BIR Ruling No. 207-83

November 23, 1983 BIR RULING NO. 207-83 Gentlemen : In reply to your letter dated October 10, 1983, 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 from the service of the employer due to death, sickness or other physical disability or for any cause beyond the control of the said official or employee is exempt from taxes regardless of age or length of service . cdti The aforementioned law requires the presence of these two conditions in order that the employee benefits may be granted tax exemption: (1) the employee is separated from the service of the employer due to death, sickness or other physical disability or for any cause beyond the control of the said official or employee; and (2) the employer pays benefits to the official or employee or his heirs as a consequence of such separation . Since the separation of the employees under the retrenchment program of the Bank is beyond the control of the said employees, any and all amounts to be received by them as a result thereof, are exempt from all taxes and consequently, from the 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. It is, however, understood that the tax exemption does not include the Bank's payments for salary and cash equivalent of accumulated vacation and sick leaves, if any. Finally, any and all amounts received by employees who have not yet been actually separated by the Bank but resigned in anticipation of being included in the said retrenchment program or pursuant thereto are subject to income tax. Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner Bureau of Internal Revenue