BIR Ruling [UN-014-94]

January 14, 1994 BIR RULING [UN-014-94] Mr. Patricio C. Villaruel San Antonio Valley 17, Carnation St., Talon, Las Pias Metro Manila S i r : This refers to your request for a ruling that the separation benefits to be paid to you by the Philippine Long Distance Telephone Co., (PLDT) by reason of health condition are exempt from income tax pursuant to Section 28(b) (7)(B) of the Tax Code, as amended. Documents submitted show that you were certified by your attending physician, Dr. Jaime S. Samaniego to be suffering from cerebral hematoma, left frontal lobe extending to the corpus callosum with mass effect, subdural hematoma, frontal, temporal and parietal lobe convexities, left, consider osteoma, left frontal bone and fracture, right occipital bone near the midline with overlying soft tissue swelling; that Dr. Erwin C. Orteza, Chief, Medical and Dental Division, BIR, confirmed the same and that said illness affects the performance of your duties if you continue working. 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 his employer as a consequence of separation of such official or employee from the service of his 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, including terminal leave pay (sick leave an vacation leave credits) which you will receive from Philippine Long Distance Telephone Co., (PLDT) as a result of your separation from the service of said company due to your aforesaid health condition is exempt from income tax and consequently, from the withholding tax prescribed under Section 72, Chapter 10, Title II of the Tax Code, a amended by B.P. Blg. 135 and implemented by Revenue Regulations No. 6-82, as amended. aisadc It is however, understood that your salary is subject income tax. Very truly yours, JAIME M. MAZA Assistant Commissioner (Legal Service)