BIR Ruling No. 526-2020

BUREAU OF INTERNAL REVENUE REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE

Quezon City

PD 1869; Secs. 109 & 27 of NIRC BIR Ruling No. 1090-18 Clep 2028 Z021

Ortigas Center, Pasig City BANIQUED LAYUG & BELLO 8/F Jollibee Center, San Miguel Avenue

Attention: Attys. Suzette A. Celicious- Sy Kathleen Mae M. Villamin Ana Margaret T. Dahilig

Gentlemen:

behalf of your client,ALABANG NUMBERS & GAMING CORPORATION ("ALABANG gaming operations conducted by ALABANG NUMBERS, as a licensee of the Philippine NUMBERS", for brevity), for confirmation of your opinion that income derived from electronic 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. This refers to your letters dated November 29, 2018 and September 4, 2019 requesting on

purpose of which is to engage in the business of providing general amusement and entertainment NUMBERS is a holder of various Gaming Licensesl for its Electronic Games Operations which such as bingo games and other amusement, entertainment, or sport activities. ALABANG was issued by PAGCOR pursuant to PD No. 1869, as amended by RA No. 9487. It is represented that ALABANG NUMBERS, with Tax Identification Number , is a corporation duly organized under the laws of the Philippines, the primary

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 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

1 Please see attached Annex "A" for the list of Gaming Licenses issued to Alabang Numbers

OT-05.26 SEP 522 20 2

provincial, or national government authority. 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.

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income or otherwise, as well as any form of charges, fees or levies, shall inure to operations conducted under the franchise, specifically from the payment of any tax, the benefit of and extend to corpc individual(s) with whom the Corporation or operator has any contractual conducted under this Franchise and to those'receiving compensation or other remuneration from the Corporation or operator as a result of essential facilities (Emphasis and underscoring supplied) relationship in connection with the operations of the casino(s) authorized to be furnished and/or technical services rendered to the Corporation or operator. (b) Others: The exemption herein granted for earnings derived from the ation(s),association(s),agency(ies),or

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:

granted for earnings derived from the operations conducted under the franchise "As the PAGCOR Charter states in unequivocal terms that exemptions

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 all 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. "

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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

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

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

National Internal Revenue Code of 1997, as amended, provides: With regard to the VAT exemption of ALABANG NUMBERS, 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

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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

holder of Gaming Licenses for its Electronic Games operations issued by PAGCOR, the exemption derived by ALABANG NUMBERS solely from its Electronic Games Operations, during the from taxes, fees and charges enjoyed by PAGCOR is extended to ALABANG NUMBERS pursuant to Section 13 (2) (b) of PD No. 1869, as amended by RA No. 9487. Therefore, the income 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 Premises considered, this Office hereby rules that since ALABANG NUMBERS is a

NUMBERS from related services or such services not falling under gaming operations, shall be purpose of applying the 5% franchise tax, any income that may be realized by ALABANG

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,

ieeramwen

CAESAR R. DULAY Commissioner of Internal Revenue

036707 K-1 gps(alabang numbers)

3 Philippine Amusement and Gaming Corporation v. Bureau of Internal Revenue, G.R. No. 172087 dated March 1

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

BIG TIME GAMING CORPORATION List of Gaming Sites Annex "A"

o Tax Identification No. ALABANG NUMBERS &GAMING CORP. Registered Address I Location Gaming License No. Valid Until

Fetival Supermall,Fiinvest Corporate CityAlabangMuntinupa City December 16, 2022

3rd Level,FesivaSupermall,Fiinvest Cororae City,Alabang,Muntinlupa December 16, 2022

2ndFloorV-Central Mal, Molino BoulevardMolin Il, Bacoor Cavite June 28, 2021