BIR Ruling [DA-052-00]

January 28, 2000 BIR RULING [DA-052-00] Secs. 8, 9 & 13, P.D. 1869 BIR Ruling No. 138-98 Triple 8 Entertainment Co ., Inc . 3rd Floor, Masagana Citimall Taft Ave. Cor. Arnaiz Avenue Pasay City Attention: Mr . Jaime T . Cruz President Gentlemen : This refers to your letter dated December 21, 1999 requesting for a confirmatory ruling to the effect that the exemptions from the payment of any tax, income or otherwise, as well as any charges, fees, or levies being enjoyed by the Philippine Amusement and Gaming Corporation (PAGCOR) under P.D. No. 1869 may be extended to your company. It is represented that Triple 8 Entertainment Co., Inc. is a franchise holder of bingo operation granted by the PAGCOR; and that you opined that the provisions of Subsection (b) in relation to subsection (a), Item (2), both of Section 13 of P.D. No. 1869, which provides that the exemptions from the payment of any tax, income or otherwise, as well as any form of charges, fees, or levies granted to the Corporation , i . e ., the PAGCOR, shall inure to the benefit of and extend to corporation(s), association(s), agency(ies), or individual(s) with whom the Corporation has any contractual relationship in connection with the operations of casino(s) authorized to be conducted under the Franchise is extended to your company. In reply, please be informed that pursuant to Section 13(a)(2) and (b) of P.D. 1869 pertinent portion of which provides that "Sec. 13. Exemptions . xxx xxx xxx "(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 percent (5%) 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. "(b) Others . The exemptions 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, 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 operation 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." any corporation, association, agency or individual with whom the Corporation (i.e., the PAGCOR) has a contractual relationship, shall, in lieu of the five percent (5%) Franchise Tax of the gross revenue or earnings derived from the operations conducted under the franchise, be extended the benefit and exemption from the payment of tax of any kind or form, income, or otherwise, as well as fees, charges or levies of whatever nature, whether National or local, being enjoyed by the Corporation. Since TRIPLE 8 ENTERTAINMENT CO., INC. has been granted an authority to hold and operate bingo games by PAGCOR, thus establishing the existence of a contractual relationship with the latter, this Office is of the opinion as it hereby holds that the exemption from taxes, fees and charges being enjoyed by PAGCOR may be extended to the former, TRIPLE 8 ENTERTAINMENT CO., INC., (BIR Ruling No. 138-98 dated September 25, 1998; BIR Unnumbered ruling DA-591-99 dated October 10, 1999) 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. LibLex Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. EQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)