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    Pagcor vs. Bir - 2014

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    Anny Yanong
    The Supreme Court ruled that: 1) PAGCOR's gaming income is subject to a 5% franchise tax but exempt from income tax under its charter. 2) PAGCOR's income from operating related services is subject to income tax but not franchise tax. 3) BIR Revenue Memorandum Circular No. 33-2013 improperly imposed both corporate income tax on PAGCOR's gaming income and franchise tax on income from other services. The SC ordered BIR to cease implementation of the parts of the Revenue Memorandum that imposed the invalid taxes.

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    © All Rights Reserved
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    Pagcor vs. Bir - 2014

    Uploaded by

    Anny Yanong
    90 views2 pages
    The Supreme Court ruled that: 1) PAGCOR's gaming income is subject to a 5% franchise tax but exempt from income tax under its charter. 2) PAGCOR's income from operating related services is subject to income tax but not franchise tax. 3) BIR Revenue Memorandum Circular No. 33-2013 improperly imposed both corporate income tax on PAGCOR's gaming income and franchise tax on income from other services. The SC ordered BIR to cease implementation of the parts of the Revenue Memorandum that imposed the invalid taxes.

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    Tax 1 Digest

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    Pagcor vs. Bir- 2014

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    The Supreme Court ruled that: 1) PAGCOR's gaming income is subject to a 5% franchise tax but exempt from income tax under its charter. 2) PAGCOR's income from operating related services is subject to income tax but not franchise tax. 3) BIR Revenue Memorandum Circular No. 33-2013 improperly imposed both corporate income tax on PAGCOR's gaming income and franchise tax on income from other services. The SC ordered BIR to cease implementation of the parts of the Revenue Memorandum that imposed the invalid taxes.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    90 views2 pages

    Pagcor vs. Bir - 2014

    Uploaded by

    Anny Yanong
    The Supreme Court ruled that: 1) PAGCOR's gaming income is subject to a 5% franchise tax but exempt from income tax under its charter. 2) PAGCOR's income from operating related services is subject to income tax but not franchise tax. 3) BIR Revenue Memorandum Circular No. 33-2013 improperly imposed both corporate income tax on PAGCOR's gaming income and franchise tax on income from other services. The SC ordered BIR to cease implementation of the parts of the Revenue Memorandum that imposed the invalid taxes.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    PHILIPPINE AMUSEMENT AND GAMING CORPORATION (PAGCOR)

    VS. THE BUREAU OF INTERNAL REVENUE


    G.R. NO. 215427
    DECEMBER 10, 2014

    FACTS:
     On April 17, 2006, petitioner filed a Petition for Review on Certiorari and Prohibition
    seeking the declaration of nullity of Section 1 of RA 9337 insofar as it amends Section
    27(c) of RA 8424, otherwise known as the NIRC by excluding petitioner from the
    enumeration of government-owned or controlled corporations (GOCCs) exempted from
    liability for corporate income tax.
     On March 15, 2011, SC partly granted the petition insofar as it held that the BIR Revenue
    Regulation No. 16-2005 which subjects PAGCOR to 10% VAT is null and void for being
    contrary to the NIRC. It also held that Section 1 of RA 9337 is valid and constitutional.
     BIR issued RMC No. 33-2013 on April 17, 2013 pursuant to the decision which clarifies
    the “Income Tax and Franchise Tax Due from PAGCOR, its Contractees and Licensees.”
    It now subjects the income from PAGCOR’s operations and licensing of gambling casinos,
    gaming clubs and other similar recreation or amusement places, gaming pools, and other
    related operations, to corporate income tax under the NIRC.
     PAGCOR filed a Motion for Clarification in the case entitled PAGCOR vs The Bureau of
    Internal Revenue, et al., which was promulgated on March 15, 2011 which also prays for
    the issuance of a TRO and/or writ of Preliminary Injunction against BIR in the
    implementation of BIR Revenue Memorandum Circular No. 33-2013 dated April 17, 2013.
    PAGCOR alleges that said RMC is an erroneous interpretation and application of the
    aforesaid decision.

    ISSUE:
    1. Whether PAGCOR’s gaming income is subject to both 5% franchise tax and income tax?
    2. Whether PAGCOR’s income from operation of related services is subject to both income
    tax and 5% franchise tax.

    HELD:
    1. Gaming Income: Franchise Tax – YES; Income Tax - NO

    Under PD 1869, as amended, petitioner is subject to income tax only with respect to its operations
    of related services. Accordingly, the income tax exemption ordained under Section 27(c) of RA
    8424 clearly pertains only to petitioner’s income from operation of related services. Such income
    tax exemption could not have been applicable to petitioner’s income from gaming operations as
    it is already exempt therefrom under PD 1869.

    There was no need for Congress to grant tax exemption to petitioner with respect to its income
    from gaming operating as the same is already exempted from all taxes of any kind or form, income
    or otherwise, whether national or local, under its Charter, save only for the five percent (5%)
    franchise tax. The exemption attached to the income from gaming operations exists independently
    would be downright ridiculous, if not deleterious, since petitioner would be in a worse position if
    the exemption was granted (then withdrawn) then when it was not granted at all in the first place.

    2. Income from Operation of related services: Income tax - YES ; Franchise tax - NO
    Petitioner’s Charter is not deemed repealed or amended by RA 9337; petitioner’s income derived
    from gaming operation is subject only to the five percent (5%) franchise tax, in accordance with
    PD 1869, as amended. With respect to petitioner’s income from operation of other related
    services, the same is subject to income tax only. The five percent (5%) franchise tax finds no
    application with respect to petitioner’s income from other related services, in view of the express
    provision of Section 14(5) of PD 1869, as amended.

    Thus, it would be the height of injustice to impose franchise tax upon petitioner for its income from
    other related services without basis therefor.

    SC granted the petition and ordered the respondent to cease and desist the implementation of
    RMC No. 33-2013 insofar as it imposes corporate income tax on petitioner’s income derived from
    its gaming operations; and franchise tax on petitioner’s income from other related services.

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