Amounts Payable under NPC Serial Bonds Exempt from All Taxes

January 9, 1984 BIR RULING NO. 003-84 53-f-000-00-003-84 Gentlemen : This refers to your letter dated November 15, 1983 seeking confirmation of your opinion to the effect that all amounts payable under the bonds to be issued by the National Power Corporation (NPC), the proceeds of which shall be utilized to partially finance NPC's on-going energy related projects, are exempt from all taxes pursuant to Section 8 of Republic Act No. 6395 as amended. It is represented that NPC will issue NPC serial Bonds worth P100 Million, in denominations of P500,000, P1,000,000, P5,000,000 and P10,000,000; that the final maturity date is eight (8) years from issue date and that the interest rate is 18-1/4% per annum payable semiannually in arrears based on the amount of the issue outstanding; that Citicorp Investment Philippines shall underwrite this issue under the terms and conditions set forth by the NPC. In reply thereto, please be informed that under Section 8 of Republic Act No. 6395 (Revised Charter of the National Power Corporation), reading: "SECTION 8. Authority to Incur Indebtedness and Issue Bonds, Their Conditions, Privileges and Exemptions, Sinking Fund Guarantee. "xxx xxx xxx "The bonds issued under the authority of this sub-section shall be exempt form the payment of all taxes by the Republic of the Philippines, or by any authority, branch, division or political subdivision thereof which facts shall be stated upon the face of said bonds. Said bonds shall be receivable as security in any transaction with the Government in which such security is required. "xxx xxx xxx any and all amounts payable under the aforementioned NPC serial Bonds shall be exempt from all taxes, and the interest income to be derived by the bond holders shall be exempt from income tax and consequently, not subject to the expanded, withholding tax prescribed by Revenue Regulations No. 13-78, as amended. aisadc Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner