SIMEON M.

VALDEZ,

G.R. No. 146175

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

-versus-

GOVERNMENT SERVICE INSURANCE

SYSTEM,
Respondent.

Promulgated:
June 30, 2008

x-----------------------------------------------------------------------------------------x
DECISION

LEONARDO-DE CASTRO, J.:

Before the Court is a special civil action for certiorari under Rule 65 of the Rules of
Court, filed by petitioner Simeon M. Valdez assailing the July 31, 2000 Decision [1] of the Court
of Appeals (CA) in CA-G.R. SP No. 54870, as reiterated in its Resolution [2] of October 17,
2000, upholding the Civil Service Commissions (CSCs) January 14, 1999 Opinion and
Resolution No. 991940.

Principally, the CSC held that petitioners services rendered in the Manila Economic
Cultural Office (MECO), Mariano Memorial State University (MMSU), Philippine Veterans
Investment Development Company (PHIVIDEC) and as OIC Vice-Governor of Ilocos Norte
cannot be credited in the computation of his retirement benefits.

The facts are as follows:

On October 09, 1998, petitioner filed his application for retirement benefits with the
Government Service Insurance System (GSIS).

On November 03, 1998, petitioner filed the same application with the CSC and at the
same time, he sought the CSCs opinion on whether his two (2) years and three (3) months
stint as MECO Director can be accredited as government service among others.

In support of his claim for retirement benefits, petitioner submitted a summary of his
government service record, to wit:
SUMMARY
1. As Congressman (5th, 6th, 7th & 10th Congress) - 15 years
2. As Director of PHIVIDEC
November 1974 to March 1987 - 12 years 5 months
Sub total 27 years 5 months
3.

As Member, Board of Regents

a) INIT (1975-1977) - 3 years
b) MMSU (1978-1987) - 10 years
c) MMSU (1989-1992) - 4 years
Sub total - 17 years
============
4.

As OIC Vice-Governor Ilocos Norte

Nov. 1986-Dec. 1986 - 2 months
Jan. 1, 1987 to Mar. 1987 - 3 months
Sub total - 5 months
============
5. As Director of MECO
1 Jan. 1993 to 31 Dec. 1994 - 2 year
1 Jan. 1995 to March 1995 - 3 months
Sub total - 2 years 3months
=================
REMARKS
1.

Please note therefore that there is overlapping of my services at

PHIVIDEC & MMSU. My services of 12 years 5 months with PHIVIDEC
should be counted and only 4 years and 7 months with MMSU where
there is no overlapping.

2.

My services as OIC Governor should not be counted as I was still

with PHIVIDEC during the 6 months I served as OIC Vice-Governor.

3.

Therefore the length of service to be credited for my retirement

will cover only the following:
a) As Congressman - 15 years
b) As Director of PHIVIDEC - 12 years 5 months
c) As Board of Regent MMSU - 4 years 7 months
d) As Director of MECO - _2 years 3 months
Total - 33 years 15 months
==============

On February 23, 1999, petitioner received two mails, one from the CSC and the other
from GSIS. The letter from CSC contained the challenged January 14, 1999 Opinion [3] denying
the accreditation of petitioners services as former Director of MECO and of PHIVIDEC and as
Member of the Board of Regents of MMSU, pertinently reading as follows:
Section 2 (1), Article IX of the 1987 Constitution provides that the civil
service embraces all branches, subdivisions, instrumentalities and agencies of
the
Government, including
government-owned
or
controlled
corporations with original charters. (Underscoring Ours). Equivocably,
subsidiary corporations created under the Corporation Code are not
considered part of the Civil Service. Since MECO is a subsidiary corporation of
the government governed by its Articles of Incorporation and By-Laws,
whatever services rendered therein shall not be considered part and parcel of
government service.
xxx
We note that at the time you were still a member of the Board of
Regents of the Mariano Marcos State University (MMSU) from 1978 to 1992,
you were likewise holding the positions of Philvidic Director (November 1974March 1987) and as OIC-Vice Governor (August 1986-March 1987). As such, it
must be reiterated that a part-time employee is not entitled to leave benefits
unless he works part-time in two different government offices and renders the
required office hours. This rule has been emphasized in CSC Resolution No.
90-1087, pertinent portion of which reads as follows:
Under the Leave Law and Rules, Leave Privileges are
accorded only to regular, temporary, provisional or casual
officials and employees who are rendering full time service in an
agency or government. However, the status of appointment of
employees in the government further identify certain
specifications in the entitlement of leave privileges; hence, a
part-time employee is not entitled to leave unless he
works part-time in two different offices and renders the
required office hours (Manual of Leave Administration, p.3.2).
Thus it is completely inconceivable that members of the various
Regulatory Board of the PRC who hold concurrently other
positions in the civil service are, at the same time on full-time
basis in other positions. x x x To grant them leave benefits in
consideration of their services would be tantamount to double
compensation, the receipt of which is constitutionally
prescribed. x x x This has to be so, otherwise they would be
enjoying leave privileges over and above what is provided in the
leave Law and Rules (Valdez v. Commission on Audit: GR 87277,
25 May 1989). Besides, CSC Memorandum Circular No. 43,
series of 1989 (Retirement of Employees Holding More than One
Positions), is explicit that an appointment to a second position
must be regarded only as imposing additional duties to the
regular functions of an employee and consequently an
employee can retire only from his regular or main position and
not from his additional position.

Let is (sic) be stressed that for purposes of computation of government

service, only full-time services with compensation are included (Section 10
(b), RA 8291). Moreover, under Section 2(l) of RA 8291, compensation refers
to the basic pay or salary received by an employee, pursuant to his
election/appointment, excluding per diems, bonuses, overtime pay, honoraria,
allowances and other emoluments received in addition to the basic pay which
are not integrated into the basic pay under existing laws. (Underscoring Ours)
Premised on our answer in your first query, your services at the MECO
for 2 years and 3 months did not earn any leave credit for you.
The correspondence from the GSIS contained a Letter[4] and a Retirement Voucher
informing petitioner of the approval of his retirement benefits computed on the basis of the
CSCs opinion.

Displeased, petitioner sought reconsideration of the subject CSC opinion in a

Letter

[5]

addressed to the CSC and the GSIS. Petitioner insisted on the inclusion of his

services rendered in the MECO, PHIVIDEC and MMSU in the computation of his retirement
benefits pursuant to Sections 10 (b) and 2 (l) of Republic Act (RA) No. 8291. [6]

The GSIS indorsed[7] the Letter to the CSC with a view that the same is within the
jurisdiction of the latter.

The

CSC,

for

its

part,

rendered

Resolution

No.

991940 [8] dated August

31,

1999 denying petitioners request for reconsideration of the subject CSC opinion, thus:

WHEREFORE, the Commission hereby resolves to deny the instant

request of Simeon Valdez. Accordingly, the assailed Opinion is affirmed.

Petitioner then elevated the matter to the CA by way of petition for review
on certiorari against the CSC and the GSIS. There, petitioner argued that his services
rendered as Director of MECO should have been credited for retirement purposes and that
his salary thereat should have been the highest remuneration considered in the computation
of his retirement benefits. Petitioner likewise insisted that his respective tenures as Member
of the Board of Regents of Ilocos Norte Institute of Technology (INIT) and the MMSU, as

Director of the PHIVIDEC and as OIC Vice-Governor of Ilocos Norte be included as

government service in the computation of his retirement benefits.

On July 31, 2000, the CA rendered the herein challenged decision dismissing the
petition and affirming both the January 14, 1999 Opinion and Resolution No. 991940 of the
CSC.Dispositively, the Decision reads:

With the foregoing, the assailed CSC Opinion dated 14 January

1999 and Resolution No. 991940 dated 31 August 1999 are hereby AFFIRMED.
SO ORDERED.
Thereafter, petitioner filed a motion for reconsideration of the foregoing decision and
for the first time raised as an issue the lack of jurisdiction of the CSC and the CA over the
case.

In the resolution of October 17, 2000, the CA denied petitioners motion for
reconsideration.

Petitioner now comes to this Court via this petition for certiorari. Although the CSC
was the author of the challenged issuances which were affirmed by the CA and in fact it was
a respondent in the case below, it was not impleaded in the instant petition. Petitioner now
lays all the blame on the GSIS as he raises the following assigned errors:

I.
THE INDORSEMENT OF THE GSIS OF PETITIONERS CLAIM FOR RETIREMENT
BENEFITS TO THE CSC SUFFERS JURAL INFIRMITY AND ALL THE RESULTING
CSC PROCEEDINGS AND RESOLUTIONS THEREON ARE NULL AND VOID AB
INITIO, INCLUDING THE NOW QUESTIONED COURT OF APPEALS DECISION AND
RESOLUTION (ANNEXES A AND B), FOR LACK OF JURISDICTION.
II.
ASSUMING THAT CSC AND THE COURT OF APPEALS HAVE JURISDICTION, THE
HOLDING THAT PETITIONERS CLAIM FOR RETIREMENT BENEFITS HAD ALREADY
PRESCRIBED IS DEFINITELY A LEGAL ERROR.

III.
ASSUMING THAT CSC AND THE COURT OF APPEALS HAVE JURISDICTION, THE
DENIAL OF THE ACCREDITATION OF PETITONERS SERVICES RENDERED WITH
MECO IS PLAINLY A LEGAL ERROR.
IV.
THE LACK OF JURISDICTION EXTENDS TO THE COURT OF APPEALS AFFIRMING
THE EXCLUSION OF PETITIONERS SERVICES RENDERED WITH INIT, MMMCST,
MMSU, PHIVEDEC AND OIC VICE-GOVERNOR OF ILOCOS NORTE.
V.
THE LACK OF JURISDICTION OF THE CSC AND THE COURT OF APPEALS,
LAWLESSLY DEPRIVED PETITIONER THE RIGHT TO A RETIREMENT BENEFITS
COMPUTED AT HIS HIGHEST SALARY RATE WITH MECO.

The petition is utterly bereft of merit.

First off, petitioners argument that the GSIS violated RA No. 8291 when it indorsed
petitioners claim to the CSC for resolution is untenable. Section 10 of RA No. 8291, otherwise
known as the Government Service Insurance System Act of 1997, explicitly authorizes the
GSIS and the CSC to work hand in hand in the computation of service in the government for
the purpose of availment of the retirement benefits under the said Act. Pertinently, the said
Act provides:

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.

Besides, the petitioner himself sought the CSCs opinion on matters related to his
application for retirement. He too filed a motion for the CSC to reconsider its opinion. Surely,
the GSIS could not be faulted for merely referring his letter seeking reconsideration of the
CSC opinion which was addressed to the GSIS, stated, I respectfully seek to reconsider the
denial of the Chairman of the Civil Service Commission of the other benefits xxx. Moreover,
the GSIS action on petitioners claim relied on the CSCs Opinion.[9] Unless the CSC would
reconsider or revise its earlier opinion, which it did not, it was unlikely for the GSIS to

reconsider its previous opinion, given the statutory mandate for the said two institutions of
government to coordinate on the matter of computation of government services of retirees.

While it is a rule that jurisdictional question may be raised at any time, this, however,
admits of an exception where, as in this case, estoppel has supervened. The Court has, time
and again, frowned upon the undesirable practice of a party submitting his case for decision
and then accepting the judgment only if favorable, and attacking it for lack of jurisdiction
when adverse.[10]

Secondly, petitioner argues that the CSC and the CA erroneously held that his claim
had already prescribed. A perusal of the record shows that no such finding was ever made,
neither by the CSC in its January 14, 1999 Opinion and Resolution No. 991940 nor by the CA
in the herein challenged July 31, 2000 Decision in CA-G.R. SP No. 54870, as reiterated the
resolution of October 17, 2000.

The remaining three assigned errors being interrelated, we shall address them
together. Petitioner would have the Court reverse the CAs rejecting his assertion that his
services rendered in the MECO, MMSU, PHIVIDEC and as OIC Vice-Governor of Ilocos Norte
should be credited in the computation of his retirement benefits. We are not convinced for
two reasons. First, the assailed CA decision affirming the impugned CSC issuances is
anchored on law and jurisprudence. Thus, we quote with approval the following excerpt from
the decision of the CA:

None other than the 1987 Constitution of the Philippines, the Highest
Law of the Land, confines the scope of the civil service as embracing all the
branches, subdivisions, instrumentalities and agencies of the government,
including government-owned and controlled corporations with original
charters.
xxx
In Philippine National Company-Energy Development Corporation v.
Leogardo, 175 SCRA 26, 30 (1989), the Supreme Court categorically ruled that
under the present law, the test in determining whether a government-owned
or controlled corporation is subject to the Civil Service Law is the manner of its
creation such that government corporations created by special charter are
subject to its provision while those incorporated under the General
Corporation Law are not within its coverage.

With this in mind, the CSC was not in error in holding that:
It is noted that MECO was created before the effectivity
of the 1987 Constitution. In this regard, granting without
admitting that at the time of its incorporation (during the
effectivity of the 1973 Constitution) MECO was yet under the
coverage of the Philippine Civil Service, the appellants (i.e.,
petitioners services rendered thereat for that period, however,
still cannot be accredited as government service because at the
time of his retirement/filing of the case/complaint, the
abovequoted provision (i.e., Section 2(1), Article IX) of the 1987
Constitution has already come into effect. As held by the
Honorable Supreme Court in Lumanta, et al. vs. National Labor
Relations Commission and Food Terminal, Inc. (170 SCRA 79),
jurisdiction is determined as of the time of the filing of the
complaint.
The established rule is that the statute (in this case, the Constitution)
in force at the time of the commencement of the action determines the
jurisdiction of the court (in this case, the administrative body).
It was likewise no error for the CSC to deny accreditation of petitioners
services rendered for MMSU, PHIVIDEC and INIT, concurrently, because of the
lack of sufficient basis to compute services rendered therefor converted to
their full-time equivalent, reckoned in hours or days actually rendered, using a
Forty-(40) hour week and 52 weeks a year as basis, in accordance with
Section 5.3, Rule V of the Rules and Regulations Implementing the
Government Service Insurance System Act of 1997.

Relevantly, the last paragraph of Section 10 of RA No. 8291 dictates that for purposes
of computation of government service, only full-time services with compensation are
included:

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.

While petitioner invokes the proviso in the above-quoted provision of law, the GSIS,
which has been given the authority to include part-time services in the computation, has
pointed out that the services in the MMSU, PHIVIDEC and as OIC Vice-Governor of Ilocos
Norte cannot be credited because, aside from having been rendered part-time in said
agencies, the said positions were without compensation as defined in Section 2(i) of RA No.
8291.[11]

Petitioners insistence that the emoluments he received as MECO director be the basis
in the computation of his retirement benefits, the same being the highest basic salary rate,
is unavailing.Indeed, the salaries that he received at the time he served as MECO director
were unusually high for any position covered by the civil service. Petitioner received a
monthly pay of P40,000.00 in addition to a P65,000.00 representation and travel allowance
and US$2,500.00 per diem for overseas board meetings. The Constitution itself mandated
the standardization of compensation of government officials and employees covered by the
civil service under Article IX B, Section 5, viz:

Sec. 5. The Congress shall provide for the standardization of

compensation of government officials and employees, including those in
government-owned or controlled corporations with original charters, taking
into account the nature of the responsibilities pertaining to, and the
qualifications required for their positions.

The salary received by petitioner during his stint at MECO appears to be way beyond
that authorized by RA No. 6758,[12] otherwise known as the Salary Standardization Law. For
this reason, it is doubtful that petitioners employment with the MECO is embraced by the
civil service. Otherwise, the salary rate received by petitioner from MECO would not have
been legally feasible, unless there was a law exempting the MECO from the Salary
Standardization Law.

Finally, the instant petition purports to be a petition for certiorari under Rule 65 of the
Rules of Court. However, a cursory reading of the issues raised discloses that petitioners
arguments are not anchored on lack of jurisdiction but on questions of law which fall within
the realm of petitions for review on certiorari under Rule 45 of the Rules of Court.

It is an elementary principle that a petition for certiorari under Rule 65 cannot be

used if the proper remedy is appeal. Being an extraordinary remedy, a party can only avail
himself ofcertiorari, if there is no appeal, or any plain, speedy, and adequate remedy in the
ordinary course of law.[13] Here, appeal is the correct mode but was not seasonably utilized
by

the

petitioner.

Resort

to

this

petition

for certiorari is,

therefore,

because certiorari cannot be used as a substitute for a lost remedy of appeal.

improper
[14]

Petitions

for certiorari are limited to resolving only errors of jurisdiction. It is not to stray at will and

resolve questions or issues beyond its competence such as errors of judgment. For, it is
basic that certiorari under Rule 65 is a remedy narrow in scope and inflexible in character. It
is not a general utility tool in the legal workshop. [15]

It offers only a limited form of

review. Its principal function is to keep an inferior tribunal within its jurisdiction. It can be
invoked only for an error of jurisdiction, that is, one where the act complained of was issued
by the court, officer or a quasi-judicial body without or in excess of jurisdiction, or with grave
abuse of discretion which is tantamount to lack or in excess of jurisdiction. It is not to be
used for any other purpose, such as to cure errors in proceedings or to correct erroneous
conclusions of law or fact, as what petitioner would like the Court to venture into. A petition
for certiorari not being the proper remedy to correct errors of judgment as alleged in the
instant case, the herein petition should be dismissed pursuant to SC Circular No. 2-90. [16]

WHEREFORE, in view of the foregoing, the petition is DISMISSED and the assailed
decision and resolution of the CA are AFFIRMED. SO ORDERED.

[G.R. No. 146494. July 14, 2004]

GOVERNMENT SERVICE INSURANCE SYSTEM, Cebu City Branch, petitioner, vs.
MILAGROS O. MONTESCLAROS, respondent.
DECISION
CARPIO, J.:
The Case
This is a petition for review on certiorari of the Decision[1] dated 13 December 2000 of
the Court of Appeals in CA-G.R. CV No. 48784. The Court of Appeals affirmed the
Decision[2] of the Regional Trial Court, Branch 21, Cebu City (trial court), which held that
Milagros Orbiso Montesclaros is entitled to survivorship pension.

The Facts
Sangguniang Bayan member Nicolas Montesclaros (Nicolas) married Milagros Orbiso
(Milagros) on 10 July 1983.[3] Nicolas was a 72- year old widower when he married Milagros
who was then 43 years old.
On 4 January 1985, Nicolas filed with the Government Service Insurance System (GSIS)
an application for retirement benefits effective 18 February 1985 under Presidential Decree
No. 1146 or the Revised Government Service Insurance Act of 1977 (PD 1146). In his
retirement application, Nicolas designated his wife Milagros as his sole beneficiary. [4] Nicolas
last day of actual service was on 17 February 1985.[5]On 31 January 1986, GSIS approved
Nicolas application for retirement effective 17 February 1984, granting a lump sum payment
of annuity for the first five years and a monthly annuity thereafter. [6] Nicolas died on 22 April
1992. Milagros filed with GSIS a claim for survivorship pension under PD 1146. On 8 June
1992, GSIS denied the claim because under Section 18 of PD 1146, the surviving spouse has
no right to survivorship pension if the surviving spouse contracted the marriage with the
pensioner within three years before the pensioner qualified for the pension. [7] According to
GSIS, Nicolas wed Milagros on 10 July 1983, less than one year from his date of retirement
on 17 February 1984.
On 2 October 1992, Milagros filed with the trial court a special civil action for declaratory
relief questioning the validity of Section 18 of PD 1146 disqualifying her from receiving
survivorship pension.
On 9 November 1994, the trial court rendered judgment declaring Milagros eligible for
survivorship pension. The trial court ordered GSIS to pay Milagros the benefits due including
interest. Citing Articles 115[8] and 117[9] of the Family Code, the trial court held that
retirement benefits, which the pensioner has earned for services rendered and for which the
pensioner has contributed through monthly salary deductions, are onerous acquisitions.
Since retirement benefits are property the pensioner acquired through labor, such benefits
are conjugal property. The trial court held that the prohibition in Section 18 of PD 1146 is
deemed repealed for being inconsistent with the Family Code, a later law. The Family Code
has retroactive effect if it does not prejudice or impair vested rights.
GSIS appealed to the Court of Appeals, which affirmed the decision of the trial
court. Hence, this petition for review.
In the meantime, in a letter dated 10 January 2003, Milagros informed the Court that
she has accepted GSIS decision disqualifying her from receiving survivorship pension and
that she is no longer interested in pursuing the case. [10] Commenting on Milagros letter, GSIS
asserts that the Court must decide the case on the merits.[11]
The Court will resolve the issue despite the manifestation of Milagros. The issue involves
not only the claim of Milagros but also that of other surviving spouses who are similarly
situated and whose claims GSIS would also deny based on the proviso. Social justice and
public interest demand that we resolve the constitutionality of the proviso.

The Ruling of the Court of Appeals

The Court of Appeals agreed with the trial court that the retirement benefits are onerous
and conjugal because the pension came from the deceased pensioners salary
deductions. The Court of Appeals held that the pension is not gratuitous since it is a deferred
compensation for services rendered.

The Issues
GSIS raises the following issues:
1. Whether Section 16 of PD 1146 entitles Milagros to survivorship pension;
2. Whether retirement benefits form part of conjugal property;
3. Whether Articles 254 and 256 of the Family Code repealed Section 18 of PD 1146.
[12]

The Courts Ruling

The pertinent provisions of PD 1146 on survivorship benefits read:
SEC. 16. Survivorship Benefits. When a member or pensioner dies, the beneficiary shall be
entitled to survivorship benefits provided for in sections seventeen and eighteen hereunder.
The survivorship pension shall consist of:
(1) basic survivorship pension which is fifty percent of the basic monthly pension; and
(2) dependents pension not exceeding fifty percent of the basic monthly pension payable in
accordance with the rules and regulations prescribed by the System.
SEC. 17. Death of a Member. (a) Upon the death of a member, the primary beneficiaries
shall be entitled to:
(1) the basic monthly pension which is guaranteed for five years; Provided, That, at the
option of the beneficiaries, it may be paid in lump sum as defined in this Act: Provided,
further, That, the member is entitled to old-age pension at the time of his death; or
(2) the basic survivorship pension which is guaranteed for thirty months and the dependents
pension; Provided, That, the deceased had paid at least thirty-six monthly contributions
within the five-year period immediately preceding his death, or a total of at least one
hundred eighty monthly contributions prior to his death.
(b) At the end of the guaranteed periods mentioned in the preceding sub-section (a), the
survivorship pension shall be paid as follows:
(1) when the dependent spouse is the only survivor, he shall receive the basic survivorship
pension for life or until he remarries;
(2) when only dependent children are the survivors, they shall be entitled to the survivorship
pension for as long as they are qualified;
(3) when the survivors are the dependent spouse and the dependent children, they shall be
entitled to the survivorship pension so long as there are dependent children and, thereafter,
the surviving spouse shall receive the basic survivorship pension for life or until he
remarries.

(c) In the absence of primary beneficiaries, the secondary beneficiaries designated by the
deceased and recorded in the System, shall be entitled to:
(1) a cash payment equivalent to thirty times the basic survivorship pension when the
member is qualified for old-age pension; or
(2) a cash payment equivalent to fifty percent of the average monthly compensation for
each year he paid contributions, but not less than five hundred pesos; Provided, That, the
member paid at least thirty-six monthly contributions within the five-year
period immediately preceding his death or paid a total of at least one hundred eighty
monthly contributions prior to his death.
(d) When the primary beneficiaries are not entitled to the benefits mentioned in paragraph
(a) of this section, they shall receive a cash payment equivalent to one hundred percent of
the average monthly compensation for each year the member paid contributions, but not
less than five hundred pesos. In the absence of primary beneficiaries, the amount shall
revert to the funds of the System.
SEC. 18. Death of a Pensioner. Upon the death of a pensioner, the primary beneficiaries shall
receive the applicable pension mentioned under paragraph (b) of section seventeen of this
Act: Provided, That, the dependent spouse shall not be entitled to said pension if
his marriage with the pensioner is contracted within three years before the
pensioner qualified for the pension. When the pensioner dies within the period covered
by the lump sum, the survivorship pension shall be paid only after the expiration of the said
period. This shall also apply to the pensioners living as of the effectivity of this Act, but the
survivorship benefit shall be based on the monthly pension being received at the time of
death. (Emphasis supplied)
Under PD 1146, the primary beneficiaries are (1) the dependent spouse until
such spouse remarries, and (2) the dependent children.[13] The secondary
beneficiaries are the dependent parents and legitimate descendants except dependent
children.[14] The law defines dependent as the legitimate, legitimated, legally adopted,
acknowledged natural or illegitimate child who is unmarried, not gainfully employed, and not
over twenty-one years of age or is over twenty-one years of age but physically or mentally
incapacitated and incapable of self-support. The term also includes the legitimate spouse
dependent for support on the member, and the legitimate parent wholly dependent on
the member for support.[15]
The main question for resolution is the validity of the proviso in Section 18 of PD 1146,
which proviso prohibits the dependent spouse from receiving survivorship pension if such
dependent spouse married the pensioner within three years before the pensioner qualified
for the pension (the proviso).
We hold that the proviso, which was the sole basis for the rejection by GSIS of Milagros
claim, is unconstitutional because it violates the due process clause. The proviso is also
discriminatory and denies equal protection of the law.

Retirement Benefits as Property Interest

Under Section 5 of PD 1146, it is mandatory for the government employee to pay
monthly contributions. PD 1146 mandates the government to include in its annual
appropriation the necessary amounts for its share of the contributions. It is compulsory on
the government employer to take off and withhold from the employees monthly salaries

their contributions and to remit the same to GSIS. [16] The government employer must also
remit its corresponding share to GSIS. [17] Considering the mandatory salary deductions from
the government employee, the government pensions do not constitute mere gratuity but
form part of compensation.
In a pension plan where employee participation is mandatory, the prevailing view is that
employees have contractual or vested rights in the pension where the pension is part of the
terms of employment.[18]The reason for providing retirement benefits is to compensate
service to the government. Retirement benefits to government employees are part of
emolument to encourage and retain qualified employees in the government service.
Retirement benefits to government employees reward them for giving the best years of their
lives in the service of their country. [19]
Thus, where the employee retires and meets the eligibility requirements, he acquires a
vested right to benefits that is protected by the due process clause. [20] Retirees enjoy a
protected property interest whenever they acquire a right to immediate payment under preexisting law.[21] Thus, a pensioner acquires a vested right to benefits that have become due
as provided under the terms of the public employees pension statute. [22] No law can deprive
such person of his pension rights without due process of law, that is, without notice and
opportunity to be heard.[23]
In addition to retirement and disability benefits, PD 1146 also provides for benefits to
survivors of deceased government employees and pensioners. Under PD 1146, the
dependent spouse is one of the beneficiaries of survivorship benefits. A widows right to
receive pension following the demise of her husband is also part of the husbands contractual
compensation.[24]

Denial of Due Process

The proviso is contrary to Section 1, Article III of the Constitution, which provides that
[n]o person shall be deprived of life, liberty, or property without due process of law, nor shall
any person be denied the equal protection of the laws. The proviso is unduly oppressive in
outrightly denying a dependent spouses claim for survivorship pension if the dependent
spouse contracted marriage to the pensioner within the three-year prohibited period. There
is outright confiscation of benefits due the surviving spouse without giving the surviving
spouse an opportunity to be heard. The proviso undermines the purpose of PD 1146, which
is to assure comprehensive and integrated social security and insurance benefits to
government employees and their dependents in the event of sickness, disability, death, and
retirement of the government employees.
The whereas clauses of PD 1146 state:
WHEREAS, the Government Service Insurance System in promoting the efficiency and
welfare of the employees of the Government of the Philippines, administers the laws that
grant to its members social security and insurance benefits;
WHEREAS, it is necessary to preserve at all times the actuarial solvency of the funds
administered by the System; to guarantee to the government employee all the benefits due
him; and to expand and increase the benefits made available to him and his dependents to
the extent permitted by available resources;
WHEREAS, provisions of existing laws have impeded the efficient and effective discharge by
the System of its functions and have unduly hampered the System from being more

responsive to the dramatic changes of the times and from meeting the increasing needs and
expectations of the Filipino public servant;
WHEREAS, provisions of existing laws that have prejudiced, rather than benefited, the
government employee; restricted, rather than broadened, his benefits, prolonged, rather
than facilitated the payment of benefits, must now yield to his paramount welfare;
WHEREAS, the social security and insurance benefits of government employees must be
continuously re-examined and improved to assure comprehensive and integrated social
security and insurance programs that will provide benefits responsive to their needs and
those of their dependents in the event of sickness, disability, death, retirement, and other
contingencies; and to serve as a fitting reward for dedicated public service;
WHEREAS, in the light of existing economic conditions affecting the welfare of government
employees, there is a need to expand and improve the social security and insurance
programs administered by the Government Service Insurance System, specifically, among
others, by increasing pension benefits, expanding disability benefits, introducing
survivorship benefits, introducing sickness and income benefits, and eventually extending
the compulsory coverage of these programs to all government employees regardless of
employment status.
PD 1146 has the following purposes:
a. to preserve at all times the actuarial solvency of the funds administered by the
System;
b. to guarantee to the government employee all the benefits due him; and
c. to expand, increase, and improve the social security and insurance benefits made
available to him and his dependents such as:
increasing pension benefits
expanding disability benefits
introducing survivorship benefits
introducing sickness income benefits
extending compulsory membership to all
government employees irrespective of status [25]
The law extends survivorship benefits to the surviving and qualified beneficiaries of the
deceased member or pensioner to cushion the beneficiaries against the adverse economic
effects resulting from the death of the wage earner or pensioner. [26]

Violation of the Equal Protection Clause

The surviving spouse of a government employee is entitled to receive survivors benefits
under a pension system. However, statutes sometimes require that the spouse should have
married the employee for a certain period before the employees death to prevent sham
marriages contracted for monetary gain. One example is the Illinois Pension Code
which restricts survivors annuity benefits to a surviving spouse who was married to a state
employee for at least one year before the employees death. The Illinois pension system
classifies spouses into those married less than one year before a members death and those

married one year or more. The classification seeks to prevent conscious adverse risk
selection of deathbed marriages where a terminally ill member of the pension system
marries another so that person becomes eligible for benefits. In Sneddon v. The State
Employees Retirement System of Illinois, [27] the Appellate Court of Illinois held that such
classification was based on difference in situation and circumstance, bore a rational relation
to the purpose of the statute, and was therefore not in violation of constitutional guarantees
of due process and equal protection.
A statute based on reasonable classification does not violate the constitutional guaranty
of the equal protection of the law.[28] The requirements for a valid and reasonable
classification are: (1) it must rest on substantial distinctions; (2) it must be germane to the
purpose of the law; (3) it must not be limited to existing conditions only; and (4) it must
apply equally to all members of the same class. [29] Thus, the law may treat and regulate one
class differently from another class provided there are real and substantial differences to
distinguish one class from another. [30]
The proviso in question does not satisfy these requirements. The proviso discriminates
against the dependent spouse who contracts marriage to the pensioner within three years
before the pensioner qualified for the pension. [31] Under the proviso, even if the dependent
spouse married the pensioner more than three years before the pensioners death, the
dependent spouse would still not receive survivorship pension if the marriage took place
within three years before the pensioner qualified for pension. The object of the prohibition is
vague. There is no reasonable connection between the means employed and the purpose
intended. The law itself does not provide any reason or purpose for such a prohibition. If the
purpose of the proviso is to prevent deathbed marriages, then we do not see why the
proviso reckons the three-year prohibition from the date the pensioner qualified for pension
and not from the date the pensioner died. The classification does not rest on substantial
distinctions. Worse, the classification lumps all those marriages contracted within three
years before the pensioner qualified for pension as having been contracted primarily for
financial convenience to avail of pension benefits.
Indeed, the classification is discriminatory and arbitrary. This is probably the reason
Congress deleted the proviso in Republic Act No. 8291 (RA 8291), [32] otherwise known as the
Government Service Insurance Act of 1997, the law revising the old charter of GSIS (PD
1146). Under the implementing rules of RA 8291, the surviving spouse who married the
member immediately before the members death is still qualified to receive survivorship
pension unless the GSIS proves that the surviving spouse contracted the marriage solely to
receive the benefit.[33]
Thus, the present GSIS law does not presume that marriages contracted within three
years before retirement or death of a member are sham marriages contracted to avail of
survivorship benefits. The present GSIS law does not automatically forfeit the survivorship
pension of the surviving spouse who contracted marriage to a GSIS member within three
years before the members retirement or death. The law acknowledges that whether the
surviving spouse contracted the marriage mainly to receive survivorship benefits is a matter
of evidence. The law no longer prescribes a sweeping classification that unduly prejudices
the legitimate surviving spouse and defeats the purpose for which Congress enacted the
social legislation.
WHEREFORE, the petition is DENIED for want of merit. We declare VOID for being
violative of the constitutional guarantees of due process and equal protection of the law the
proviso in Section 18 of Presidential Decree No. 1146, which proviso states that the
dependent spouse shall not be entitled to said pension if his marriage with the pensioner is
contracted within three years before the pensioner qualified for the pension. The
Government Service Insurance System cannot deny the claim of Milagros O. Montesclaros
for survivorship benefits based on this invalid proviso.

No pronouncement as to costs.
SO ORDERED.
Davide, Jr., C.J., Puno, Vitug, Panganiban, Quisumbing, Ynares-Santiago, SandovalGutierrez, Austria-Martinez, Corona, Carpio-Morales, Callejo, Sr., Azcuna, and Tinga,
JJ., concur.

A.M. No. 08-2-01-0, February 11, 2010

EN BANC
RE: PETITION FOR A.M. No. 08-2-01-0
RECOGNITION OF THE
EXEMPTION OF THE Present:
GOVERNMENT SERVICE
INSURANCE SYSTEM FROM PUNO, C.J.,
PAYMENT OF LEGAL FEES. CARPIO,
CORONA,
GOVERNMENT SERVICE CARPIO MORALES,
INSURANCE SYSTEM, VELASCO, JR.,
Petitioner. NACHURA,
LEONARDO-DE CASTRO,
BRION,
PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,
VILLARAMA, JR.,
PEREZ and
MENDOZA, JJ.
Promulgated:
February 11, 2010
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

RESOLUTION
CORONA, J.:
May the legislature exempt the Government Service Insurance System (GSIS) from
legal fees imposed by the Court on government-owned and controlled corporations and local
government units? This is the central issue in this administrative matter.
The GSIS seeks exemption from the payment of legal fees imposed on governmentowned or controlled corporations under Section 22, [1] Rule 141 (Legal Fees) of the Rules of
Court. The said provision states:

SEC. 22. Government exempt. The Republic of the Philippines, its

agencies and instrumentalities are exempt from paying the legal fees
provided in this Rule. Local government corporations and governmentowned or controlled corporations with or without independent
charter are not exempt from paying such fees.

However, all court actions, criminal or civil, instituted at the instance of

the provincial, city or municipal treasurer or assessor under Sec. 280 of the
Local Government Code of 1991 shall be exempt from the payment of court
and sheriffs fees. (emphasis supplied)

The GSIS anchors its petition on Section 39 of its charter, RA [2] 8291 (The GSIS Act of 1997):

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 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 and 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 favour of the GSIS. (emphasis
supplied)

The GSIS then avers that courts still assess and collect legal fees in actions and
proceedings instituted by the GSIS notwithstanding its exemption from taxes, assessments,
fees, charges, or duties of all kinds under Section 39. For this reason, the GSIS urges this
Court to recognize its exemption from payment of legal fees.

According to the GSIS, the purpose of its exemption is to preserve and maintain the actuarial
solvency of its funds and to keep the contribution rates necessary to sustain the benefits
provided by RA 8291 as low as possible. Like the terms taxes, assessments, charges, and
duties, the term fees is used in the law in its generic and ordinary sense as any form of

government imposition. The word fees, defined as charge[s] fixed by law for services of
public officers or for the use of a privilege under control of government, is qualified by the
phrase of all kinds.[3] Hence, it includes the legal fees prescribed by this Court under Rule
141. Moreover, no distinction should be made based on the kind of fees imposed on the GSIS
or the GSIS ability to pay because the law itself does not distinguish based on those matters.

The GSIS argues that its exemption from the payment of legal fees would not mean
that RA 8291 is superior to the Rules of Court. It would merely show deference by the Court
to the legislature as a co-equal branch. [4] This deference will recognize the compelling and
overriding State interest in the preservation of the actuarial solvency of the GSIS for the
benefit of its members.[5]

The GSIS further contends that the right of government workers to social security is
an aspect of social justice. The right to social security is also guaranteed under Article 22 of
the Universal Declaration of Human Rights and Article 9 of the International Covenant on
Economic, Social and Cultural Rights. The Court has the power to promulgate rules
concerning the protection and enforcement of constitutional rights, including the right to
social security, but the GSIS is not compelling the Court to promulgate such rules. The GSIS
is merely asking the Court to recognize and allow the exercise of the right of the GSIS to
seek relief from the courts of justice sans payment of legal fees.[6]

Required to comment on the GSIS petition, [7] the Office of the Solicitor General (OSG)
maintains that the petition should be denied. [8] According to the OSG, the issue of the GSIS
exemption from legal fees has been resolved by the issuance by then Court Administrator
Presbitero J. Velasco, Jr.[9] of OCA[10] Circular No. 93-2004:

TO : ALL JUDGES, CLERKS OF COURT AND COURT PERSONNEL OF THE

METROPOLITAN TRIAL COURTS, MUNICIPAL TRIAL
COURTS IN CITIES, MUNICIPAL TRIAL COURTS, MUNICIPAL
CIRCUIT TRIAL COURTS, SHARIA CIRCUIT COURTS

SUBJECT : REMINDER ON THE STRICT OBSERVANCE OF ADMINISTRATIVE

CIRCULAR NO. 3-98 (Re: Payment of Docket and Filing
Fees in Extra-Judicial Foreclosure); SECTION 21, RULE
141 OF THE RULES OF COURT; SECTION 3 OF
PRESIDENTIAL DECREE NO. 385; and ADMINISTRATIVE
CIRCULAR NO. 07-99 (Re: Exercise of Utmost Caution,
Prudence, and Judiciousness in Issuance of Temporary
Restraining Orders and Writs of Preliminary Injunctions)
Pursuant to the Resolution of the Third Division of the Supreme Court
dated 05 April 2004 and to give notice to the concern raised by the [GSIS] to
expedite extrajudicial foreclosure cases filed in court, we wish to remind all
concerned [of] the pertinent provisions of Administrative Circular No. 3-98, to
wit:

2. No written request/petition for extrajudicial foreclosure of

mortgages, real or chattel, shall be acted upon by the Clerk of
Court, as Ex-Officio Sheriff, without the corresponding filing fee
having been paid and the receipt thereof attached to the
request/petition as provided for in Sec. 7(c), of Rule 141 of the
Rules of Court.

3. No certificate of sale shall be issued in favor of the highest

bidder until all fees provided for in the aforementioned sections
and paragraph 3 of Section 9 (I) of Rule 141 of the Rules of
Court shall have been paid.The sheriff shall attach to the records
of the case a certified copy of the Official Receipt [O.R.] of the
payment of the fees and shall note the O.R. number in the
duplicate of the Certificate of Sale attached to the records of the
case.

Moreover, to settle any queries as to the status of exemption from

payment of docket and legal fees of government entities, Section 21, Rule
141 of the Rules of Court explicitly provides:

SEC. 21. Government exempt. The Republic of the

Philippines, its agencies and instrumentalities are exempt from
paying the legal fees provided in this Rule. Local governments
and government-owned or controlled corporations with
or without independent charters are not exempt from
paying such fees.[11]
xxxxxxxxx

The OSG contends that there is nothing in Section 39 of RA 8291 that exempts the GSIS from
fees imposed by the Court in connection with judicial proceedings. The exemption of the
GSIS from taxes, assessments, fees, charges or duties of all kinds is necessarily confined to
those that do not involve pleading, practice and procedure. Rule 141 has been promulgated
by the Court pursuant to its exclusive rule-making power under Section 5(5), Article VIII of
the Constitution. Thus, it may not be amended or repealed by Congress.
On this Courts order,[12] the Office of the Chief Attorney (OCAT) submitted a report and
recommendation[13] on the petition of the GSIS and the comment of the OSG thereon.
According to the OCAT, the claim of the GSIS for exemption from the payment of legal fees
has no legal basis. Read in its proper and full context, Section 39 intends to preserve the
actuarial solvency of GSIS funds by exempting the GSIS from government impositions
through taxes. Legal fees imposed under Rule 141 are not taxes.

The OCAT further posits that the GSIS could not have been exempted by Congress from the
payment of legal fees. Otherwise, Congress would have encroached on the rule-making
power of this Court.

According to the OCAT, this is the second time that the GSIS is seeking exemption
from paying legal fees.[14] The OCAT also points out that there are other government-owned

or controlled corporations and local government units which asked for exemption from
paying legal fees citing provisions in their respective charters that are similar to Section 39
of RA 8291.[15] Thus, the OCAT recommends that the petition of GSIS be denied and the issue
be settled once and for all for the guidance of the concerned parties.
Faced with the differing opinions of the GSIS, the OSG and the OCAT, we now proceed
to probe into the heart of this matter: may Congress exempt the GSIS from the payment of
legal fees? No.

The GSIS urges the Court to show deference to Congress by recognizing the
exemption of the GSIS under Section 39 of RA 8291 from legal fees imposed under Rule 141.
Effectively, the GSIS wants this Court to recognize a power of Congress to repeal, amend or
modify a rule of procedure promulgated by the Court. However, the Constitution and
jurisprudence do not sanction such view.

Rule 141 (on Legal Fees) of the Rules of Court was promulgated by this Court in the
exercise of its rule-making powers under Section 5(5), Article VIII of the Constitution:

Sec. 5. The Supreme Court shall have the following powers:

xxxxxxxxx
(5) Promulgate rules concerning the protection and
enforcement of constitutional rights, pleading, practice, and
procedure in all courts, the admission to the practice of law,
the Integrated Bar, and legal assistance to the underprivileged.
Such rules shall provide a simplified and inexpensive procedure
for the speedy disposition of cases, shall be uniform for all
courts of the same grade, and shall not diminish, increase, or
modify substantive rights. Rules of procedure of special courts
and quasi-judicial bodies shall remain effective unless
disapproved by the Supreme Court.
x x x x x x x x x (emphasis supplied)

The power to promulgate rules concerning pleading, practice and procedure in all
courts is a traditional power of this Court. [16] It necessarily includes the power to address all
questions arising from or connected to the implementation of the said rules.

The Rules of Court was promulgated in the exercise of the Courts rule-making power.
It is essentially procedural in nature as it does not create, diminish, increase or modify
substantive rights. Corollarily, Rule 141 is basically procedural. It does not create or take
away a right but simply operates as a means to implement an existing right. In particular, it
functions to regulate the procedure of exercising a right of action and enforcing a cause of
action.[17] In particular, it pertains to the procedural requirement of paying the prescribed
legal fees in the filing of a pleading or any application that initiates an action or proceeding.
[18]

Clearly, therefore, the payment of legal fees under Rule 141 of the Rules of Court is
an integral part of the rules promulgated by this Court pursuant to its rule-making power
under Section 5(5), Article VIII of the Constitution. In particular, it is part of the rules
concerning pleading, practice and procedure in courts. Indeed, payment of legal (or docket)
fees is a jurisdictional requirement. [19] It is not simply the filing of the complaint or
appropriate initiatory pleading but the payment of the prescribed docket fee that vests a
trial court with jurisdiction over the subject-matter or nature of the action. [20] Appellate
docket and other lawful fees are required to be paid within the same period for taking an
appeal.[21] Payment of docket fees in full within the prescribed period is mandatory for the
perfection of an appeal.[22] Without such payment, the appellate court does not acquire
jurisdiction over the subject matter of the action and the decision sought to be appealed
from becomes final and executory.[23]

An interesting aspect of legal fees is that which relates to indigent or pauper litigants.
In proper cases, courts may waive the collection of legal fees. This, the Court has allowed in
Section 21, Rule 3 and Section 19, Rule 141 of the Rules of Court in recognition of the right
of access to justice by the poor under Section 11, Article III of the Constitution. [24] Mindful
that the rule with respect to indigent litigants should not be ironclad as it touches on the
right of access to justice by the poor, [25] the Court acknowledged the exemption from legal
fees of indigent clients of the Public Attorneys Office under Section 16-D of the
Administrative Code of 1987, as amended by RA 9406. [26] This was not an abdication by the
Court of its rule-making power but simply a recognition of the limits of that power. In
particular, it reflected a keen awareness that, in the exercise of its rule-making power, the
Court may not dilute or defeat the right of access to justice of indigent litigants.

The GSIS cannot successfully invoke the right to social security of government
employees in support of its petition. It is a corporate entity whose personality is separate
and distinct from that of its individual members. The rights of its members are not its rights;
its rights, powers and functions pertain to it solely and are not shared by its members. Its
capacity to sue and bring actions under Section 41(g) of RA 8291, the specific power which
involves the exemption that it claims in this case, pertains to it and not to its members.
Indeed, even the GSIS acknowledges that, in claiming exemption from the payment of legal
fees, it is not asking that rules be made to enforce the right to social security of its members
but that the Court recognize the alleged right of the GSISto seek relief from the courts of
justice sans payment of legal fees.[27]

However, the alleged right of the GSIS does not exist. The payment of legal fees does
not take away the capacity of the GSIS to sue. It simply operates as a means by which that
capacity may be implemented.

Since the payment of legal fees is a vital component of the rules promulgated by this
Court concerning pleading, practice and procedure, it cannot be validly annulled, changed or
modified by Congress. As one of the safeguards of this Courts institutional independence,
the power to promulgate rules of pleading, practice and procedure is now the Courts
exclusive domain. That power is no longer shared by this Court with Congress, much less
with the Executive.[28]

Speaking for the Court, then Associate Justice (now Chief Justice) Reynato S. Puno
traced the history of the rule-making power of this Court and highlighted its evolution and
development inEchegaray v. Secretary of Justice:[29]

Under the 1935 Constitution, the power of this Court to promulgate

rules concerning pleading, practice and procedure was granted but it
appeared to be co-existent with legislative power for it was subject to the
power of Congress to repeal, alter or supplement. Thus, its Section 13, Article
VIII provides:

Sec. 13. The Supreme Court shall have the power to

promulgate rules concerning pleading, practice and procedure
in all courts, and the admission to the practice of law. Said
rules shall be uniform for all courts of the same grade and
shall not diminish, increase, or modify substantive rights. The
existing laws on pleading, practice and procedure are hereby
repealed as statutes, and are declared Rules of Court, subject
to the power of the Supreme Court to alter and modify the
same. The Congress shall have the power to repeal, alter or
supplement the rules concerning pleading, practice and
procedure, and the admission to the practice of law in the
Philippines.

The said power of Congress, however, is not as absolute as it may

appear on its surface. In In re Cunanan, Congress in the exercise of its power
to amend rules of the Supreme Court regarding admission to the practice of
law, enacted the Bar Flunkers Act of 1953 which considered as a passing
grade, the average of 70% in the bar examinations after July 4, 1946 up to
August 1951 and 71% in the 1952 bar examinations.This Court struck
down the law as unconstitutional. In his ponencia, Mr. Justice Diokno held
that "x x x the disputed law is not a legislation; it is a judgment - a judgment
promulgated by this Court during the aforecited years affecting the bar
candidates concerned; and although this Court certainly can revoke these
judgments even now, for justifiable reasons, it is no less certain that only
this Court, and not the legislative nor executive department, that may do
so. Any attempt on the part of these departments would be a clear
usurpation of its function, as is the case with the law in question." The
venerable jurist further ruled: "It is obvious, therefore, that the ultimate
power to grant license for the practice of law belongs exclusively to this
Court, and the law passed by Congress on the matter is of permissive
character, or as other authorities say, merely to fix the minimum conditions
for the license." By its ruling, this Court qualified the absolutist tone
of the power of Congress to "repeal, alter or supplement the rules
concerning pleading, practice and procedure, and the admission to the
practice of law in the Philippines.

The ruling of this Court in In re Cunanan was not changed by

the 1973 Constitution. For the 1973 Constitution reiterated the power
of this Court "to promulgate rules concerning pleading, practice and
procedure in all courts, x x x which, however, may be repealed, altered or
supplemented by the Batasang Pambansa x x x." More completely, Section
5(2)5 of its Article X provided:

xxxxxxxxx

Sec. 5. The Supreme Court shall have the following

powers.
xxxxxxxxx
(5) Promulgate rules concerning pleading, practice,
and procedure in all courts, the admission to the
practice of law, and the integration of the Bar, which,
however, may be repealed, altered, or supplemented

by the Batasang Pambansa. Such rules shall provide a

simplified and inexpensive procedure for the speedy
disposition of cases, shall be uniform for all courts of
the same grade, and shall not diminish, increase, or
modify substantive rights.

Well worth noting is that the 1973 Constitution further

strengthened the independence of the judiciary by giving to it
the additional power to promulgate rules governing the integration of the Bar.

The 1987 Constitution molded an even stronger and more

independent judiciary. Among others, it enhanced the rule making
power of this Court. Its Section 5(5), Article VIII provides:
xxxxxxxxx
Section 5. The Supreme Court shall have the following
powers:
xxxxxxxxx
(5) Promulgate rules concerning the protection
and
enforcement
of
constitutional
rights,
pleading, practice and procedure in all courts, the
admission to the practice of law, the Integrated Bar,
and legal assistance to the underprivileged. Such rules
shall provide a simplified and inexpensive procedure
for the speedy disposition of cases, shall be uniform for
all courts of the same grade, and shall not diminish,
increase, or modify substantive rights. Rules of
procedure of special courts and quasi-judicial
bodies shall remain effective unless disapproved
by the Supreme Court.

The rule making power of this Court was expanded. This Court
for the first time was given the power to promulgate rules concerning the
protection and enforcement of constitutional rights. The Court was also
granted for the first time the power to disapprove rules of procedure of
special courts and quasi-judicial bodies. But most importantly, the 1987
Constitution took away the power of Congress to repeal, alter, or
supplement rules concerning pleading, practice and procedure. In
fine, the power to promulgate rules of pleading, practice and procedure is no
longer shared by this Court with Congress, more so with the Executive.

The separation of powers among the three co-equal branches of our government has
erected an impregnable wall that keeps the power to promulgate rules of pleading, practice
and procedure within the sole province of this Court. The other branches trespass upon this
prerogative if they enact laws or issue orders that effectively repeal, alter or modify any of
the procedural rules promulgated by this Court. Viewed from this perspective, the claim of a
legislative grant of exemption from the payment of legal fees under Section 39 of RA 8291
necessarily fails.

Congress could not have carved out an exemption for the GSIS from the payment of
legal fees without transgressing another equally important institutional safeguard of the
Courts independence fiscal autonomy. [30] Fiscal autonomy recognizes the power and
authority of the Court to levy, assess and collect fees, [31] including legal fees. Moreover, legal
fees under Rule 141 have two basic components, the Judiciary Development Fund (JDF) and
the Special Allowance for the Judiciary Fund (SAJF). [32] The laws which established the JDF
and the SAJF[33] expressly declare the identical purpose of these funds to guarantee the
independence of the Judiciary as mandated by the Constitution and public policy. [34] Legal
fees therefore do not only constitute a vital source of the Courts financial resources but also
comprise an essential element of the Courts fiscal independence. Any exemption from the
payment of legal fees granted by Congress to government-owned or controlled corporations
and local government units will necessarily reduce the JDF and the SAJF. Undoubtedly, such
situation is constitutionally infirm for it impairs the Courts guaranteed fiscal autonomy and
erodes its independence.

WHEREFORE, the petition of the Government Service Insurance System for

recognition of its exemption from the payment of legal fees imposed under Section 22 of

Rule 141 of the Rules of Court on government-owned or controlled corporations and local
government units is hereby DENIED.

The Office of the Court Administrator is hereby directed to promptly issue a circular to
inform all courts in the Philippines of the import of this resolution.

SO ORDERED.

RENATO C. CORONA
Associate Justice

WE CONCUR:

REYNATO S. PUNO
Chief Justice

ANTONIO T. CARPIO
Associate Justice

CONCHITA CARPIO MORALES

Associate Justice

PRESBITERO J. VELASCO, JR.

Associate Justice

TERESITA J. LEONARDO-DE CASTRO

Associate Justice

DIOSDADO M. PERALTA
Associate Justice

ANTONIO EDUARDO B. NACHURA

Associate Justice

ARTURO D. BRION
Associate Justice

LUCAS P. BERSAMIN
Associate Justice

MARIANO C. DEL CASTILLO

Associate Justice

ROBERTO A. ABAD
Associate Justice

MARTIN S. VILLARAMA, JR. JOSE P. PEREZ

Associate Justice Associate Justice

JOSE C. MENDOZA

Associate Justice