Mr. Robert T. Gatan

June 23, 2009 BIR RULING [SB-(028) 400-09] Secs. 32 (B) (6) (b) and 79; DA-462-99 dated August 11, 1999; DA-068-00 dated February 2, 2000 Mr. Robert T. Gatan No. 74 Badihoy St., Guisad, Baguio City Sir : This refers to your letter dated April 23, 2009 requesting for a ruling that the separation benefits to be paid to you by your employer Banco de Oro Universal Bank, Inc.-Baguio Cash Hub, Baguio City by reason of your health condition are exempt from income tax. Documents submitted to this Office show that you are suffering from "PULMONARY TUBERCULOSIS, FAR ADVANCED, AFD NEG, PNEUMONIA, UROLITHIASIS, RIGHT AND DM TYPE II" according to the Clinical Abstracts dated April 15, 2009 issued by John L. Tinoyan MD, MPH, Medico-Legal Officer, HSO of the Baguio Health Department, Baguio City and by Leopoldo A. Calimlim, MD, MPH, FPCOM of Notre Dame De Chartres Hospital, Baguio City dated May 29, 2008. In reply thereto, please be informed that pursuant to Section 32 (B) (6) (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 because of 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. The phrase "for any cause beyond the control of the 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 used for or initiated by him. In other words, the separation must not be of own making or choice (BIR Ruling DA-462-99 dated August 11, 1999). TAIEcS In view of the foregoing, the separation benefits, including terminal leave pay to be received by Mr. Robert T. Gatan from Banco de Oro Universal Bank, Inc. are exempt from income tax and consequently from the withholding tax. The payment of salaries, however, is subject to income tax and consequently to withholding tax. (BIR Ruling DA-068-00 dated February 2, 2000). This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service