CTA Case No. 4955 (Decision)

� f t �~ v . REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY FERNANDO D. SAN RAMON, P et i t ioner, -- - vet~s u s C.T.A. CASE NO. 4955 THE COMMISSIONER OF INTERNAL REVENUE, )( - - - - Res ponde nt . - - - - - - )( DEC I s 0N (Judgment on the Ple~dings) This p(�?tition s e f? I< s ,t o !; e ~ as i d .e the fin a 1 d e c i s i on of \ assessing petitioner the amount of P8,712.69 inclusive of i n c t�� e me n t s , as income tax deficiency for the 1989 due to the alleged failure of the latter to include cash gift and commutable representation and trans po~t a tion allowance <F~nH-)) of his taxable incomf?. The undisputed facts are as follows: 1. an official of � the But~f?au of 15, 1990 his c.mnual income tc.~x re turn for 1989. On ~Tunr> 11' 19'32, .petitioner received from the .I l�' f?~:;pond(�?nt: Commissionf?t~ o f Int(~t~ nal income tax 1 034

.' DECISION - C.T.A. CASE NO. 4955 .. - 2- assessment notice dat e d Ma y 199 2 i n the am ount of PB,7 12.69, details of which are s h own b elo w: Tax Due <Cash gift and RATA > ~) l.lt'Ch at' rJ e 1 , 0BB. B6 I n t et'e st Co mpt' om is e 2, 258 . L~ 1 Tot<::-\ 1 _l.s_!2Q.o. 0 0 _, ~8,? 1 2.59 Petitioner timely protested the a b o ve assessme nt on 19~1~~: in a lettet' dated J�une 1 '3, 1 r:392 add t� e s sed to Director Sol E. Hubahib of Bureau of Internal Re v e nue Region 7 :in Cebu City. 1993, petitio n e r received f r om the t' e s p o n d e n t t h e latter's final decis ion d ated Septe mb er 2 4, 1992 denying petitioner's protest for l ack of legal bas is . Thus, thi~; petition fot' t'f?View. Afte r the respondent filed his an s wer , p eti tioner, i n h is re pl y , moved for judg me n t on the pl eadings sta t i ng that : "Considet�ing that s�J b stant i a ll y all matet'i al facts alleged in the pet i tion h ave been a d mitte d by the respondent, and th e rem ai ning iss u es are purely legal in nature, pe titi oner here in, t' e ,, p e c t f '-' 1 1 y x x x mo v !.'~ s t h .:~ t i t s h e at' i n g <s i c ) o n June 7, 19'33 and thereafter be di spense d with and instead, respectfully prays for judgment on the pleading s under Section 1, Rule 1 '3 of the Ru les of Co tH�"'t �� � (C .. T. (..). F~ e co t... c1 s, p. 33 > Th e applicable provision of the Ru l es of Co urt reads as follows: "Sec. 1. Judgment OQ the pleadi n gs.- Whe t' e an answer fails t o tender an iss u e , or oth e r wise admits the material allegations of the adverse p <.H'ty' s plf?<.:uhng , �the co~.n-t may , o n motion of tha t pat� ty, d:i. t"ect .judgm��~ nt em such pleadin g . But i n actions for annulment of marria g e or for legal

DECISION - C.T.A. CASE NO. 4955 ) - 3- !;,ep<:n'e.~t: icm~ the mattn' ie.~J. �f'acts alleged in compl a int shall a lway s be pt'() V f?d � II This Co urt hereby grants the motion since re spondent's answer admitted tl1e mat e rial al leg atio n s of the petitioner's plr�~ c:\dings. "In t' uling upnr, C:\ motion f o r' jud~~m e nt or, the pleadings, the co urt s hould co n side r the whole t' eccn �' d <~nd givE~ juc:lgmt~nt fot' the pat'ty who, on the whol e , a pp !?<.H'S to b~~ entitled to judqment. The ju d~1men t on the plr~.:H:Iinh15 ITI C:\Y b�~ ba se d upon the pleading s a nd t he exhibit s attach ed there to and subseq u e ntly introduced in evid ence. <Mar tin , Rules of Court , 1989 Eel., p. 555) "DrH~ who pt'ay~; fen' jt.1dgmr~nt on the pl ea ding s w :i i:: 11 out offer' in g pt' o c f as i.: o t h f! t t ' '-' t h of hi s aller.F:'ticm, and wjtho ut giving th�~ opp osing p e:n ��t y <:H l o p p <H' t u n i t y t D i n t t' o d u c e h i. s !? v "i d f? n c e mu !; t b e understood to have admitted the truth of all the material and relevant allegat ions of the opposing par��t y e:\ nd to h ave r�' estec:l his motion fm�. judgmt~nt on t h n !; e .::d 1 e g a �t i n n s t .:.:11 <~? n t D ~] !? t h e r' wi. t h s u c h o f h i s o wn .:~ s cH' e e.~ d 111 i t t e d i n t h e p J. e ad i n g s � " ( .Tb .id., p .. 55'+) The only issue to be decided by this Court i s whether or�' not g if t a nd RATA amo un ting to Pl,OOO.OO and P21 , 600.00, respe ctiv e ly, constitute taxable income on the him li <'.:\ bln r=or' deficiency income t."t>< in thfl <~ mount of PB 1 7L=.::. 69 :i.nclu~;i ve of inct'e ments. not s ubjt~c t t 0 i 11Ctllll �~ t <~X but t () gi ft or donor' s tax for ~'.i h i ch th f? d<Jnot�, is In s upp<H't of his <:\J. l��~gation, he adv.:mct~d the. follo wing ar� guments: " C3i ft i !; !;omethin[~ giv !?n <H' b!?stow!?d, as a pl�'est~nt, donatio n en�� C>ff tn�in g e.~s e.~11 act of love and a f fectio n , or libera l ity and kindnes s , f r eely y i v �~ 11 t o an y b o d y , o t' t o wh o m i t ma y c on c e t' n , f cw s o mf? !; p f? c i a l r' !? a s o n s � I n t IH? c.:~ �; e o f c a s h q i f t , A _,

DECISION - C.T.A. CASE NO. 4955 - 4- it is granted to all government offi cials and e mp l o y e !'? s , t o b f?at t? w l; t~ "" �-- o t~ d i n .:.n~ y i n f l at i. o n , "" s a r,; nc i a 1 am e 1 i cn�-at ion, coup 1 �~d with c\ Ch t~i"st ian s pi. r~ �i t , a !; a t o ken f (H~ t h e Ch t~ i s t ma s seas !J n. That i s vJh y, i t i s ~~iven in Dect:!mbet~ as a Cht~i~;trnas gift to a ll con ce rned and that is why it is called a c.:~.~; h r~ i f t be c au s e i t i s a g i f t i n ca s h � " <P !? t i t i o n f o t~ F< !? v i f? w, c-; � T � f-i � He co r' rJ !; , p p � '~ - 5 ) 11 C "' ~; h g i f t i s n e v e r~ g t~ an t E~ d a s a c o mp e n s at i o n or r emuneration or payment for an ything, services or otherwise, henc e it sho uld not be su bj ected to income tax, as contemplated under Section 21 (a) of th�~ Tc<X Code. It is misc1.:~ssj fied as an income a n d t a x ;.:~ b l f? u n d e t' S e c t i o n 2 o f f-~ f? v e n IJ e Rf? g u l a t i o n No. 2 - 82 as amended by Revenue Re gul ation No. 12- 85. II ( .lb.id.) Republic net No . an Act a u t h o r~ i z i n g annue:\1 C1�1t~ i �:; t Ill a �; I.J o n 1.1 s to n c.,t ional and lo ca l government officials an c:l E~ 111 p 1 o y E~ e s , pr�� o v ides : "~~ec~ . 1.. (-)11 o�ffic:-ic"":\ l s ancl E~mploy�-?es of the l'! ;..:~t i on a 1 C1o v f?1��� n Ill f?llt who h;.;~ v f? ~D d ~t~~-g_ at __!__gas t _f.o '-tt::.._.J!l_Q_l.lt.ll~--� of _.2J~X'..Y-.i.�_g_._f.r::_o m ..�J i."li!_!-te.' t~..:t_~ t !J Octo bet~ .JL._9_L_.. ..!5...S' c b...... Y f? ~~t::_~~D..fl__wh_Q_____~l.C1~--.----'l.!!!.J1 l o y_e d i n t h e !1.~~-:L~~ED..!!l_g.n~t; !5J.~_c_y_,i_~;_g____i:~.3.._....Q.f.___~~ c t...Q.b ~~ t~ 3 1 o f t h e s a me .Y..!?...s~t::.____ �:. hall f?ach �r"'!?Cf~ive a Cht~istm.:.:~s bonus equivc<lent t o OTH~ month basic ~,c.~J. e:n~ y and additional cas h gift of One thousand pesos ( P 1 , 000. 00) � " ( Un dE~ t~ ~;cot~ in g sup p J. i �~ d ) � no doubt fl-~ o m t 11 e t .i t l e o f t h e s t a t u t e t h at the Pl,OOO.OO cash gift i s i n c J. u d e c:l i n t h e t e t~ m " C h t~ i s t ma s bonu �; 11 � (:i S S U C h i t W 0 IJ l d 0 n l y l f? ad i; 0, a b 5 t_lf' d i t y i r= t a X W i S ~? , c as h gift woul d be treated differently from Christmas bonus which is s ubje c t to income t ax . " T h e b o d y o f a s t at u t E~ c �~ n n o t b e b t~ o ad e t~ t h an the l;itlf? wi thout s ome of its pt'OVi!;ions , pel�~ h c.'\ p s th e ent:it~ e act , being invalid. " <Sut herl and Statuto-r~y Construct i on, Vol. lA, '~th Edition, 137C.:, p. �?9 ).

DECISION - C.T.A. CASE NO. 4955 -s- I f t: h e in t c n t ion of h t f:) 1 e g i s 1 at tw �~ in en c:~ct in g RA . No. GfJ3(.; :i s t o I] i v !? donation tD tllf? govf? l'n ment offici<:\l s and f:.'mpJ.oyee~; , it li-JOU1d haV�> included such in t h e t i t l e ; or t o avo id invalidity, it would have enacted a separate b ill for t h <':\ t p c:i t ' t j_ C IJ 1 C:\ t ' pUt'pOS�~. The statute is c le ar that t h ere vJ<:<s no sucl1 in1;ention. Furthermore, contrary to petition e t' ' s belief, the ma i n c o n !5 :i cJ f? r~ <::>. t i o n in g ;-�� <:?. n t i n !] the c~'l sll ~i i ft is not put'e 1 i b E! t' .;,, 1 i t y o n t h e of the ~1 o v E! t ' n me n t but fo t' the by g (J v (:' t "' Tllll (i!!lt offici.,;;~.l. s and f?mployees .:n i~,. ing fl 'D ITI �~mp loyf:) t'�- Pmployt~e 1'P l .::1t ions h jp. Co 111 p f?n s <."'\ t :i on f o t' pet' :.; on a 1 set' v ice s of what e ve t ' !-< i n cl '"' n d fot' ITI p.::licl constitut�~s inC O ITI�~ . It includes commission';;;, b o n 1.1 s f? s , comp e nsation fot' by employees. The import a nt thing is that it b !�? 1�� !? c e i v t'? d f <:H' !:; e t' v i c e !5 f or work perfor med. ( Arana s , Up d a te d Nat i onal In t ern al Revenue Code, 1988 Ed . , The E) I.! p�r�r~ me several occasio n s, t' u l e d t hat :; i n c e t 11 f? Cht�i st mc."'\s bonus was paid reg u larly over a perioJ then it becomes part of the wages or salaries of f:'mploye es .::md t hu s not to be considered a g ift <Philippine Air Lines, Inc. vs. Philippine Air Lines Employees Ass o c iation, et. a l., l3 SCRA '+83; National Wa terw o r ks and Se wera ge Au thority vs. NAWASA Consolidated Labor Un io n s, et. al., 21 s crn 203>.

DECISION - C.T.A. CASE NO. 4955 - 6- Petit:i. O Tl�~) �-1 s l~(�~ lic:mce to SE-�ctions 28(b) (3), 9 1 and r:32 of the T c'\X Code f?Xcl-uding gifl;s, bf?qUf?sts , cHid dev' :ises ft~om gross incom e and providing for donor's tax, i s therefore out o�f context. With reg ar d to RATA, petitioner claimed that: " r~ e s p o n d 1;1 n t >< >< x , a ~p~ f?f?d w i t h t h e h e t~ e i n petitioner that RATA is in deed not a c o mpensation subjf?Ct to income tr.:\X , I t is a commutable r~e pl�~ es�?Tlt<":\tiCJn and t r~e:\nsp or~ta ticln allow<~nce, a re i ~bursement for th~ represe nt at ion and transportation expenses incurred in the p !? 1�~ f o r �m<.< n c e o f o 11 e ' s r.i u t :i f? s , t' ;.~ t h tH~ t h an a s an 2\d dit jo rli::\1 c:� c>nrp�?nr~t?A l:icln and l~ het't? fnt' t~ not subject to ir l C!)III!:? t<:~x and et)n~if?querl'bly , to withholding ta>{". <Ptd;ition f'or~ Fh?view, C.T.(~. Rt?ctn�ds, p. f, ) denied pet i tioner's claim s t a t i n g th.:~t: "With l�" �HlptH~ �t 'l;o t lie iss1.1e o n R epr~esentation and Transportation ~llcwance <RnTA>, unde r Revenue Cir~cul.:n~ Nt>. ~;.o -�~H, d.:~ted J�.1ly 9, 1 991. , cl.:n~ifying BIR Ruling No. 21 Ca l - 000-00 -0G2-9 1 dated April 15, 19 '::H, HnTn :ir� .::\ ~~~ :irnbt.l r�st~ m e nt fen ' th�~ expen ses incurred in the pe~f orm ance af one ' s duties rather than <:\S <m ucjditiont\\1 cc>mpens;~tio n , and tll H~E~f or~ e, is not compensation a ubj ~ct to inco me t ax, and consequently , t o wj. thho lding tnx , but sh.::\11 be i~lH~J. i.~:;.~~.t~.~--o n l y_J;uuLi..!l~1 i_!l.Q._~ alir~ b..J.JL.~!~.r:_1991_. " "In t iH? C<-ll>e at b<.w� , si n ce tile t .:t><<~ ble per~ iod i nvolved is the year 1989, petiti oner' s c l ai m for t ill? ~? X e Ill p t :i 0 n () I" rH-1T (.) i s �I; h (~ 1�' I? f ()1-' e n () t t:' 0 v e )�~ H:I �.m dE~ 1��� thE~ c:~ for~~~ 5 'l at �~ d Hc~ v E-~ nu E~ C it;c~ 1.1 J. a r' No. f:.O -- '31." ( (-)nswl?r~ , C. T. ~1. F~ecin~d!>, pp. ;~6 -�2 7) It seems that the responde nt' s de n ial of petitioner's ba sf?d on the i=act :tl1r3'l; UH? r~A TA . W<.:\5 t'eceived p t' i Cl t~ t () 1. 9 9 1. � R~)T(-) W<:\S granted under Section 28 of th e Genera l Provisions of R.A. No. E.50l:3 <) t h ~~ l�'vJ is e kn own as Gener21 l ~

DECISION - C.T.A. CASE NO. 4955 - 7- Appropriation Act of 1. '3EYJ. I t li st �~d the qualifi�~d I] o v ~? r' n 111 f? n t officia l ~; "h er' e b 'y' monthly a l l OI-'IC.~ncP .:~ nd payob l e from t he programm ed appropriations p l"' () v i d �~ d for' l; h >? i r' r' e ~; fH? c t i v !�? o f f :i c f? s x x x " � ( lJ n d f? r' ~:; c o 1�' i n r.-:1 !; u p p l i f? d ) Ba EE~cJ on the opinioJls m ad�~ by t h e Com mi ssio n on Audit and t he Depart ment of Budg et and Ma n a g e me nt , RATA i s indeed, "not cclm pc�~ ll 5<.:\t ion s ubj �~c t to 1--1 i thholding." <C .O.f.). 91 7 0 9 , t�1 a y ;:;:: , 1. �] 'J 1 ; 1.. e t t f? r' �t; o t h e B � I � R � by ~~ecT�f.�~t:.:n �� y of' D. B. t~., f'o1c-n'c h El, 1.'::3'31 ). I n F~ ~~ v f? n u e Mem orandum Circul a r No. 60 which incorporatPs there in B. I.R . Ruling No. 21.(a ) - 000 - 00 - 062 -9 1. No. 1c>85 , \ c=.:> ,::\n d f.)f?Ct i 011 ;:~ (c) of r~ f? v f? n IJ <? respondent thus stat es : " ><><>< XXX ><><>< P 1 �~ .:~ ~; e b e i n f o 1��� me d t h <=< t u n d �~ r�� E) e c t i o n 2 ( C.: ) <c ) of Revenue Regu l ation s No. 12-86, imple menting Secl:ion E: l. (.;,, ) of th �~ T r.:t>< Coch~, .:i\ S a mended by E.D . .'.";"j' '"I" ~ '()!! t OIJllt~; , �,ncr.~ jved by F.\ n emp J. oytlr~ , �~ithf:~r-� iJ. ~; .;). r:J V cOl Tl C ~ ()\'' ) ' fJ l Ill b IJ t ' l; f? In I? n l; f IH' t �, �.:.\ 11 <::. p o r' t at i o 1�, , Y' c> p r�� E�' s P n t c:\ t i o 1l i3 n d o t h e t' bona - fide ordin ary and neces s ary expen ses i.ncu;��,���ed Dr' r��e <:\~;or�l c!. bly f:~H p ecte d to be ! :i r1c IJ ; ., l�' 1:? d b y t h e e mp 1 o y f? c :i n t 1 e p e l�' f o t ' 111 <.:\ n c P o f h i s d IJ t i e s c.n�� e n o t c o mf.H~ n s at i o ll s u b j e c t to tr.J:i.t hl� l olcliTl ~1.. H ov,<!? Vf?l��-, if the �<"�� P i. mb 1_\ r' s �~ 111 en t e H c �> E' c:l ,, t hE' "'' c t u <~ J. E-~ H p e 1l s e s , t: I ; e c f? }{ f? ~; <; i f n o t r' <~ t 1_\ r' n E:� d t o t h e e 111 p 1 u y e l�' , constitu t es taKable i ncome x><x. ' s u pp l i <�? cl) In :i 111 p 1 e Ill e n t: j ; 1~1 t h P .:~ b o v P -- q '-\ o t e d p r' o vi s i o 11 s of Revenue Regulations No . 1 2-8 6, this Office ;�u J.ed in BI F~ RuJ.inrJ No. C.:1.7 -- ~30 that :

DECISION - C.T.A. CASE NO. 4955 - 8- H H>:. F'i He'd en�� v .:-n'ic:\bl e t l�' <Hl~; prn�t.:t\t i o n, r' !? p l ' !�? ;:; !0n t ,;, t i n n <-:~ rEi o t 11 !? r' '-'\ 1 l o w~" n c e s \1-J h i c 11 ;:.n� c> 1� f.! c: P i. v �! d � b y .:~ p '-'�b 1 i c o f f i c f! t ' o r' e mp 1 o y t; P 1 :; c o 111 p f? n :,; <:~ t i o n :-:, u b j e c t I; o wi t t1 h o 1 d .i n g " ! Io �.�J e v C�' �,�. , a 111 o u n t ~-. p .::1 i. c:l s p e c i f i c a 1 1 y E' i t h e �r"�� .J ic<. s i:.' d \' �3. n c !? ::; D r" t' e i mtJ �..t1�' s f? m!? n t f o 1�' t 1� ~~ n ~= p en-�t "'' t i o n , r' e rn-� e ~; en t at i on o 1�' 1: n t !? t�� t "' i n m1:- n l:; r.:\ n d <:J l:; h I? 1�"� bo n a [' i d c or' cJ i n '" 1' y a n rJ n e c: !:! s ~; <~ 1' y e H p t n s e ~; i n c tw�r' e d en�� r' !? :>. ::; c:�� n i'\ ll 1. y t~ ><p I? c t f? d t o b !? i n c u t ' r��f? d b y t t 1 e e Ill p 1 D 'y' (�~ �! i 11 t h (�) p f.!l"' f CH' Ill (:\11 C f.! 0 f hi S c:l U l; i ' 5 i3. i"'� t: not c: olllp!~ ll ~; ~::~ tion subjf? c t to ,.J.i.thholdin~~' i f the foll o wi.n�~ con ditione:.; ar�� e s a tisfied: 1 ) I I, i. \; f !) 1- tH' d 'i 11 iH ' y an d !If? c e ':5 s a r� y t r�' e:>. v C' J l i 11 [~ nnd 1 ' E! p 1' C�~ ~; e 1Y at i on en � c n t (�? 1��� t ;:, inm r�?l1 t !'}.( P!~n<:!?'r. p .:>. :i<.J !J1 '' incut' t'' l~ d l�ly U , :1 e 111 p 1 o y e e i 11 t h e p '�' 1�' s; '-' i t cJf t h e t t~ ,::uJ e o l�' IJ 1J ~> t n !? !3 ~; o f ~ It e H mp l !) y (~ l�' ; :t.. ~: > I.I..!..~L.. �..!~tPJ.9. y__qJ:L.~ t.~.-....t~gq_:,\.l.x.:.r:_cj__ 9...'l..�����:.mJL9..CJ.J!...?...L .!!.Li:'.. !5. ~........s'..l.l .. �,..._tjl.r:gg_!-~ DJ:.j.J1.!1.L......._1..\ .fL':Li..ft?'.!t.i.QD....-..fl H:.._____Ji!..!:l.t;:l:!. t c;. !'U.<.H.!:?.D..'?Jt_____j_n _.___~!'.~;,.c.~<.".!.~it~i..ll_~~-~ -........~.!. i;J!____j~_bJL. ~?.Q_g__<;.if.. cg q !JJX!.?...!!!J2D .t?.... ......9...L .... . . . . ,);_~J tJ 5__~..!.~!J..tiil.~i...!.l.!l___fgJ.::.__ g_S\_C l�t !:;_!:-~. ~-g.D m.:. Y.....J.?L._:.u~ p_g_n.li.f.?... r r- t 11(1 )"' e i rn b l..ll' ' ~; f.' Ill &1 n \; s; () t ' ad v C:\ n c e ,, l' ){ c !:.' e cJ �.; 11!? r:\ o:: ~ u ;~ <? ) < p ~~ 11 s !~ !; y t 11 !~ e x c e !5 s i f n o t; l 'P tU\ ' ll!) d L D t, l 1!\" E!ITi plc,ye r �� CC)l \ t- t i t u t e s taxc;\1:�-'J.e c omp!? ns:J.t i un ( 0Dc tl o n 2 , RQv enue negulatlo ns I\IO. C -� 0(.:: c.IS t:llil t~ n c1ed by He v. nc~g. t..!o. 12 - HE. i IT! p l +? m(~ n 'l; :t n ~1 1:. ,'.'\ i; ,c;~ !; Pi::lmbc.,nsa Blg � .t:~~.:)).' I n .:1 l ett�!\"� l: t:J lhi~; Office dr::\ �b~ d Ma1 ' c h 8, o r 1 'J 3l, t h i? ::3!?e 1' 1? t i., l ' Y �th e Budkl f?t and Man;.:\ g f~ ITI(~ Ill; c o 1 f j_ r m�~ c1 l h t':\ l; " Hf.)T () i s i n f.:~ c t <~ ,., e i 111 bur~<; -~ men t f o i'' t 11 e P l < p <�~ n ~; ~~ ~; i n c 1.1~� 1.... !? d i n t h e pet' f o 1�' m"-' n c e o f o n e ' !:_; d 1..1 t: i �~ r.; ,. c:\ t h �! t ' t 11 c:\ n a 11 add it ion a l c o mp !? n :> ::.\ l:; :i. o 11 i.:\ r1d r: I; l1 !? l ' t? o ,.� !? <.'\ r' e 11 o t c o mp P. n 5 c.' t i o n s.~ 1.1u j f:-) c: : t: o ltJ i t h h Cl 1 c.f i g 11 11 p u r:� ~; u <Hl t t o t he , 3 f 0 i ., (? ~::(' ..l c� t: !: tJ p \' () v i ~:; :i (J n 0 r: ~:; f? c t i () n ;~ ( c~) ( c ) () f f~e v PriU E� f~�!DUl<:lti o n ~; No. 12 -�� EJ G . Ho wf~ V�!'r' , c:llth o ugh t he�? <>m n unt () f rH-i T A i s nDt su b.j t? ct: t<l withholding, t:tH' e);Ce~;s of nf.H(.), if no t t'et tlt'ned to the f? 111 p l o y 1.:! 1�' , co n s t: i 'l; 1. d : f'? ~~ t ""' >< .�.~ b 1. t.: :i nco me ltJ h i c 11 s h o u 1 d b e r1 P L 1 c:H ., c l.l j n t h l�' r ' t>c i p i. C! n t ' s i n c o Ill e t a x t ' e t �.w �n rrr r= 0 \ " i; 11 (? y ~~ 21 l' :i n wh .i c " t h () r~ n ,,,, r.~. <:; t' !? c 2 i v e d b y hi Ill. H )(>< XX){ X ><X. II ( U n d f? l�" :; c o l ' i n g s u p p 1 i ~~ d ) 1 ()111

DECISION - C.T.A. CASE NO. 4955 - 9- RATA, p rj or to 199 1 , was c o ris id er e d a fixed or varia bl e a llow anc e su bj ect t <j withholding . T he afo re said Memora ndum C i. �, �. c u J. a�,�. t' ID � C0 ���� '::31 , c h a 11~I P d t h e n ~~ t IJ t' �! o f r~ f..)T n t o t h at o f a 11 .,.. e i mb 1..1 .,., t ~; I? 111 I? n , i'.l l l d 1.; h !? t ' ~? f o r' ~? n nl; ~; ubj ec l; to w :it hh o 1 d i n f:l l: .::1>: . r~ AT A n ot s ubj�~ ct t o �i n c om e t a.>{ ~ :i \; :i. mpose d s e v e r al c o n dit i ons for the ta xp a ye r tc> c o mp l y. RnTn i s .::1 c ommut<~ r.> l e T he \I'Hn' cl " c o mmut e " , f t' 0 Ill yj h :i c h t h e I; I? 1�' m " c o mm�.d ; i:1 b l I? " c o m<? s f r' o 111 , " me i:t n s t o p a y XX X to c: ll <:I 11 ~] (�? 0 l1 f? l<i. nd of p a y 111 f? n t i n i; o o , ., f o .,., i':\ n o �I; h <�? t' , e s p <�? c i <::1 1. 1 y t: <) t ~; u 1::.>s i t 1.1 t e ,,,, :;; ingl�! pc:t y me n t fo r�� a 11 um b e 1�' U.J o r' d s and Pht'a s es, Vol. o, 1s:-.:. 1 Ed. , We b ste r 's Th i r d New I nt et' na t io na l D i ction ar y , l. 'J7G E d.) On th t? o t h e t�� 11a n d , dn ad v 6:< T1 C <�? i s pay mt?n t b <�? fo r' e h and ,.. e i mb u 1��� s P m-) n l: r�� e p c:l y 111 e 11t , p c:1ym ent , l'' e E t ituti nn .J Y' inde mnifi cat ion .. <Webste r , s upt' a ) Tl' l:is Co u t�� t h old s that Rf.HA , br>i n g co mmu tab le ne:itht?r' an i::l d v <<: n c e n o r' a. r�� e :i mtnw s f? me n t . suc h, th e co ndit i on s s �~t fcn��th in the Ci1�'c�.d. .::n' do not a pply T I"'1P J re n j ~; J r,,, t ut' �~ , in m ,:,l ~<i n g F~ f.-)T n �~ co1n rnu te.~ b lr) a J 1o we:1 n ct>i l 1ad i n mi n d t he s ma ll extr a e x p en sas o f g over nm en t offici a l s vJh i c h <H' E' �~ 11t i t� P 1 y �r o r' t h e b e n e f i t o 'f t h e g o v e t ' n me n t an d y e t 1:� f? i n g s h o IJ l d f? 1�' e d b y til e off i c i al s ~on ce r ned . C o n s i d e r' i n g 104 2

� DECISION - C.T.A. CASE NO. 4955 - 10 - in the ~>JiSt) tn fl � t? f? !; I 1 e? I]!J'll?l ' ' llllt?nt � of fi.ci.<.l l s btJl ' ti (~ Tl () f' fool::inq �' f... t1C)~:.�> P \: t �, � .::, P ><p e 11:; e s. :i. n his Z E~c'.d Of collr.~ cti1tn taxes f () ,., ~10 �; e ,... n 111 I�? r1 t , CD11 ':. i d P. i ' f�? d C.15 st.\b j<~ ct to 1 :i. quid ;,,t i 0 11 ;::1nd the excr.>ss, as s ubject to income Thi s Cou1 ���l:; dof?s not bt?lit?ve !;o ; fo1�' in !; 0 doing, y�p s ponc.lent vJoulcJ in eff'ect def��)cAt the very propo se of the a fix e d amount: as RnTR. I f this Co 1..11 ��. t '' �' o 1..1 1 c! <�. �.lo p(:; the a ,... IJ u Ill!? n t i:!<. cl'v' <J n L' !? c! b y t h e 1�' f? !; p o n d e n t t h t~ if ,,,, n 'i 1. c� s ubj Pet to inCOITI �~ tax; ::> c o 11 v 1: r' s t? l 'i , t 11 ~~ ~1 () \/ {~ t ' fl IJI f? 11 (:; IJ f f i C: i i:~ l S would be e n t i t led for The statutP i~; ~; i.l E? nt: ()!--� d i n i.H' i. 1 y , n D i !; S IJ f? rJ f () t '' 1,? :< p I�? n <; e s l i 1-< e \�Ja. i. �:; I? 1' <; , co n l �, � i. bu. t :i. o n !; a nd dDn<:-\tions 1 :i I~ e . To l �t: quir�' l? gov e;�� nmE~llt offici.;,,. ! ~; tc1 procu rD r e c e i p t s for these I I IJ Ill (�? t' () U !5 <::1 T"t CJ yet !S m<:d l To t-~ffecl; ively t h f? � mu. l t i f a r�� i o '.l s bur' d ens of offi cia ls s hould be t'e 1 i eved of s trained interpretation 0 f -I; h e 1 <.WI � Statutes levying taxe s D1� c.lu t i �e ~; ~; h o u 1 d b �~ i 11t: e �r' p �r'� e t �~ d i 11 c C'\ :; e o f cl o l.l b t <~ ~4 a i n s t t h �->

_, DECISION - C.T.A. CASE NO. 4355 - 11 - ::D. :� : .i. n r,: ""' u tho r :i. l: y b e c ,:,-. l..i !:. c~ b 1.1 r� d e 11 s not t o be i m p o~~ed lJ �: y n n c.l C 1 ~? i:H' 1 y i mpot�t r C o mm i s s i o n e t ' o f Internal Revenue v . Co ur t of Ap p e a 1 , 20L~ r:;cnn lO ;::::; Republic v. Intet �tned i a t e App el la t e C om-t, l 36 SCnA 3 35; Co mmissioner of Int et~ nal Revenu e v. Fit- emen' s Fund I nsurance Company , et al . , 31S; Co mmissi o n e r of Int ern a l Rev e nue v. L a T ondena, I nc. , 5 SCR n 665) C 1 d i Ill f1 cJ [; l li::\ [; r~nTr.:'l i s f CH' e >< pen s e s r r� i. n r :� I. u- l ' e cI j ll L: I \ r! p (�' l " l) , . j;l i".\ I l c ('� 0 0 11 ~) ' ~; 0 f f i c i "-~ 1 d u t i (~ <; f 0 r' t h e IJ(~nuf'it; o f n() \/ t 11 r!) n !? ,. ITI (�? ll L '" !; (? mp l () y (:0 1 ' i~ ll cl 1'1 () t: n <:.:1 (:\ d cJ i t i 0 Jl '"' 1 t h 0 1. \ J. cJ bE! s '-' b .j r= c t ~) d t o 1'.' i. �- 1 ll l ('\ 1 d i I I IJ \; i \ )( () l ' J. 11 t:� (j Ill (;> t; i:L: � J"l.t I. i. ng t h c:i'\.: t he ex ~)mption r- '.\I . 1.: I ., ;;:�l "� r l 0 1 c ' l ~~ n ~ ) () 11 t.l p 1I t ~ ,. U "t l '/ tc-\>< a b1P l3'Jl ce:u1n ot r ~ (�2 1J, .. i '�./ c: �:.: h f.? �; ;:-, 111 c~ i n the o f r~. n. tiP. CC80. Thi s Court sa w n o r� d i f. 1: I (?i �c: r: .i 11 i I; S l, l ' �! d t: 111 0 i~ I. ,. () f' t r:: l C U 1: :; J. cJt: ~- l ! 1~j and i ::. s '.l e s 1- 11 :i. ~�: C; ; u�, � t hol r."ls t l l<xt Ll 1c� C:tJ I'' l'!?c :; c: u mp u� � ;:Ji:::i.on of �Lncomf? ta x l ' :. �'" ~;. r 0 l l ll v.' e ~ t� t c: l; i. 11 c: o rn ii:'. pe r� l' e t u �r�n t ci [! )( (~ Ill p i T1 ~. P 1 UO , 2~B2 . 0 ') r ('~ :.:_o :�; :.., !J i. i: ____. .J...s_QQ2.'!...9~~~ i�lc! t .i.i"1CD1HC: i:\~; C < ' l'' t 'L' '�~ l;c ) d 1 0 1. ., . .~�~[:3;:;: (l(l I'"' (: 1�� � S D 1l ,-\ 1 .:~'II cJ c:\ cJ cl j t j 0 l1 t:\ J. __J:..~~_,__<;.~Q.!.~.~ (!_(~~ t�~ (? t I� <:.:1 :< �.1 IJ 1. t~ �i n co 1!1 f? C..J)::~.1. ;3t.~..;;;!. QQ. ~=~L1d.~~g:2:.z~~,~H: T <<. x due _,

DECISION - C.T.A. CASE NO. 4955 - 12 - l�l'::o ;:,dcJi t.i orl<:\ 1 iT �,co m_, t.:,\x is duf.' th�.' pe titio1 1Pt"' sincE' h P () r n p .1. J. ' ~OJ~.:; ~'j. ~=.; i":\ s ~;I I () vJ r l b E.' 1 () vJ : "]" .::\ ){ hi i I; 1"1 1"1(�? l d P1.1 , 7 1 ~i. 1.1 T e. )< r_~ .:,\i. d ------���s;.~+-~~~-~-f?.Z. ~~:Lt' ~~:?::;~,~,;-~::t..:l: To i;;0. l il1 t.:- Ulllf? co 111 p1 �' tj mi ~; e p!~l"l<.:\ l ty , til i s Co ul�'l; 1:; 1�1(~ r..�.t, O <.lU. r)() the pe rl.7o\l ty '' i. n c e p f? t .i. t :i. o rH? t'' n ~ ~ 1 e 1 � u r r�P l�' f? cJ t o c t' m~H' o mi s e h i. ,; d e f i c i f? 11 c y r� i n c () Ill (' t i.\ )i i:\ II cl j I I ~; t: t�~ tc\ c.l i 1 p cJ t II j ~; i n s l: C:'\ 11 t c t":\ s p � WHERErORE, IN VIEW OF THE FOR EGOit G, l 'e!; pnl1dent' ~� cl f, C. i !ii i Clll :i. S MODIFIED. �1h r:l tJ ? f i c j r. n e y :i. n c !J me t 21 >< '"' s !; e s s me n t r� .l [l "I; h (�.1 t 0 l; i:'\ J i:1 ill () IJ 1\ l. () f" 0 ' )' 1 ~:: � C ') i t1 C l 1.\ S i \1 e 0 f' :i l"l C)"' (~ Ill (~ 11 G~3 f 0 l"' i�:t,r:~ L i'.\H r.!\hJP yr:e.y� J'JO'J i !; llfc l �oi:J)l CANCELL ED. r�~o p1. "�()JJD U1"1Cemen l; i?. ::; -I; D C (J <; 1:. .. SO ORDERED . Que zon C ty , Metro M~ n i l a , Octob er 26 , WE CO NC U R~ Q . G~ ACOSTA ~ ~L~ I 1:RAf\"10 ~ 0. DE'-,f(}: / l-~l t.::..c.�..n. L�~ :Jc-., t~ l".-\ �.rfJc:ln . II 104 '

- DECISION - C.T.A. CASE NO. 4955 - 13 - CEI<TiriCATIDN I I� C'�l"Phr� c f? ~- t: i f y t h '' t: ~� l ~-� p c i".\ 1 ::; j 11 mf? 111 b l? �, ~; o 1� ( ' () IJ) \; : ~ c n �; t i \:: 'J 1.: i o T\ � )l- \; :i. c: 1 P \) J I ~Q ~Q~ ERJESTO D. ACOSTA r �1�� e �a .i cJ i n g ..J �..1. d g C! C o '�\i � t. Cl f T a ): n p p e .::1 1 s 1048