BIR Ruling [DA-357-99]

June 18, 1999 BIR RULING [DA-357-99] Ganado Leisure and Development Corporation Bingohan Sa Tutuban, 3rd Level, Centermall II Tutuban Center C.M. Recto, Divisoria Manila Attention: Mr . Tony Co General Manager Gentlemen : This refers to your letter dated May 25, 1999 requesting for a ruling as to whether the tax exemption being enjoyed by the Philippine Amusement and Gaming Corporation (PAGCOR) under Sec 13(2)(a) and (b) of P.D. 1869 may be extended to Ganado Leisure and Development Corporation (GLDC). It is represented that GLDC is a domestic corporation organized for the purpose of establishing, operating and managing amusement and recreation enterprises such as Bingo parlors; that pursuant to P.D. 1869, PAGCOR granted GLDC the sole authority to operate Bingo Games in Tutuban Mall-Divisoria; and that on June 16, 1998, the Board of Directors of PAGCOR approved the extension of the term of the grant of authority given to GLDC for a period of five (5) years. prLL In reply, please be informed that in BIR Ruling No. 138-98 dated September 25, 1998, this Office ruled 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 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 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." "Since ABLE is under contractual relationship with PAGCOR by virtue of an Authority to operate bingo games, this Office is of the opinion as it hereby holds that the exemption from taxes, fees and charges enjoyed by PAGCOR is effectively extended to Bingo Bonanza. "xxx xxx xxx" Considering that the Board of Directors of PAGCOR has approved on June 16, 1998 the extension of the term of the grant of authority to GLDC to operate bingo games at the Tutuban Mall in Divisoria, Manila for a period of five (5) years, it is therefore safe to conclude that the exemption from taxes, fees and charges being enjoyed by PAGCOR may also be extended to GLDC. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. prcd Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal & Enforcement Group)