515 Phil. 518
YNARES-SANTIAGO, J.:
Wherefore, premises considered, the instant claim is given due course and the payment of the subject amounts to the herein petitioner may now be allowed without prejudice to any action for recovery of claimant's accountabilities, if warranted. [9]BSP filed a motion for reconsideration contending that since respondent (1) assumed responsibility effective September 19, 1992, over all the properties under the custody of the former Aircraft Maintenance Chief; [10] and (2) affixed his signature [11] in the list of unaccounted properties, [12] as of February 28, 1995, he thereby admitted his indebtedness to BSP. Invoking the case of Villanueva v. Tantuico, Jr., [13] BSP averred that compensation should take place between it and respondent since they are both creditors and debtors in their own right.
x x x no negligence attended the petitioner's encashment of the treasury warrants. Even assuming that she could be held liable for non-compliance with or violation of some rule or regulation, this Court agrees with the petitioner that Section 624 of the Revised Administrative Code cannot be construed to authorize a deduction of the value of the treasury warrants from her retirement benefits. Said section provides:The case of Cruz, [16] citing Hunt v. Hernandez, explained the reason for such policy in this wise:Section 624. Retention of salary for satisfaction of indebtedness. – When any person is indebted to the Government of the Philippine Islands (or Government of the United States), the Insular Auditor may direct the proper officer to withhold the payment of any money due him or his estate, the same to be applied in satisfaction of such indebtedness.
The Solicitor General, in his comment, is in agreement with the petitioner that her retirement pay may not be withheld by administrative fiat to answer for the shortage incurred while in office [Rollo, p. 99.] This has also been the interpretation applied by the respondent COA Acting Secretary in similar cases [Rollo, pp. 62-63.]
That the retirement pay accruing to a public officer may not be withheld and applied to his indebtedness to the government is settled x x x.
x x x we are of the opinion that the exemption should be liberally construed in favor of the pensioner. 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. Unless otherwise clearly provided, the pension should inure wholly to the benefit of the pensioner x x x.The above ruling was reiterated in Tantuico, Jr. v. Domingo, [17] and Government Service Insurance System v. Commission on Audit, [18] where the Court held that benefits under retirement laws cannot be withheld regardless of the employee's monetary liability to the government. 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. [19]
Sec. 21. Retention of Money for Satisfaction of Indebtedness to the Government. – When any person is indebted to any government agency, the Commission may direct the proper officer to withhold the payment of any money due such person or his estate to be applied in satisfaction of his indebtedness.The aforequoted provision originated from Section 624 of the Revised Administrative Code of 1917. In construing Section 624, the Court held in Villanueva v. Tantuico, Jr., [20] that the "indebtedness" contemplated therein pertains to one that is acknowledged by the employee or one that is adjudged by the court. Absent any of these two circumstances, no compensation under Article 1278 of the Civil Code may be had, thus –
While Section 624 of the Revised Administrative Code does indeed authorize the set-off of a person's indebtedness to the Government against "any money due him or his estate to be applied in satisfaction of such indebtedness," that indebtedness must be one that is admitted by the alleged debtor or pronounced by final judgment of a competent court. In such a case, the person and the Government are in their own right both debtors and creditors of each other, and compensation takes place by operation of law in accordance with Article 1278 of the Civil Code. Absent, however, any such categorical admission by an obligor or final adjudication, no legal compensation can take place, as this Court has already had occasion to rule in an early case. Unless admitted by a debtor himself, the conclusion that he is in truth indebted to the Government cannot be definitely and finally pronounced by a Government auditor, no matter how convinced he may be from his examination of the pertinent records of the validity of that conclusion. Such a declaration, that a government employee or officer is indeed indebted to the Government, if it is to have binding authority, may only be made by a court. That determination is after all, plainly a judicial, not an administrative function. No executive officer or administrative body possesses such a power.In the same vein, Section 265 of the Government Accounting and Auditing Manual explicitly limits the power of COA to retain the retirement benefits of a government employee for the purpose of satisfying his indebtedness only to instances where (1) the employee admits his indebtedness and consents to such retention; or (2) a competent court so directs, thus –
Sec. 265. Retention of salary for the satisfaction of indebtedness to the government. – When any person is indebted to the Government of the Philippines or to any government-owned or controlled corporation or to any other self-governing board, commission or agency of the government, the COA may direct the proper officer to withhold the payment of any money due him or his estate, the same to be applied in satisfaction of such indebtedness (Sec. 37, PD 1145 [21]). However, the retention of the retirement gratuity of a person to satisfy his indebtedness to the government may be resorted to only if the person admits his indebtedness and consents to the retention or when a competent court so directs. (Emphasis supplied)The COA correctly debunked the averment that respondent admitted his indebtedness when he issued a certification assuming responsibility over the properties turned over by the former Aircraft Maintenance Chief. [22] To warrant the application of set off under Article 1278 of the Civil Code, the debtor's admission of his obligation must be clear and categorical and not one which merely arise by inference or implication from the customary execution of official documents in assuming the responsibilities of a predecessor, as in the instant case. Neither would respondent's signature in the list of unaccounted properties as of February 28, 1995 operate as an acknowledgement of an obligation. Suffice it to state that said signature alone hardly satisfies the requisite open and direct recognition of an obligation that would justify the diminution of retirement benefits. There must be an independent evidence showing the employee's intention to unmistakably recognize his indebtedness which was never shown in the present controversy. On the contrary, respondent categorically stated in his February 9, 1999 letter to the BSP that he never admitted any indebtedness nor consented to the retention of his benefits by the bank. [23]
SEC. 134. Separation Benefits. – Pursuant to Section 15 of this Act, the Monetary Board is authorized to provide separation incentives, and all those who shall retire or be separated from service on account of reorganization under the proceeding section shall be entitled to such incentives, which shall be in addition to all gratuities and benefits to which they may be entitled under existing laws. (Emphasis added)As to the provident fund, BSP cannot successfully assert a paramount lien thereon because the provision invoked by it contemplate of losses arising from "offenses" and "debts." Section 5, Article IV of the Rules and Regulations Governing The Bangko Sentral Ng Pilipinas Provident Fund, states:
Section 5 – Bank's LienIn the instant case, respondent was neither found guilty of any offense nor conclusively established to be indebted to BSP. Hence, the latter's assertion of first and paramount lien over the amount due respondent under the provident fund, must fail.
The Bank shall have a first and paramount lien upon the amount to which the erring member is entitled as stated in the preceding Section to cover all losses, costs, and expenses which the Bank may sustain through his dishonesty, defalcation, theft, embezzlement or falsification and other similar offenses.
The same lien shall also apply for any amount due to a member to cover any debt due to the Bank or the Fund. [29]