BIR Ruling [DA-024-99]

January 15, 1999 BIR RULING [DA-024-99] MEMORANDUM FOR: Jaime D. Gonzalez Assistant Commissioner Financial Service RE : Accumulated vacation and sick leave benefits of Ms . Teresita D . Sebastian This refers to your 1st Indorsement dated November 24, 1998 relative to the request of Ms. Teresita D. Sebastian, a retired BIR Official, for the payment of the money value of her accumulated vacation and sick leave credits which is being withheld by the Revenue Accounting Division allegedly upon notice of the Commission on Audit (COA) on account of unliquidated amount from Fund 101 (Salaries and allowances), Fund 152 (RATA and Gasoline) and Fund 153 (for Supplies). prcd It is alleged that Ms. Teresita D. Sebastian, being an accountable officer, was investigated by the Commission on Audit and allegedly the latter found unliquidated amounts of the aforementioned funds due to the absence of officials receipts evidencing receipt of checks to cover payment of claims; that all the receipts and vouchers appertaining thereto were all regularly submitted and reported to the Accounting Division on a monthly and/or quarterly basis; that it is impossible for her to locate the said documents since the Accounting Division had acquired custody of the same; and that she has not been informed of any irregularity in her duties during her tenure up to her retirement despite the fact that she was regularly subjected to audit by COA. In a case involving the requests of retirees Gregorio B. Sabayle, then Chief of the Appellate Division and Jaime M. Masa of the Office of the CIR on the issue of whether they should be paid their terminal leave benefits which were also being withheld by the COA for non-compliance with a new COA requirements on the granting of tax refunds to taxpayer-claimants, this Office granted the request of the duo on the ground that the same constitutes gratuity which should be paid to them for services rendered purely out of the generosity of the giver or grantor. Citing the decision rendered by the COA in Re: Claim of Cesar Ramirez for terminal leave benefits dated January 19, 1995 wherein the Petitioner Cesar Ramirez invoked in his favor the ruling of the Supreme Court in Romulo Villanueva vs. Francisco Tantuico, Jr. (G.R. No. 53585 dated February 15, 1990), this Office ruled that "it is very clear that the subject terminal leave benefits constitute gratuity which is paid to the beneficiary for past services rendered purely out of the generosity of the giver or grantor and is therefore exempt from garnishment, attachment or other legal processes except when there is a court order to that effect or an express consent on the part of the retiree and which cannot be withheld by mere administrative fiat. Thus, unless and after their is a decision by the Court that the concerned government employees (who are both retirees, in this instant case) are held liable by the Court for financial accountability, no executive officer or administrative body can withhold the payments of the subject benefits from them. It is axiomatic that all doubts as to the intent of the law in treating the subject terminal leave benefits as "gratuity" should be resolved in favor of the retiree who is entitled to the said benefits upon his retirement in order to achieve its humanitarian purpose." In view thereof, the claim of Ms. Teresita D. Sebastian, a former Cashier IV at the General Services Division of this Office who retired on April 17, 1998, for the payment of the money value of her accumulated vacation and sick leave should be granted except when there is a court order to that effect or an express consent on the part of retiree. LexLib (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue