BIR Ruling [DA-101-03]

March 31, 2003 BIR RULING [DA-101-03] Miriam Lara Geronimo C/o BPI Ayala corner Paseo de Roxas Makati City M a d a m : This refers to your undated letter requesting for a ruling that the separation benefits to be paid to you by Bank of the Philippine Islands by reason of your poor health condition shall be exempt from income tax and consequently from withholding tax pursuant to Section 32(B)(6)(b) of the Tax Code of 1997. Documents submitted show that you are 47 years old and presently the Manager of BPI, Pasig E. Rodriguez Branch; that you were certified by your attending physician, Dra. Belinda Basaca Salazar to be suffering from dysfunctional uterine bleeding caused by multiple myomas in the uterus and nabothian cysts in the cervix; that you have to take regular oral medication to relieve the pain and stop bleeding; that your recent x-ray revealed that you have cervical spondylosis which is giving you back pain, dizziness and migraine; and that the continuous employment and performance of your regular duties would endanger your physical well-being. In reply thereto, please be informed that pursuant to Section 32(B)(6)(b) of the Tax Code of 1997, any amount received by an official or employee or by his heirs from the employer as a consequence of separation of such official or employee from the service of the employer due to death, sickness or other physical disability, or for any cause beyond the control of said official or employee shall not be included in the gross income and shall be exempt from taxation under Title II of the Tax Code of 1997. In view thereof, this Office holds that any amount which you will receive as a result of your separation from the service of BPI, including your terminal leave pay (sick leave and vacation leave credits), due to your aforesaid health condition are exempt from income tax and consequently from withholding tax prescribed in Section 79, Chapter XIII, Title II of the Tax Code of 1997. The payment of the 13th month pay and other benefits in excess of the P30,000,00 threshold, and your salary, however, is subject to income tax and consequently to withholding tax. ( BIR Ruling No. SB-69-98 dated October 6, 1998 ) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. TEacSA Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service