CTA Case No. 4571 (Decision)

-- REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY LEANDRO A. ALMENDRAL, Peti tion er, Ve t'SUS- C.T.A. CASE NO. 4571 THE COMMISSIONER OF INTERNAL REVENUE, Respondent. x --� -- ------ X DEC s 0N I his simpJP. claim f ()\"� t'e f �J nd by c n v e ,.. i n q the amo~tnt of P18,01E..72 t' P m� P s c n t i n q income t""x wjt hhe ld the vacati on and s id< leaves upon his t' e t i t' fY me n t f 1' n 111 n n v f~ 1' n mP. ~�d; s r0 t' v i c e � n. thal ['� P t' :i t i o n e t ' Lea' Indt'o P J men rl r'211 was the ns<:; istant Dir��ectol' of the DPnat� tment of Loan s \ ;m �.i C ,- e d i t o f t h e C e n t t ' '"" l Ban ~< o f t h e Ph i l i p p i n e s ' until h:i.s compulsot' Y t�etir ement on Ma1�'ch 15, 1'389. At the t ime o f his retirement, petitioner was . e nti, tled to thP commutatjon of 153.20 days unused , vc.r:at:i.on and si c !< l�~ ave ct�edits (Exh. "~=!", p. 57, CH~ t-Ji t h money value amountinq to 39~ �. r

DECISION - C.T.A. CASE NO . 4571 - 2- '" i. t 11 h ,, I r I by thp f'1f'f."O IJ.nt :i nq of' the f' P n t �,.- :" .l of thP Ph i J i o !':' j n e s i n o~v.m ent of .) i. r,r�� n IT! e t :"\ >< d ' 1e <HF" i n r.; t o e t; i t i o n P 1'' 21 n cl \�' e m i t t e cl t h e l''JB'J ( L-:x h. "C". o. :::i'J. CT(.) t ''PCIH'fit:). tn Z "" :1 << tn P ~-\ ., Chief (-~cr. o �.m t .-::~ n t ., ~:.) ceo unt i nq Bani< of the Philippines, \ �~ :v�; tl r' r ' ' \ct. e d F.\ c; �.�1 i t h h 0 l cJ i n Q t :'\ .< f )�'' () m t h e m0 n e y v '" 1. '--' '�? () f h i s 1 p '"' p c )�' p d i t ""� F.: x h s. "D" . and "D -1 " , nn. C.C> ---� Ct, CTn t''<-~ r.. nl� ds). But in r; te,:\d of actinq on the l0tter of Detitione~, Centr~J Bank referred the Clnq of the 'Thus . on cltd. m fot' ,.. P -F �. tn r: I o f t h P '? mn u n t e q u :i v a 1 r> n t t o t h e c a ~; h v a lr.t e nf accumulated vacation and sick Je n v os was filed b~f ore respondent Commis s ioner of Thi'OIJQh dated 30, 1990 oetitioner's c aim fo~ refund C �T (-) n ,.. E-~ , ... I ' cl r. ) � it 390�.'

DECISION - C.T.A. CASE NO. 4571 - 3- p �r: c :i. p i t at e d f i l :i n q o f t h P. pet i t ;. on for rev i. e w t o thi s Hr.> snond �-~nt tht~ounh his Deputy C o 1'1 mi s ~ ;i on P. t~ E u ft~ a c i o D. San t o s c i t e d t he> o t~ j q i n a 1 dPci si nn of the Suoreme Court in the : case of COMMISSIONER OF INTERNAL REVENUE vs. OSCAR R. VICTORINO and THE COURT OF TAX APPEALS, G. R. No. 83176 as ba sis for the denial of the petitio ner's c 1..�:\J..m (IC)nnex "B"~ p. 4, CTA records). {.)t thi S inst.:'lnC(l? \<\If? find i t impot~ tant tO c I. �~n�� i f v t h e co,.~ t' e c t; c J a i m.~ b 1 e am n u n t pre sent e d here by pr>tjtionet~. In hi s Petition for Review the no fi(Jm~e PE:1, 70i~:. was the amount cl.:dm. Howe ver ol"titinnet' � in his memot~andum dated May 27, 1992 cl~im~d an entirely different and lesser amount of PlC.UlC.72. An examint'\tion of the evidences available on t; t�~ecot�d s wi J J sho\�1 thF.It no ,,document was introduce thi s the claim of p et; it i. one t~ few p;::�1.. 70~. 00. In contt�ast, oetitioner l fiH'maJ.J.y - offet~ecl as evidence Exh.ibit "C" which is the cert ifi catio n issued by Dolores E. Lachica, nccounta nt. V, Accounting Department of the Cen tral B21n I�< of the Philippines. noted .bY LourC:Ies' s. B21scot'. Bank E><f.)cutive Officet~ II, that the amount 0f Pl6~0:L6.7;::: was withheld as income ti:\X on the I'!Of"tPV value of accumulatecj eav credits of �.I .

' DECISION - C.T.A. CASE NO. 4571 - 4- IV"' �'- i t- i. o n e t ' � .:~ n c1 t h a t t h e s a me w a s t' e mi t t f.> rl t o t h e Hm�'P. �'-'11 of In te�r -ni':\1 F~evenue on .Tune 1 0, 198'3 (p, 5'3, cT n l ' !?cot�ds) .. The i ssu<? no sP d on this appeal is whPthet" or not th e mone y v al ue of the accumulated vacation and sicl< .I.J:?av e h~~n,>fits is subject t o wi th hold ing tax. This in nu mbet' of ca s s has con s i s tently ru le d that the money v a lue of terminal l P<:~ve ct� edit s of 1�� etit' inq qov e l�"nment employee s is not subje ct t o withholdinq tax. 1 Th e l ead ing case of Castaneda vs. CoiiiJWissioner. lll'as uphel d by the CD Ut't of rlnneals in Internal Revenue vs. The Cour�t ot= TaK llppeals 8 Et=t~en P. Castaneda, Cn-FR S P No . E:Ot.~B2 , S ent e mbet' ;:?5, 1990 and e ventua lly affit"med by the decision of the S u Pt' c~ �n ~? C o '..W t; wh P. n i t d e n i e d t h e p e t i t i on f or' r; t� c~ vi r:>~t-J on cel-�tiot';::wi f i l e c:l by the BIR in TI-lE 'I CUNNISS IONER OF INTERN~L REVENUE vs . COURT OF ' See Ef1� en P. Castkneda vs. Commissioner of Internal Revenue. C. T. A.� Case No. 3809, Febrr..ta 'Y 4 , 1987; Florencio E. Santos vs. Comm issi onet� of In t ernal Rev en ue, C. T.A. Case No. 400 4 , Novembet" 18, 1987; Oscar R. Victorino vs. Commissioner of Intet�nal Revenu e, C. T.A. Case No . 4035, January 2 9 ," 1988; J Alfo ns o B. Camillo vs. Commis s ion er of Internal Revenue, C. T. A. Cas e No . 2260, December 2 9 , 1989; Mat'c os Z. Catalan vs . Commissionet� of Internal Revenue , C. T.A. Case No. �4345, l\lovembet' 11, 1991; Maximo B. Castillo vs. Co mi~sioner of In t et�na l Revenue, C. T. A. Case No. 4346, November 11, 1991; Pacifico Ton,e s v s. Co mmissioner of Intet�nal Revenue C.T.A. Case No . 4595 ; M.:n�ch 2 3, 1992; Arte mio S. Tioon vs. Co mmissjo ner of Internal Revenue , C. T.A. Case No � . 454B, ' Jt\lY E.~ 1':V12; F lo rencio Z. Ji'!lenez vs . Com issi on er of Intet�n al Re ve nt.tP . C. T. A. C;,:~sp No. '+6'+0, July 14, 19 2.

DECI S ION - C.T.A. CASE NO . 4571 - 5- "Tt"IH :I't:iPn~ _Withhn]tljng te\H; Tel'mi, na! ] P~ VP pny; Te r~inal leave pay rec iverl by a qnvP.nlment offjrial . Ot' . emoloye e i s ,not !:.�JhjPct tn lo'dt h holdinq t .:o< . ThP. Cou1��t h�""'� ah��p<v-lv t' 'llP.cl that the tet"m inal leave n �'=' y t' e c c i v P. rl b v a q o v e t' n mP n t o f f j c i a J o t' r: �n J:l l o v P P. c; i s not sub :i e ct t o w �. t h h o 1 din q ( i. n c n me ) t i:t '( � I n t h e t' e r: e n t c a s e o f ' J esus N. Borro meo v s . The Hon. Civi l Se r vi c e Com mi ssio n e r, et . a l., G. R . 1\lo. ~:! C, 0 3 �::~ ~ =~ l .J u l y l '::3 9 1 , t h e C o t n -� t P. >< tJ 1 a j n e d i�! 1 r.> l�'�"'t:ip nale behjnc:f thP emnloyee ' s !'Tl'l:5 tJcrn rnt: t;o r-m exr>mntio_n f t'om ~� � i t h h n 1 rl inn ( in r-~ n fT1 r� ) t r.:1 >< on hi s t e t�� min a 1 I r? �''"' P. p ''" v 21 r, f P J 1 n !' J s e " x >< x c o mmu t at i o n o f '-'-'1'\ VP c 1��p d i t "��� mnt'P c.ommCln1v ~<nown as .,.. ,, ,.� mi.n i< l �tr.�;>\1 f�'� i~; aonlit:>d fl'Om by ,"\n n(� fi.cel�' or� emp loyee \o'Jhn J~p+� i t'PS . t'e si q n~; rq �� j S SP.Di'l1 �� at�ocl ft'OrTI t h e SP.1'ViCP. t h l~nuq h 11 fl f a �.t J t o f h i s o ~'~ n � (1~1 an u i'l 1 o n L e c'3 v e ()dmi n j. !;t�.-�;" tinn Co u l' SE> fm�� Effectivencsc; p �.t h l i s lv? d by the C j v j. 1 S e 1' v j c e f' n mmi r.; != i. " n , In t he r.> ""- ne s 1 5 -- l 7 ) � :��~l~ 1'C::i "'f1 r>f' ~: (Hillel pe r��sonnc] poJ ic::y, the n n v e i ' n mP n t P n c n �J 1' "'' q P. c:; u n u s e c:l 1 e a v P s t o b e ,::tr:c1Jmulat0rl. The �Gov e1 ' nmr>nt t'P.c o qnizes t h at f o t' rn D <; t p u b 1 i c s f.~ t' v an t s , t' e t i r e mP n t oav is a:lwr'lvc. ' 'lec':.s th21n QP nf' t'ou s if n0t m~? i::l q e t' 0'1 n c1 c::. f"'l'' :i mp y � f.jl mn d e c::. t n e s t e q q ~-� l� li.ch tt\ P ~;r.onifH' c i t i z e n mr'lv Joo l-< fol�'wat'ri t o i s thus .':'lvoic:!Pd . Te1'minal l eave r, ,_,v mr> n l: �;; .-~i�� e ojve n not on ly at the s.~me t��i. r��P h�Jt ,:;\Jso 1 f o l ' t hP sa mP. po l ic y co 11 s i. de 1�~ ;_:d~ i. on s q o v e 1' n inn. t' e t i t... em en t ~H�nP.fit s. " nn e n t t h !o~ a 1 1 e q at i on i n t' e s po nd e n t me mor a nd u m t hi':\ t net i t i n n P. l.. ' ~; e v i d C! n c e at' e n o t s u f f i c i e n t t o t h e t�� e fund suf f i ce it to sa y wh en ont i. tinnP. l' �frwma ll y of f e t... e c:l E xhib i t "C " , the ban i< n I; h "1� Jil<e F~h. "B " , the rer.e i ot � by

DECISION - C.T.A. CASE NO. 4571 - 6- l''rt i.l't>mr> nt hen efj ts by oetitjonel''� Exh . "D" and " D ���� I" � t h e cl r> rtt .::\ n rl t o t' e t u t' n t h !? t a H w j t h h e 1 d , an'd F xh. "E", thP J. e tt!:' l"� of the Centl~aJ Bi:\n l< st ating thAt hts claim wa s forwarded to the BIR, UDobjected to l.., v the t'' f?Sf":londent, wi 1 1 Pt' OV �~ th e authenticity " of thP. tax withheld and t he tt'uthfulness of the c l aim fo t' t'efund. Fut'thet'more~ S1-~ct ion 53 of the tax Ps dedu ctPrl and withhe l d by the with holding r.HJr:>nt sha ll be held in tt�us t as a soec ial fund for the oove t' nm en1� }(){){. The withholding aqent is l ' f)C] '..O. il�' r~d to f ile the C'Dl'l'"'espond i nq withholdinq tax t' e t u t' n and o a y t h e B I R t h e w i t h h e 1 cl t ax e s � For fa i .l r.w e t o t'' e n d e t ' a t' e t urn o t' f o t' t' e n d e t' i n q fa 1 s e tAJ:i thh e ld. COl ' t��esoondin o sr.wchat'qes and pena lties (, s h2ll be imr:Jr> !:'e d aqainst tt-H~ withholding agent in a c d i. t i. t) n t o h o J d i n o h i m p e t' s o n a 1 J. y 1 i a b 1 e f o t' t h e In accOt'dance with th e cit eel r.wovision it i s the pri mat'Y t'espon s ibi 1 itv of the t'e s pond ent ' s withholding agent to t'emit the amou nt of tax wit hh eld ft'Om r n P. t i t i. n n e t' � The contt' act of agency is b etwe'.en the respondent e nd th e Central Bank of the Philippines 1-'JithhoJ.cling agent. Any or nPoiji:JP nc e on tr'f.' oc:n' t o f the w'thh old ' nq aqent �.I

DECISION - C.T.A. CASE NO. 4571 - 7- ~h8uld nut in any manne r prejudice the taxpay er who f ,~. i. l1..ll' c o f t h P t" !? s D o n rl e n t t o i mp l c.> me n t r u l i n g s 9 f wi. thout the necessi ty of resot"ting to a separate Co twt E\Ct ion. WHEREFORE, in view of the cleat~ pt"onouncement by the Supreme Court, respondent is hereby ordered to refu nd to petitioner the amo1..mt of P1G, 016. 72 representing erroneously withheld tax from the money value of his terminal leave. SO ORDERED. Quezon City, Mett"o Manila, "::ay 7, 1993. WE CONCUR: Qv�~- Q.C~ ~ � � ERNESTO D. ACOSTA 'I � GRUBA Judqe 1/NV', p"~~ RAMON 0. DE VE A Associate Jud _ . ' ) (j - u,Ou �. r

DECI S ION - C.T.A. CASE NO. 4571 - 8- CERTIFICATION I hereby certif y that th' s decision was reached after due co n s ult ation amonq the members of t h e Court o f Tax Appeals in accordance with Section 1 3, (.h~ticle VIII of th e ConstittJtion. ~-::cz ca~ ERNESTO D. ACOSTA Pl�~esidi nq Judqe Col.ll ~t of T ax Appeals 'I 385. �. t