BIR Ruling [DA-041-99]

January 22, 1999 BIR RULING [DA-041-99] 2nd Indorsement December 16, 1998 Respectfully returned to the Assistant Commissioner, Financial and Administrative Service, the within papers bearing on his request for opinion regarding the proprietary of the payment of the retirement benefits to Ms. Florinda R. Napenas which are being held by the Accounting Division due to the COA Notice of Suspension/Disallowance of the said benefits. cdt The COA' Suspension/Disallowance was issued for failure of the aforementioned employee to furnish the required Original Official Receipts, certifications of travel completed, acceptance, attendance during seminars, exclusive distributorship, auditor's copy of checks, and no signature of claimants on the payrolls for RATA and traveling expenses. In a decision rendered by the COA in Re: Claim of Cesar Ramirez for terminal leave benefits dated January 19, 1995, although not squarely in point, the dispositive portion of which states: "After a circumspect review of the records, this Commission finds merit in the justifications/reasons invoked by claimant Ramirez. To begin with, this Commissioner is not unmindful of the prevailing jurisprudence that when leave benefits are allowed to be accumulated, not to be paid while an employee but to be reserved for old age, then this constitutes gratuity. (Borromeo vs. Civil Service Commission, 199 SCRA 911). A gratuity is that amount paid to the beneficiary for past services rendered purely out of the generosity of the giver or grantor. (Peralta vs. Auditor General, 100 Phil. 1051). As terminal leave benefits may be considered a gratuity, the same is, therefore, exempt from garnishment, attachment or other processes except when there is a court order to that effect or an express consent on the part of the retiree. (Villanueva vs. Tantuico, et al.). Moreover, it is worth mentioning that this Commission had, in the past, ruled that retirement gratuity or any part thereof cannot be withheld by mere administrative fiat, and that the authority granted under Sec. 37 of P.D. 1445 to this Commission to withhold any money due to a person who is indebted to the government does not embrace retirement gratuity unless there is such a court order. (Re: Claim of Vicente Lavides, Jr., COA Decision No. 251 dated August 31, 1981)". (Emphasis supplied) it is very clear that retirement benefits are 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 until there is a decision of the Court that the concerned government employee is held liable to financial accountability, no executive officer or administrative body can withhold the payment of retirement benefits of a retiree. It is axiomatic that all doubts as to the intent of the law in treating retirement benefits should be resolved in favor of the retiree in order to achieve it humanitarian purpose. (DA-244-97 dated July 16, 1997) In view of the foregoing, it is our opinion that the payment of the terminal leave benefits to Ms. Florinda R. Napenas may now be granted and should not be withheld except when there is a court order to that effect or an express consent on the part of the retiree. cdti Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue