Tantuico vs. Domingo

Retirement benefits duly approved under R.A. No. 1568 may not be withheld in whole or in part to answer for alleged fiscal accountability pending audit, the laws granting them being liberally construed in favor of the retiree and expressly exempt from garnishment, levy, or execution. The re-audit of a former accountable officer's transactions was not aborted where its findings were still tentative, without prejudice to due process in commenting thereon.

Francisco S. Tantuico, Jr. served as Acting Chairman of the Commission on Audit from 1975 and as Chairman appointed January 26, 1980 for a seven-year term. Respondent Eufemio Domingo succeeded as COA Chairman after the post-EDSA transition, with the other respondents impleaded in connection with audit and clearance functions. The governing framework included R.A. No. 1568 vesting final approval of the Auditor General's retirement in the COA and granting life pension, and P.D. No. 1146 exempting government retirement benefits from attachment and execution.

On January 26, 1980, Francisco S. Tantuico, Jr. was appointed Chairman of the Commission on Audit for a seven-year term expiring January 26, 1987, after discharging the functions in an acting capacity since 1975. On December 31, 1985, in preparation for retirement, he applied for and obtained clearance from all money, property and other accountabilities for 1976 to December 31, 1985, bearing all required signatures and certification that he was cleared by the Commission, subject to noted suspensions and disallowances still in process of settlement in the amounts of P36,196,962.11 and P28,762.36, reconciliation of accounting and property records, and turnover of property assigned to him as agency head.

After the EDSA Revolution, petitioner submitted his courtesy resignation to President Corazon C. Aquino and relinquished office to newly appointed Chairman Teofisto Guingona, Jr. on March 10, 1986, applying for retirement effective immediately that same day. He sought a second clearance for January 1, 1986 to March 9, 1986, which obtained all necessary signatures except that of Chairman Guingona, who failed to act thereon. Chairman Guingona was later replaced by respondent Chairman, who a year later issued COA Office Order No. 87-10182 creating a committee to inventory all equipment acquired during his two predecessors' tenures.

On May 7, 1987, respondent Chairman indorsed petitioner's retirement application to the Government Service Insurance System, certifying among others that petitioner was cleared of money and property accountability and that no pending administrative and criminal cases existed, with the application thereafter returned to COA pursuant to R.A. No. 1568. On September 25, 1987, the inventory committee submitted its report recommending petitioner's clearance from property accountability, there being no showing of personal gain or primary liability for missing property. Dissatisfied, respondent Chairman directed the committee to explain why no action should be filed against its members for failure to complete physical inventory and verification, exceeding authority in recommending clearances, and disregarding Section 102 of P.D. No. 1445, and the members were subsequently administratively charged.

On January 2, 1988, respondent Chairman created a special audit team under COA Office Order No. 88-10677 to conduct financial and compliance audit of COA transactions during petitioner's tenure from 1976 to 1984. On February 28, 1989, the team submitted its report stating the audit was a selective review of post-audit transactions disclosing deficiencies adversely affecting COA's financial condition and operations, with constraints such as unavailability of records and personnel movements, mentioning several officials including petitioner as possibly responsible without making recommendations. On November 20, 1989, respondent Chairman decided the administrative case against the inventory committee's principal members, finding them guilty and imposing reprimand, with stern warning to others except one exonerated member.

In a letter dated December 21, 1989 received December 27, 1989, respondent Chairman informed petitioner of approval of retirement under R.A. No. 1568 effective March 9, 1986, but allowed payment of only one-half of the money value pending final results of audit on fiscal responsibility. Petitioner requested full payment on January 22, 1990. He was furnished the special audit report only on January 29, 1990, with attached November 14, 1989 letter requiring comment within 30 days. Petitioner submitted a letter-complaint assailing the re-audit of closed accounts and its manner, was furnished requested documents and given another 30 days, then requested working papers on September 10, 1990, which was denied as restricted under the State Audit Manual; reconsideration was denied with a non-extendible five-day period to comment. Instead of commenting, petitioner sought clarifications and 90 days given the ten-year coverage, while respondent Chairman demanded accounting and turnover of Fiscal Administration Foundation, Inc. assets within 30 days. As of filing on December 21, 1990, no criminal or administrative charge had been filed against petitioner in connection with his service, and he had been paid only half his benefits after seven years since retirement.

• Withholding of Retirement Benefits: Petitioner argued that release of the remaining half was purely ministerial notwithstanding prior clearances and respondent Chairman's certification of clearance, and maintained that regardless of monetary liability later discovered, benefits under retirement laws cannot be withheld.
• Re-audit of Settled Accounts: Petitioner maintained that the re-audit should be enjoined because (a) it involved settled and closed accounts that under Section 52 of the Audit Code can no longer be reopened, (b) it was initiated by respondent Chairman alone and not by the Commission as a collegial body, (c) the special audit team report was faulty in view of admitted constraints such as unavailability of documents and personnel turnover, (d) it covered transactions even after retirement, (e) no prior notice was given, (f) access to working papers was denied, and (g) respondents were barred by res judicata.
• Need for Time and Documents: Petitioner argued that 90 days was needed to comment given the ten-year coverage and that working papers and clarifications were necessary to prepare his comment.

• Withholding of Retirement Benefits: Whether respondent Chairman may withhold one-half of petitioner's retirement benefits pending final results of audit on fiscal responsibility.
• Validity of Re-audit: Whether COA Office Order No. 88-10677 and the audit report dated February 28, 1989 should be nullified and the re-audit aborted.

• Withholding of Retirement Benefits: No. Retirement pay accruing to a public officer, once cleared and approved, may not be withheld and applied to alleged indebtedness, being exempt from garnishment, levy, or execution and liberally construed in favor of the retiree.
• Validity of Re-audit: No. Nullification was denied, the audit findings being still tentative and petitioner having subsequently cooperated, but he must be afforded reasonable time and full access to working papers to comment on adverse findings.

• Withholding of Retirement Benefits: The prohibition was grounded on prior clearance and approval curing infirmities: the December 31, 1985 clearance, the second clearance signed by all except the incoming Chairman, and the May 7, 1987 indorsement certifying clearance and absence of pending cases. Because retirement had been approved under R.A. No. 1568 effective March 9, 1986, further withholding to answer for subsequently discovered liability was impermissible. Reliance was placed on Romana Cruz vs. Hon. Francisco Tantuico, 166 SCRA 670 (1988), where withholding for negligent encashment of falsified warrants was rejected after clearance, and on the rationale from Hunt vs. Hernandez, 64 Phil. 753 (1937) that pensions inure wholly to the pensioner and may not be appropriated administratively when they cannot be attached on execution under Act No. 4051. Section 4 of R.A. No. 1568 and Section 33 of P.D. No. 1146, as amended, expressly shield benefits from garnishment, levy, or execution, and retirement laws are liberally interpreted for sustenance under Profeta vs. Drilon, 216 SCRA 777 (1992). Seven years of half-payment without any criminal or administrative charge underscored the unreasonableness of continued withholding.
• Validity of Re-audit: Abortion of the audit was refused because initial objections to authority and manner gave way to cooperation with examination of accounts, leaving only tentative partial findings on accountability. Due process, not nullification, was the remedy: petitioner was entitled to reasonable time to comment, and fairness required access to working papers where the report spanned ten years (1976-1985) and numerous transactions, verification being impossible from conclusions alone. Accordingly, the Office Order and report were sustained but conditioned on disclosure of the basis for findings.

• Non-withholding of retirement benefits — Retirement pay accruing to a public officer who has been cleared from money and property responsibility may not be withheld and applied to his alleged indebtedness to the government. Applied to annul the retention of one-half of petitioner's R.A. No. 1568 benefits pending audit.
• Exemption from execution of pension and retirement benefits — Under Section 4 of R.A. No. 1568 and Section 33 of P.D. No. 1146, as amended, benefits are not subject to garnishment, levy, attachment, or execution; administrative withholding to satisfy claims would accomplish indirectly what cannot be done directly. Applied to bar retention as security for possible fiscal liability.
• Liberal construction of retirement laws — Retirement laws are liberally interpreted in favor of the retiree to provide sustenance and comfort when no longer capable of earning livelihood. Applied to resolve doubts toward full payment and monthly pensions from March 1991.
• Pension as bounty for past service — Pension flows from government graciousness to reward past services and support the pensioner and his family, inuring wholly to the pensioner unless clearly provided otherwise. Cited from Hunt vs. Hernandez to support release in full.

• "Pension in this case is a bounty flowing from the graciousness of the Government intended to reward past services and, at the same time, to provide the pensioner with the means with which to support himself and his family." — States the benign rationale for shielding pensions from setoff, borrowed from Hunt vs. Hernandez and applied through Romana Cruz vs. Hon. Francisco Tantuico.
• "Well-settled is the rule that retirement laws are liberally interpreted in favor of the retiree because the intention is to provide for the retiree's sustenance and comfort, when he is no longer capable of earning his livelihood (Profeta vs. Drilon, 216 SCRA 777 [1992])." — Articulates the interpretive canon compelling full payment despite pending audit.
• "It would be unfair to expect petitioner to comment on the COA's findings of the report without giving him a chance to verify how those findings were arrived at." — Defines the due-process condition for sustaining the re-audit, requiring access to working papers for a ten-year selective audit.

• Romana Cruz vs. Hon. Francisco Tantuico, 166 SCRA 670 (1988) — Controlling precedent holding that retirement pay of a cleared employee may not be withheld for alleged negligence in encashment of warrants; followed to order full payment.
• Hunt vs. Hernandez, 64 Phil. 753 (1937) — Source of pension-as-bounty rationale and rule that Act No. 4051 exempts gratuity from execution and bars indirect administrative appropriation; cited via Tantuico.
• Profeta vs. Drilon, 216 SCRA 777 (1992) — Authority for liberal interpretation of retirement laws in favor of retiree; applied to resolve withholding issue.

• Section 4, R.A. No. 1568 — Provides life pension to the Auditor General and exempts benefits from garnishment, levy, or execution; applied to prohibit withholding of petitioner's approved benefits.
• Section 33, P.D. No. 1146, as amended — Declares benefits under the Revised Government Service Insurance Act of 1977 not subject to attachment, garnishment, levy, or other processes; applied as additional shield for retirement benefits.
• Section 102, P.D. No. 1445 — Government Auditing Code provision invoked by respondent Chairman against inventory committee for recommending clearance; noted as basis for administrative charges against committee members.
• Section 52, Audit Code — Invoked by petitioner to argue settled and closed accounts can no longer be reopened; rejected as ground to abort tentative re-audit.
• Section 624, Administrative Code of 1917; Section 3, Act No. 4051 — Contrasted in Hunt vs. Hernandez rationale to treat the later exemption from execution as exception to general setoff authority; cited to bar administrative appropriation of pension.

Narvasa, C.J., Cruz, Feliciano, Padilla, Bidin, Regalado, Davide, Jr., Romero, Nocon, Bellosillo, Melo, Puno, Vitug and Kapunan, JJ., concur.