BIR Ruling [DA-591-99]

October 7, 1999 BIR RULING [DA-591-99] Bingo Amusements Corporation 3rd Floor Gotesco Grand Central Caloocan City Attention: Mr. Johnson Yu President Gentlemen : This refers to your letter dated August 26, 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 Bingo Amusements Corporation, as one of its contractors. cdlex It is represented that Gotesco Properties, Inc. is a domestic corporation duly organized and existing under the laws of the Philippines with principal office address at 1958 C.M. Recto Avenue, Manila; that it is organized for the purpose of establishing, operating, and managing amusement and recreation enterprises such as Bingo parlors; that on September 25, 1995, Gotesco Properties, Inc. was granted an authority to operation bingo games by PAGCOR at the shopping malls, located at C.M. Recto, Manila, Monumento & Grand Central, Caloocan City, Commonwealth, Quezon City, Las Pias, Metro Manila and Cainta. Rizal; that on November 15 1995, Gotesco Properties, Inc. executed a Deed of Assignment in favor of Bingo Amusements Corporation whereby the former assigned, transferred and conveyed unto the latter its right to operate the aforesaid Bingo Games; and that on January 12, 1996, the Board of Directors of PAGCOR in its meeting held on December 27, 1995 approved the assignment of Gotesco Properties, Inc.'s rights under the Grant of Authority to operate Bingo Games executed between PAGCOR and Gotesco Properties, Inc. on September 25, 1995 to Bingo Amusements Corporation. In reply please be informed that in BIR Ruling No. 138-98 dated September 25, 1998, this Office ruled that "Sec. 13. Exemptions "(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, 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 therein 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 December 27, 1995 the assignment of Gotesco Properties, Inc.'s rights to operate Bingo Games to Bingo Amusement Corporation until September 25, 2000, it is therefore safe to conclude that the exemption from taxes, fees and charges being employed by PAGCOR may also be extended to one of its contractor's, Bingo Amusement Corporation. 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. Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group