G.R. No. 205837. November 21, 2017.
PHILIPPINE INTERNATIONAL TRADING CORPORATION, Petitioner, vs. COMMISSION ON AUDIT, Respondent.

FACTS

The Philippine International Trading Corporation (PITC), a government-owned and controlled corporation, sought to annul a Commission on Audit (COA) decision denying its request to amend its 2010 Annual Audit Report. The audit report contained provisions disallowing the payment and accrual of liability for retirement benefits under Section 6 of Executive Order (E.O.) No. 756. This section granted separated employees a gratuity of one month’s pay for every year of service, computed at the highest salary plus all allowances.
PITC had continued to grant these benefits to its qualified employees long after the issuance of E.O. No. 877 on February 18, 1983. E.O. No. 877 mandated PITC’s reorganization to be completed within six months and provided that personnel laid off under the new structure would be entitled to the separation benefits under E.O. No. 756. The legality of PITC’s continued application of these benefits beyond the reorganization period was previously resolved by the Supreme Court in G.R. No. 183517 (2010), which ruled that the grant was a temporary incentive only for the reorganization period.

ISSUE

Whether the COA committed grave abuse of discretion in denying PITC’s request to amend its audit report concerning the disallowance of retirement benefits under E.O. No. 756.

RULING

The Supreme Court dismissed the petition, upholding the COA’s decision. The Court found no grave abuse of discretion. The legal logic is anchored on the doctrine of conclusiveness of judgment or “bar by prior judgment.” The core issue regarding the nature and duration of the retirement benefits under Section 6 of E.O. No. 756 had already been definitively settled in the earlier case, G.R. No. 183517. In that decision, the Court explicitly ruled that the gratuity was a temporary measure intended solely as an incentive for employees affected by the reorganization mandated under E.O. No. 756 and its successor, E.O. No. 877.
The Court previously held that E.O. No. 877, which required completion of the reorganization within six months and repealed conflicting provisions of E.O. No. 756, clearly supplanted the earlier executive order. The benefit was not a permanent retirement plan but was limited to the six-month reorganization window. Therefore, PITC’s continued accrual and payment of these benefits beyond that period had no legal basis. Since the matter was already settled with finality, PITC could not relitigate it. The COA correctly applied this established judicial precedent in its audit disallowance.