Land Bank Bonds Form Part of the Estate of a Decedent for Estate Taxation Purposes

July 30, 1980 BIR RULING NO. 114-80 Mrs. Dolores E. Rivera 2541 Ramos Street Tarlac, Tarlac Dear Mrs. Rivera : This refers to your letter dated January 12, 1980 requesting information on whether or not the bonds issued by the Land Bank of the Philippines, are includible in the gross estate of a decedent for estate tax purposes. cdta In reply, please be informed that Section 166 of R.A. No. 3844, as amended, otherwise known as the "Code of Agrarian Reforms of the Philippines, provides: "Sec. 166. Definition of Terms . xxx xxx xxx "(26) Tax Free" in reference to bonds and shares of stock issued by the Land Bank as payments for acquired private agricultural land shall mean all government taxes, except gift tax and inheritance tax." (Emphasis ours) The inheritance tax was abolished, but the estate tax was retained by P.D. No. 69, the effectivity if which was on November 24, 1972. On the other hand, the aforequoted provision was incorporated into the Code of Agrarian Reforms by R.A. No. 6389, which became effective on September 10, 1971, a date which is prior to the date of the abolition of the inheritance tax. Thus, at the time of the adoption of the aforesaid definition both the estate and the inheritance taxes were still in existence. The two were correlative taxes, they having been imposed on the right to transmit and to receive property by succession, respectively. Considering that at the time of the adoption of the aforequoted definition the existence of the inheritance tax in any particular case necessarily presupposes the corollary existence of the estate tax, it is our opinion that the reference to the "inheritance tax" in the aforequoted definition also includes the correlative "estate tax". Accordingly, it is our position that Land Bank bonds form part of the estate of a decedent for estate taxation purposes. cdt Very truly yours, RUBEN B. ANCHETA Acting Commissioner