CTA Case No. 4348 (Decision)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY ARTEMIO S. TIPON, Pet it i o ner, - v�rsus - C. T. A. CASE NO. 4348 THE COMMISSIONER OF INTERNAL REVENUE, Re s p o n d e n t . X- - - - - - - - - - - - - X D E C: B :1: 0 N There is no dispute as to the relevance of the ruling in Commissioner of Internal Revenue v. The Court of Tax Appeals and Efren P. Castaneda, G.R. No. 96016, October 17, 1991, arrd the Resolutio:�n of the Suprerne Cc�tn~t o;)f October 18, 1990 Re: Request of Atty. Be~~r.ardo Z ialci t a for Reconside~~at iorr of the Act ic�rr o;)f the Finarrcial and Budget Office, to wit: government benefLt, terminal leave pay is not subject tc� irrceorne tax", or that the actual service of a govermnerrt employee is the pet~ic�d of t irne fc�r which pay has beerr received, excludirrg the peric�d covet~ed by terminal leave, respectively, to the cas~ on hand. 507

I DECISION C.T.A. CASE NO. 4348 - 2- Plairrly, the cases just cited and the irrstarrt case involve similar issues. In its last "Martifestaticorr" petit iorrer at"gued fot" the appl icat iorr of the doctrine irr the aforecited cases arrd pt"ayed fot" the grant of the reliefs prayed for in his Petition for Review. The following facts predominate the instant case. Orr Februat"Y 15, 1 '387, petit i correr retired from the Philippine National Bank <PNB> a government owned Cot" corrtrolled ccot"pOt"at iorr. Upon his ret i rernerrt, he wa s errtitled to payrr1ertt of the money value o:::.f his accumulated unused vacation and sick leave credits in the amount of P135,357.'37. Against the foregoing amount, the sum of P20,277.44 was withheld as tax on .� i rrcome. Further, from Jartuary 1, 1987 to February 15, 1987, pet it i orter also received from PNB P19,390.26 as salaries and allowances. The amount of P2,937.13 was withheld as tax ort irrcome agair.st the afot"esaid sum. Consistent with the ruling in Castaneda and Zialcita, howevet", the amount of P20,277.44 is refundable pertaining to the first cause of action of petitiorter; while as teo the secortd cause cof action, since ortly P3, 3'30. 26 is the taxable ir.come, or.ly the amount of P8.90 is the tax due. This was arrived at through the following computation of petitioner which we f i rtd correct : 508

( DECISION C.T.A. CASE NO. 4348 - 3- Total C011pensation as reflected in p 19,290.26 P154 1 748.23 BIR For1 No. W-2: 135,357.97 1. Sheet 11 P135,357.97 2. Sheet 12 p 19,390.26 Less: Alllount erroneously reflected as eo~pensation (See Annex "B" p 12,000.00 certification issued by PNB dated Mar. 21, 1988 to the 4,000.00 16,000.00 effect that the su11 of P1351357.97 represents the 110ney p 3,390.26 value of unused leave credits paid as of date of retirement on P 8. 90 Feb. 161 1987l. Under CA 1861 as a~ended1 in relation to Sec. � 23,214.57 29(cl (7) (BJ of the National Internal Revenue Code, the Court (p 23,205.67) of Tax Appeals in the case entitled "Efren P. Castaneda v. The C0111issioner of Internal Revenue, C. T.A. Case No. 3809 held that the 110ney value of leave credits is an ite~ Mhich should not be included in gross incoMe since it is exe~pt fro~ taxation Correct AMount of Gross CoMpensation Less: Exe~ption Married Special IP4,000.00 if aggregate gross iY'ICOIII! is not 10re than P201 000.00J Taxable Inc01e Tax Due Less: Tax withheld (See Sheets 11 & tel Total Alount of Tax Due/ (Refundable) 509

. �'' DECISION C.T.A. CASE NO. 4348 - 4- WHEREFORE, the Court renders judgrnant in favor Respondent is hereby ordered to REFUND to petitioner the arnounts of P20,277.44 .and P2,937.13, or a total of P23,205.67 which ware deducted by respondent on the erroneous presumption that petitioner's termin.al leave pay is subject to tax. SO ORDERED. Quezon City, Metro Manila, July 16, 1992. Q~Q... ~ ERN~STO D. ACOSTA Presiding Judge I CONCURa DADIVAS-FARRAL S Associate Judge CERTIFICATION I hereby certify that this decision w.as reached after due consult at ion between the rnembars of the Court of Tax Appeals in .accordance with Section 13, Article VIII of the Constitution. ~~.x;Q~~ ERNESTO D. ACOSTA Presidir�g Judge Court of Tax Appeals 510