Ms. Betty Siy-Yap

October 30, 2009 BIR RULING [SB-(048) 686-09] 32 (B) (6) (b); RR 2-98; DA-283-06 Ms. Betty Siy-Yap No. 7 Caroline Street, Parkway Village Quezon City Madam : This refers to your letter dated September 8, 2009 requesting for a ruling that your share in the Andersen Worldwide Fund ("AW Fund") that you will receive as part of your separation benefit as a dissenting and/or separated partner of SGV & Co.,which separation and/or departure is due to a cause beyond your control, shall be considered exempt from income tax and consequently, not subject to withholding tax pursuant to Section 32 (B) (6) (b) of the Tax Code of 1997, as amended. It is represented that the SGV-Ernst & Young Far East Area (SGV-EY FEA) integration which was undertaken primarily to reduce costs, enhance shared services within FEA, and align strategies and resources with strategic FEA priorities will result in a manpower complement in SGV that is not consistent with the current organizational structure. Moreover, there were issues raised that had not been resolved to the satisfaction of both SGV and the dissenting partners, such as yourself. Thus, to allow the partners who voted in the affirmative to effect a smooth transition and to effect the necessary changes in the manpower structure, some partners, including you, as the Market Circle Leader, who are below the managing partner level and considered employees of the partnership who fall outside SGV-EY FEA rules and conditions, were forced to be separated from the partnership. The said separation is due to a cause beyond your control. In reply, please be informed that pursuant to Section 32 (B) (6) (b) of the Tax Code of 1997, as amended, any amount received by an official or employee 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 thus be exempt from taxation under Title II of the Tax Code. ScCDET In view thereof, this Office is of the opinion, as it hereby holds, that your share in the AW Fund that you will receive as a consequence of your separation from the service of SGV & Co., due to a cause beyond your control, such as your forced separation due to some disagreements with the majority of the partners, is exempt from income tax and consequently from withholding tax prescribed under Section 79, Chapter XIII, Title II of the Tax Code of 1997, as amended. (BIR Ruling No. DA-283-06 dated April 26, 2006) 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.) SIXTO S. ESQUIVIAS IV Commissioner of Internal Revenue