The Supreme Court (SC) denied a former government employee’s claim for maturity benefits under a government life insurance policy, ruling that his 15-year delay in seeking to convert his compulsory insurance into an optional policy constituted laches, or unreasonable delay in asserting a right.

In a decision penned by Associate Justice Maria Filomena D. Singh, the Court’s Third Division upheld rulings by the Government Service Insurance System and the Court of Appeals denying the claim of Lopez.

Lopez entered government service on 1 July 1994 as Clerk I at the Provincial Treasurer’s Office of Negros Occidental and was issued a Life Endowment Policy with a maturity date of 1 July 2017.

He separated from government service on 8 May 2002 but did not apply for GSIS benefits or seek to convert his compulsory life insurance into an optional policy.

Lopez returned to government service on 1 September 2012 as legal officer II of the City Government of Escalante, Negros Occidental, and was issued a new Enhanced Life Policy.

On 14 July 2017, he applied for benefits under his original LEP, claiming its maturity benefit. The GSIS denied the application and advised him to instead claim the policy’s cash surrender value.

The Supreme Court held that Presidential Decree 1146 governed Lopez’s rights under the LEP but rejected his argument that his compulsory life insurance automatically converted into an optional policy when he left government service.

The Court said a separated employee must signify the intention to convert the compulsory insurance into an optional policy and pay the required premiums.

The LEP provided two options upon separation: terminate the insurance and collect its cash value, or convert it into optional insurance and pay the required premiums.

Although neither the law nor the policy specified a period for conversion, the Court said the right must be exercised within a reasonable period.

“Fifteen years after Lopez’s separation from the service is not a reasonable period for him to choose to convert his LEP into an optional insurance and claim benefits thereunder,” the Court said.

The Court noted that allowing the claim would prejudice the GSIS because Lopez had not paid premiums on the LEP after leaving government service.

“Thus, Lopez is already barred by laches from claiming the maturity benefits under the LEP,” it said.

The ruling, however, did not deprive Lopez of all benefits under the original policy. He may still claim its cash surrender value as of the last day of his government service.

The Court also said Lopez’s return to government service in 2012 did not revive the original LEP because he received a new compulsory life insurance policy when he reentered government service.