BIR Ruling [UN-209-94]

July 13, 1994 BIR RULING [UN-209-94] Balgos & Perez Law Offices 5th Floor, Corinthian Plaza Paseo de Roxas Makati, Metro Manila Attention: Atty . Marcial O . T . Balgos Gentlemen : This refers to your letter dated March 7, 1994 requesting, in behalf of your client, PARAMOUNT INSURANCE CORPORATION, for reconsideration of our BIR Ruling UN-064-94 dated February 1, 1994, he dispositive portion of which states as follows: cdtech ". . . , the separation pay/benefits to be received and already received by . . . MR. HERNAN P. SAN LUIS, who was involuntarily separated from his service with PARAMOUNT INSURANCE CORPORATION for the reason that the son of the Chairman of the Board took over his position as President thereof, are not subject to income tax and consequently to the withholding tax prescribed by Section 72 . . . of the Tax Code, . . ." It should be noted that the above-questioned opinion of this Office was based on the representation made by the counsels of Mr. San Luis, as well as from an affidavit executed by Mr. San Luis himself, that he was involuntarily separated, effective June 30, 1992, from his employment as President of Paramount Insurance Corporation for a cause beyond his control, i.e., the placement in his position, upon the instance of the Chairman of the Board, Mr. Daniel C. Go, of the son of the latter. On the other hand, you are contending that said Mr. San Luis was not involuntarily separated from his employment but it was he who sought for the said separation and was therefore granted retirement. You likewise represented that the amount on which Paramount Insurance Corporation sought to impose withholding tax was on the additional retirement pay granted to Mr. San Luis and not on his regular retirement benefit under the Company's pension plan duly registered with the Bureau. Finally, your client was advised by its external auditors that the said type of benefit payments is not exempted from withholding tax under Section 28 of the Code. We understand, however, that a Civil Case for a Sum of Money was filed by said Mr. San Luis against Paramount Insurance Corporation and the same is now pending in the Regional Trial Court, Branch 59, Makati, Metro Manila. In reply, please be informed that since there is a Civil Case now pending in Branch 59 of the Regional Trial Court of Makati on this matter as above-discussed, we are desisting from commenting on this case, the same being still sub judice or under judicial consideration. cdi Very truly yours, ALICIA P. CLEMENO Acting Assistant Commissioner Legal Service