Terminal Leave Pay of the Retired or Retiring Philtrust Bank Employees are Still Subject to Withholding Tax

June 14, 1991 BIR RULING NO. 102-91 28 (b) 000-00 102-91 Gentlemen : This refers to your letter dated October 29, 1990 requesting for an authority to refund the taxes which were allegedly erroneously withheld from the money value of the accumulated vacation and sick leaves of your retired employees, in view of the Supreme Court En Banc Resolution dated August 23, 1990. In reply, please be informed that in reiterating the exemption from the withholding tax of the terminal leave pay of its retiree-employee, Atty. Bernardo F. Zialcita, the Supreme Court, in another En Banc Resolution dated October 18, 1990, denying the motion for clarification and/or reconsideration of the Bureau of Internal Revenue, specifically stated that the August 23, 1990 resolution (Admin. Matter No. 90-6-015-SC) exempting terminal leave pay from withholding tax " applied only to employees and officers of the Judiciary who retire, resign or are separated through no fault of their own." (Emphasis supplied) Since the retired Philtrust Bank employees are not retired employees of the Judiciary, the August 23, 1990 and October 18, 1990 En Banc Resolution of the Supreme Court do not apply to them. In view of the foregoing, this Office is of the opinion as it hereby holds that until the Supreme Court rules otherwise, the terminal leave pay of the retired or retiring Philtrust Bank employees are still subject to the withholding tax. Accordingly, your request for authority cannot be granted as yet. Very truly yours, (SGD.) JOSE U. ONG Commissioner