a permanent appointment on May 7, 1990. On December 10, 1996, she was
promoted as Senior General Insurance Specialist,[4] her position to date.
In her post, Cordero examines insured government properties to verify the
existence of overinsurance or underinsurance, the degree of risks, correctness of
rate charged and paying capacity of the insurer; gathers situations and conditions of
insurance risks exposure and rates, previous losses and other pertinent data and
information relative to non-life insurance; inspects damaged properties and reports
the value of a claim payable to the insured, in accordance with established policies in

force; and interviews or corresponds with claimants and witnesses to determine the
extent of GSIS liability for insurance claims.[5]
From April 12 to 17, 2000, Cordero was confined at the Quezon
City Medical Center and was diagnosed with Chronic Glomerulonephritis with
Hypertension. Then, fromJune 25 to 28, 2001 and from October 10 to 14, 2001,
she was confined at St. Lukes Medical Center in Quezon City. The final diagnosis
was Chronic Renal Failure secondary to Chronic Glomerulonephritis. Also, based
on her medical records, she had hypertension since 1995.[6]
Accordingly, Cordero filed with the GSIS a claim for compensation benefits
under P.D. No. 626, as amended. She stated that in her pre-employment physical
and medical examinations, she was in perfect health when she entered GSIS in
1987. But later, she was diagnosed with hypertension, and then hospitalized in
April 2000, June 2001 and October 2001 because of Chronic Renal Failure
secondary to Chronic Glomerulonephritis.
To prove that her illness is work-connected, she presented a medical
certificate[7] dated December 6, 2001 issued by Dr. Florencio J. Pine, M.D., F.P.C.P.,
F.P.S.N., Internal Medicine, Kidney Diseases and Hypertension of
the UERM Memorial Hospital and National Kidney Institute. Dr. Pine certified that
based on the history and available diagnostic examinations, the predominant evidence
indicates that Corderos end stage renal disease is secondary to the combined damage
inflicted by the urinary tract infection and hypertension since 1995. He likewise
certified that both conditions are work-related.
Cordero also presented a Certification[8] issued by Mr. Arnulfo Q. Canivel,
Division Chief III, GSIS Claims Department, stating that [t]he nature of her work
and working conditions outside the office increased the risk and is probably a big
factor in the development of her hypertension which led to her End Stage Renal
Disease secondary to Chronic Gl[o]merulonephritis requiring three times a week
hemodialysis.
On January 16, 2002, the GSIS denied her claim on the ground that her illness is
not work-connected and her duties did not increase the risk of contracting the
same.[9] Cordero sought reconsideration, but to no avail. Aggrieved, Cordero
appealed to the ECC.

On September 6, 2002, the ECC affirmed the Decision of the GSIS and held
that:
xxxx
As Sr. General Insurance Specialist, there was no proof that she was significantly
exposed to occupational hazards that would result to kidney injury. Her job does not
involve exposure to chemicals implicated in Chronic Glomerulonephritis. Thus, the
ailment cannot be considered work-related.
WHEREFORE, the assailed decision is hereby AFFIRMED and the instant appeal
is dismissed for lack of merit.
SO ORDERED.[10]

Pursuant to Rule 43[11] of the Rules of Court, Cordero filed a petition for
review with the Court of Appeals. In its Decision dated February 3, 2006, the Court
of Appeals reversed the ECC ruling and held that Cordero contracted Chronic
Glomerulonephritis during her employment in the GSIS and that the risk of
contracting the same was increased by her working conditions. It pointed out that
in her pre-employment physical and medical examination with the GSIS in 1987,
Cordero was in perfect health condition. But sometime in 1995, she was diagnosed
with hypertension, which eventually led to the development of her End Stage Renal
Disease secondary to Chronic Glomerulonephritis. The Court of Appeals agreed
with her physician that both conditions are work-related. The fallo of the decision
reads:
WHEREFORE, premises considered, the Petition for Review is GRANTED DUE
COURSE. The Decision of the Employees Compensation Commission in ECC Case No.
GM-12987-202 approved on 06 September 2002 under Board Resolution No. 02-09-646,
is REVERSED and SET ASIDE and the Government Service Insurance System is
hereby DIRECTED to pay petitioner Maria Teresa S.A. Cordero her claim for
compensation benefits pursuant to P.D. 626, as amended. No costs.
SO ORDERED.

[12]

Hence these petitions. Petitioner GSIS raises the following issues:


I.

WHETHER THE RESPONDENTS AILMENT DENOMINATED AS CHRONIC


GLOMERULONEPHRITIS MAY BE CONSIDERED WORK-CONNECTED PURSUANT TO
SECTION 1 (B), RULE III OF THE AMENDED RULES OF P.D. NO. 626, AS AMENDED.
II.
WHETHER THE COURT OF APPEALS WAS CORRECT IN ALLOWING THE RESPONDENTS
CLAIM FOR COMPENSATION BENEFITS UNDER P.D. 626, AS AMENDED, MAINLY DUE TO
A HUMANITARIAN IMPULSE.[13]

Petitioner ECC, for its part, raises a single issue:


[WHETHER] THE COURT OF APPEALS ERRED IN CONSIDERING CHRONIC
GLOMERULONEPHRITIS AS A WORK-RELATED DISEASE AND COMPENSABLE UNDER THE
THEORY OF INCREASED RISK.[14]

In her Memorandum[15] dated February 22, 2007, covering both G.R. No.
171378 and G.R. No. 171388, respondent Cordero presents the following
statement of issues:
I.

THAT RESPONDENT WAS ABLE TO DISCHARGE THE BURDEN OF SHOWING THAT


THE RISK OF CONTRACTING HER AILMENT, CHRONIC GLOMERULONEPHRITIS, WAS
INCREASED BY HER WORKING CONDITIONS, HENCE, COMPENSABLE UNDER THE
LAW.

II.

THAT THE COMPENSABILITY OF THE CLAIM IS CONSISTENT WITH APPLICABLE


LAWS AND PREVAILING JURISPRUDENCE.

III.

THAT PRESIDENTIAL DECREE 626, AS AMENDED, IS A SOCIAL LEGISLATION THAT


MUST BE INTERPRETED AND CONSTRUED IN FAVOR OF ITS INTENDED
BENEFICIARIES.

[16]

Simply stated, the issue posed for our resolution is: Is respondents End
Stage Renal Disease secondary to Chronic Glomerulonephritis compensable under
P.D. No. 626, as amended?
GSIS contends that Chronic Glomerulonephritis is not an occupational
disease; accordingly, Cordero should adduce proof that the risk of contracting her
disease was increased by her working conditions. But Cordero failed to do so;
hence, her illness is not compensable under the law.

Cordero counters that her illness is compensable even if Chronic


Glomerulonephritis is not an occupational disease because her working conditions
increased the risk of contracting the illness. She contends that she started with the
GSIS in perfect health but years later, because of the strenuous nature of her work,
she suffered from hypertension, which eventually led to the damage of her kidney
resulting to End Stage Renal Disease.
After a careful consideration of the submissions of the parties, we are
unanimous in finding that Cordero has substantially proved her claim to
compensability.
Under Section 1(b),[17] Rule III implementing P.D. No. 626, sickness or death
is compensable if the cause is included in the list of occupational diseases
annexed to the Rules. If not so listed, compensation may still be recovered if the
illness is caused or precipitated by factors inherent in the employees work and
working conditions.[18] Here, strict rules of evidence are not applicable since the
quantum of evidence required under P.D. No. 626 is merely substantial evidence,
which means such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion.[19]
What the law requires is a reasonable work-connection and not a direct
causal relation.[20] It is sufficient that the hypothesis on which the workmens
claim is based is probable since probability, not certainty, is the touchstone. [21]
Inasmuch as Corderos disease was not listed as an occupational disease, it
is incumbent upon her to adduce substantial proof that would show that the
nature of her employment or working conditions increased the risk of End Stage
Renal Disease or Chronic Glomerulonephritis. The evidence presented by Cordero
shows that her Chronic Glomerulonephritis that led to End Stage Renal Disease
was caused by hypertension.[22]
At the onset, Cordero was given a clean bill of health and declared fit-towork when she was employed by GSIS in 1987. But in 1995, she contracted
hypertension. While End Stage Renal Disease secondary to Chronic
Glomerulonephritis is not among those enumerated as an Occupational Disease
under Annex A of the ECC Rules,[23] it is scientifically linked to hypertension, a

compensable illness.[24] Hence, we cannot close our eyes to the reasonable


connection of her work vis--vis her ailment.
Years after Cordero contracted hypertension, her health condition worsened
when she was hospitalized in April 2000, June 2001 and October 2001 and she was
diagnosed as having End Stage Renal Disease secondary to Chronic
Glomerulonephritis. Her attending physician certified that based on medical
examinations, her hypertension has led to the development of her End Stage Renal
Disease. In our jurisprudence, a doctors certification as to the nature of the
claimants disability normally deserves full credence because in the normal course
of things, no medical practitioner will issue certifications indiscriminately,
considering the serious and far-reaching effects of false certifications and its
implications upon his own interests as a professional.[25]
Premised on the aforementioned considerations, this Court affirms the
findings and conclusions reached by the Court of Appeals upholding Corderos
claim to compensability.
WHEREFORE, the instant petitions are DENIED. The Decision dated February
3, 2006 of the Court of Appeals in CA-G.R. SP No. 74399 is
hereby AFFIRMED. Petitioner Government Service Insurance System is
hereby ORDERED to pay respondent Maria Teresa S.A. Cordero the compensation
benefits due her under Presidential Decree No. 626, as amended.
SO ORDERED.