BIR Ruling No. 414-2022

REPUBLIC OF THE PHILIPPINES

BUREAU OF INTERNAL REVENUE DEPARTMENT OF FINANCE

Sec. 32(B)(6)(f),Tax Code BIR Ruling No. OT-172-2021 BIR Ruling No. 363-12 OT- 14 - 2022 QCT 1 1 2022

Malate, 1004 Manila LANDBANK OF THE PHILIPPINES Landbank Plaza, 1598 M.H. Del Pilar corner Dr. J. Quintos Sts.

Attention: Ativ. Joselito B. Vallada Human Resources Management Group First Vice President

Gentlemen:

involuntary separation under its Separation Incentive Program (SIP) are tax exempt. Philippines ("LBP" or the "Bank") to its employees who retired from the Bank service via This refers to your request for confirmation that the proceeds paid by the Land Bank of the

Background

1.LBP is a universal bank in the Philippines owned by the Philippine Government.

2. As part of continuing restructuring/realignment, systems improvement and automation. outsourcing of non-core functions and infusion of fresh and critical talents in the Bank.

the Board approved the involuntary separation of employees through SIP Medical for employees with critical, incapacitating or debilitating medical condition and SIP Tenure for those employees who are at least fifty-five (55) years of age and have been in the government service for at least twenty-five (25) years (the last twenty (20) years of which were spent in LBP).

3. The Bank's implementation of the SIP is an incident of its continuing internal

reorganization. LBP-SIP is a way of incentivizing the inyoluntary separation of tenured employees with medical conditions.

Code of 1997 (Tax Code), as amended, provides that any amount received by an official or employee or by his heirs from the employer as a consequence of separation of such official or In reply, please be informed that Section 32(B)(6)(b) of the National Internal Revenue

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employee from the service of the employer due to death, sickness or other physical disability or of age or length of service. The phrase "for any cause beyond the control of the said official or for any cause beyond the control of the said official or employee is exempt from taxes regardless employee" in effect connotes involuntariness on the part of the official or employee. The separation from the service of the official or employee must not be of his own making.l

recommended by LBP to have met the criteria for SIP is involuntary and is a consequence of the consequently to the withholding tax on wages pursuant to Section 79 of the same Code. to be received by them as a consequence of their involuntary separation from the service of LBP is not subject to income tax imposed under Section 24 (A) of the Tax Code, as amended, and Bank's continuing efforts to rationalize its organizational structure. Therefore, any and all amounts As represented, the separation of the LBP officials and employees identified and

upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered null and void. This ruling is being issued on the basis of the foregoing facts as represented. However, if

Very truly yours

Aan0 LILIA CATRIS GUILLERMO

K-1 Commissioner of Internal Revenue 001947

1 Section 4(f), Revenue Regulations (RR) No. 1-68 and Sec. 2 (b) (2), RR No. 6-82, as amended.