BIR Ruling

December 27, 1967 The General Manager National Power Corporation Manila S i r : In reply to your letter dated December 7, 1967, inquiring from this Office whether the incentive bonus paid to the officials and employees of the National Power Corporation in the form of 30-year 7% NPC Bond Certificates are taxable to the recipients thereof, please be informed that said bonds constitute taxable income to the recipient. However, since these bonds are yet to be redeemed by the Corporation within a period of 5 years, they shall be taxable to the recipients only in the year when actually redeemed by the Corporation or when the Corporation is ready and capable to effect redemption even if not encashed by the recipient. This Office is of the opinion as it hereby holds that the interests on said bonds are, under the provisions of Section 4 of Commonwealth Act No. 120, as amended by Commonwealth Act No. 495 exempt from income tax. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue