Republic of the Philippines KS aul RESE>
HOUSE OF REPRESENTATIVES tg
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Quezon City
01 JUL 2013

SIXTEENTH CONGRESS Nia

First Regular Session

} 565

HOUSE BILL NO.

Introduced by Honorable Amado S. Bagatsing

EXPLANATORY NOTE

This measure seeks to amend the National Internal Revenue Code of 1997, as
amended by Republic Act No. 9337, to expressly include the Philippine Amusement and
Gaming Corporation (PAGCOR) as one of the government-owned or controlled corporations
(GOCCs) exempt from income tax, which exemption was previously enjoyed under Republic
Act No. 8424,

Itis worth noting that pfior to the enactment of Republic Act No. 9337, PAGCOR was
one of the five (5) government owned corporations which enjoyed exemption from income
tax, included among which are the Government Service Insurance System (GSIS), the Social
Security System (SSS), the Philippine Health Insurance Corporation (PHIC), and the
Philippine Charity Sweepstakes Office (PCSO),

The exclusion of PAGCOR from the class of income tax-exempt GOCCs violates
certain basic legal precepts. It must be emphasized that the rationale for the creation of this
class of income tax exempt GOCCs is their direct involvement in the various socio-civic and
poverty alleviation programs of the Govemment They provide direct funding to these
programs. PAGCOR on its own provides funds for the implementation of the following laws
a) Early Childhood Care and Development Program; b) Sports Benefit and Incentives Act; c)
Gasoline Station and Training and Loan Fund; d) National Museum Act of 1998: e)
Comprehensive Dangerous Drugs Act of 2002; f) Children's TV Act of 1997; g) Barangay
Micro Business Enterprises Development Fund; h) Philippine Seafarer's One Stop Processing
Center; i) The Philippine Sports Commission Act, and, j) An Act Creating a Board of Claims
under the Department of Justice for Victims of Unjust Imprisonment or Detention and
‘Victims of Violent Crimes.

In terms of revenue contribution to the government, PAGCOR pays a franchise tax of
five percent (5%) of its winnings to the Bureau of Internal Revenue. After deducting the 5%
franchise tax, from the remaining balance of ninety five percent (95%), PAGCOR remits to
the National Treasury the goverment share of fifty percent (50%) of its winnings as
mandated in its charter. The Office of the President also receives its share of PAGCOR


winnings under the President’s Social Fund while cities hosting PAGCOR branches are given
a fixed amount for their respective community development projects.

To subject PAGCOR to corporate tax creates an absurd situation where Government is
taxing itself — the Government taking money from one pocket and putting it in the other- and
there is really no additional revenue generated.

Moreover, PAGCOR’s exclusion from the class of GOCCs exempt from corporate
income tax is violative of the equal protection clause. It now behooves upon this august
chamber to restore to PAGCOR its previous status as exemp! from corporate income tax.

Itis therefore eamestly requested that this measure be urgently approved

AMADO S. BAGATSING
Representative
5" District, Manila



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

565

HOUSE BILL NO.

Introduced by Honorable Amado S. Bagatsing

AN ACT AMENDING SECTION 27 OF THE NATIONAL INTERNAL REVENUE
CODE OF 1997, AS AMENDED BY REPUBLIC ACT NO. 9337, EXPRESSLY
INCLUDING THE PHILIPPINE AMUSEMENT AND GAMING CORPORATION
(PAGCOR) AS ONE OF THE GOVERNMENT OWNED OR CONTROLLED.
CORPORATIONS EXEMPT FROM INCOME TAX

Be it enacted by the Senate and the House of Representatives of the Philippines in
Congress Assembled:

SECTION 1. Section 27 “C” of the National Internal Revenue Code of 1997 is
hereby amended to read as follows

“(©)” Government-owned or ~ Controlled Corporations Agencies or
Instrumentalities - The provisions of existing special or general laws to the contrary
notwithstanding, all corporations, agencies, or instrumentalities owned or controlled by the
Government, except the Government Service and insurance System (GSIS), the Social
Security System (SSS), the Philippine Health Insurance Corporation (PHIC), THE
PHILIPPINE AMUSEMENT AND GAMING CORPORATION (PAGCOR) and the
Philippine Charity Sweepstakes Office (PCSO), shall pay such rate of tax upon their taxable
income as are imposed by this Section upon corporations or associations engaged in a similar
business, industry, or activity

SEC. 2. Repealing Clause - All laws, decrees, orders, rules and regulations, other
issuances, or parts thereof inconsistent with the provisions of this Act are hereby repealed,
modified or amended accordingly

SEC. 3. Effectivity ~ This Act shall take effect fifteen (15) days after its publication in
at least two (2) newspapers of general circulation

Approved,