The Supreme Court has 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 an unreasonable delay in asserting a right.

In a decision penned by Associate Justice Maria Filomena D. Singh, the Court’s Third Division upheld the rulings of the Government Service Insurance System (GSIS) and the Court of Appeals (CA), which denied the claim of a certain Lopez.

The case stemmed from Lopez’s entry into government service on July 1, 1994, as Clerk I at the Provincial Treasurer’s Office of Negros Occidental. He was issued a Life Endowment Policy (LEP) with a maturity date of July 1, 2017.

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

He returned to government service on Sept. 1, 2012, as Legal Officer II of the City Government of Escalante, Negros Occidental, and was issued a new Enhanced Life Policy.

On July 14, 2017, Lopez applied for life insurance benefits under his original LEP, claiming its maturity benefit.

The GSIS Bacolod Branch Office denied the application, citing GSIS Board Resolution No. 234, which provides that a member who separates from service for reasons other than dismissal for cause or total permanent disability ceases to be a life insurance member upon separation.

Lopez sought reconsideration, arguing that the resolution could not apply to him because his LEP took effect in 1994, while the resolution was issued only in 2001.

The GSIS maintained its denial and advised him to instead apply for the cash surrender value of the policy.

After his appeals before the GSIS Office of the Vice President of the Visayas Operations Group, Committee on Claims and Board of Trustees were denied, Lopez elevated the matter to the CA, which also affirmed the GSIS ruling.

The Supreme Court held that Presidential Decree No. 1146 governed Lopez’s rights under the LEP but rejected the 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 corresponding premiums.

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

Although neither the law nor the LEP specified a period within which the conversion had to be made, the Court said the right must be exercised within a reasonable period.

It found that Lopez’s 15-year delay in asserting his right to convert the policy was unreasonable.

“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 also noted that allowing the claim would prejudice the GSIS because Lopez had not paid premiums on the LEP from the time he separated from government service.

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

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

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