It seems that the difficult, combative and antagonistic BIR may still lose in its court battle over a tax issue with the state-owned gaming firm Pagcor.
Word goes around business circles that the Supreme Court already has a decision on the case filed by a private casino operator questioning the BIR’s imposition of a 30-percent income tax on the earnings of Pagcor.
All these years, Pagcor claimed that its charter, Presidential Decree 1869, which was issued more than 30 years ago, exempted it from income tax payments. Moreover, based on the agreement between Pagcor and four private gaming operators in the Pagcor-sponsored Entertainment City, those operators were also deemed exempted from income tax payment.
In effect, both Pagcor and the private gaming companies would have to pay only the 5-percent franchise tax on gross earnings. But then in 2013—way before even just a single one of those private hotels and casinos could start operations—the BIR issued a “revenue memorandum circular,” or RMC 33-2013, imposing the 30-percent income tax on casinos.
That, in an offbeat kind of way, would really be on top of the 5-percent franchise tax on gross earnings.
The BIR at that time insisted that RA 9337, which was the Expanded Value-Added Tax Law, already removed the exemption of Pagcor from the payment of the corporate income tax.
In effect, due to the BIR memorandum, casino operators in the country would be shouldering tax payments (30-percent income tax on top of the 5-percent franchise tax) to the BIR equivalent to more than 50 percent of their incomes.
In short, well, nowhere in the world!
And so one of the private operators, the publicly listed Bloomberry Resorts and Hotel (BRHI), owner of the Solaire Resort and Casino at the Entertainment City, went straight to the Supreme Court to contest the BIR memorandum.
Based on our info, the Supreme Court is already inclined to uphold the exemption of Pagcor from income tax payments—with an important qualification.
It seems that the exemption covers only the earnings of Pagcor itself as a casino operator, meaning Pagcor’s earnings from the various in-house casinos it owns and operates.
Also, it seems that the Supreme Court is inclined to scrap Pagcor’s exemption from the payment of income tax on whatever revenues it earns from private gaming companies such as those four private casinos and hotels at the Entertainment City.
Those four companies are the Travellers International Hotel Group, Bloomberry Resorts and Hotels, MCE Leisure (Philippines) Corp. and Tiger Resorts Leisure and Entertainment.
Together, they projected to invest some $5 billion in their hotel and casino ventures at the Entertainment City, employ more than 80,000 people directly and open some 3,000 hotel-rooms.
Uh-oh, with the BIR seemingly able to catch them regarding the 30-percent income tax issue, will it mean that all those $5-billion bets are off?
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A well-known executive of a P20-billion mining company is facing a petition for deportation at the Bureau of Immigration.
Joseph C. Sy, who also sits in the board of the influential Philippine Chamber of Commerce and Industry (PCCI), is not a Filipino citizen, according to the complaint at the bureau that was filed by a certain Nestor Cas, who claimed to be a resident of Olongapo City.
Cas alleged that Sy faked his Filipino citizenship to legalize his investments in the mining industry, in which the law limits foreign controlling ownership to at most 40 percent.
Now, Sy is the president of Global Ferronickel Holdings (Global Ferronickel) and of Platinum Group Metals Corp. (PGMC).
PGMC, believed to be majority controlled by Sy, also took over control of Global Ferronickel, formerly known as Southeast Asia Cement.
Global Ferronickel, in turn, acquired 100 percent of Ferrochrome Resources and Southeast Palawan Nickel Ventures. Reports said that the company also had plans to raise $600 million (or about P27 billion) by selling shares to the public this year.
Ferrochrome Resources also has two existing operating agreements in Zambales for chromite mining.
Southeast Palawan Nickel Ventures, on the other hand, has an operating agreement covering an area with nickel ore deposits.
In the complaint, Cas alleged that Sy falsified his citizenship documents to qualify for ownership of controlling interests in local mining companies. Sy allegedly has controlling interests in PGMC and Global Ferronickel, aside form being the OIC for mining of the business organization PCCI.
In the complaint, Cas alleged that Sy filed an affidavit for late registration of his birth on Dec. 28, 2007. (The lawyer of Cas is Renny Domingo of the ADBLACCC law office.)
Now, Cas noted that Sy actually executed the affidavit on his birth some 41 years after the birth date that Sy claimed in his affidavit, which was Oct. 10, 1966.
The complaint noted: “The only time in recent memory of the country that a group of people did not possess birth certificates for a certain period of time was during the 1970s with the discovery of the Tasaday Tribe.”
In the affidavit, Sy claimed that he was the son of Filipino couple Emilio Toledo Sy and Aida Samson Cue, who married on June 18, 1964, in Balanga, Bataan.
Cas nevertheless produced a certification from the office of the Civil Registrar of Balanga saying that its archived records of marriages in 1964 were fully intact, but they showed “no record of marriage” of Aida Samson Cue and Emilio Toledo Sy.
In his affidavit, Sy also specified an address as his place of birth: 31 Visayas Ave., Upper Sta. Lucia, Novaliches, Quezon City. The complainant said that the address has been a vacant lot for more than a hundred years now and that residents in the neighborhood never knew Sy or his alleged parents.
Thus, the complainant also questioned the ability of Sy to obtain travel documents without a birth certificate all these years since he filed for the “late registration” of his birth only about eight years ago. (Birth certificate is a requirement in getting a passport.)
The complaint alleged that Sy had to file for late registration of his birth to obtain Philippine citizenship—“in the most speedy and expeditious way”—to be allowed to own controlling shares in mining companies.