BIR Ruling No. 423-2020

REPUBLICOF THE PHILIPPINES

BUREAU OF INTERNAL REVENUE DEPARTMENT OF FINANCE Of-0473-22

Quezon City

PD 1869;Secs.109& 27 of

NIRC BIR Ruling No.1090-18

0T-02F-200

BANIQUED LAYUG & BELLO JUL 27 2320

8/F Jollibee Center, San Miguel Avenue Ortigas Center, Pasig City

Attention: Attys. Suzette A. Celicious- Sy

Kathleen Mae M.Villamin

Ana Margaret TDahilig

Gentlemen:

This refers to your letters dated November 29, 2018 and September 4, 2019 requesting

on behalf of your client, ONE BINGO PAVILION INC. (ONE BINGO, for brevity), for

confirmation of your opinion that income derived from bingo games operations conducted by

ONE BINGO, as a licensee of the Philippine Amusenhent and Gaming Corporation (PAGCOR), shall be subject to 5% franchise tax, in lieu of all kinds of taxes, pursuant to

Section 13(2)(b) of Presidential Decree (PD)No. 1869 as amended by Republic Act (RA)

No. 9487.

It is represented that ONE BINGO, with Tax Identification Number

is a corporation duly organized under the laws of the Philippines, the primary purpose of which

is to purchase, acquire, establish, own, hold, sell, lease, conduct, operate, manage general

amusement and recreation enterprises of every kind and nature; to furnish amusement and

recreation to the public, and other similar related business activities, including the

establishment and operation of information center, technology facility and production studios:

and to carry on any lawful activities and to do any and] everything necessary, suitable,

convenient or proper for the accomplishment of any of the purposes enumerated or incidental

to the powers of the corporation. ONE BINGO is a holder of various Gaming Licenses' for its

Bingo Games Operations which was issued by PAGCOR pursuant to PD No. 1869, as amended

by RA No.9487

In reply, please be informed that Section 13(2) of PD No. 1869, as amended by RA No.

9487, provides, viz:

"SEC.13. Exemptions.

(2) Income and other taxes -- (a) Franchise Holder: No tax of any kind or form,

income or otherwise, as well as fees, charges or levies of whatever nature,

whether National or Local, shall be assessed and collected_under this

Franchise from the Corporation, nor shall any form of tax or charge attach

1 Please see attached Annex "A" for the list of Gaming Licenses issued to One Bingo

OT-0423-2020

2 JUL 2 7 2820

in any way to the earnings of the Corporation, except a Franchise Tax of five

5%) percent of the gross revenue or earnings derived by the Corporation from its operation under this Franchise. Such tax shall be due and payable

quarterly to the National Government and shall be in lieu of all kinds of taxes,

levies,fees or assessments of any kind, nature or description, levied, established or collected by any municipal, provincial, or national government authority.

XXX XXX XXX

(b) Others: The exemption herein granted for &arnings derived from the

operations conducted under the franchise, specifically from the payment of any

tax, income or otherwise, as well as any form of charges, fees or levies, shall

inure to the benefit of and extend to corporation(s), association(s).

agency(ies), or individual(s) with whom the Corporation or operator has any

contractual relationship in connection with the operations of the casino(s)

authorized to be conducted under this Franchise and to those receiving

compensation or other remuneration from the Corporation or operator as a

result of essential facilities furnished and/or technical services rendered to

the Corporation or operator. (Emphasis and underscoring supplied)

In the case of Bloomberry Resorts and Hotels, Inc. vs. Bureau of Internal Revenue, the

Supreme Court affirmed the applicability of the tax exemption provisions of PD No. 1869, as

amended by RA No. 9487, to PAGCOR's licensees. Thus, the Supreme Court ruled that:

"As the PAGCOR Charter states in unequivocal terms that exemptions

granted for earnings derived from the operations conducted under the franchise

specifically from the payment of any tax, income or otherwise, as well as any

form of charges, fees or levies, shall inure to the benefit of and extend to

corporation(s), association(s), agency(ies), or individual(s) with whom the

PAGCOR or operator has any contractual relationship in connection with the

operations of the casino(s) authorized to be conducted under this Franchise, so

it must be that all contractees and licensees of PAGCOR, upon payment of the

5% franchise tax, shall likewise be exempted from qll other taxes, including

corporate income tax realized from the operation of casinos.

For the same reasons that made us conclude in the December 10, 2014

Decision of the Court sitting En Banc in G.R. No. 215427 that PAGCOR is

subject to corporate income tax for "other related services," we find it logical

that its contractees and licensees shall likewise pay corporate income tax for

income derived from such "related services. "

XIXX XXX XXX

Plainly, too, upon payment of the 5% franchise tax, petitioner's income

from its gaming operations of gambling casinos, gaming clubs and other similar

recreation or amusement places, and gaming pools, defined within the purview

of the aforesaid section, is not subject to corporate income tax. " (Emphasis and

underscoring supplied)

2G.R. No. 212530 dated August 10, 2016.

0T-0423-23 JUL 2 7 2020

Internal Revenue Code of 1997, as amended, provides: With regard to the VAT exemption of ONE BINGO, Section 109 (1) (K) of the National

Subsection (2) hereof, the following transactions shall\be exempt from the value- added tax: "SEC. 109. Exempt Transactions. - -- (l) Subject to the provisions of

XXX XXX XXX

which the Philippines is a signatory or under special laws, except those under Presidential Decree No. 529; (Emphasis supplied) (K) Transactions which are exempt under international agreements to

PAGCOR's charter, PD No. 1869, is a special law that grants the latter exemption from taxes and such exemptions extend or inure to the benefit of its licensees.3 Thus, PAGCOR and its licensees are exempt from the payment of VAT because

Premises considered, this Office hereby rules that since ONE BINGO is a holder of

Gaming Licenses for its Bingo Games Operations issued by PAGCOR, the exemption from

taxes,fees and charges enjoyed by PAGCOR is extended to ONE BINGO pursuant to Section

13 (2) (b) of PD No. 1869, as amended by RA No. 9487. Therefore, the income derived by

ONE BINGO solely from its Bingo Games Operations, during the validity period of its Gaming

Licenses on the specified gaming sites, is subject only to the 5% franchise tax, and shall be

exempted from corporate income tax and VAT However, for the purpose of applying the 5%

franchise tax, any income that may be realized by ONE BINGO from related services or such

services not falling under gaming operations, shall be subject to corporate income tax and

VAT.4

This ruling is being issued on the basis of the foregoing facts as represented, However.

if upon investigation, it shall be disclosed that the facts are different, then this ruling shall be

considered null and void.

Very truly yours.

Ma&y

CAESAR R.DULAY

Commissioner of Internal Revenue

035968 Q

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K-1 gps(one bingo)

3 Philippine Amusement and Gaming Corporation v. Bureau of Internal Revenue, G.R. No. 172087 dated March

4 Section 14 (5) of PD No.1869, as amended by RA No. 9487. 15,2011

ng Sites MING CORPORATION OT-0423-2020 JUL 12 7 2020 Annex "A"

Tax Identification No. :008-096-692-000 008-096-692-003 Grudn Floor 2L5A,Puregod Buiing,Natinal Higway cor.Magayay Roa, Brgy San Antonio, San Pedro, Laguna Sky One Bldg, Brgy Baleleng, Bantay locos Sur ONE BINGO PAVILION, INC. Registered Address I Location Gaming License No. 16-594 15-020 January 27, 2021 March 12,2021 Valid Until

008-096-692-004 B!dg 537, Rizal Highway Subic Bay Freeport Zone Zambales 16-590 January 19, 2021

008-096-692-005 TLJ Building McArthur Highway Brgy.Mabiga Mabalacat Pampanga 15-212 May 04, 2021

008-096-692-006 S and R Centre, De Venecia Ave., Nalsian, Calasiao, Pangasinan 17-936 October 27,202