BIR Ruling [DA-109-99]

February 19, 1999 BIR RULING [DA-109-99] MEMORANDUM: TO : Ms. Estelita V. Datu Chief, Personnel Division This refers to your 1st Indorsement dated August 28, 1998 requesting information as to whether or not the request of Atty. Jose F. Del Castillo III to be included as one of the claimants for death benefits of the late Jardiolin Del Castillo Ureta may be given due course. LLjur Based on the attached records, the late Jardiolin Del Castillo Ureta died on May 16, 1998 while still in active service as Regional Director of Revenue Region No. 6, Bacolod City; that the deceased died without any issue and was survived by her husband, Gil S. Ureta, her brother, Jose Francisco Del Castillo III and another brother also named Jose Francisco Del Castillo, Jr.; that while still alive, the deceased Jardiolin Ureta allegedly told claimant Jose Francisco Del Castillo III that she (Jardiolin) had not changed the names of their parents, Spouses Jose Del Castillo, Sr. and Resurreccion Francisco, as beneficiaries in her GSIS and BIR insurance benefits; that Sps. Jose Del Castillo Sr. and Resurreccion Francisco had already died, leaving Jose Francisco III and Jose Francisco, Jr. as the surviving heirs to the intestate estate of their parents which include their rights and interests over the intestate estate of the deceased Jardiolin Ureta. Retirement benefits are payments for services provided after reaching the retirement age or upon withdrawal from one's position or occupation and are separate and distinct from the salaries received. It was held in Ferrer vs. GSIS (12 CA Rep. 361) that retirement benefits are not conjugal properties but belong to the beneficiary designated by the deceased member. (p. 179, The Family Code of the Philippines, Annotated, 1991 edition, by Ernesto L. Pineda) Furthermore, it was held in the case of Vda. De Consuegra vs. GSIS (37 SCRA 315) that in the case of the proceeds of a life insurance, the same are paid to whoever is named the beneficiary in the life insurance policy. The insured in a life insurance may designate any person as beneficiary unless disqualified to be so under the provisions of the Civil Code. In the absence of any beneficiary named in the life insurance policy, the proceeds of the insurance will go to the estate of the insured. In case of a retirement insurance where the employee failed or overlooked to state the beneficiary, the retirement benefits will accrue to his estate and will be given to his legal heirs in accordance with law, as in the case of a life insurance if no beneficiary is named in the insurance policy. As can be gleaned from the Whereas clauses of Presidential Decree No. 1146 as amended by Republic Act No. 8291 (otherwise known as the GSIS Law), the GSIS policy provided to the government employees are in the nature of insurance coverage and social security whereby an employee, in case he outlives the policy, gets additional benefits in the form of retirement pay or basic monthly pension and old-age pension benefit (Sec. 11, RA 8291) In this light, where the GSIS policy and the BIR insurance policy of the late Jardiolin Del Castillo-Ureta has a designated beneficiary, the proceeds of the death benefits shall be granted to the named beneficiary to the exclusion of the other heirs, provided that the named beneficiary is not disqualified to be so under the Civil Code. However, in case Ms. Ureta failed or overlooked to designate any beneficiary, the retirement benefits will accrue to her estate and will be given to her legal heirs in accordance with the law of succession. In conclusion, the request of Atty. Jose F. Del Castillo III to be included as one of the claimants for death benefits of the late Jardiolin Del Castillo-Ureta may only be given due course in case the decedent has failed or overlooked to designate a beneficiary. Thus, the claim of Atty. Jose Francisco Del Castillo III based on Article 1001 of the Civil Code which provides, viz: "ARTICLE 1001. Should brothers and sisters or their children survive with the widow or widower, the latter shall be entitled to one-half of the inheritance and the brothers and sisters or their children to the other half." shall apply. In cases where the premiums are paid out of conjugal funds, the surviving spouse shall get one-half (1/2) as his share in the retirement benefits as part of the conjugal property of the spouses and one-half (1/2) from the share of the decedent. The remaining one-half share of the decedent shall be distributed among her brothers in accordance with the foregoing provisions of the Civil Code. However, we have entertained some serious doubts concerning the genuineness of the Application For Retirement Benefit under Republic Act No. 1616 executed and to be effective on May 16, 1998 which, incidentally is the date of death of Director Ureta. Surprisingly, two (2) applications were accomplished one by the husband Gil S. Ureta and the other purportedly by the deceased herself by affixing her thumbmark thereon. It will be noted however, that in both applications supposedly accomplished at the point of death, only the name of Gil S. Ureta appears thereon as the beneficiary. This runs counter to the allegation of Atty. Del Castillo that the late Director Ureta did not change her beneficiaries, i.e., Sps. Jose Del Castillo and Resurreccion Francisco, in her GSIS insurance policy contract. To resolve the issue, the GSIS policy contract of the deceased should be secured in order to determine her true beneficiary/ies . The other alternative is to refer the matter to the GSIS which has original and exclusive jurisdiction to settle controversies arising under the GSIS Laws. Cdphil Please be guided accordingly. (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue