BIR Ruling

December 7, 1973 Sycip, Gorres, Velayo & Co. 6760 Ayala Avenue Makati, Rizal Gentlemen : This refers to your letter dated December 3, 1973 requesting in effect information as to the propriety of establishing a classification of employees for purposes of the coverage of retirement benefit plans on the basis of union and non-union employees. It is represented that the management of a certain group of companies is thinking of installing a retirement benefit plan to cover firstly only non-union employees, the reason being that with respect to union employees, the installation of retirement benefit plans as to them will go through the normal process of collective bargaining negotiations and shall form part of the whole package of compensation and other benefits which the unions might demand. In reply, I have the honor to inform you that it is the opinion of this Office, as it hereby holds, that the classification of employees as union and non-union for purposes of Republic Act No. 4917 has a sound basis as it is founded on well defined differences, that is, with respect to non-union employees, the grant of benefits rests under the exclusive unilateral act and discretion of management, whereas, with respect to union employees, the grant of benefits rests on bilateral agreement of management and union. Your inquiry is, therefore, hereby answered in the affirmative. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue TAN-1601-593-5