Separation Pay - Tax-Exempt

November 25, 1993 BIR RULING NO. 468-93 SEPARATION PAY TAX-EXEMPT 28 (b) (7) (B) 376-93 468-93 The Coca-Cola Corporation 10th Floor, King's Court Bldg. 2129 Pasong Tamo, Makati Metro Manila Attention: Mr . Mariano A . Limjap Senior Vice-President and Administration Director This refers to your request for a ruling that the separation benefits to be paid to MR. MELVIN D. DELOS REYES by reason of health condition are exempt from all taxes pursuant to Section 28(b)(7)(B) of the Tax Code, as amended. LibLex Documents submitted show that your employee, Mr. Melvin D. Delos Reyes was certified by your company physician, Dr. Jose V. Lopez, to be suffering from CVA Thrombosis, LMCA with right hemparesis, asphasia, small parietal subcortical infarct and that said illness affects the performance of his duties and endangers his life if he continues working. Said finding is confirmed by the BIR Medical Officer. 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 the employer as a consequence of separation of 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 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 which Mr. Melvin D. Delos Reyes will receive as a result of his separation from the service of your company due to the aforesaid health condition are exempt from income tax and consequently, from withholding tax prescribed by 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 Mr. Melvin D. Delos Reyes's salary is subject to income tax. prcd LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue