BIR Ruling No. 386-2020

REPUBLICOF THE PHILIPPINES

BUREAU OF INTERNAL REVENUE DEPARTMENT OF FiNANCE

Quezon City

PD 1869; Secs. 109 & 27 of NIRO

BIR Ruling No.1090-18 OT-038620 JUL 62020

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

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

Gentlemen:

confirmation of your opinion that income derived from bingo games operations conducted by BINGO PALACE, as a licensee of the Philippine Amusement and Gaming Corporation Section 13(2)(b) of Presidential Decree ("PD) No. 1869, as amended by Republic Act ("RA) No. 9487. (PAGCOR), shall be subject to 5% franchise tax, in lieu of all kinds of taxes, pursuant to on behalf of your client, BINGO PALACE CORPORATION (doing business under the name and style of Bingo Palace and Bayview Bingo) (BINGO PALACE, for brevity), for This refers to your letters dated November 29, 2018 and September 4, 2019 requesting

to the powers of the corporation. BINGO PALACE is a holder of various Gaming Licenses' supervise restaurants, cafes, bars and general amusement and recreation to the public, such as but not limited to, bingo games, ballroom dancing, tea and garden parties, movie premiers, 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 for its Bingo Games Operations which were issued by PAGCOR pursuant to PD No. 1869, as amended by RA No. 9487. which is to purchase, acquire, establish, own, hold, sell, lease, conduct, operate, manage and stage plays, basketball games, concerts, variety shows and other similar related business , is a corporation duly organized under the laws of the Philippines, the primary purpose of It is represented that BINGO PALACE, with Tax Identification Number

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

"SEC.13.Exemptions.

income or otherwise, as well as fees, charges or levies of whatever nature. (2) Income and other taxes - (a) Franchise Holder: No tax of any kind or form.

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

Oi.* 1 8 %o2g2 0 2

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 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 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 tocorporation(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

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."

XXX IXX IXX

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

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

OT-0336-2020 JUL 1 6 2020

of 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 BINGO PALACE, Section 109 (1)(K) of the

"SEC. 109. Exempt Transactions. - (1) Subject to the provisions of Subsection (2) hereof, the following transactions shall be exempt from the value-

added tax:

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

services or such services not falling under gaming operations, shall be subject to corporate income tax and VAT.4 Section 13 (2) (b) of PD No. 1869, as amended by RA No. 9487. Therefore, the income derived by BINGO PALACE 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 BINGO PALACE from related of Gaming Licenses for its Bingo Games Operations issued by PAGCOR, the exemption from taxes, fees and charges enjoyed by PAGCOR is extended to BINGO PALACE pursuant to Premises considered, this Office hereby rules that since BINGO PALACE is a holder

if upon investigation, it shall be disclosed that the facts are different, then this ruling shall be considered null and void. This ruling is being issued on the basis of the foregoing facts as represented. However.

Very truly yours,

Maeeau1wan

CAESAR R.DULAY Commissioner of Internal Revenue 035708

K-1

gps(bingo palace)

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. Space# 04138 Level 4 Robinson's Place, Padere Faura Street cor N. Adriatico Street BINGO PALACE CORPORATION Registered Address I Location Gaming License No. Valid Until

2 Bgy. 669 Zone 072, Ermita, Manila 166-167 (EM) G/F Entertainment Bay City SM Mallof Asia, Pasay City LGF Congressional Town Center#23 Congressional Avenue, Quezon City January 13, 2023 March 18, 2022 June 22, 2021

G/F Robinson's Luisita, McArthur Highway, San Miguel, Hacienda Luisita Tarlac August 7, 2020

Gaisano Capital, Labangan, Poblacion, San Jose Occidental Mindoro June 09, 2021

Ground Floor Sicangco Building, Mc. Arthur Highway, Brgy. San Rafael Tarlac May 26, 2021

U-101 & 102 Benry Square, McArthur Highway, San Nicolas, Tarlac City May 26, 2021

8 242- C Manly Building Mac Arthur HiWay, Dalandanan, District I, Valenzuela City July 13, 2021

2/F, HBC Bldg. 9013 E. Tecson St.,San Jose, San Miguel Bulacan May 23, 2023

10 LG/F, Imal-Camarin. Kiko Rd., Camarin, Caloocan City May 08, 2021

1 2nd Floor FRC Mall Kalinisan St., Talaba V., Bacoor City Cavite December 19, 2021

1 ATI Bidg,Don Domingo II,Tuguegarao City Cagayan December 19, 2021

N GD Plaza,Mc Arhur Higway, Brgy. Ilang lang,Guiguinto, Bulacan November 16, 2021

A Unit 132FNonwak Complex,Olongapo-Gapan Road,Dolores,San Femando Pampanga December 19, 2021

Puregold Novaliches 1018 Quirino Highway Sta. Monica Novaliches Quezon City January 14, 2023