REPUBLIC OF THE PHILIPPINESGOVERNMENT SERVICE TNSURANCE SYSTEM

FINANCIAL CENTE& ROXAS BOULEVARD, PASAY CITY

BOARD OF TRUSTEES

IN RE:

REQUEST TO BE ALLOWEDTO RETURN SEPARATIONBENEFITS PREVIOUSLYRECETVED FOR THEPURPOSE OF TACKING THEPERIOD OF SERVICEPREVIOUSLYCOMPENSATED TO THECURRENT PERIOD OFSERVICE ANDRECOMPUTATION OFSEPARATION BENEFITS

GSIS CASE NO. 016-13

FRANCISCA D. GONZALEZ,Petitioner.

DECISION

Before the Board is a Petition filed on September 2, 2013 by

Francisca D. Gonzalez, appealing the May 28, 2Ol3 Resolution of

the Committee on Claims (hereinafter, CoC), in Case No' 35-2013,

denying Petitioner's request that she be allowed to return the

separation benefits she previously received in order that her

previous period of service may be added to her current years of

service for the purpose of increasing her benefits under R'A' No'

8291. The dispositive portion ofsaid CoC Resolution reads:

WHER.EFORE, premises considered, the requestof Francisca D. Gonzalez to refund the separationbenefits she previously received from GSIS is herebyDENIED.

FACTS OF THE CASE

Petitioner entered government service through the National

Power Corporation (NPC) on June 21, 1979. She was deemed

separated from service effective March 1, 2003 pursuant to

National Power Board (NPB) Resolution No. 2OO2-124 issued by

the National Power Board as a consequence of R'A' No. 9136 or the

Electric Power Reform Act of 2001 (EPIRA). On the same day,

Petitioner was rehired bY the NPC.

In view of Petitioner's separation ftom service by virtue of

NPB Resolution No. 2OO2-124, Petitioner fiIed an application for

the grant of separation benefits under R'A. No. B29t from the

GSIS. The same was granted and Petitioner was paid in

accordance with Sec. 11(b) of R.A. No. 8291, the gross amount of

Three Hundred Thirty Two Thousand Seven Hundred Ninety Eight

Pesos and Fifty Eight Centavos (Php 332,798.58) representing the

L8-month cash payment benefit. Additionally under the same

provision of law, upon reaching the age of sixty (60) years,

Petitioner shall be paid an old-age monthly pension in the amount

of Eighteen Thousand Four Hundred Eighty Eight Pesos and Eighty

One Centavos (Php 18,488.81).

In a letter dated February 18, 2004 addressed to GSIS

Laguna Branch Office, Petitioner requested, in view of her

immediate rehiring by the NPC, to be allowed to return the amount

she received from GSIS Laguna Branch Office "for the purpose of

increasing (her) retirement benefit in the future." Said request

was denied by the GSIS Laguna Branch Office on the ground that

the same is not allowed under existing GSIS policy.

On May 26, 2009, Petitioner's employment with the NPC was

terminated due to the privatization of the Makban Geothermal

Power Plant pursuant to the EPIRA' On August 12, 2009,

Petitioner filed her application for separation benefits. Her claim

was approved in accordance with Sec. 11(a) of R.A. No' 82911

given that her period with premium payments amounted to 5'57

years. Said provision entitled her, per tentative computationz, to a

cash payment in the gross amount of Php 203,LG8.27 payable to

her when she reaches 60 years of age.

Subsequently, Petitioner wrote a letter dated March IB,2013

addressed to the President and General Manager of the GSIS,

reiterating her desire to return the benefits she previously received

from the GSIS with interest. Said letter was referred to the CoC

for resolution.

' SEC. 11. Separation Benefits. - The separation benefit shall consist of: (a) a cash payment

equivalent to one h..ndred 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 or upon separation, whichever comes later:'proui,re,r,

rnut 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;

xxxr Subject to final comPutation on April 14,2013 (Petitioner's 60e birthday)'

In April 2013, Petitioner started receiving her old-age

pension benefits by virtue of her first separation from the NPC

through automatic crediting to her UMID account.

On May 28, 2013, the CoC issued a Resolution in Case No'

35-2013, denying Petitioner's request to be allowed to return the

separation benefits she received in 2003 covering her period of

service from June 2l , 197I to February 28, 2003.

On October tl, 2013, Petitioner sent a verified letter3 dated

October 10, 2013 to the GSIS Office of the Corporate Secretary,

assailing the CoC Resolution and alleging that she "sincerely

returned the amount (she) received in order that (her) service be

continued-(she) withdraw (her) application for retirement because

(she) was rehired."

In compliance with the Summons dated October 21, 2013,

the CoC through counsel fiIed its Answer prayrng for the dismissal

of this Petition. The CoC argued that under the provisions of R'A'

No. 8291 and its 1997 Implementing Rules and Regulations (IRR),

Petitioner upon her re-entry in the government service and

payment of separation benefits covering her previous government

seryice, was already considered as a new entrant. The CoC

averred that R.A. No. 8291 and its 1997 IRR expressly provide that

anyone who re-enters government service shall be considered as a

new entrant and the period of service for which corresponding

benefits have already been previously paid shall be excluded in the

I Trcated as a Petition.

computation of service for the purpose of determining future

benefits.

The CoC further stated that this position is further

strengthened by the approval of Policy and Procedural Guidelines

(PPG) No. 183-06 (Guidelines in the Processing of Retirement

Claims of Re-employed Government Officials/Employees who had

Previously Received Retirement Benefits) as said PPG distinguishes

between those government employees who re-entered government

service before the date of effectivitya of R.A. No. B29t and those

who re-entered government service after its effectivity. The CoC

stated that said PPG allows only those employees who re-entered

government service before June 24, 1997 to include their previous

services in the computation of their Period with Premium Payments

(PPP) for the purpose of subsequent retirement, provided that

he/she refunds the benefits he/she previously received. Petitioner,

having re-entered the government service after June 24' 1.997 ' is

not covered by the aforementioned PPG as she is already

considered as a new entrant pursuant to Section 8.6, RuIe VIII of

the 1997 IRR of R.A. No. 8291.

Thus, having no basis in law and regulation, the CoC prayed

for the dismissal of the Petition.

Thereafter, a preliminary conference was held on December

6, 2013 where the parties entered into stipulations offact and had

their respective documentary evidence marked. Both parties were

a lwc 24, 199-l .

also ordered to submit their respective Position Papers.

In March 20L4, tt.le monthly release of Petitioner's pension

payments was suspended as per her requests in view of the

pendency of her appeal for recomputation.

On May 15, 2014, a clarificatory hearing was conducted

where Petitioner was requested to submit additional documentary

evidence. On June LO, 2014, Petitioner submitted a copy of her

Service Record, Notice of Termination dated Apnl 24, 2009 and

her letter dated February 18, 2004 addressed to the then Manager

of GSIS Laguna Branch Office.

On August lg, 2014, the net amount of Php 178,389'666,

representing the cash payment benefit for her 2009 termination,

was credited to Petitioner's UMID account.

Petitioner then submitted excerpts from the Supreme Court

Decision and Resolutions in G.R. No. 156208 captioned as NPC

Ddverc and Mechanics Association (NPC Dama), et aI. vs.

NPC, et aI.

Finally, on November 12, 2014, Petitioner submitted a letter

reiterating her claim that the amounts credited to her UMID

account representing her pension has remained intact as she has

not touched the said amounts while her appeal is pending'

Petitioner likewise requested for the speedy disposition of her

5 Made through a letter received on February 13, 20't4.6 Gross amount of Php 229,052.90\ess PhP 50,663.24 (balance of policy loan)'

Petition.

ISSUE

The basic issue for resolution is whether Petitioner's previous

government service covering the period from June 21., 1979 to

February 28, 2003, for which she has previously received

separation benefits under R.A. No. 8291, may be included in the

computation of her period of government service in relation to her

current application for separation benefits under R.A. No. 8291,.

DISCUSSION

The Petition is meritorious. Although the position and the

arguments of the CoC are well-taken, those, however, failed to take

into account the peculiar factual backdrop surrounding this case. If

this case merely involves the determination of whether a

government employee is allowed to return whatever beneflts he/she

might have received from GSIS covering a specific period of service

so that that same period of service may be added on to his/her

current period of service for the purpose of determining and

increasing the amount of benefits to be given for a subsequent

retirement or separation, the CoC would undoubtedly have been

correct. Indeed, R.A. No. 8291 and its IRR both sufficiently and

explicitly provide that all the service for which benefits have

already been paid shall no longer be included in the computation of

service for a second or subsequent retirement or separation, such

that, a government employee upon re-employment into the

government shall be considered as a new entrant. This case,

however, is not so cut and dried.

It is noted that Petitioner, who was a former employee of the

NPC, was first terminated effective March 1, 2003' pursuant to

NPB Resolution No. 2002-1'24, which was issued as a consequence

of the implementation of the EPIRA. It is likewise noted that the

implementation of the EPIRA has spawned many cases in its wake,

which have inevitably made an impact on the question of

retirement and separation of NPC employees'

One of these cases of particular significance to the case at

bar is the case of NPC Driverc and Mechanics Association

(NPC DAMA), et aI. vs. The National Power Corporation, et

aI.7 The Supreme Court in this case declared that National Power

Board (NPB) Resolution Nos. 2002-124 and 2002-125, both dated

November 18, 2002, which directed, among other things, the

termination of all employees of the NPC as a consequence of its

restructuring under the EPIRA, are void and without legal effect'

In its subsequent Resolutions dated September 17, 2008 and

December 2, 2OOg, respectively, the Supreme Court further held

that as a consequence of the nullity of the aforementioned NPB

Resolutions, all the employees who were terminated by virtue

thereof were illegally terminated and are thus entitled to

reinstatement or payment of separation pay in lieu of reinstatement

with back wages subject to the deduction of the separation pay they

received from their illegal termination. The Supreme Court further

'G.R. No. 156208, Scprember 26,2006.

held that in view of the issuance of NPB Resolution No. 2007-55 on

September 14, 2007, which adopted, confirmed and approved the

contents of NPB Resolution Nos. 2002-124 and 2002-125, all NPC

employees were considered to have been Iegally terminated as of

that date (September 14,2OO7) and not earlier.

Thus, given the foregoing, it is immediately clear that

Petitioner's termination from the NPC effective March 1, 2003 was

illegal as the same was effected pursuant to NPB Resolution No'

2OO2-t24, which the Supreme Court declared as a nullity. That

being the case, the grant of separation benefits to Petitioner for her

services from June 21, L979 to February 28, 2003 was unwarranted

and must necessarily be rectified. Given that Petitioner's 2003

termination was declared illegal, it is as if she was not separated

from the service during that time. Consequently, absent a legal

termination, there is no valid cause or contingency to compensate'

Thus, in view of the supervening events in this case, there is no

basis to grant separation benefits to Petitioner in 2003' The

amounts Petitioner had already received as separation benefits

were, as a result, paid by mistake and must necessarily be

returned.

Considering that Petitioner has also received the cash

payment representing separation benefits for her 2009 termination

from the NPC, covering the period from 2003 to 2009, she is

Iikewise liable to return the same. Correspondingly, Petitioner's

separation benefits must inevitably be recomputed.

Although the Supreme Court likewise held that all NPC

employees who were illegally terminated by virtue of NPB

Resolution Nos. 2002-124 and 2002-125 are considered terminated

on the date the National Power Board issued NPB Resolution No.

2007-55 or specifically on September 14, 2007, It must also be

emphasized that Petitioner was immediately rehired in 2003 and

went on to serve the government until her final termination from

the NPC on May 26, 2009. Thus, in reality, there was no gap in

Petitioner's period of government service. Moreover, with the

declaration by the Supreme Court that Petitioner's 2003

termination was a nullity, Petitioner's first application for

separation benefits was improper and should not have been

granted. Consequently, given that there was no valid application

for separation benefits in 2OO7 and given that Petitioner validly

applied for separation benefits only after her final termination from

the NPC in 2009, said application should, therefore, as a matter of

course, cover the period of her government service from June 21.,

1979 to May 26, 20098.

The erroneous payment of separation benefits to Petitioner

for her 2003 and 2009 terminations, respectively, necessarily gives

rise to an obligation on the part of the Petitioner to return the said

amounts under the principle of solutio indebiti.

Under the said principle, if something is received when there

is no right to demand it, and it was unduly delivered through

N Wilh Period with Premium Paymcnls rrl 29.1 t5tr5tr44 ycars.

l0

mistake, the obligation to return it arises.e Hence, the erroneous

payment of separation benefits to Petitioner for her 2003 and 2009

terminations is covered by solutio indebiti and gives rise to an

obligation on her part to return the total amount of Seven Hundred

Sixty Seven Thousand Two Hundred Sixteen Pesos and Fifty Seven

Centavos (Php 767,216.57) she erroneously received, which is

broken down as follows:

BENEFIT GROSS AMOUNTLB-month Cash Payment(2003 termination)

Php 332,798.58

Old-age Pension from April2013 to February 2Ol4 +cash qift

Php 205,365.09

Cash Payment Benefit (2009termination)

Php 229,052.90

TOTAL P}rp 767,2L6.57

However, no interest on said amount should be imposed

against Petitioner. Under the Civil Code:

Art. 2159. Whoever in bad faith acceptsshall pay legal interest if a sum of moneybe liable for fruits received or whichreceived if the thing produces fruits.

He shall furthermore be answerabieimpairment of the thing from any cause,the person who delivered the thing, until

an undue payment,is involved, or shallshould have been

for any loss orand for damages toit is recovered.

In this case, no bad faith can be imputed to the Petitioner as

she was completely unaware that the grant of separation benefits

to her will later on be adjudged as unwarranted as a consequence

of supervening events, of which she had no knowledge. Verily,

Petitioner must not be penalized for the occurrence of

circumstances and events, over which she had absolutely no

lt

e Article 2154, Civil Code of the Philippines

control. Hence, no interest may be charged against the Petitioner'

She is liable to return the amount of Php 767,216.57 without

interest.

Even as it turned out that Petitioner is not entitled to the

separation benefits which were actually given to her for her 2003

illegal termination and 2009 termination, she is also undoubtedly

entitled to separation benefits for the period from June 21, 7979 to

May 26, 2009.

The corresponding recomputation of Petitioner's separation

benefits entitles her to (1) an 1B-month cash payment benefit in the

amount of Four Hundred Ninety Five Thousand One Hundred

Ninety Four and Sixty Nine Centavos (Php 495,194.69); and (2) a

basic monthly pension of Twenty Seven Thousand Five Hundred

Ten Pesos and Eighty Two Centavos (Php 27,510.82)''0 Under R'A'

No. 8291, Petitioner is entitled to receive her monthly pension upon

reaching the age of 60.11 Petitioner turned 60 years old on April

14, 2Ol3; thus, Petitioner has already earned the release of her

recomputed pension for twenty one (2 1) months or the period

covering April 2013 to January 2015. A summary of Petitioner's

earned separation benefits is presented, as follows:

BENEFIT AMOUNT1B-month Cash Payment Php 495,194.69Old-age Pension from April2013 toJanuary 2015

Php 593,316.68

TOTAL Php 1,088,5L1.37

r0 Pursuant to Sec. 11(b) of R.A. No. 8291 .

rt Ibid.

12

On the other hand, as discussed above, Petitioner is still

liable to return the amount of Php 767,216.57 under the principle

of solutio indebiti. Hence, in order to facilitate the immediate

release of beneflts to Petitioner, the total amount Petitioner already

received as separation benefits (Php 767,216'57) should first be

deducted from her recomputed separation benefits (Php

1,088,511.37), in order to arrive at the amount to be released to

Petitioner. Thus:

Total of earned seParationbenefits until IanuarY 2015

Php 1,088,511.37

Total of separation benefltspaid to Petitioner for her2003 and 2009terminations

Less:Php767,216.57

TOTAL Php 321,294.8O

Therefore, the amount of Three Hundred Twenty One

Thousand Two Hundred Ninety Four Pesos and Eighty Centavos

(Php 321,294.80) shoutd be immediately released to Petitioner'

Consequently, the GSIS Operating Unit Concerned (OUC) is hereby

directed to immediately release the said amount to Petitioner and

to resume the monthly pension payments of Php 27,5t0'82 to her

UMID account starting February 2015 onwards.

IN VIEW OF THE FOREGOING, the Petition is GRANTED, the

GSIS OUC is directed to:

(1) Immediately release the amount of Php 321,2g4'BO,

which is the difference between Petitioner's

recomputed separation benefits (Php 1,088,511'37) and

13

the separation benefits she actually received

(Php767,216.57). Petitioner's recomputed separation

benefits consist of the 1B-month cash benefit and old-

age pension from April L4, 2Ot3 to January 2015; while

the separation benefits already received by her consist

of the L8-month cash benefit and old-age pension from

April 14, 2013 to February 2Ol4t2 for her illegal 2003

termination and cash payment benefit for her 2009 final

termination.

(2) Resume the timely and regular release of Petitioner's

monthly old-age pension in the amount of Php

27,510.82 starting February 2015 onwards.

Accordingly, CoC Resolution in Case No. 35-2013 dated May

28,2013 is hereby reversed and set aside'

SO ORDERED.

Pasay City, 3 0 APR 2015

/v)xRT G. VE(!7ARA

ice Chairman

!Ua* q, qrTr^/frrsrl cJcdztr

tnr(te# u

t o,*t

KARINA

GERALDIN

CONSTANTINO-DAVID

MARTINEZTrustee

Trustee

RIE BERBERABE

r? wirh cash giti.

14

OMAN FEL .{k

Copy furnished:

Ms. Francisca D. GonzalezPetitionerBlock 9 Lot 14Juniper St. Jubilation Home Village WestBrgy. Zapote, Biflan City, Laguna

Atty. Julie Marie M. RiveraCounsel for CoCProsecution and Quasi-Judicial Cases DepartmentLegal Services GroupGSISFinancial Center, Pasay City

15

I,VANESSAJOYB.ONGPE-JONES,AttorneyV,oftheGSISLegalServicesiroup, havin-g been assigned as the Hearing Offlcer to draft the Decision inGSIS- i3oard of TrusteeJ Case Nos. 016-13 entitted "In Re: Request to beAllowed to Return separation Benefits Preuiously Received for the Purposei ir"iing the period of Seruice Previously Compensated to Current Periodof Seruici and Recomputation of Separation Benefits"hereby certify_that thestatement of facts herein stated and being presented before this Board isu"ir.ut" and true, based on the records oflhe case, the pleadings and otherdocuments submitted by the parties.

CERTIFICATION

This certification is issued in compliance with Board Resolution No. 198-A

adopted on September 15,2004.

Pasay City, November 17 ,2014.

VANESSAJOY B. O ONESHearing

G S I S ffJ,:',l T."#i,:,"i,"#?',?,',}Jfl li,*f }sffi

OFFICE OF THE CORPORATE SECRETARY

EXACT COPY OF RES. NO. 58 ADOPTED BY THE GSIS BOARD OFTRUSTEES IN ITS MEETING NO. 8 HELD ON 30 APRIL 2015

Approval of the Decision in GSIS Case No. 016-13, fn Re.'Request to be Allowed. to Return Separation BenefitsPretlouslg Receiaed Jor the Purpose oJ Tacking the

Period of Service Preuiouslg Compensated to the CurrentPeriod of Servlce and Recomputdtion of Separation

Benefits, Francisca D, Gonzalez, Petitioner

RESOLUTION NO. 58

WHEREAS, Ms. Francisca D. Gonzalez flled aPetition before the GSIS Board of Trustees, docketedas GSIS Case No. O16-13, appealing the 28 May 2O13Resolution of the GSIS Committee on Claims (CoC) inCase No. 35-2013, which denied Petitioner's requestthat she be allowed to return the separation benefitsshe previously received, in order that her previousperiod of service may be added to her current years ofservice, for the purpose of increasing her benefitsunder R.A. No. 8291;

WHEREAS, pursuant to Section 3O of R.A. No.8291, the GSIS has original and exclusive jurisdictionto settle any dispute arising from the application ofthe laws administered by the GSIS;

RESOLVED, to APPROVE and CONFIRM theDecision in GSIS Case No. 016-13, In Re: Request tobe Allowed to Return Separation Benefits PreuiouslgReceiued for the Purpose of Tacking the Period ofSeruice Preuiouslg Compensated to the Cunent Peiodof Seruice and Recomputation of Separation Benefits,

BOARD MEETING NO. 830 APRIL 2015

Page 2(Res. No. 5A -2015)

Francisca D. Gorrzalez, Petitioner, the dispositiveportion of which states:

"IN VIEW OF THE FOREGOING, thcPetition is GRANTED, the GSIS OUC is directedto:

(1) Immediately release3.21,294.8O, whichbetween Petitioner's recomputed separationbenefits (Php 1,088,511.37) and theseparation benefits she actually received(Php 767,216.57). Petitioner's recomputedseparation benefits consist of the l8-monthcash benefit and old-age pension from April14, 2013 to January 2015; while theseparation benefits already received by herconsist of the l8-month cash benefit andold-age pension from April 74, 2073 toFebruary 2ol4t2 for her illegal 2OO3termination and cash payment benefit forher 2009 final termination.

(2) Resume the timely and regular release ofPetitioner's monthly old-age pension in theamount of Php 27,SLO.82 startingFebruary 2015 onwards.

"Accordingly, CoC Resolution in Case No.35-20f3 dated May 28,2013 is hereby reversedand set aside.

"SO ORDERED."

theis

amount of Phpthe difference

12 wirh cash gift.

t;rrl,,.i,,1

BOARD MEETING NO. 830 APRIL 2015

Page 3lRes. No. 68 -2015)

A copy of the Decision in GSIS Case No. 016- 13is attached and made an integral part of thisResolution.

CERTIFIED CORRECT:

ATTY. MARIA THEREISA ABESAMIS-RAAGASCorporate Secretary

c. ve0crRA KARINA CONSTANTINO-DAVID

"k"HJkTrustee

Chairman

GERALDINE MATrustee

II

l,,l

Trustee

OMAN FELIDE S. IEYES