Land Bank Certificates or Bonds Cannot be Used for Tax Payment

July 29, 1981 BIR RULING NO. 133-81 51-00 000-73 133-81 The Regional Director Revenue Region No. 1 Tuguegarao, Cagayan S i r : In reply to your telegram dated May 18, 1981, you are informed that Land Bank certificates or bonds issued under Presidential Decree No. 27 cannot be applied by the holders thereof in the payment of internal revenue tax liabilities due from said holders. Hence, they cannot also be used in payment of the administrative amnesty tax under Presidential Decree No. 1740. cdt Under Section 85 of R.A. Nos. 3844 and 6389, otherwise known as "The Code of Agrarian Reforms of the Philippines", as amended by Presidential Decree No. 251, said bonds issued by the Land Bank may be used only by the holder thereof and shall be accepted for any of the following: "1. Payment for agricultural land or other real properties purchased from the Government. "2. Payment for the purchase of shares of stock or assets of government-owned or controlled corporation. . . . "3. Surety, bail bonds for the provisional release of accused persons or performance bonds in all cases where the Government may require or accept real property as bonds. "4. Security for loans applied with the PNB, DBP, GSIS, SSS, and other government financial institution, existing charters of these institutions to the contrary notwithstanding. "5. Payment for reparation goods. . . ." The foregoing enumeration does not include payment of internal revenue taxes due from the holder of the bond. However, your attention is invited to the 1975 Revised Charter of the Philippine National Bank which states that "if, for any reason whatever, the Bank is compelled by statute to accept assignments of, or as payment, certificates of indebtedness, bonds or other similar Government securities, such certificates, bonds or securities can be used by the Bank in payment of any and all taxes." (Sec. 13(c), P.D. No. 694). In other words, an exception to the above enumeration is that Land Bank bonds accepted by the Philippine National Bank may be used in the payment of internal revenue taxes due from said Bank. cdta Very truly yours, RUBEN B. ANCHETA Acting Commissioner