Clarification of the Exemption of the Interest Income of Land Bank

July 24, 1981 BIR RULING NO. 124-81 53-e 002-80 124-81 Land Bank of the Philippines 6th Floor, BF Condominium Bldg. Intramuros, Metro Manila Attention: Mr . Raul I . Goco General Counsel Gentlemen : This refers to your letter dated October 14, 1980 requesting clarification of the exemption of the interest income of Land Bank from the withholding tax provision of Section 53(e) of the Tax Code, as amended by Presidential Decree Nos. 1156 and 1739. cdtech In reply, I have the honor to inform you as follows: 1. The interest income of Land Bank is not exempt from the aforesaid withholding tax. For although, under its Charter (P.D. 251, as amended by P.D. No. 338), the Land Bank shall be exempt from all national, provincial, municipal and city taxes and assessments, said exemption has been superseded by Section 23 of Presidential Decree No. 1177, effective on July 30, 1977, which requires government-owned or controlled corporations to pay income taxes, customs duties and other taxes and fees as are imposed under revenue laws. (See Opinion No. 133, s. 1977, Secretary of Justice); 2. The provisions of Finance Circular No. 2-78 shall govern with respect to the taxability of said deposits. Land Bank is entitled to either tax subsidies or payments constituting equity contributions, in which case, it shall not be required to pay cash. The revenue collecting agencies shall instead issue a "payment compliance certificate" indicating the nature of the assessment and amount due. The subsidy or equity contribution shall be effected through journal vouchers or their equivalent. (See Paragraphs 4, 6 and 9, Finance Circular No. 2-78, implementing Section 23, P.D. No. 1177). 3. With respect to the taxes already withheld and remitted to the BIR, a refund thereof is in order; otherwise, that would be tantamount to requiring you to pay cash. Accordingly, you are advised to file a request for refund, attaching therewith the certificates from the withholding banks as to the amount of tax withheld. Very truly yours, RUBEN B. ANCHETA Acting Commissioner