Case Digest (G.R. No. 226064)
Facts:
The case involves Anna Mae B. Mateo (petitioner) and Coca-Cola Bottlers Phils. Inc. (respondent). The circumstances surrounding this legal dispute stem from events that transpired after the petitioner was employed as a Sales Supervisor by Philippine Beverage Partners, Inc. (PhilBev) before transitioning to the respondent's employ. In 2007, PhilBev ceased its operations, leading to the petitioner’s separation from service, but she received her due separation benefits. Subsequently, she was hired by the respondent, where she eventually advanced to the position of District Team Leader. In February 2012, respondent informed the petitioner that it would be enhancing its Route to Market (RTM) strategy, resulting in a determination that her position was redundant. This led to her termination effective March 31, 2012, along with a tentative separation benefit amounting to approximately P676,657.15. However, upon receiving two checks totaling P402,571.85 on April 21, 2012, the petitioner...Case Digest (G.R. No. 226064)
Facts:
- Background and Employment History
- Petitioner’s Early Employment
- Initially employed by Philippine Beverage Partners, Inc. (PhilBev) as a Sales Supervisor.
- In 2007, PhilBev ceased operations, leading to petitioner’s separation from service.
- Upon separation from PhilBev, petitioner received her corresponding separation benefits.
- Subsequent Employment with Respondent
- Petitioner was hired by respondent, Coca-Cola Bottlers Phils. Inc., also in the capacity of Sales Supervisor.
- She was later promoted to District Team Leader.
- Termination and Computation of Benefits
- Notification of Redundancy
- In February 2012, petitioner was informed that respondent was enhancing its Route to Market (RTM) strategy to improve sales force effectiveness.
- As a consequence, her position was considered redundant, and she was notified of termination effective March 31, 2012.
- Respondent computed her separation benefit at approximately P676,657.15.
- Payment and Deductions
- On April 21, 2012, respondent released two checks totaling P402,571.85.
- Upon review, petitioner discovered deductions amounting to:
- Her outstanding loan balance.
- P134,064.95 representing withholding tax.
- Petitioner inquired about these deductions and was told that the retirement benefit she received was no longer tax exempt because she had already availed of such exemption upon her separation from PhilBev.
- Dispute over Tax Withholding
- Administrative Queries and References
- Petitioner wrote to the Bureau of Internal Revenue (BIR) for clarification on the propriety of the tax withheld.
- The BIR Regional Director referenced Section 32(B)(6)(b) of the National Internal Revenue Code (NIRC) of 1997, as amended, and delegated the query to the Revenue District Officer.
- Petitioner highlighted a previous BIR ruling concerning a similar case where an employee terminated due to redundancy had separation benefits exempt from income tax.
- Denial and Subsequent Legal Actions
- Respondent denied petitioner’s claim for reimbursement of the deducted tax withheld.
- Consequently, petitioner filed a complaint before the Labor Arbiter.
- Labor Tribunal Proceedings
- Labor Arbiter Decision (July 25, 2013)
- The Labor Arbiter ruled in petitioner’s favor regarding the erroneous withholding of tax.
- Ordered respondent to pay the complete separation pay along with attorney’s fees, totaling P147,471.44.
- Disposed of the case by dismissing other claims for lack of merit.
- NLRC Decision (January 30, 2014)
- The National Labor Relations Commission (NLRC) affirmed the award of separation pay differentials.
- However, the NLRC deleted the award for attorney’s fees.
- The NLRC’s reasoning was anchored on the tax exemption of separation benefits rendered pursuant to Section 32(B)(6)(b) of the NIRC.
- Appellate Review and Court of Appeals Action
- Respondent’s Certiorari Petition
- Citing a grave abuse of discretion by the NLRC, respondent elevated the case by filing a petition before the Court of Appeals (CA).
- Court of Appeals Decision
- The CA reversed the rulings of the labor tribunals by dismissing petitioner’s complaint.
- It held that under respondent’s Retirement Plan, an involuntarily separated employee is entitled to either the retirement benefit as computed in the plan or the termination benefit as provided by law, whichever is higher.
- Given that petitioner had been employed for less than five years and had previously availed of a tax exemption benefit with PhilBev, the CA classified her benefit as retirement pay, thereby justifying the tax withholding.
Issues:
- Nature of the Benefit Received
- Whether the amount received by petitioner from respondent should be classified as separation pay or retirement pay.
- The implications of its classification on the taxability of the benefit.
- Legality of the Withholding Tax
- Whether respondent is liable for the withholding of tax on the benefit received by petitioner.
- Applicability of Section 32(B)(6)(b) of the NIRC regarding the income tax exemption on separation benefits.
- Interpretation of the Retirement Plan Provisions
- Whether the use of the retirement benefit formula in computing petitioner’s separation pay altered the character of the benefit.
- The extent to which the provisions of respondent’s Retirement Plan influence the tax treatment of the benefits received.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)