BIR Ruling No. 014-06

November 13, 2006 BIR RULING NO. 014-06 Department of Budget and Management Malacaang, Manila Attention: Mr. Eduardo P. Opida Assistant Secretary Gentlemen : This has reference to BIR Ruling No. DA093-06 dated March 7, 2006 , where this Office ruled that ". . . PRCI is now subject to VAT, the above-named beneficiaries are nevertheless, entitled to their corresponding share in the collection of the aforesaid taxes, since VAT merely replaced the franchise tax and its rate. Thus, every person, including PRCI, liable to pay VAT is required to file a quarterly return of the amount of its quarterly gross sales or receipts within the twenty five (25) days following the close of taxable quarter. Accordingly, it is not PRCI that should remit the share of the local government unit under its franchise but the National Treasury in excess of the increase in collections for the immediately preceding year pursuant to Section 283 of the Tax Code of 1997 ." In the aforesaid ruling, it invoked Section 283 of the Tax Code of 1997 and Section 284 of Republic Act (R.A.) No. 7160, otherwise known as the Local Government Code of 1997, in relation to Section 9 of R.A. No. 7953 as basis for the entitlement to 25% of the gross earnings of Philippine Racing Club, Inc. (PRCI) only in excess of the increase in collections for the immediately preceding year, but there is no mention as to the rate to which the following beneficiaries, under R.A. No. 7953 should be entitled, to wit: National Government 5% Local Government (province or city/municipality) 5% Philippine Charity Sweepstakes Office 7% Philippine Tuberculosis Society 6% White Cross 2% Total 25% It should be emphasized that the condition provided therein that the allocated amount to be distributed to PRCI's beneficiaries significantly depends on the "excess of the increase in collections for the immediately preceding year" is not a condition sine qua non for the entitlement to the said shares, as Section 283 of the Tax Code of 1997 refers to the total amount of collection of each Revenue District Office of the BIR for subsequent distribution under the Tax Code and Local Government Code. Since PRCI is in effect a separate collecting agent in itself, the aforesaid Section 283, supra , should not be applied for purposes of allocating the amounts to the beneficiaries of PRCI. This is so because it is a canon in statutory construction that a later statute, general in its terms and not expressly repealing a prior special statute, like R.A. No. 7953, will ordinarily not affect the special provisions of such earlier statute, ( Johnson J. [citing Minnesota v. Hitchcock, 185 US, 373, 396-397, 22 S. CT. 650, 659, May 5, 1902, Cass County v. Gillett, 100 US 585, 593, 10 Otto 585, 593, October term, 1879; and New Jersey Steamboat Co. v. Collector, 85 US 478, 490-491, 18 Wall 478, 490-491, October term 1873 ) Please be informed that R.A. No. 7716 and R.A. No. 8241 merely replaced the franchise tax and its rate with that of VAT and did not affect the obligation of PRCI under its franchise. Accordingly, the allocation of the percentages above-mentioned shall be, based on the VAT payable, as follows: SDcITH National Government 5% - 5/25% x 10% - 2% Local Government 5% - 5/25% x 10% - 2% PCSO 7% - 7/25% x 10% - 2.8% PTS 6% - 6/25% x 10% - 2.4% WC 2% - 2/25% x 10% .8% TOTAL 10.0% However, effective February 1, 2006, the ratio shall be as follows: National Government 5% - 5/25% x 12% - 2.4% Local Government 5% - 5/25% x 12% - 2.4% PCSO 7% - 7/25% x 12% - 3.36% PTS 6% - 6/25% x 12% - 2.88% WC 2% - 2/25% x 12% .96% TOTAL 12.0% Please be guided accordingly. Very truly yours, (SGD.) JOSE MARIO C. BUAG Commissioner of Internal Revenue