Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon , Metro Manila

Sixteenth Congress
First Regular Sessios

HOUSE BILL NO.

Introduced by : Cong. George P. Amaiz, Cong, Rene L. Relampagos,
Cong, Pryde Henry A. Teves

EXPLANATORY NOTE

This measure seeks fo amend the National Intemal 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 (GOCC's) except from income tax, which exemption was
previously enjoyed under Republic Act No. 8424.

Itis worth noting that prior 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
GOCC's violates certain basic legal precepts. It must be emphasized
that the rationale for the creation of this class of income tax exempt
GOCC's is their direct Involvement in the various socio-civic and
poverty alleviation programs of the Government. 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; ) 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 ifs 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 GOCC's
exempt from corporate income tax is violative of the equal protection
clause. If now behooves upon this august chamber to restore to
PAGCOR its previous status as exempt from corporate income tax,

It is thereforé earhestly requested that this measure be urgently
approved.

RGE P. ARNAIZ PRYDE HENRY A. TEVES
fepresentative Representative
2n4 District, Oriental Negros 314 Distyét, Oriental Negros

¢
RENE relamracos

Reppresentative
1s District, Bohol


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon C Metro Manila

Sixteenth Congress
First Regular Session

HOUSE BILL NO. _ 2286

Introduced by: Cong. George P. Amaiz, Cong. Pryde
Henrgy A. Teves, Cong. Rene L. Relampagos

AN ACT
AMENDING SECTION 27 OF THE NATIONAL INTERNAL REVENUE CODE OF
1997, AS AMENDED BY THE REPUBLIC ACT NO. 9337, EXPRESSLY
INCLUDING THE PHILIPPINE AMUSEMENT AND GAMING CORPORATION
(PAGCOR) AS ONE OF THE GOVERNMENT OWNED AND 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 of
1997 is hereby amended to read as follows:

“(C)"Govemment-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 Charity Sweepstakes Office (PCSO)
and the Philippine Amusement and Gaming Corporation (PAGCOR),
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.

SECTION 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.

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

Approved,