BIR Ruling No. 365-2020

BUREAU OF INTERNAL REVENUE REPUBLICOFTHE PHILIPPINES DEPARTMENT OF FINANCE

Quezon City

PD 1869; Secs.109 & 27 of BIR Ruling No.1090-18 NIRC OT-0365-2020 JUL 0 2 202U

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

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

Gentlemen:

brevity), for confirmation of your opinion that income derived from bingo games operations No. 9487. (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) on behalf of your client, BIG TIME GAMING CORPORATION ("BIG TIME for conducted by BIG TIME, as a licensee of the Philippine Amusement and Gaming Corporation This refers to your letters dated November 29, 2018 and September 4, 2019 requesting

is to engage in, conduct and maintain the business of amusement, entertainment, gaming and a corporation duly organized under the laws of the Philippines, the primary purpose of which recreational activities, including the operation of electronic games and similar games for the general public, at specified venues allowed by law. BIG TIME is a holder of various Gaming Licenses' for its Bingo Games Operations which were issued by PAGCOR pursuant to PD No. 1869, as amended by RA No. 9487. It is represented that BIG TIME, with Tax Identification Number is

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

"SEC. 13. Exemptions. -

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 whether National or Local, shall be assessed and collected under this Franchise from the Corporation, nor shall any form of tax or charge attach (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

1 Please see attached Annex "A" for the list of Gaming Licenses issued to Big Time

OT-0365-2020 jUL 0 2 .ZUZU

from its operation under this Franchise. Such tax shall be due and payable or collected by any municipal, provincial, or national government authority. 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

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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 inureto thebenefit ofand (b) Others: The exemption herein granted for earnings derived from the extend corporation(s),association(s)

contractual relationship in connection with the operations of the casino(s) agency(ies), or individual(s) with whom the Corporation or operator has any 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)

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: In the case of Bloomberry Resorts and Hotels, Inc. vs. Bureau of Internal Revenue,2 the

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

underscoring supplied)

With regard to the VAT exemption of BIG TIME,Section 109(1)(K) of the National

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

01-0355-2020 JUL 0 2 z020

Internal Revenue Code of 1997, as amended, provides:

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

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(K) Transactions which are exempt under international agreements to

Presidential Decree No. 529; (Emphasis supplied) which the Philippines is a signatory or under special laws, except those under

Thus, PAGCOR and its licensees are exempt from the payment of VAT because 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

Premises considered, this Office hereby rules that since BIG TIME 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 BIG TIME pursuant to Section 13

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

TIME 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 BIG TIME 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,

CAESAR R. DULAY

Commissioner of Internal Revenue

035617 O

gps(big time) K-1

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

15,2011.

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

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

No.Tax Identification No. BIG TIMEGAMING CORPORATION Sunshine Bivd. Plaza, Quezon Ave. Comer Sct Santiago St. South Triangle, Quezon Registered Address/Location Gaming License No. Valid Until

Unit 21 Intrepid Plaza,E.Rodriguez Jr. Avenue, Bagumbayan, Quezon City City October 13, 2021 April 15, 2021

D RS228 06 to 08 Robinsons Supermarket, EMA Town Center, Brgy. Camalig. 233 Tomas Morato Ave., South Triangle, Quezon City Unit 102, G/F Web Jet Acropolis Bldg. 88 E. Rodriguez Jr Ave., Bagumbayan 3, Quezon Citv October 13, 2022 July 23, 2021

Meycauayan Bulacan December 17,2021

Units 8, 9 10 & 32 Aubum Place, Alabang Zapote Road, Talon II, Las Pinas City December 18, 2021

N Merville Arcade, West Service Road, corner Merville Brgy. 201 Pasay City Decerher 17, 2021

N Falcon St., Brgy Poblacion, Sta. Cruz, Laguna May 08, 2023

10 0 2/F Bocobo Commercial Center,1253 Bocobo St. cor Padre Faura St., Barangay 670, Zone 072, Ermita Manila G/F Hotel Sogo, Distrito 1 O Purok 7, Mahalika Highway, San Juan ACCFA Cabanatuan City March 25, 2023 April 10, 2022

1 21 Puregold Gen. Luna St., Banaba, San Mateo Rizal February 06, 2022

2F Parkmall, Ouano Avenue, South Special Economic Zone Mandaue City April 21, 2020

13 138 -142 SkyOne Bldg.M.L.Quezon Avenue,San Isidro Angono Rizal December 21, 2020

14 Roben Theatre C. M Recto Avenue Brgy. 313 Zone 31, Sta. Cruz Manila March 30, 2021

15 2F Syquio Business Center Bldg. Maharika Highway, Purk Lambingan, Daan Sarile Cabanatuan City June 29, 2021

16 G/F Jea Bldg. Lopez St., Corner Jalandoni St., Iioilo City January 19, 2021

1 Insular Square, J.P. Rizal St., Tabok, Mandaue City, Cebu September 21, 2021

18 miliano Pineda Building, Mac Arthur Highway, San Francisco, Mabalacat City, Pampanga August 06, 2021

109 2F Blue Horizon Bidg.Quezon Avenue Poblacion Alaminos City Pangasinan 2404 January 26, 2022

20 ATDRMAM BIdg., Sitio Kanluran, Kumintang Ibaba, Batangas City May 16, 2020

21 Zone C-1,2,3,4 Meerea High St., Ouano Ave., North Reclamation Area, Mandaue City January 26, 2022

22 243 Dizon Building, Sto. Entiero Street, Brgy. Sto. Cristo, Angeles City November 04, 2021

23 L2-107-108 Robinsons Place Las Pinas Alabang Zapote Rd. Talon Uno, Las Pinas City May 09, 2021

2 2F, No. 14 Tanjuatco Building, Plaza Aldea, Sampaloc, Tanay, Rizal December 19,2021

2F Sir Thomas BIdg., No. 18 Matalino St. corner Matatag St., Barangay Central Diliman Quezon City. June 10, 2022

2 252 EJ Arcade, Friendship Highway, Brgy.Anunas, Angeles City November 16, 2021

27 St., Barangay 293, Zone 028, Binondo, Manila G/F CS-15 and 2/F Unit C1 Chinatown Mall, Annex B Calle Felipe II cor. La Chambre November 27,2021

Robinson's Place, J. Catolico Sr. Ave., Brgy. Lagao, General Santos City December 11,2021