Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 2310

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.

It is 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 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 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; b) Sports Benefits 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 Vietims 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,
Afier deducting the 5% franchise tax, from the remaining balance of ninety five
percent (95%), PAGCOR remits tothe National Treasury the government 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 (o restore to PAGCOR its previous status as exempt from
corporate income tax.

It is therefore earnestly requested that this measure be urgently approved.

Ge.

AMADO S. BAGATSING


of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. __2310

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 Intemmal 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 (GSI),
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.

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

Approved,