Interest on Land Bank Bonds Used by PNB in Payment of Its Tax Obligations

March 20, 1984 BIR RULING NO. 063-84 24-000-00-063-84 Gentlemen : This refers to your letter dated March 23, 1983 to the Auditor, BIR, Quezon City, requesting that the interest on Land Bank Bonds used by the Philippine National Bank (PNB) in payment of its tax obligations, be considered as an added value to the Land Bank Bonds and should be accepted/receipted in the same manner as the bond's principal. It is represented that the Bureau of Internal Revenue, in accepting Land Bank Bonds as payment of the tax obligations, of PNB, credit it only for the bond's principal or face amount, disregarding the amount of interest that has accrued on the bonds to date of payment that it is by virtue of P.D. No. 694, the revised charter of PNB, that the bank is authorized to use government securities, such as Land Bank bonds in payment of its tax obligations; and that Joint Circular No. 6-81 dated August 7, 1981 of the Commission on Audit and the Ministry of Finance on the handling and accounting of Land Bank Bonds received by the National Government should not be made to apply to PNB. In reply, I have the honor to, inform you that the said Joint Circular No. 6-81 apply specifically to the three (3) uses of Land Bank bonds in payment of obligations to the government and does not cover payment of taxes. However for lack of any other relevant guidelines or procedure, this Office takes the position that said circular should be used to apply to the payment of taxes by PNB thru the utilization of its Land Bank bonds. Such being the case, pursuant to said circular, this Office shall credit only the face value of the Land Bank bonds, exclusive of the accrued interest, to the internal revenue taxes due from PNB. Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner