INTERCONTINENTAL BROADCASTING CORPORATION VS NOEMI AMARILLA[G.R. No. 162775. October 27, 2 6.!

"#ct$% On various dates, petitioner employed the following persons at its Cebu s t a t i o n : Candido C. Quiones, Jr, Corsini R. Lagahit, as tudio !e"hni"ian, #natolio $. Otadoy, as Colle"tor and %oemi #marilla, as !raffi" Cler&. On 'ar"h()*+, the government se,uestered the station, in"luding its properties, funds and other assets, and too& over its management and operations from its owner, Roberto -enedi"to. .owever, in /e"ember ()*+, the government and -enedi"t entered into a temporary agreement under whi"h the latter would retain its management and operation. On %ovember ())0, the 1residential Commission o n $ o o d $ o v e r n m e n t 2 1 C $ $ 3 a n d - e n e d i " t o e 4 e " u t e d a C o m p r o m i s e #greement, where -enedi"to transferred and assigned all his rights, shares and interests in petitioner station to the government. 5 n t h e m e a n t i m e , t h e f o u r e m p l o y e e s r e t i r e d f r o m t h e " o m p a n y a n d re"eived, on staggered basis, their retirement benefits under the ())6 Colle"tive - a r g a i n i n g #greement between petitioner and the b a r g a i n i n g u n i t o f i t s employees. 5n the meantime, a 1(, 700.00 s a l a r y i n " r e a s e w a s g i v e n t o a l l employees of the "ompany, "urrent and retired, effe"tive July ())8. .owever, when the four retirees demanded theirs, petitioner refused and instead informed them via a letter that their differentials would be used to offset the ta4 due on their retirement benefits in a""ordan"e with the %ational 5nternal Revenue Code 2%5RC3. !he four retirees filed separate "omplaints against 5-C !9:(6 Cebu and tation 'anager Louella ;. Cabaero for unfair labor pra"ti"e and non:payment of ba"& wages before the %LRC. I$$&e% <hether or not the retirement benefits of respondents are part of their gross in"ome. R&'()*% !he Court agrees with petitioner that under the C-#, it is not obliged to pay for the ta4es on the respondents= retirement benefits. C-# did not provide a p r o v i s i o n where petitioner obliged itself to pay the ta4es on the retirement benefits of its employees. !he Court also agrees with petitioner that, under the % 5 R C , t h e r e t i r e m e n t b e n e f i t s o f r e s p o n d e n t s a r e p a r t o f t h e i r g r o s s i n " o m e sub>e"t to ta4es. e"tion ?* 2b3 2@3 2#3 of the %5RC of ()*+ ?6 provides: $ross 5n"ome. A 2b3 B4"lusions from gross in"ome. A !he following items shall not be in"luded in gross in"ome and shall be e4empt from ta4ation under this !itle: 2@3 Retirement benefits, pensions, gratuities, et". A #.3 Retirement benefits re"eived by offi"ials and employees of private firms whether individuals or "orporate, in a""ordan"e with a reasonable private benefit plan maintained by the employer: 1rovided, ! h a t t h e r e t i r i n g o f f i " i a l o r e m p l o y e e h a s b e e n i n t h e s e r v i " e o f t h e s a m e employer for at least ten 2(03 years and is not less than fifty years of age at the time of his retirement: 1rovided, further, !hat the benefits granted under this s u b p a r a g r a p h s h a l l b e a v a i l e d o f b y a n o f f i " i a l o r e m p l o y e e o n l y o n " e . ; o r purposes of this subse"tion, the term Creasonable private benefit planC means a pension, gratuity, sto"& bonus or profit: sharing plan maintained by an employer for the benefit of some or all of his offi"ials or

employees, where "ontributions are made by su"h employer for offi"ials or employees, or both, for the purpose of distributing to su"h offi"ials and employees the earnings and prin"ipal of the fund thus a""umulated, and wherein it is provided in said plan that at no time shall any part of the "orpus or in"ome of the fund be used for, or be diverted to, a n y p u r p o s e o t h e r t h a n f o r t h e e 4 " l u s i v e b e n e f i t o f t h e s a i d o f f i " i a l a n d employees. Revenue Regulation %o. (?:*+, the implementing rules of the foregoing provisions, provides: 2b3 1ensions, retirements and separation pay. A 1ensions, retirement and separation pay "onstitute "ompensation sub>e"t to withholding ta4, e4"ept the following: 2(3 Retirement benefit re"eived by o f f i " i a l a n d employees of private firms under a reasonable private benefit plan maintained by the employer, if the following re,uirements are met: 2i3 !he retirement plan must be approved by the -ureau of 5nternal RevenueD 2ii3 !he retiring offi"ial or employees must have been in the servi"e of the same employer for at least ten2(03 years and is not less than fifty 2703 years of age at the time of retirement Dand 2iii3 !he retiring offi"ial or employee shall not have previously availed of the privilege under the retirement benefit plan of the same or another employer. !hus, for the retirement benefits to be e4empt from the withholding ta4, the ta4payer is burdened to prove the "on"urren"e of the following elements: 2(3a reasonable private benefit plan is maintained by the employerD 2?3 the retiring offi"ial or employee has been in the servi"e of the same employer for at least (0yearsD 263 the retiring offi"ial or employee is not less than 70 years of age at the and 2iii3 !he retiring offi"ial or employee shall not have previously availed of the privilege under the retirement benefit plan of the same or another employer. !hus, for the retirement benefits to be e4empt from the withholding ta4, the ta4payer is burdened to prove the "on"urren"e of the following elements: 2(3a reasonable private benefit plan is maintained by the employerD 2?3 the retiring offi"ial or employee has been in the servi"e of the same employer for at least (0yearsD 263 the retiring offi"ial or employee is not less than 70 years of age at the time of his retirementD and 283 the benefit had been availed of only on"e. #rti"le 9555 of the ())6 C-# provides for two &inds of retirement plans : "ompulsory and optional. !hus: #R!5CLB 9555 RB!5RB'B%! e"tion (: Compulsory Retirement A #ny employee who has rea"hed the age of ; i f t y ; i v e 2 7 7 3 y e a r s s h a l l b e r e t i r e d f r o m t h e C O ' 1 # % E a n d s h a l l b e p a i d a retirement pay in a""ordan"e with the following s"hedule: L B % $ ! . O ; B R 9 5 C B R B ! 5 R B ' B % ! - B % B ; 5 ! ( year:below 7 yrs.(7 days for every year of servi"e7 y e a r s : ) y e a r s 6 0 d a y s f o r e v e r y y e a r o f s e r v i " e (0 years:(8 years70 days for every year of servi"e(7 years:() years+7 days for every year of servi"e ? 0 y e a r s o r m o r e * 0 d a y s f o r e v e r y y e a r o f s e r v i " e # supervisor who rea"hed the age of ;ifty 2703 may at hisFher option retire with the same retirement benefits provided above. e"tion ?: Optional Retirement A #ny "overed employee, regardless of age, who has rendered at least five 273 years of servi"e to the CO'1#%E may voluntarily r e t i r e a n d t h e C O ' 1 # % E agrees to pay Long e r v i " e 1 a y t o s a i d " o v e r e d employee in a""ordan"e with the following s"hedule: L B % $ ! . O ; B R 9 5 C B R B ! 5 R B ' B % ! - B % B ; 5 ! 7 : ) y e a r s ( 7 d a y s f o r e v e r y y e a r o f s e r v i " e ( 0 : ( 8 y e a r s 6 0 d a y s f o r e v e r y y e a r o f s e r v i " e ( 7 : ( ) y e a r s 7 0 d a y s f o r e v e r y y e a r o f s e r v i " e ?0 years or more+0 days for every year of servi"e

e"tion 6: ;ra"tion of a Eear A 5n "omputing the retirement under e"tion ( and? of this #rti"le, a fra"tion of at least si4 2+3 months shall be "onsidered as one of this #rti"le, a fra"tion of at least si4 2+3 months shall be "onsidered as one whole year. 'oreover, the CO'1#%E may e4er"ise the option of e4tending the employment of an employee. e"tion 8: everan"e of Bmployment /ue to 5llness A <hen a supervisor suffers from disease andFor permanent disability and herFhis "ontinued employment is p r o h i b i t e d b y l a w o r p r e > u d i " i a l t o h e r F h i s h e a l t h o f t h e h e a l t h o f h i s " o : employees, the CO'1#%E shall not terminate the employment of the sub>e"t supervisor unless there is a "ertifi"ation by a "ompetent publi" health authority that the disease is of su"h a nature or at su"h stage that it "annot be "ured w i t h i n a p e r i o d o f s i 4 2 + 3 m o n t h s e v e n w i t h p r o p e r m e d i " a l t r e a t m e n t . ! h e supervisor may be separated upon payment by the CO'1#%E of separation pay pursuant to law, unless the supervisor falls within the purview of either e"tions( o r ? h e r e o f . 5 n w h i " h " a s e , t h e r e t i r e m e n t b e n e f i t s i n d i " a t e d t h e r e i n s h a l l apply, whi"hever is higher e"tion 7: Loyalty Re"ognition A !he CO'1#%E shall re"ogniGe the servi"es of the supervisorFdire"tor who have rea"hed the following number of years upon retirement by granting himFher a pla,ue of appre"iation and any lasting gift: (0y e a r s b u t below (7 years 216,000.003 worthD (7 years but below ?0 y e a r 21@,000.003 worthD ?0 years and more 21(0,000.003 worth. Respondents were ,ualified to retire optionally from their employment with petitioner. there is no re"ord that the ())6 C-# had been approved or was ever presented to the -5R. .en"e, the retirement benefits of respondents are ta4able. H n d e r e " t i o n * 0 o f t h e % 5 R C , p e t i t i o n e r , a s e m p l o y e r , w a s o b l i g e d t o withhold the ta4es on said benefits and remit the same to the -5R. e"tion *0. Liability for !a4 . A 2#3 Bmployer. A !he employer shall be liable for the withholding and remittan"e of the "orre"t amount of ta4 re,uired to be dedu"ted and withheld under this Chapter. 5f the employer fails to withhold and remit the "orre"t amount of ta4 as re,uired to be withheld under the provision of this C h a p t e r , s u " h t a 4 s h a l l b e " o l l e " t e d f r o m t h e e m p l o y e r t o g e t h e r w i t h t h e penalties or additions to the ta4 otherwise appli"able in respe"t to su"h failure withhold and remit.