BIR Ruling [DA-704-99]

December 22, 1999 BIR RULING [DA-704-99] Mr . Angelito Apuan 114 Cattleya Street Malolos Subdivision Malolos, Bulacan S i r : This refers to BIR Ruling No. DA-011-99 dated January 7, 1999 where this Office held that "xxx xxx xxx "In reply, please be informed that Section 32(B)(6)(a) of the Tax Code of 1997, as implemented by Revenue Regulations No. 2-98, provides that retirement benefits received under R.A. No. 7641 and those received by officials and employees of private firms, whether individual or corporate, in accordance with a reasonable private benefit plan maintained by the employer: Provided, that the retiring official or employee has been in the service of the same employer for at least ten (10) years and is not less than fifty (50) years of age at the time of his retirement. . . ." shall be excluded from gross income. "The above-cited section of the Tax Code provides merely for the minimum requirements of ten (10) years of service and not less than fifty (50) years of age in order that the retirement benefits may be exempt from income tax. However, the retirement plan rules and regulations, as in the case, the Manila Hotel Employees' Retirement Plan can under its under retirement date require an employee to retire on the first day of the month upon attainment of age 55 and after completion of at least 15 years of credited service with the Hotel. These conditions must be complied with by the employees availing the early retirement incentive program being offered by Manila Hotel Corporation in order that their retirement benefits may be exempt from income tax and consequently from withholding tax. "Such being the case and, and considering that not all employees who have availed the early retirement incentive program offered by Manila Hotel Corporation have complied with the early retirement date of age 55 and completion of at least 15 years of credited service with the Hotel as provided under the early retirement date of the Manila Hotel Employees' Retirement Plan, this Office is of the opinion that only the retirement benefits paid to the following employees named hereunder are exempt from the income tax and consequently from withholding tax prescribed by Section 79, Chapter XIII, Title II of the said Code, to wit: 1. Abrigo, Ricardo S. 2. Canete, Ernesto T. 3. Dela Rosa, Pablo M. 4. Eniego, Rosita R. 5. Fonseca, Genoveva O. 6. Gallardo, Virgilio B. 7. Grefaldin, Romeo C. 8. Leuterio, Oscar A. 9. Osmea, Nolasco A. 10. Ramos, Cornelio R. 11. Recinto, Jose R. 12. Rivas, Edgardo I. 13. Tomimbang, Onofre D. "Accordingly, the taxes withheld from their respective retirement benefits under the Manila Hotel Employees' Retirement Plan should be refunded to them." In your letter dated June 16, 1999, you stated that all the time you availed of the Early Retirement Incentive Program (ERIP) offered by the Manila Hotel Corporation, you were already 60 years old and has rendered at least 20 years of service to the said hotel as certified to by the HRD & Administrative Director, Mr. Reynaldo N. Rigor dated August 16, 1995; and that you stated that this Office omitted you name as one of the employees whose retirement benefits are likewise exempt from income tax and consequently from withholding tax prescribed by Section 79, Chapter XIII, Title II of the Tax Code of 1997. In reply thereto, please be informed that paragraph 3 of BIR Ruling No. DA-011-99 dated January 7, 1999 is hereby modified by including your name, Mr. Angelito F. Apuan, as on of the employees of The Manila Hotel Corporation who was required to avail of its early retirement incentive program and who also had complied with the early retirement date of age 55 and completion of at least 15 years of credited service with the Hotel as provided for under the early retirement date of The Manila Hotel Employees Retirement Plan. Such being the case, the retirement benefits paid to you is exempt from income tax and consequently from the withholding tax prescribed by Section 79, Chapter XIII, Title II of the Tax Code of 1997. Thus, taxes withheld from your retirement benefits under The Manila Hotel Employees Retirement Plan should be refunded to you. Your claim for refund of the taxes withheld from your retirement benefits should be filed with the Chief, Appellate Division, BIR NOB, Diliman, Quezon City. Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Local & Enforcement Group)