Tax Liability of PLDT Employees

December 15, 1958 BIR RULING NO. 715-58 Messrs. Ponce, Enrile, Siguion Reyna Montecillo & Belo Attorneys-at-Law Manila Gentlemen : This is in connection with your request for a ruling on the following questions: (1) What tax or taxes would be payable by the employees of the Philippine Long Distance Telephone Company in the event payments would be made under any of the contingencies mentioned in the benefit plan adopted by the company for its employees? (2) In the event any of such payments should be considered income to the employee or his beneficiaries whether or not the Philippine Long Distance Telephone Company has any obligation or is required to withhold the corresponding income taxes on any of such payments? The privileges granted to the employees under the benefit plan are (1) retirement benefit, (2) death benefit and (3) service terminal pay. There is no question that the amount received as retirement benefit and service terminal pay are taxable as income to the recipient thereof pursuant to the provisions of Section 29(a) of the National Internal Revenue Code. The amount received by the heir as death benefit is not subject to income tax. It should, however, form part of the estate of the deceased subject to the estate and inheritance tax. As regards your second query please be further informed that pursuant to the provisions of Article 2 of the Withholding Tax Law, the Philippine Long Distance Telephone Company is required to withhold the corresponding income tax on payments made to its employees of retirement benefits and service terminal pay. aisadc Very truly yours, (SGD.) MELECIO R. DOMINGO Acting Commissioner of Internal Revenue