CIR vs. CA , G.R. No.

95022 207 Scra 487

Facts:
Petitioner, seeks a reversa o! t"e #ecision o! res$on%ent CA, %ate% A&'. 27,
(990, in CA)G.R. SP No. 2042*, entite% +Co,,issioner o! Interna Reven&e vs.
GC- Retire,ent Pan, re$resente% ./ its 0r&stee)#irector an% t"e Co&rt o! 0a1
A$$eas,+ 2"ic" a3r,e% t"e #ecision o! t"e atter Co&rt, %ate% (5 #ece,.er
(98*, in Case No. 4888, or%erin' a re!&n%, in t"e s&, o! P((,402.(9, to t"e GC-
Retire,ent Pan re$resentin' t"e 2it""o%in' ta1 on inco,e !ro, ,one/ ,arket
$ace,ents an% $&rc"ase o! treas&r/ .is, i,$ose% $&rs&ant to Presi%entia
#ecree No. (959.
0"ere is no %is$&te 2it" res$ect to t"e !acts. Private Res$on%ent, GC- Retire,ent
Pan 5GC-, !or .revit/6 is an e,$o/ees7 tr&st ,aintaine% ./ t"e e,$o/er, GC-
Inc., to $rovi%e retire,ent, $ension, %isa.iit/ an% %eat" .ene8ts to its e,$o/ees.
0"e Pan as s&.,itte% 2as a$$rove% an% 9&ai8e% as e1e,$t !ro, inco,e ta1 ./
Petitioner Co,,issioner o! Interna Reven&e in accor%ance 2it" Re$. Act No.
49(7.
ISS:;:
Are sc"oo<s retaine% earnin's ta1)e1e,$t=
R:-ING:
>es.
GC- Pan 2as 9&ai8e% as e1e,$t !ro, inco,e ta1 ./ t"e CIR in accor%ance 2it"
Re$. Act. 49(7. 0"e ta1)e1e,$tion $rivie'e o! e,$o/ees7 tr&sts, as %istin'&is"e%
!ro, an/ ot"er kin% o! $ro$ert/ "e% in tr&st, s$rin's !ro, Section 5*5.6 5no2
54?.@6 o! t"e 0a1 Co%e, A0"e ta1 i,$ose% ./ t"is 0ite s"a not a$$/ to
e,$o/ee7s tr&st 2"ic" !or,s $art o! a $ension, stock .on&s or $ro8t)s"arin' $an
o! an e,$o/er !or t"e .ene8t o! so,e or a o! "is e,$o/ees . . .B
An% ri'"t/ so, ./ virt&e o! t"e raison %e7etre .e"in% t"e creation o! e,$o/ees7
tr&sts. ;,$o/ees7 tr&sts or .ene8t $ans nor,a/ $rovi%e econo,ic assistance to
e,$o/ees &$on t"e occ&rrence o! certain contin'encies, $artic&ar/, o% a'e
retire,ent, %eat", sickness, or %isa.iit/. It $rovi%es sec&rit/ a'ainst certain
"aCar%s to 2"ic" ,e,.ers o! t"e Pan ,a/ .e e1$ose%. It is an in%e$en%ent an%
a%%itiona so&rce o! $rotection !or t"e 2orkin' 'ro&$.
D"at is ,ore, it is esta.is"e% !or t"eir e1c&sive .ene8t an% !or no ot"er $&r$ose.
It is evi%ent t"at ta1)e1e,$tion is ike2ise to .e enEo/e% ./ t"e inco,e o! t"e
$ension tr&st. Ft"er2ise, ta1ation o! t"ose earnin's 2o&% res&t in a %i,in&tion
acc&,&ate% inco,e an% re%&ce 2"atever t"e tr&st .ene8ciaries 2o&% receive
o&t o! t"e tr&st !&n%. 0"is 2o&% r&n a!o& o! t"e ver/ inten%,ent o! t"e a2. 0"ere
can .e no %en/in' eit"er t"at t"e 8na 2it""o%in' ta1 is coecte% !ro, inco,e in
res$ect o! 2"ic" e,$o/ees7 tr&sts are %ecare% e1e,$t 5Sec. 5* ?.@, no2 54 ?.@,
0a1 Co%e6.
0"e a$$ication o! t"e 2it""o%in's s/ste, to interest on .ank %e$osits or /ie%
!ro, %e$osit s&.stit&tes is essentia/ to ,a1i,iCe an% e1$e%ite t"e coection o!
inco,e ta1es ./ re9&irin' its $a/,ent at t"e so&rce. I! an e,$o/ees7 tr&st ike
t"e GC- enEo/s a ta1)e1e,$t stat&s !ro, inco,e, 2e see no o'ic in 2it""o%in' a
certain $ercenta'e o! t"at inco,e 2"ic" it is not s&$$ose% to $a/ in t"e 8rst
$ace.