BIR Ruling No. 406-2020

REPUBLIC OF THE PHILIPPINES

DEPART'MENT OF FINANCE

BUREAU OF INTERNAL REVENUE

Quezon City

PD 1869; Secs. 109 & 27 of

NIRC BIR Ruling No. 1090-18

-0406-2020

J242020

BANIQUED LAYUG & BELLO

8/F Jollibee Center, San Miguel Avenue

Ortigas Center, Pasig City

Attention: Attys. Suzette A. Celicious- Sy

Kathleen Mae M. Villamin

Ana Margaret T. Dahilig

Gentlemen:

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

on behalf of your client, MANILA BINGO CORPORATION (doing business under the

name and style of Bingo City, Inc.) (MANILA BINGO, for brevity), for confirmation of

your opinion that income derived from bingo games operations conducted by' MANILA

BINGO, as a licensee of the Philippine Amusement 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 MANILA BINGO, with Tax Identification Number , is a corporation duly organized under the laws of the Philippines, the primary purpose of which is to furnish amusement and recreation to the public, such as but not limited to, bingo

games, ballroom dancing, tea and garden parties, movie premiers, stage plays, basketball games, concerts, variety shows and other similar related business activities; and to carry on any lawful business 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. MANILA 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.

9487, provides, viz: In reply, please be informed that Section 13(2) of PD No. 1869, as amended by RA No.

"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 Manila Bingo

OT-0406-2020 JUL 2 4 2U20

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.

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(b) Others: The exemption herein 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 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,2 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

corporate income tax realized from the operation of casinos. 5% franchise tax, shall likewise be exempted from all other taxes, including it must be that all contractees and licensees of PAGCOR, upon payment of the

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. "

XXX 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)

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

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

Subsection (2) hereof, the following transactions shall be exempt from the value- added tax: "SEC. 109. Exempt Transactions. -- (1) 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

of Gaming Licenses for its Bingo Games Operations issued by PAGCOR, the exemption from taxes, fees and charges enjoyed by PAGCOR is extended to MANILA BINGO pursuant to Premises considered, this Office hereby rules that since MANILA BINGO is a holder

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

the 5% franchise tax, any income that may be realized by MANILA BINGO from related shall be exempted from corporate income tax and VAT. However, for the purpose of applying

services or such services not falling under gaming operations, shall be subject to corporate income tax and V AT.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.

aesalea

Commissioner of Internal Revenue CAESAR R.DULAY

035952

gps(manila bingo) K-1

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.

List of Gaming Sites

No.Tax Identification No. Novaliches, Quezon City Upper GroundSMCity FaiiwQuirin Higway cor. RegaadoGreaterLagr MANILA BINGO CORPORATION Registered Address I Location Gaming License No. December 10,2021 Valid Until