RMC No. 27-2008: Circularizes the full text of EO No. 659, entitled “Improving the Negotiability and Acceptability of Agrarian Reform Bonds”

Key points

1. Nature of AR Bonds. Agrarian Reform (AR) Bonds are deemed issued by the National Government and are a direct, unconditional and general obligation of the Republic of the Philippines. They carry market interest rates aligned with 91-day treasury bill rates, and 10% of face value matures every year.
2. Who may use the bonds. The landowner, successors-in-interest or assigns may use them up to face value for items such as government land and assets, government-owned shares, surety, bail or performance bonds, loan security, and certain fees and tuition. The PARC may allow other uses.
3. Payment of tax liabilities. The matured portion, or the PARC-determined percentage of the outstanding balance, is accepted for tariff and duties and for taxes such as income tax, capital gains tax of individuals, estate tax, donor’s tax, VAT, excise tax, percentage taxes and deficiency assessments. Withholding tax for non-withholding or non-remittance of taxes withheld is excepted.
4. Other uses and eligibilities. Ten-year AR Bonds can also pay real estate taxes, certain BSP fees assessed on banks, and serve as SEC security deposits and HLURB performance bonds. They are accepted as loan collateral at a discounted value, and have the same eligibilities as SDT, ERAP and other government bonds.

Who is affected

• Landowners holding AR Bonds, their successors-in-interest and assignees