BIR Ruling

November 24, 1975 Mr. Agapito Horario Silay-Hawaiian Central Occidental Negros S i r : This refers to your request for refund of the amounts withheld as income tax by the Hawaiian-Philippine Company from the retirement benefits of its employees, viz: cdti Retiree Tax w/held Date Paid to O/R No. "1. Jose Fernandez P1,859.43 2/10/71 BIR Silay 4472983E 2. Ruperto Belgira 835.61 6/9/72 BIR Silay 297714E 3. Marcelino Patulin 428.19 3/8/72 BIR Silay 095117E 4. Moises Alemani 416.47 3/8/72 BIR Silay 095117E 5. Teofilo Solis 337.56 3/8/72 BIR Silay 095117E 6. Generoso de Dios 75.47 3/8/72 BIR Silay 095117E 7. Albino Tuberos 722.80 11/10/67 BIR Silay 1510091 8. Jose Pacgeo 650.00 7/10/68 BIR Silay 2599257 9. Gualberto Precioso 130.00 11/8/68 BIR Silay 2623552 10. Raymundo Aradillos, Sr. 330.00 12/10/68 BIR Silay 2623637 11. Jose Beri 1,107.60 5/12/69 BIR Silay 1087261 12. Zosimo Villestar 397.43 2/10/71 BIR Silay 4472983 13. Francisco Leonero 1,740.00 3/12/73 PNB Silay 570090 14. Inocencio Empleo 460.95 11/8/68 BIR Silay 2623552E 15. Agapito Horario 603.96 2/10/71 BIR Silay 4472983E 16. Excelso Locsin, Sr. 826.93 2/10/71 BIR Silay 4472983E 17. Ponciano Dumaicos 160.71 2/10/71 BIR Silay 001275 18. Leodegario Ilaya 335.44 1972 H. P. Co. -0-" In reply thereto, I have the honor to inform you that pursuant to Republic Act No. 4917, the retirement benefits received by officials and employees who have been in the service of the same private firm for at least ten (10) years and who are not less than fifty (50) years of age at the time of retirement are exempt from all taxes provided that the retirement benefits are in accordance with a reasonable private benefit plan maintained by the employer. However, in order that retiring employees who meet the qualifications called for by the act may avail of the tax-exemption benefit under Republic Act No. 4917, the employer-company must submit to this Office, B.I.R. Form No. 17.60 duly filled out and accompanied by a written program constituting the plan and the trust instrument; otherwise, the benefits to be received by the retiring employee under the plan shall be subject to the withholding tax. Under the final proviso of Section 1, Republic Act. No. 4917, may amount received by an official or employee from his employer by reason of death, sickness or other physical disability or for any cause beyond the control of the official or employee is likewise exempt from taxes regardless of age or length of service. casia It is to be noted in this connection, that the aforenamed employees did not receive their retirement benefits under a qualified retirement plan because their employer, the Hawaiian-Philippine Company does not maintain one for its employees like you. Neither can the said employees avail of the tax exemption under the final proviso of Section 1, Republic Act No. 4917 inasmuch as they were separated from the employ of the Hawaiian-Philippine Company due to normal retirement, and not for reasons beyond their control. In view thereof, this Office is of the opinion and so holds that the retirement benefits of the above mentioned employees are subject to income tax; that the deduction and withholding of the income tax on such retirement benefits are legal and proper; and that the refund thereof cannot be granted. Very truly yours, (SGD.) EFREN PLANA Acting Commissioner of Internal Revenue TAN-1456-040-3