Oriental Assurance Corporation

December 27, 2007 BIR RULING [DA-689-07] Oriental Assurance Corporation 2/F OAC Building 27 San Miguel Avenue Ortigas Center Pasig City Attention: Atty. Melody Anne E. Calo-Villar Chief Legal Counsel Gentlemen : This refers to your letter dated October 26, 2007 requesting for clarification as to whether or not the retirement benefits to be paid to your employee who voluntarily resigned are subject to income tax and consequently to withholding tax. cACHSE It appears that you are an insurance company specializing in non-life insurance business; that your employee was hired on October 1, 1991 as Marine Insurance Supervisor; that on October 22, 2007, after rendering 16 years of service with the company and at the time was 51 years of age, said employee voluntarily resigned; that your company has a private benefit plan duly approved by the Bureau of Internal Revenue (BIR); that Section 1, Article VI of the said Plan on Voluntary Resignation from Service provides that "Any employee who voluntarily resigns from the Company shall not be entitled to any benefits under this Plan until after he would have rendered ten (10) years of continuous service in which case he shall be entitled to receive an amount computed as a percentage of the retirement benefit in accordance with the following schedule: HTDAac Years of Service Applicable Percentage Less than 10 years 0% 10 years to less than 15 years 50% 15 years to less than 20 years 75% 20 to 25 years 100% In reply thereto, please be informed that any and all amounts to be received by the employee-member who voluntarily resigns from the service of the company shall be subject to income tax and consequently from withholding tax. Accordingly, the retirement benefits to be paid to your employee who voluntarily resigns from your company shall be subject to income tax and consequently to withholding tax. 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. ADHaTC Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service