BIR Ruling [DA-268-00]

June 26, 2000 BIR RULING [DA-268-00] P.D. 1869; 109-98; 138-98; 227-2000; DA-268-2000 Philippine Amusement & Gaming Corporation PAGCOR HOUSE 1330 Roxas Boulevard Ermita, Manila Attention: Mr. Joe E. Rodriguez III Officer-in-Charge PAGCOR Jai-Alai Department Gentlemen : This refers to your letter dated June 5, 2000 requesting in effect for a ruling that the tax exemption privilege extended to Power Management and Consultancy, Inc. as an entity having contractual relationship with the Philippine Amusement and Gaming Corporation (PAGCOR) be addressed directly to your office. LexLib Representation made by Power Management and Consultancy, Inc. (POWER) which was the basis of the issuance of BIR Ruling DA-227-2000 states that it is an existing corporation duly organized and registered with Securities and Exchange Commission (SEC); that it has entered into an agreement with PAGCOR in connection with the operations of Jai-Alai; that on the basis of said agreement, POWER had been engaged by PAGCOR to undertake and handle the promotional and marketing aspects of Jai-Alai, with end in view of increasing revenue generated from said operations; and that as provided for in the said contract, POWER shall be entitled to receive certain percent of gross ticket sales as service fees. In reply, please be informed of the following pertinent provisions of Section 13(2)(a) and (b) of P.D. 1869, which states: "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 (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. "(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 or 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 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 to the Corporation or operator." Since POWER is under contractual relationship with PAGCOR to undertake and handle marketing aspects of Jai-Alai pursuant to an Agreement entered into on January 24, 2000, this Office is of the opinion as it hereby holds that an exemption from taxes, fees and charges enjoyed by PAGCOR is effectively extended to POWER. 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. prcd Very truly yours, (SGD.) DAKILA B. FONACIER Commissioner of Internal Revenue