BIR Ruling [DA-132-03]

April 28, 2003 BIR RULING [DA-132-03] 32 (B) (6) (a) 263-96 Land Bank of the Philippines 1598 M.H. del Pilar Cor. Dr. Quintos Malate, Manila Attention: Atty. Virgilio M. Quintana Legal Counsel Gentlemen : This refers to your letter dated January 17, 2003 requesting for an updated Certification and/or Tax Exemption Clearance on interest income derived by the LBP Provident Fund from its money placements in bank deposits, deposit substitutes, trust funds and/or similar or like arrangements/investments. It is represented that the Land Bank of the Philippines Provident Fund, as an employees' trust fund established in 1975 pursuant to Republic Act No. 4537 has been enjoying tax exemption from the payment of income tax as recognized by former BIR Commissioners Conrado P. Diaz and Ruben P. Ancheta in their letters dated June 27, 1978 and January 12, 1981 respectively; and that although tax exempt, the LBP Provident Fund in its recent dealings with the Bureau of Treasury as well as other concerned banks and other institutions/corporation relative to its placements/investments, is being required by the latter to submit an updated Certification and/or Tax Exemption Clearance on the payment of interest income derived from bank deposits, deposit substitutes and other related investments. aTICAc In reply, please be informed that the LBP Provident Fund, being an employees' trust remains exempt from income tax under Section 32(B)(6)(a) of the Tax Code of 1997 and that the income of the trust fund from its investments are exempt from income tax provided that in its investment activities, no part of the corpus or income of the fund shall be used for or diverted to purposes other than for the exclusive benefit of the member-employees or their beneficiaries. LBP Provident Fund is likewise not subject to the 20% final tax on interest and/or yield on deposit substitute instruments and interest on its Philippine Currency bank deposits. (CIR vs. GCL Retirement Plan, G.R. No. 95022, March 20, 1993). 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, Commissioner of Internal Revenue By: (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service