G.R. No. 177387 - COMMISSIONER OF INTERNAL REVENUE, VS. SECRETARY OF JUSTICE, AND PHILIPPINE AMUSEMENT AND GAMING CORPORATION.D E C I S I O N - Supreme Court E-Library

Ruling

WHEREFORE , premises considered, PAGCOR is declared exempt from payment [of] all taxes, save for the franchise tax as provided for under Section 13 of PD 1869, as amended, the presidential issuance not having been expressly repealed by RA 7716. [3] while the March 12, 2007 resolution denied the CIR's motion for reconsideration of the December 22, 2006 resolution. Antecedents Respondent Philippine Amusement and Gaming Corporation (PAGCOR) has operated under a legislative franchise granted by Presidential Decree No. 1869 (P.D. No. 1869), its Charter, [4] whose Section 13(2) provides that: (2) Income and other Taxes - (a) Franchise Holder: No tax of any kind or form, income or otherwise, as well as fees, charges or levies of whatever nature, whether National or Local, shall be assessed and collected under this Franchise from the Corporation; nor shall any form of tax or charge attach in any way to the earnings of the Corporation, except a Franchise Tax of five percent (5%) of the gross revenue or earnings derived by the Corporation from its operation under this Franchise. Such tax shall be due and payable quarterly to the National Government and shall be in lieu of all kinds of taxes, levies, fees or assessments of any kind, nature or description, levied, established or collected by any municipal, provincial or national government authority. (bold emphasis supplied) Notwithstanding the aforesaid 5% franchise tax imposed, the Bureau of Internal Revenue (BIR) issued several assessments against PAGCOR for alleged deficiency value-added tax (VAT), final withholding tax on fringe benefits, and expanded withholding tax, as follows: ASSESSMENT DATE ISSUED PERIOD COVERED TOTAL AMOUNT DUE (inclusive of interest, surcharge and compromise penalty) No. 33-1996/1997/1998 (for deficiency VAT) [5] November 14, 2002 1996/1997/1998 P4,078,476,977.26 No. 33-99 (for deficiency VAT, final withholding tax on fringe benefits, and expanded withholding tax ) [6] November 25, 2002 1999 P6,678,346,966.49 No. 33-2000 (for deficiency VAT and final withholding tax on fringe benefits) [7] March 18, 2003 2000 P2,953,321,685.92 TOTAL P13,710,145,629.67 On December 18, 2002, PAGCOR filed a letter-protest with the BIR against Assessment Notice No. 33-1996/199711998 and Assessment Notice No. 33-99. [8] On March 31, 2003, PAGCOR filed a letter-protest against Assessment Notice No. 33-2000, in which it reiterated the assetions made in its December 18, 2002 letter-protest. [9] In reply to both letters-protest, the BIR requested PAGCOR to submit additional documents to enable the conduct of the reinvestigation. [10] The CIR did not act on PAGCOR's letter-protest against Assessment Notice No. 33-1996/1997/1998 and Assessment Notice No. 33-99 within the 180-day period from the latter's submission of additional documents. [11] Hence, PAGCOR filed an appeal with the Secretary of Justice on January 5, 2004 relative to Assessment Notice No. 33-1996/1997/1998 and Assessment Notice No. 33-99. [1