CTA Case No. 4614 (Decision)

.... ' REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY HEIRS OF SPOUSES NAZARIO DEL ROSARIO & EUFEMIA DE OCAMPO REPRESENTED BY DOUGLAS EDWIN DEL ROSARIO, Petit i onet~ s, - versus - C.T.A. CASE NO. 4 614 THE COMMISSIONER OF INTERNAL REVENUE, Respondent. X- - - - -- X DEC 0N This is a simple clai m fat~ by petit i onet~ covering the amount of P17,420.92 rept~esent ing income tax withheld the accumulated vacation and sick leave credits of their late father, Nazario Del Ro s ario, who retired from the government service. It appears from the record s of the case that Na z at~ io del Rosario, father of pet it ionet~s, was an employee of the But~ eau of Intet~nal Re ven ue until his death on Februat~y 14, 1989. He set~ved the govet~ nment fat~ almost forty (40) years. His heirs wa s able to collect and to t~eceive the t~etirement benefit s of theit~ father sometime in August 1989. The money value of the tet~mina l leave ct~ edits of Nazat'io del Rosat~ io amounted to P129,831.38 ft~ om �_7_5

DECISION CTA CASE NO. 4614 - 2- which the BIR withheld taxes in the amount of P17,42 0.92 . Petitionet~ filed a claim for t~efund of the said amount of P17, 420. 4 2 with the BI R which was denied by the Assistant Commissioner for Adminl strative in a letter dated April 15, 1991 and received by the petitioner on March 29, 1991. Hence, on May 24, 1991, petitionet~ s filed this instant Petition for Review. Respondent in his answet~, denied most of the allegations of the petitioners and by way of affirmative defenses alleged that the case A.M. No. 91-6-015- SC, entitled "Re: Request of Atty. Bet~nardo F. Z i a l c i t a fot~ t~econsidet~ation of the action of the Financial and Budget Office", cited by petitionet~ s applies only to retit~ing employees of the Supt~eme Com~ t. What is applicable is the case of Co��issioner of Internal Revenue vs. Oscar Victoriano, G. R. No. 83176, August 10, 1989, holding that the tet~minal leave pay is part of salaries and therefore subject to withholding tax. The issue raised is whether or not the money value .of the accumulated vacation and sick leave benefits ot~ terminal leave credits is subject to withholding tax. 7 6.

i DECISION CTA CASE NO. 4614 - 3- This com~t has consi s tently t~uled that the money value or tet~ minal leave credits or t~etit~ ing govet~ nment employees is not subje c t to withholding tax. We cited in support or thi s stand Commonwealth Act No. 186 as amended by R.A. 1616, Pt~esidential 2 2 0 and Section 29 (b) (7) or the National Intet~ nal Revenue Code <Now Section 28 <b> (7) and the 'following cases the said provisions or laws: Co��issioner of Internal Revenue vs. Court of Tax Appeals and Florencio E. Santos, G. R. No. 81362, Ju 1 y 4, 1988; Jesus N. Borro�eo vs. the Hon. Ci vi 1 Service Co��issioner, et. al., G. R. No. 96032, 31 July 1991, and lately the case or Co��issioner of Internal Revenue vs. The Court of Appeals and Efren Castaneda, G.R. No. 96016 dated Octobet~ 17, 1991 involving anothet~ employee or the Commissionet~ or Intet~ nal Revenue. The latest case settled any doubt, i'f any, on the issue by reason or the Supreme Court pronouncement in the Oscar Victoriano case. WHEREFORE, in view of this clear and consistent pr�onounce�ent by the Supre�e Court, respondent is hereby ordered to refund to

DECISION CTA CASE NO. 4614 - 4- petitioner the a�ount of P17,420.92 representing erroneously withheld tax fro� the 11oney value of his ter11inal leave. SO ORDERED. Quez o n City , M et t~ o Manila , Feb t~uat~y 1 7 , 199 2 . ~~{lc~ ERNESTO D. ACOSTA A��ociate Judge I (; 71/1/tv--- TANTE c. ROAQUIN ng Presiding Judge C E R T I F I C A.T I 0 N I hereby certify that this decision was reac hed after due consultation between the me11bers of the Cour t of Tax Appeals in accordance with Section 13, Article VIII of the Constitution. i f i1J" ' - - ~n~~ANT�c. ROAQUIN Ac t ' ng Presiding Judge Court of Tax Appeals