BIR Ruling [DA-099-99]

January 16, 1999 BIR RULING [DA-099-99] MEMORANDUM FOR: The Assistant Commissioner (Collection Service) RE : Retirement Benefits of Mr . Eduardo Pamittan Returned to you herewith are the papers relative to your request on whether Mr. Pamittan's case could be patterned to the case of Mr. Franklin F. Hernando who appealed his case to the Commissioner of Internal Revenue citing the decision rendered by the Commission on Audit (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 Tantuatco, Jr. (G.R. No. 53585 dated February 15, 1990). LLphil It is represented that Mr. Eduardo Pamittan retired from government service on October 12, 1998; that prior to his retirement, he was the Head Revenue Executive Assistant of the Collection Service of the Bureau of Internal Revenue; that he has the following outstanding ledger balance from February 24, 1976 to May 23, 1977, when he was the Chief of the Accountable Forms Division; Documentary Science Strip City Stamps Stamps Stamps TOTAL Quezon City 3,145,751.11 5,229,490.98 284,529,898.38 292,905,140.47 that due to the lapse of time since the above outstanding ledger balance were recorded in the books, the supporting documents to adjust the same to zero are no longer available; that the Revenue Accounting Division and Mr. Eduardo Pamittan had exerted all possible efforts to produce the documents and/or to locale documents/papers which might have a bearing on the same accounts, produced a negative result. In the decision rendered by the COA in Re: Claim of Cesar Ramirez for terminal leave benefits dated January 19, 1995, 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 is working 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 gratuity, the same 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. (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 specifically, the terminal leave benefits of Mr. Eduardo Pamittan 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, Mr. Eduardo Pamittan, and which cannot be withheld by mere administrative fiat. Hence, unless and until there is an order of the Court that Mr. Eduardo Pamittan is held liable for his above accountability, no executive officer or administrative body can withhold the payment of his retirement benefits (terminal leave benefits). It is axiomatic that all doubts as to the intent of the law in treating retirement benefits (terminal leave benefits) should be resolved in favor of the retiree in order to achieve in humanitarian purpose (DA-244-97) dated July 16, 1997). In view thereof, this Office is of the opinion as it hereby holds that the instant case may be patterned to the case of Mr. Franklin F. Hernando, wherein the payment of the vacation and sick leave benefits of Mr. Franklin F. Hernando was granted and was not withheld considering that the same is being paid to the beneficiary for the part services rendered purely out of the generosity of the giver or grantor and therefore, exempt from garnishment, attachment or other legal processes except and 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. (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue