BIR Ruling

April 15, 1968 The President Philippine Amateur Cycling Association Rizal Memorial Track-Football Stadium Macario Adriatico Street Manila S i r : This refers to your letter dated January 22, 1968 requesting full exemption from the payment of the amusement tax on the admission fees to the movie film "Phantom, The Killer", under Republic Act No. 3135, which provides as follows: "Sec. 22. Exemption of income and properties from taxes . Any laws to the contrary notwithstanding, all income, properties, and importation of sports equipment and materials by the Philippine Amateur Athletic Federation and the members shall be exempt from amusement, real property, specific taxes and all other taxes and duties: Provided , however , That the sports equipment and materials imported herein shall be for the exclusive use of the Federation, the associations and their athletic members and not to be disposed of for commercial purposes or for profit." It appears that the Philippine Amateur Cycling Association bought the rights to distribute exclusively in the Philippines the aforesaid movie film from its owner, Amonia S. Aragon. Through its broker, the Prudential International Films, the film is to be distributed to all theaters throughout the Philippines and the proceeds to be derived therefrom will be used for the construction of a cycling track. Our records further show that by letter dated January 29, 1968, this Office granted you exemption on the benefit showing of the same film from January 29, to February 3, 1968 pursuant to Section 14-2, in relation to Section 22 (quoted above), of Republic Act No. 3135. Said Section 14-12 is quoted viz.: "Sec. 14. Functions , powers and duties of Associations . The National Sports Association shall have the following functions, powers and duties: "1. . . . "2. To raise funds by donations, benefits, and other means for their purposes. "xxx xxx xxx In reply, I have the honor to inform you as follows: The benefits for which you are granted exemption from the amusement by the law embrace fund raising ones to assist you finance and accomplish the purposes of your existence. Said benefits do not and cannot embrace activities carried on as a business. As owners of the exhibition rights to the film "Phantom, The Killer", you are considered cinematographic film owners within the purview of Section 195 of the Tax Code. The showing of said film, therefore, either direct by yourselves or thru your brokers, the Prudential Films International, does not constitute a mere benefit fund raising but the doing of business. For this reason, your request for exemption for the alleged benefit showing of the film at the Galaxy Theater from March 20 to March 31, 1968 has to be as it is hereby denied. In this connection, it may be stated that as cinematographic film owners, you are subject to the fixed tax of P200 per annum prescribed by Section 182(A)(3)(v) of the Tax Code and to 2% percentage tax on your gross receipts pursuant to Section 195 of the same Code. It is of course understood that you are further subject to the income and residence taxes. atdc Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue