Publishing the Resolution of the Supreme Court in the Case of Commissioner of Internal Revenue vs. Oscar R. Victoriano and the Court of Tax Appeals Re: Taxability of Terminal Leave Pay of Retiring Official/Employee in the Government Service

December 8, 1989 REVENUE MEMORANDUM CIRCULAR NO. 76-89 SUBJECT : Publishing the Resolution of the Supreme Court in the Case of Commissioner of Internal Revenue vs. Oscar R. Victoriano and the Court of Tax Appeals Re: Taxability of Terminal Leave Pay of Retiring Official/Employee in the Government Service TO : All Internal Revenue Officers and Others Concerned Quoted hereunder is the Resolution of the Supreme Court En Banc dated August 10, 1989; 'G.R. No. 83176 (Commissioner of Internal Revenue vs. Oscar R. Victoriano and the Court of Tax Appeals). In view of the fact that the terminal leave pay of respondent former Presiding Justice of the Court of Appeals, Oscar R. Victoriano, is part of his salary, the Court Resolved to GRANT the petition and thus allow the imposition of the withholding tax thereon.' upholding, the effect, BIR Ruling No. 29-c-7-F-036-85 dated April 10, 1985 and BIR Ruling No. 29-C-7-F-053-85-158-85 dated September 13, 1985 that the terminal leave pay or the money value of the accumulate/unused vacation and sick leave credits received by the employee/official upon his retirement or separation from the government service is part of compensation for service performed subject to income tax and consequently to the withholding tax on wages prescribed under Section 72, Chapter X, Title II of the Tax Code as amended and as implemented by Revenue Regulations No. 6-82 as amended. It is desired that this Circular be given as wide a publicity as possible. (SGD.) JOSE U. ONG Commissioner of Internal Revenue