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    COMMISSIONER OF INTERNAL REVENUE, Petitioner, vs. THE COURT OF APPEALS and EFREN P. CASTANEDA

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    Benjie Sales
    Efren Castaneda received terminal leave pay upon retiring from government service in the Philippine Embassy in London. The Commissioner of Internal Revenue withheld P12,557.13 in income tax from this payment. Castaneda claimed a refund, arguing that terminal leave pay is exempt from income tax. Both the Court of Tax Appeals and the Court of Appeals ruled in Castaneda's favor, finding that terminal leave pay received upon compulsory retirement is a retirement benefit, not taxable income. Prior jurisprudence established that terminal leave is meant to provide a modest retirement nest egg for public servants and encourage accumulated leave, so it is not subject to withholding tax.

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    COMMISSIONER OF INTERNAL REVENUE, Petitioner, vs. THE COURT OF APPEALS and EFREN P. CASTANEDA

    Uploaded by

    Benjie Sales
    90 views1 page
    Efren Castaneda received terminal leave pay upon retiring from government service in the Philippine Embassy in London. The Commissioner of Internal Revenue withheld P12,557.13 in income tax from this payment. Castaneda claimed a refund, arguing that terminal leave pay is exempt from income tax. Both the Court of Tax Appeals and the Court of Appeals ruled in Castaneda's favor, finding that terminal leave pay received upon compulsory retirement is a retirement benefit, not taxable income. Prior jurisprudence established that terminal leave is meant to provide a modest retirement nest egg for public servants and encourage accumulated leave, so it is not subject to withholding tax.

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    COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. THE COURT OF APPEALS and EFREN P. CASTANEDA

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    Efren Castaneda received terminal leave pay upon retiring from government service in the Philippine Embassy in London. The Commissioner of Internal Revenue withheld P12,557.13 in income tax from this payment. Castaneda claimed a refund, arguing that terminal leave pay is exempt from income tax. Both the Court of Tax Appeals and the Court of Appeals ruled in Castaneda's favor, finding that terminal leave pay received upon compulsory retirement is a retirement benefit, not taxable income. Prior jurisprudence established that terminal leave is meant to provide a modest retirement nest egg for public servants and encourage accumulated leave, so it is not subject to withholding tax.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    90 views1 page

    COMMISSIONER OF INTERNAL REVENUE, Petitioner, vs. THE COURT OF APPEALS and EFREN P. CASTANEDA

    Uploaded by

    Benjie Sales
    Efren Castaneda received terminal leave pay upon retiring from government service in the Philippine Embassy in London. The Commissioner of Internal Revenue withheld P12,557.13 in income tax from this payment. Castaneda claimed a refund, arguing that terminal leave pay is exempt from income tax. Both the Court of Tax Appeals and the Court of Appeals ruled in Castaneda's favor, finding that terminal leave pay received upon compulsory retirement is a retirement benefit, not taxable income. Prior jurisprudence established that terminal leave is meant to provide a modest retirement nest egg for public servants and encourage accumulated leave, so it is not subject to withholding tax.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    G.R. No. 96016 October 17, 1991 COMMISSIONER OF INTERNAL REVENUE, petitioner, vs.

    THE COURT OF APPEALS and EFREN P. CASTANEDA, respondents. PADILLA, J.:

    FACTS: Efren P. Castaneda retired from the government service as Revenue Attache in the
    Philippine Embassy in London, England. Upon retirement, he received, among other benefits,
    terminal leave pay from which petitioner Commissioner of Internal Revenue withheld
    P12,557.13 allegedly representing income tax thereon. Castaneda filed a formal written claim
    with petitioner for a refund of the P12,557.13, contending that the cash equivalent of his terminal
    leave is exempt from income tax. CTA ordered CIR to refund Castaneda the sum of P12,557.13
    withheld as income tax which was affirmed by CA.

    ISSUE: whether or not terminal leave pay received by a government official or employee on the
    occasion of his compulsory retirement from the government service is subject to withholding
    (income) tax.

    RULING: In the case of Jesus N. Borromeo vs. The Hon. Civil Service Commission, et al., the
    Court explained the rationale behind the employee's entitlement to an exemption from
    withholding (income) tax on his terminal leave pay as follows: . . . commutation of leave credits,
    more commonly known as terminal leave, is applied for by an officer or employee who retires,
    resigns or is separated from the service through no fault of his own. In the exercise of sound
    personnel policy, the Government encourages unused leaves to be accumulated. The
    Government recognizes that for most public servants, retirement pay is always less than
    generous if not meager and scrimpy. A modest nest egg which the senior citizen may look
    forward to is thus avoided. Terminal leave payments are given not only at the same time but
    also for the same policy considerations governing retirement benefits. In fine, not being part of
    the gross salary or income of a government official or employee but a retirement benefit,
    terminal leave pay is not subject to income tax.

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