INTERCONTINENTAL BROADCASTING CORPORATION VS NOEMI AMARILLA[G.R. No. 162775. October 27, 2 6.!

Facts: On various dates, petitioner employed the following persons at its Cebu s t a t i o n : C a n d i d o C. Quiones, Jr, Corsini R. Lagahit, as t u d i o ! e " h n i " i a n , #natolio $. Otadoy, as Colle"tor and %oemi #marilla, as !raffi" Cler&. On 'ar"h()*+, the government se,uestered the station, in"luding its properties, funds and other assets, and too& over its management and operations from its owner, Roberto -enedi"to. .owever, in /e"ember ()*+, the government and -enedi"t entered into a temporary agreement under whi"h the latter would retain its management and operation. On %ovember ())0, the 1residential Commission o n $ o o d $overnment 21C$$3 and -enedi"to e4e"uted a Compromise #greement, where -enedi"to transferred and assigned all his rights, shares and interests in petitioner station to the government. 5 n t h e m e a n t i m e , t h e f o u r e m p l o y e e s r e t i r e d f r o m t h e " o m p a n y a n d re"eived, on staggered basis, their retirement benefits under the ())6 Colle"tive -argaining #greement between petitioner and the bargaining unit of its employees. 5n the meantime, a 1(, 700.00 salary in"rease was given to all employees of the "ompany, "urrent and retired, effe"tive July ())8. .owever, when the four retirees demanded theirs, petitioner refused and instead informed them via a letter that their differentials would be used to offset the ta4 due on their retirement benefits in a""ordan"e with the %ational 5nternal Revenue Code 2%5RC3. !he four retirees filed separate "omplaints against 5-C !9:(6 Cebu and tation 'anager Louella ;. Cabaero for unfair labor pra"ti"e and non:payment of ba"& wages before the %LRC. Issue: < hether or not the retirement benefits of respondents are part of their gross in"ome. Ruling: !he Court agrees with petitioner that under the C-#, it is not obliged to pay for the ta4es on the respondents= retirement benefits. C-# did not provide a p r o v i s i o n w h e r e p e t i t i o n e r o b l i g e d i t s e l f t o p a y t h e t a 4 e s o n t h e r e t i r e m e n t benefits of its employees. !he Court also agrees with petitioner that, under the % 5 R C , t h e r e t i r e m e n t b e n e f i t s o f r e s p o n d e n t s a r e p a r t o f t h e i r g r o s s i n " o m e sub>e"t to ta4es. e"tion ?* 2b3 2@3 2#3 of the %5RC of ()*+ ?6 provides: $ross 5n"ome. A 2b3 B4"lusions from gross in"ome. A !he following items shall not be in"luded in gross in"ome and shall be e4empt from ta4ation under this !itle: 2@3 Retirement benefits, pensions, gratuities, et". A #.3 Retirement benefits re"eived by offi"ials and employees of private firms whether individuals or "orporate, in a""ordan"e with a reasonable private benefit plan maintained by the employer: 1rovided, ! h a t t h e r e t i r i n g o f f i " i a l o r e m p l o y e e h a s b e e n i n t h e s e r v i " e o f t h e s a m e employer for at least ten 2(03 years and is not less than fifty years of age at the time of his retirement: 1rovided, further, !hat the benefits granted under this s u b p a r a g r a p h s h a l l b e a v a i l e d o f b y a n o f f i " i a l o r e m p l o y e e o n l y o n " e . ; o r purposes of this subse"tion, the term Creasonable private benefit planC means a pension, gratuity, sto"& bonus or profit:sharing plan maintained by an employer for the benefit of some or all of his offi"ials or employees, where "ontributions are made by su"h employer for offi"ials or employees, or both, for the purpose of distributing to su"h offi"ials and employees the earnings and prin"ipal of the fund thus a""umulated, and wherein it is provided in said plan that at no time shall any part of the "orpus or in"ome of the fund be used for, or be diverted to, a n y p u r p o s e o t h e r t h a n f o r t h e e 4 " l u s i v e

b e n e f i t o f t h e s a i d o f f i " i a l a n d employees. Revenue Regulation No. 12-86, the implementing rules of the foregoing provisions, provides: (b) ensions, retirements and separation pa!. " ensions, retirement and separation pa! #onstitute #ompensation sub$e#t to %ithholding t a & , e & # e p t t h e f o l l o % i n g : ( 1 ) R e t i r e m e n t b e n e f i t r e # e i v e d b ! o f f i # i a l a n d emplo!ees of private firms under a reasonable private benefit plan maintained b! the emplo!er, if the follo%ing re'uirements are met: (i) (he retirement plan must be approved b! the )ureau of *nternal Revenue+ (ii) (he retiring offi#ial or emplo!ees must have been in the servi#e of the same emplo!er for at least ten(1,) !ears and is not less than fift! (-,) !ears of age at the time of retirement +and (iii) (he retiring offi#ial or emplo!ee shall not have previousl! availed of the privilege under the retirement benefit plan of the same or another emplo!er. (hus, for the retirement benefits to be e&empt from the %ithholding ta&, the ta&pa!er is burdened to prove the #on#urren#e of the follo%ing elements: (1)a reasonable private benefit plan is maintained b! the emplo!er+ (2) the retiring offi#ial or emplo!ee has been in the servi#e of the same emplo!er for at least 1,!ears+ (.) the retiring offi#ial or emplo!ee is not less than -, !ears of age at the and (iii) (he retiring offi#ial or emplo!ee shall not have previousl! availed of the privilege under the retirement benefit plan of the same or another emplo!er. (hus, for the retirement benefits to be e&empt from the %ithholding ta&, the ta&pa!er is burdened to prove the #on#urren#e of the follo%ing elements: (1)a reasonable private benefit plan is maintained b! the emplo!er+ (2) the retiring offi#ial or emplo!ee has been in the servi#e of the same emplo!er for at least 1,!ears+ (.) the retiring offi#ial or emplo!ee is not less than -, !ears of age at the time of his retirement+ and (/) the benefit had been availed of onl! on#e. 0rti#le 1*** of the 122. 3)0 provides for t%o 4inds of retirement plans - #ompulsor! and optional. (hus: 0R(*356 1*** R6(*R676N( 8e#tion 1: 3ompulsor! Retirement " 0n! emplo!ee %ho has rea#hed the age of 9 i f t ! 9 i v e ( - - ) ! e a r s s h a l l b e r e t i r e d f r o m t h e 3 : 7 0 N ; a n d s h a l l b e p a i d a retirement pa! in a##ordan#e %ith the follo%ing s#hedule: 5 6 N < ( = : 9 8 6 R 1 * 3 6 R 6 ( * R 6 7 6 N ( ) 6 N 6 9 * ( 8 1 !ear-belo% - !rs.1- da!s for ever! !ear of servi#e! e a r s - 2 ! e a r s . , d a ! s f o r e v e r ! ! e a r o f s e r v i # e 1, !ears-1/ !ears-, da!s for ever! !ear of servi#e1- !ears-12 !ears6- da!s for ever! !ear of servi#e 2 , ! e a r s o r m o r e 8 , d a ! s f o r e v e r ! ! e a r o f s e r v i # e 0 supervisor %ho rea#hed the age of 9ift! (-,) ma! at his>her option retire %ith the same retirement benefits provided above. 8e#tion 2: :ptional Retirement " 0n! #overed emplo!ee, regardless of age, %ho has rendered at least five (-) !ears of servi#e to the 3:7 0N; ma! voluntaril! r e t i r e a n d t h e 3 : 7 0 N ; a g r e e s t o p a ! 5 o n g 8 e r v i # e a ! t o s a i d # o v e r e d emplo!ee in a##ordan#e %ith the follo%ing s#hedule: 5 6 N < ( = : 9 8 6 R 1 * 3 6 R 6 ( * R 6 7 6 N ( ) 6 N 6 9 * ( 8 - - 2 ! e a r s 1 d a ! s f o r e v e r ! ! e a r o f s e r v i # e 1 , - 1 / ! e a r s . , d a ! s f o r e v e r ! ! e a r o f s e r v i # e 1 - - 1 2 ! e a r s - , d a ! s f o r e v e r ! ! e a r o f s e r v i # e 2, !e ar s or m o r e 6 , d a ! s f o r e v e r ! ! e a r o f s e r v i # e 8e#tion .: 9ra#tion of a ;ear " *n #omputing the retirement under 8e#tion 1 and2 of this 0rti#le, a fra#tion of at least si& (6) months shall be #onsidered as one of this 0rti#le, a fra#tion of at least si& (6) months shall be #onsidered as one %hole !ear. 7oreover, the 3:7 0N; ma! e&er#ise the option of e&tending the emplo!ment of an emplo!ee. 8e#tion /: 8everan#e of 6mplo!ment ?ue to *llness " @hen a supervisor suffers from disease and>or permanent disabilit! and her>his #ontinued emplo!ment is p r o h i b i t e d b ! l a % o r p r e $ u d i # i a l t o h e r > h i s h e a l t h o f t h e h e a l t h o f h i s # o - emplo!ees, the 3:7 0N; shall not terminate the emplo!ment of the sub$e#t supervisor unless there is a #ertifi#ation b! a #ompetent publi# health authorit! that the disease is of su#h a nature or at su#h stage that it #annot be #ured % i t h i n a p e r i o d o f s i & ( 6 ) m o n t h s e v e n % i t h p r o p e r m e d i # a l t r e a t m e n t . ( h e supervisor ma! be separated upon pa!ment b! the 3:7 0N; of separation pa! pursuant to la%, unless the supervisor falls %ithin the purvie% of either 8e#tions1 o r 2 h e r e o f . * n % h i # h # a s e , t h e r e t i r e m e n t b e n e f i t s i n d i # a t e d t h e r e i n s h a l l appl!, %hi#hever is higher 8e#tion -:

5o!alt! Re#ognition " (he 3:7 0N; shall re#ogniAe the servi#es of the supervisor>dire#tor %ho have rea#hed the follo%ing number of !ears upon retirement b! granting him>her a pla'ue of appre#iation and an! lasting gift: 1,! e a r s b u t b e l o % 1 - ! e a r s ( . , , , , . , , ) % o r t h + 1 - ! e a r s b u t b e l o % 2 , ! e a r ( B,,,,.,,) %orth+ 2, !ears and more ( 1,,,,,.,,) %orth. Respondents %ere 'ualified to retire optionall! from their emplo!ment %ith petitioner. there is no re#ord that the 122. 3)0 had been approved or %as ever presented to the )*R. =en#e, the retirement benefits of respondents are ta&able. C n d e r 8 e # t i o n 8 , o f t h e N * R 3 , p e t i t i o n e r , a s e m p l o ! e r , % a s o b l i g e d t o %ithhold the ta&es on said benefits and remit the same to the )*R. 8e#tion 8,. 5iabilit! for (a& . " ( 0 ) 6 m p l o ! e r . " ( h e e m p l o ! e r s h a l l b e l i a b l e f o r t h e %ithholding and remittan#e of the #orre#t amount of ta& re'uired to be dedu#ted and %ithheld under this 3hapter. *f the emplo!er fails to %ithhold and remit the #orre#t amount of ta& as re'uired to be %ithheld under the provision of this 3 h a p t e r , s u # h t a & s h a l l b e # o l l e # t e d f r o m t h e e m p l o ! e r t o g e t h e r % i t h t h e penalties or additions to the ta& other%ise appli#able in respe#t to su#h failure %ithhold and remit.