GSIS V Reynaldo Palmiery

1. GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), Petitioner vs.
REYNALDO P. PALMIERY, Respondent

G.R. No. 217949 February 20, 2019
FACTS:
On May 2, 1961, respondent Reynaldo P. Palmiery (Reynaldo) started working for the
government as a laborer for the Philippine Veterans Administration. He left the
Development Bank of the Philippines (DB-P) as a Manager on January 1, 1987, following
more than 25 years of service, as part of the bank's reform. In accordance with Republic
Act (R.A.) No. 1616, the DBP paid payment of Php 189,618.46 as his gratuity benefit.
Reynaldo was given a reimbursement of Php 60,395.85 for his contributions. He was
given a total of Php 250,014.31.
Reynaldo returned to government employment on January 2, 1987, when he was hired
as a Manager III in the Social Security System (SSS). Up to his retirement as a Deputy
Administrator on June 1, 1994, he kept up his employment with the SSS. Next, Reynaldo
filed an R.A. application for retirement benefits. No. 660; as a result, he was given a lump
sum pension of Php 532,491.28 for five (5) years. The following deductions were made
from this amount: (a) the sum of his previous benefits (Php 250,014.31); and (b) the
amount of his unpaid accountabilities (Php 57,774.64). Consequently, on July 4, 1994,
Reynaldo received the total sum of Php 224,836.73.
Reynaldo was appointed as a member of the Government Service Insurance System
(GSIS) Board of Trustees on July 7, 1998, which was four (4) years later. He started
acting as the GSIS Executive Vice-President in addition to being a member of the board
on July 16, 1998, when he was appointed to this role. Reynaldo refunded Php 895,320.78,
or the benefits he had previously earned from his retirement, to GSIS on July 11, 2001.
In addition, he asked for the suspension of his monthly pension, which was granted on
July 1, 1999, which is five (5) years after his lump sum pension was paid. In addition,
Reynaldo returned the pension he had received on a number of occasions, awaiting the
GSIS's response to his request. Overall, Reynaldo gave Php 920,566.72 to GSIS as
reimbursement.
On May 28, 2005, Reynaldo reached mandatory retirement age and retired. He filed an
application for retirement benefits under R.A. on May 14, 2010. Item 8291. His application
included a request for full credit for the 38 years, or so, he was required to serve in the
government from July 1, 1961, until his forced retirement on May 28, 2005.
Reynaldo's application for retirement benefits under R.A. No. 8291was denied by the
GSIS Claims Department due to non-compliance with the service obligation. According
to the Claims Department, Reynaldo's service would only be recognized by the GSIS
following his re-entry into the government in 1998. Additionally, Reynaldo was told that
he would receive his money back from the GSIS without incurring interest. Acting on
Reynaldo's petition, the GSIS Board of Trustees promulgated its Decision26 dated
February 28, 2013, which ruled to dismiss the petition for lack of merit.
Reynaldo appealed to the CA via a petition for review. In a Decision dated January 21,
2015, CA granted Reynaldo's petition, thus, GSIS filed appealed in this Court.
ISSUE:
Whether or not Reynaldo's previous years in government should be included in the
computation for his retirement benefits.
RULING:
Yes. The GSIS should give full credit to Reynaldo's years of service in the government.
The current GSIS Law excludes only services credited for retirement for which
appropriate benefits have been awarded when calculating years of service. The current
governing law for government retirees is R.A No. 8291, also known as "The Government
Service Insurance System Act of 1997," which amended P.D No. 1146, or the "Revised
Government Service Insurance Act of 1977." Under this law, all government employees
who have not reached the mandatory retirement age are required to join the GSIS. Except
for individuals in the court and constitutional commissions, this membership allows
employees to life insurance, retirement, and other benefits (such as disability,
survivorship, separation, and unemployment).
For retirement benefits, in particular, R.A. No. 8291 provides the following conditions
before a member may become qualified to receive this benefit: (a) the employee must
have rendered at least 15 years of service; (b) the employee must be at least 60 years
old at the time of retirement; and (c) the employee must not be receiving a monthly
pension as a result of permanent total disability. R.A. No. 8291 further provides for the
manner by which service is computed, thus:
SECTION 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.
The term "service" shall include full-time service with compensation for the purposes
of this section. Provided, however, that part-time and other compensated services may
be included under such rules and regulations as the GSIS may specify.
According to this provision, there is no longer "any exemption or condition such as
refund of previously received benefits as a restorative recourse of adding previous
services in the computation of service [for reinstated employees]." Section 12(g) of C.A
No. 186, which allows for the refund of previously received benefits, is no longer found
in the current law. As a result, the GSIS claims that this remedy is unavailable to people
who re-entered government service after the effective date of R.A. No. 8291.
More crucially, a simple reading of Section 10(b) of R.A. No. 8291 indicates that
employees who have previously received retirement benefits under R.A. No. 8291 or
other legislation cannot count their years of service prior to re-entry into the
government. Employees who have not collected their retirement benefits, on the other
hand, are entitled to full credit for their service.
Those in a similar situation, or those who refunded their retirement benefits to the GSIS
after re-entering government employment, should be permitted to consider their former
years of service in the calculation of their eligibility and retirement payments. This is
consistent with the legal precept against double compensation, which prohibits
payment for the same services covering the same period.54 Thus, if the employee has
not received or has returned his/her retirement benefits to the GSIS, the prohibition
against double retirement benefits does not apply.
As a result, awarding full credit to Reynaldo's years of government work does not
violate any existing statute or policy, especially given that Reynaldo refunded his
previously obtained benefits to the GSIS. The GSIS even terminated his monthly
pension on October 1, 2001, at Reynaldo's request. His re-entry into government
service following the effective date of R.A. No. 8291 is so unimportant in this situation.
The distinction made by the GSIS between people who re-entered government
employment prior to the effective date of R.A. No. 8291 and those who re-entered after
its effective date cannot override the clear policy stated in Section 10(b) of the new
GSIS Law.

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1. GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), Petitioner vs.

REYNALDO P. PALMIERY, Respondent

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