BIR Ruling No. 131-84

July 31, 1984 BIR RULING NO. 131-84 29 (c) (7) (B)-237-8-131-84 Gentlemen : This refers to your letter dated April 13, 1984 requesting a ruling as to whether or not separation benefits to be received by Mr. Antonio Felix on account of his separation from the service of the Philippine Veterans Bank, are exempt from withholding tax. It appears that in his letter dated April 6, 1984, Mr. Felix applied for separation in the service of the Bank effective May 9, 1984. In reply, I have the honor to inform you that pursuant to Section 29(c)(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 by such official or employee for any cause beyond the control of said official or employee is exempt from income tax. The phrase "for any cause beyond the control of said official or employee" connotes involuntariness on the part of the official or employee. The separation from the service of the official or employee must not be asked for or initiated by him. In other words, the separation must not be of his own making or choice. In the instant case, the separation of Mr. Antonio Felix was asked for or was initiated by him in anticipation of being included in the retrenchment program of the said bank and therefore is of his own making. Accordingly, the separation benefits which he received from the bank are subject to income tax and consequently to withholding tax prescribed by Section 91, Chapter XI, Title II of the Tax Code, as amended by Batas Pambansa Blg. 135 and implemented by Revenue Regulations No. 6-82 dated October 1, 1982. Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner