Amounts Received as Compensation for Personal Injuries or Sickness Shall be Exempt from Taxation

August 9, 1991 BIR RULING NO. 150-91 28 (b) (5) 000-00 150-91 Gentlemen : This refers to your letter dated June 10, 1991 requesting for a ruling on whether or not the work-connected accident disability benefits received by the regular rank and file hourly union employees of the Philippine Automotive Manufacturing Corporation, in accordance with its Collective Bargaining Agreement, is subject to tax. It appears that Section 4, Article X of the Collective Bargaining Agreement, entered into between the Chrysler Philippine Labor Union and the Philippine Automotive Manufacturing corporation, provides as follows: "SEC. 4. Work Connected Accident Disability Benefit . In the event that a covered employee suffers a disability or is unable to perform his regular work in the COMPANY as a result of a work-connected injury or illness caused by accident, as determined by ECC/SSS authorities, the COMPANY shall pay the difference between the actual daily basic pay of the injured or disabled employee and the amount of daily sickness benefits payments approved by the ECC/SSS authorities for the duration of the approved disability period. Such differential benefit payments shall be governed by such rules as, may be prescribed by the COMPANY and shall cease whenever the ECC/SSS sickness benefit payments cease." In reply, please be informed that pursuant to Section 28 (b) (5) of the Tax Code, as amended, amounts received, through Accident or Health Insurance or under Workmen's Compensation Acts, as compensation for personal injuries or sickness, plus the amounts of any damages received whether by suit or agreement on account of such injuries or sickness shall not be included in gross income and shall be exempt from taxation under Title II of the Tax Code, as amended. aisadc Very truly yours, (SGD.) JOSE U. ONG Commissioner