BIR Ruling [DA-320-00]

August 22, 2000 BIR RULING [DA-320-00] 32 (B) (6) (b) SB-69-98 Coca-Cola Bottlers Philippines, Inc. Feliza Building, 108 Herrera Street Legaspi Village, Makati City Attention: Mr . Nelson D . Empalmado Vice-President - Tax Counsel Gentlemen : This refers to your letter dated May 16, 2000 requesting for a ruling that the separation benefits to be paid and/or given by your company, Coca-Cola Bottlers Philippines, Inc. (CCBPI) to your employees who will be separated from the service due to the redundancy program adopted by CCBPI are exempt from income tax and consequently from the withholding tax and that the expenses incurred by CCBPI in providing the said benefits are deductible from gross income in computing the income tax liability of CCBPI. It is represented that the Asian financial crisis, which hit the Philippines and most of the countries in Southeast Asia in 1997, is still taking a toll on CCBPI's business; that markets are changing dramatically and very quickly; that CCBPI's customers and consumers, the bulk of whom come from the lower socio-economic classes, now have reduced purchasing power and are forced to spend their available cash on basic necessities like food and education; that as a result, CCBPI have not been hitting sales targets; that following a thorough and careful evaluation of the current state of its business, CCBPI decided to realign its operations; that CCBPI believes that restructuring initiatives, coupled with a significant reduction in operating expenses in all areas in operations, is critical in bringing CCBPI closer to a position of financial strength; that current organizations were reviewed in an effort to build a structure that will best address CCBPI's current and future business requirement; that this streamlining of the organizations resulted to the redundancy of certain positions within the organizations; that certain job positions were declared redundant and no longer necessary; and that to cushion the effect of their separation from the service of the CCBPI, the affected employees will be paid and/or given the following separation benefits: DaHISE FINANCIAL PACKAGE A. To be paid by CCBPI RETIREMENT PLAN 1. Separation pay equivalent to 100% of monthly salary for every year of service B. To be paid and/or given by CCBPI 1. Displacement Assistance For employees with 15 years or more in service an amount equivalent to 75% of the separation pay For employees with less than 15 years of service, an amount equivalent to 50% of the separation pay 2. Commutation of unused sick and vacation leave credits 3. Proportionate 13th month pay 4. Annual Gratuity Pay of P5,000.00 each 5. Shares of stock in Coca-Cola Amatil Limited purchased by CCBPI and held by a trustee for the benefit of participating employees under the Employee Share Plan, which although not yet vested will nevertheless be awarded due to the said employees' separation from the service of CCBPI; 6. Medical Insurance for 5 years; SUPPORT PROGRAM To help the affected employees deal with the change and facilitate the transition, CCBPI has contracted the services of Foresight to guide the said employees through the process, step-by-step. Foresight's services include: 1. "Preparing For Change" seminar - 2 days Financial Preparation; Personal Preparation; 2. "Job Hunting" seminar - day Preparation of Bio-data; Strategies for Applying for a Job, including Preparation of Application Letter 3. One-on-One Consultancy Specific Advice on Career and Finances and that the following is the list of employees to be separated: PLANT NAME POSITION 1 Antipolo DELFIN, JEFFREY S. Personnel Coor. 2 Antipolo FIGUEROA, ANTONIO A. Gas Issuer 3 Antipolo GARCIA, JAIME C. Teller 4 Antipolo JAVIER, MERCEDITA F. Statistical clerk 5 Antipolo MANGAHAS, FERDIE R. Pre-Seller 6 Antipolo NAIG, RODULFO R. Payrollman 7 Antipolo VERANO, WILLIAM Pre-Seller 8 Antipolo VIZCARA, JAIME R. Field Asst. 9 Bacolod AGUILAR, MARLON Salesman 10 Calamba ABULAR, LILIAN Market Analyst H. 11 Calamba CASTILLO, RODOLFO BDU SM 12 Calamba GENEVOSO, ANTONIO M. Asst. Mechanic 13 Calamba JAGMIS, EFREN BDU Helper 14 Calamba JIMENEZ, ALEXANDER Bottling Crew 15 Calamba MANAIG, JAIME S. Auto Electrician 16 Calamba MORALES, ROSEMARIE V. Secretary 17 Calamba NUNEZ, CESARIO M. Utility Mechanic 18 Calamba PLOPINIO, REY T. DSS 19 Calamba RECOCO, FRANCISCO BDU Driver 20 Calamba REYNALES, HILARIO Toolkeeper 21 Calamba SAMANIEGO, MARIO Carpenter 22 Calamba SAMAR, JESUS Carpenter 23 Calamba TAN, CESAR JR. MDC 24 Calamba TERRENAL, IRENEO Bottling Crew. 25 Calasiao BAYQUEIN, DOMINIC Sales Office Assistant 26 Calasiao BONIOL, ABELARDO Sales Office Asst. 27 Calasiao LIBID, JULIE C. Personnel Clerk 28 Calasiao MENESES, REGINA B Executive Sec.. 29 Calasiao PARAGAS, NORBERTO T. Refrigeration Foreman 30 Carlatan CUMIGAD, ARSENIO O. Dist. Sales Supervisor 31 Carlatan DE GUZMAN, MA. ANNABELLE S. GM's Secretary 32 Carlatan DELA CRUZ, VIRGILIO P. Security Guard 33 Carlatan JOSE, DELFIN P. Mechanic 34 Carlatan LACSAMANA, RAUL HOOVER V. MKt. Dev't. Coordinator 35 Carlatan LIM, POCHOLO C. Channel Dev. Officer 36 Carlatan ORDONO, RONALDO U. MST Operator 37 Carlatan PADILLA, MARILOU I. Fountain Clerk 38 Carlatan REGACHO, JUAN C. Painter 39 Cebu MA, BONIFACIO A. Supervisor 40 Gen. Santos MEDEL, MA. LUNA T. GM Secretary 41 Head Office ABLOLA, ANNETTE C. Finance & Admin Head 42 Head Office ACOPIADO, TELESFORO C. Security Guard 43 Head Office ACOSTA, EULOGIO Sec Guard 44 Head Office AGUILA, DELIO M. Sr. Logistics Operns Specialist 45 Head Office AGUILAR, DANILO Trans Doc Processor 46 Head Office ALCARAZ, MARIA CYRIL R. Account Supervisor 47 Head Office ANG, ANTONIO A. Group Auditor Mindano 48 Head Office ARISTORENAS, SANCHO Regional Embedded Coord 49 Head Office ARONG, NARCISO Driver 50 Head Office ASTUDILLO, AMADOR G. JR. Mktg. Planning Manager 51 Head Office ATANACIO, SARAH JANE P. Secretary 52 Head Office AZA, ANDRES A. Account Mgr. - 7 Eleven 53 Head Office AZUCENA, HENRY Area Distribution Manager 54 Head Office BACTIN, ANNA LIZA Ret Plan Spec 55 Head Office BALQUIN, ALFONSO RODRIGO P. Account Manager 56 Head Office BANGCUYO, NICOLAS Executive Driver 57 Head Office BARRION, MARIA THERESA G. Admin Asst 58 Head Office BASA, MANUEL Gen Manager - Tacloban Plant 59 Head Office BAYLON, HENRY T. Executive Driver 60 Head Office BAYUDAN, VENANCIO R. Subject Matter Expert 61 Head Office BUKALAN, ELLEN F. Financial & Admin Asst. 62 Head Office BUSTILLOS, NILO G. National Finance & HR Mangr 63 Head Office CABAS, JESULITO R. Corporate Systems Manager 64 Head Office CACNIO, MA. THERESA P. Account Supervisor 65 Head Office CAJAYON, RUBEN M. Subject Matter Expert 66 Head Office CALANSINGIN, MARIA LOURDES A. Documents Processor 67 Head Office CALAYAG, CESAR G. Subject Matter Expert 68 Head Office CALUYA, YVETTE AZUNCION A. Jr. Systems Analyst 69 Head Office CANANUA, CLARO C. Project Assistant 70 Head Office CANON, ELISA M. Cash Mgmt. Head 71 Head Office CARANDANG, NENITA C. Research Analyst 72 Head Office CASACOP, JAIREX R. Housekeeper 73 Head Office CEFRE, WARLITO V. Security Guard 74 Head Office CONCEPCION, MARIA LUISA B. Insurance & Risk Management Analyst 75 Head Office CRUZ, VIRGILIO S. Financial Analyst III 76 Head Office DASIG, FELIX F. HO Sec & Admin Officer 77 Head Office DAUMAR, EFREN Driver 78 Head Office DE GUZMAN, MARILYN C. Wage & Salary Admin Head 0 79 Head Office DE JESUS, ROGELIO A. Collection Representative 80 Head Office DE LA CRUZ, ARTURO M. Supervisor 81 Head Office DE LA FUENTE, MARIA ISABEL D. Physician 82 Head Office DECENA, ROLANDO R. Project Assistant 83 Head Office DEFANTE, HERNI D. Executive Assistant 84 Head Office DELA CERNA, DOUGLAS G. Engineering Services Engineer. 85 Head Office DELA CRUZ, WILLIAM S. Corporate Audit 86 Head Office DENSING, RAMONITO N. Channel Mgr. - Petroleum 87 Head Office DESCALLAR, MARCIANO A. Storekeeper/Store Asst. 88 Head Office DIMAYUGA, BERNADETTE C. Mktg. Comp. Intel Analyst 89 Head Office DIZON, MERLE GAY CDQ Analyst 90 Head Office DY, EMMA D. Executive Secretary 91 Head Office EMBRADURA, AIDA D. Executive Secretary 92 Head Office ESCUADRO, ROWENA E. Admin Asst 93 Head Office ESGUERRA, JOSE L. Engineering Services Engineer 94 Head Office ESPIA, HILARIO Sec Guard 95 Head Office FABRICA, LEOPOLDO C. Stores & Shipping Supvr 96 Head Office FERIA, RAYMOND ANTHONY V. Infrastructure Plng Manager 97 Head Office FLORES, CESAR G. Executive Driver 98 Head Office FLORES, NENA C. Financial Planning Officer 99 Head Office FONTANILLA, EVELYN C. Sr. Accounting Analyst 100 Head Office FRANCISCO, DINO T. Business Manager 101 Head Office GAJO, REYNALD C. Sr. Presentation Specialist 102 Head Office GALLARDO, ROBERTO JR. M. Security Guard 103 Head Office GAYOL, ELADIO O. Custodian/Messenger 104 Head Office GICAEN, JOSEFINA T. Functional & Admin Svcs. Head 105 Head Office GONZALEZ, MA. ELIZABETH G. Account Supervisor 106 Head Office GUERRERO, CARLOS R. Subject Matter Expert 107 Head Office GUEVARRA, DANIEL CYPRIANO P. Medical Clerk 108 Head Office HERNANDEZ, GODOFREDO I. Fleet Specialist 109 Head Office JAVIER, NOMERITO E. Facilities Manager 110 Head Office JIMENEZ, JENNIFER B. Mktg. Planning Process Head 111 Head Office JUNIO, JOSE D. Executive Driver 112 Head Office KAGAOAN, DIGNA SUSAN L. Group Auditor - Mega Manila 113 Head Office LAPUZ, FERNANDO C. Clerk 114 Head Office LAROCO, RODOLFO S. Group Auditor - North Luzon 115 Head Office LEYBLE, ANALIZA A. Nurse 116 Head Office LOMOTAN, MA. MILAGROS REGINA I. Executive Assistant 117 Head Office LOREZCA, RAMON A. Executive Driver 118 Head Office LUMINARIAS STEVE LEO G. Jr. Systems Analyst 119 Head Office MACAPAGAL RODA S. Records Clerk 120 Head Office MACATALAD, SHIRLEY M. Secretary 121 Head Office MACATANGAY, MICHAEL SHERWIN M. National Sales Supervisor 122 Head Office MAGBANUA, TERESITA C. Dental Aide 123 Head Office MAGLANOC, CAROLINA S. Executive Secretary 124 Head Office MAPA, MARIA ZAIDIE V. Records Clerk 125 Head Office MEDALLA, PEDRO ANTONIO R. JR. Nurse 126 Head Office MICHAEL, MARIA LUCY A. Secretary 127 Head Office MONDRAGON, BERLIN S. Office Administrator 128 Head Office MORALES, CLEOPHAS F. L&D Manager 129 Head Office MORELOS, ALICIA G. Executive Secretary 130 Head Office MUSNGI, SHARON-MAY R. Category Mgmt Specialist 131 Head Office NACPIL, REYNALDO V. Operations Audit Staff 132 Head Office NADERA, NITA G. CDQ Area Manager 133 Head Office NATIVIDAD, LAMBERTO D. Security Guard 134 Head Office OBRA, LORETO B. Subject Matter Expert 135 Head Office ONGKINGCO, MA. CONSOLACION F. MAX Consultant 136 Head Office ONTIVEROS, HENRY A. Area Distribution Mgr - N/S Luzon 137 Head Office ORTEGA, ELVIRA E. Subject Matter Expert 138 Head Office OTICO, GERITO A Executive Driver 139 Head Office PANSACOLA, FORTUNATO Forklift Operator 140 Head Office PANSACOLA, MANUEL M. Engineering Services Architect 141 Head Office PAUNLAGUI, ELIZABETH D. Consumer Affairs Manager 142 Head Office PICONADA, LOLITA A. Accountant II 143 Head Office PLATON, MARITO L. VP Treasury 144 Head Office POBLETE, RODANTE IR Staff 145 Head Office POBRE, MARIA LOURDES P. Charge Account Supervisor 146 Head Office REDELOSA, JESUS M. Safety Engr 147 Head Office REYES, MELITA V. VP & Chief Internal Auditor 148 Head Office RICAFORT, RAMON EDUARDO J. Engineering Services Engineer 149 Head Office ROA, MARILYN A Admin Asst 150 Head Office RODRIGUEZ, GREGORIO Driver 151 Head Office SABLAN, EDITHA G. Category Mgmt Specialist 152 Head Office SALAC, ERIC S. CAD Operator 153 Head Office SALAZAR, CONSTANCIO Sec Guard 154 Head Office SALVADOR, FELINO Exec. Assistant - Mindanao 155 Head Office SAN JOSE, ROMEL S. Payables Administrator 156 Head Office SANTOS, VERONICA S. Executive Secretary 157 Head Office SARMIENTO, ALBERTI JR. P. Senior Accountant 158 Head Office SIBULO, LARRY Helper 159 Head Office SILVA, ROSA MARIA DOLORES M: Jr. Systems Analyst 160 Head Office SIOJO, ROBERTO F. Area Operns Log Svcs Mgr. 161 Head Office SISON, MARIA STELLA O. Compensation Analyst 162 Head Office SORIANO, REGINALD VICTOR A. Account Manager 163 Head Office SUPETRAN, HANNA M. Consumer Affairs Specialist 164 Head Office TALAY, REMEDIOS C. Accountant II 165 Head Office TAN, PATRICK MARIO PONCE G. Infrastructure Plng Specialist 166 Head Office TANCIONGCO, JOCELYN G. Database Administrator 167 Head Office TOLENTINO, CLEOTILDE R. Payroll & Benefits Admin Head 168 Head Office TORRES, OLIVIA N. National Sales Analyst I 169 Head Office VICENTE, FIDEL Executive Assistant 170 Head Office ZARAGOZA, MANUEL H. IR Manager 171 Head Office ZEPEDA, EVANGELINE C. L&D Coordinator 172 Ilagan BULAN, ARISTEO CASASOLA Carpenter 173 Ilagan CABALONGA, PEDRO Sales Office Asst. 174 Ilagan CANTILLANA, MYRNA GAVINO RSM Sec 175 llagan CAYABA, ELOISA ROSALES GM Sec 176 Ilagan DONATO, JOSE JR. RUIZ Svc Driver 177 Ilagan DY QUIANGCO, JULIETO BULLAG Ref Foreman 178 Ilagan GUMPAL, JUANCHO L. Sales Office Asst. 179 Ilagan HUMIWAT, JOENARD Sales Office Asst. 180 Ilagan MANALO, ALEXANDER Sales Office In-Charge 181 Ilagan ROQUE, ADRIAR Sales Office Asst. 182 Ilagan TAGAO, ROMEO TAGGUEG Guard 183 Ilagan TORIBIO, ELIGIO LITONJUA Sales Office Asst. 184 Ilagan YUHMO, ROBERT Sales Office Asst. 185 Ilocos ALMAZAN, ROBERT BITANGA CDO 186 Ilocos DAQUIAOG, ARCELI GM Sec 187 Ilocos MAXIMILLIAN, CARLOS Carpenter 188 Ilocos ROCUTAN, EMERSON GABBAC Painter 189 Iloilo BLANCE, RUBEN Rt. Driver Helper Clerk 190 Iloilo GALLO, JOVEN Order Taker Collector 191 Iloilo GUMBAN, RODRIGO Messenger 192 Iloilo LAGDAMEN, DAVID A/P - cash Disbursement 193 Iloilo MACALALAG, ERNESTO Cashier 194 Iloilo NARANJILLA, EVELYN Nurse 195 Manila ABDON, WILLY Mechanic 196 Manila AGLIAM, ROBERTO OTC 197 Manila ALCANTARA, NELSON Mechanic 198 Manila AVILA, LAMBERTO Mechanic 199 Manila BALCITA, AGRIPINO Route Salesman 200 Manila BAUTISTA, PAULINO JR. O. Helper 201 Manila BERGANTINOS, DEOGRACIA Rt Salesman 202 Manila BORELA, NESTOR Helper 203 Manila CALDITO, ORLANDO Stock Clerk 204 Manila CAMBA, BENJAMIN Tinsmith/Welder 205 Manila. CANTES, DIOMEDES Fountain Technician 206 Manila CAPISTRANO, ERNESTO Helper 207 Manila CARAIG, VICTOR Helper 208 Manila CONDE, RODOLFO Mechanic 209 Manila CUARESMA, LOREN Mechanic 210 Manila DE GUZMAN, GREGORIO Helper 211 Manila DELA ROSA, RONALDO Helper 212 Manila DELOS SANTOS, ARTURO Route Salesman 213 Manila DIMAANO, LEONARDO Route Salesman 214 Manila ENCABO, NICANOR Tinsmith/Welder 215 Manila ESTANISLAO, NONOY Mechanic 216 Manila FLORES, JASMIN Statistical Clerk 217 Manila FONTILLAS, LEONARDO E. Mechanic 218 Manila FRANCISCO, BENIGNO Mechanic 219 Manila GANAL, AMERPINO Route Salesman 220 Manila GATCHALIAN, AMADO Helper 221 Manila GAVINA, CONRADO Helper 222 Manila ISLA, ROMEO Painter 223 Manila LACSAMANA, EDMUNDO Helper 224 Manila LARIOSA, PATRICIO Helper 225 Manila LUBI, JUANITO Helper 226 Manila MACA, ORLANDO Helper 227 Manila MANGAOANG, BONIFACIO Mechanic 228 Manila MARANGE, JIMMY Helper 229 Manila MASANGKAY, RESTITUTO Painter 230 Manila MIRANDA, VICTOR Washer/Driver 231 Manila NACPIL, LETICIA Sales 232 Manila. NAVARRO, DOMINGO Helper 233 Manila ORTEGA, ISAGANI Rt. Salesman 234 Manila OSORIO, ARNULFO Helper 235 Manila PANGAN, RENATO Tinsmith/Welder 236 Manila PENAFLORIDA, ELMER Route Salesman 237 Manila POLICARPIO, JOSE V. Mechanic 238 Manila RAPIZ, GEORGE Helper 239 Manila SALMORIN, NESTOR Gas Issuer 240 Manila SAN MATEO, LIDO Helper 241 Manila SANTIAGO, ALFREDO Mechanic 242 Manila SEDANO, SALVADOR JOSE JR Gas Issuer 243 Manila SILVA, ECLID PD Clerk 244 Manila TIBAYAN, MARY ANN Acctg Analyst 245 Manila VILLARBA, ROLANDO Painter 246 Meycauayan ABATAYO, NILO Rte. Helper 247 Meycauayan ANGELES, ELMO Advtg. Asst. 248 Meycauayan CABANTOG, VICTORIANO Pre-seller 249 Meycauayan CALADO, AGUSTIN Rte. Helper 250 Meycauayan CALPE, NOEL Rte. Helper 251 Meycauayan CAMUA REY Rt-Dvr Helper 252 Meycauayan CANDIA, NARCISO Painter 253 Meycauayan CRUZ, RIZALITO M. RS Analyst 254 Meycauayan DAET, FERNANDO Rte Helper 255 Meycauayan DAVID, RICARDO Rte. D/Helper 256 Meycauayan DE OCAMPO, ROBERTO Rte. Helper 257 Meycauayan DELA CRUZ, PABLO Route Helper 258 Meycauayan DELA CRUZ, VICTORIANO Rt-Dvr Helper 259 Meycauayan ESTRABILLO, LEVY Route Helper 260 Meycauayan FEDERIZO, JOSE Rte. Helper 261 Meycauayan FERMIN, EDILBERTO Advtg. Asst. 262 Meycauayan GENUINO, MANUEL Sign Painter 263 Meycauayan GORAL, ALEXANDER Rte. Helper 264 Meycauayan GRABADOR, ROOSEVELT T/S Welder 265 Meycauayan LIBAO, EMETERIO Rte. Helper 266 Meycauayan LOPEZ, VICTORIANO Route Helper 267 Meycauayan MANANDEG, CHARLITO Route Helper 268 Meycauayan NAGA, DALMACIO Rte. Helper 269 Meycauayan NICOLAS, RICKY Route Helper 270 Meycauayan PACQUING, FLAVANIO Lead Helper 271 Meycauayan PANGAN, VIRGILIO Route Helper 272 Meycauayan PASCUAL, RICARDO M. Fld. Ref. Mechanic 273 Meycauayan PINEDA, PRIMO Route Helper 274 Meycauayan QUIAMBAO, EDGARDO Route Helper 275 Meycauayan SORIANO, PONCHITO Rt-Dvr Helper 276 Meycauayan SORIANO, ROWEL Rte. D/Helper 277 Meycauayan SUPAN, JUNE S Rte. D/Helper 278 Meycauayan TOMABIAO JAIME JR. L. Route Helper 279 Meycauayan VARGAS, PABLITO Rte. Helper 280 San Fernando BAUTISTA, RICARDO R. MST OPERATOR 281 San Fernando DAVID, ALEXANDER SALESMAN 282 San Fernando GONZALES, LUCIANO P. MECHANIC 283 San Fernando MANALASTAS, ROMEO MECHANIC 284 San Fernando ROSILLO, JERRY P. MECHANIC 285 San Fernando SUBASTE, RICARTE U. JANITOR/MESSENGER 286 Tacloban PONTILAN, WILMA B. Personnel Assistant 287 Tacloban RAAGAS, CELERINA Secretary 288 Tagbilaran AROT, ADRIANO Security Guard 289 Tagbilaran MADERA, HORMISDAS Security Guard 290 Zamboanga AIZON, PEDRO LARRAGA Rt-Dvr Helper 291 Zamboanga ASTILLERO, HERMIE GRAPA Rt-Dvr Helper 292 Zamboanga CIMAFRANCA, ROBERTO EBIDA Salesman 293 Zamboanga DELA CRUZ, RUBEN POTENCIANO Rt-Dvr Helper 294 Zamboanga ELIMEYOS, GUILLERMO ROSALES Ref Mech 295 Zamboanga GIMENA, GLORIA CANTILLER Plt Nurse 296 Zamboanga GIRON, VICENTE SR. BABIERA PAINTER 297 Zamboanga JULIAN, JOSEPH YBANOFF SECURITY GUARD 298 Zamboanga MONTES, MELECIO PARROCO SECURITY GUARD 299 Zamboanga REYES, EFREN SR. GUEVARRA PAINTER In reply, please be informed that pursuant to Section 32(B)(6)(b) of the Tax Code of 1997, any amount received by an official or employee or by his heirs from the employer as a consequence of separation of such official or employee from the service of the employer because of death, sickness or other physical disability or for any cause beyond the control of the said official or employee is exempt from taxes regardless of age or length of service. The phrase "for any cause beyond the control of said official or employee" connotes involuntariness on the part of the official or employee. The separation from the service of the official or employee must not be asked for or initiated by him. DCScaT The above-mentioned law requires the presence of two (2) conditions in order that the employee benefits may be granted tax exemption, namely: (1) the employee is separated from the service of the employer due to death, sickness or other physical disability or for any cause beyond the control of-the said official or employee; and (2) the employer pays benefits to the official or employee or his heirs as a consequence of such separation. Since the separation of the employees is due to redundancy and, therefore, beyond their control, any and all amounts to be received by them as a result thereof, are exempt from income tax and consequently from the withholding tax prescribed by Section 79, Chapter XIII, Title II of the Tax Code of 1997, as implemented by Revenue Regulations No. 2-98. Moreover, the commutation and payment of unused sick leave and vacation leave credits are likewise not subject to income tax and, consequently, to withholding tax (CIR vs. CA & Efren P. Castaeda, GR 96016 prom. Oct. 17, 1991). The payment of the 13th month pay and "other similar benefits" in excess of the P30,000.00 threshold and the salaries of Coca-Cola Bottlers Philippines, Inc. employees, however, are subject to income tax and, consequently, to the withholding tax. (BIR Ruling No. SB-69-98 dated October 6, 1998) The expenses incurred by CCBPI in providing the said benefits are deductible from gross income for being an ordinary and necessary trade or business expense pursuant to Section 34(A)(1)(a)(i) of the Tax Code of 1997. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) LILIAN B. HEFTI Deputy Commissioner Legal and Inspection Group