Separation Pay - Tax Exempt

February 16, 1993 BIR RULING NO. 065-93 SEPARATION PAY TAX EXEMPT 28 (b) (7) (B) 50-93 065-93 Philippine Long Distance Telephone Company PLDT Building Legaspi Street, Legaspi Village Makati, Metro Manila Attention: Mr . Mariano A . Linyap Senior Vice-President & Administration Director This refers to your request for a ruling that the separation benefits to be paid to Mr. Zosimo C. Aldas by reason of death are exempt from all taxes pursuant to Section 28(b)(7)(B) of the Tax Code, as amended. cdtech Documents submitted show that your employee, Mr. Zosimo C. Aldas was certified by your Medical Services Director Dr. Felix M. Rustia, and diagnosed to be suffering from nasopharynx CA, which led to his death on August 23, 1992. In reply, please be informed that pursuant to Section 28(b)(7)(B) of the Tax Code, as amended, any amount received by an official or employee or by his heirs from his employer as a consequence of separation of such official or employee from the service of his employer due to death, sickness or other physical disability or for any cause beyond the control of the said official or employee shall not be included in gross income and shall be exempt from taxation under Title II of the Tax Code. In view thereof, this Office is of the opinion as it hereby holds that any and all amounts, including terminal leave pay (sick leave and vacation leave credits) which Mr. Zosimo C. Aldas will receive from you as a result of his separation from the service of your company due to his death is exempt from income tax and consequently, from withholding tax as prescribed under Section 72, Chapter 10, Title II of the Tax Code, as amended by B.P. Blg. 135 and implemented by Revenue Regulations No. 6-82, as amended. It is however, understood that this exemption does not include your payment of Mr. Zosimo C. Aldas's salary. JOSE U. ONG Commissioner of Internal Revenue