PHILIPPINE AMUSEMENT AND GAMING CORPORATION (PAGCOR), V. THE COMMISSIONER OF INTERNAL REVENUE AND THE HEAD REVENUE EXECUTIVE ASSISTANT, LARGE TAXPAYER SERVICE, IN THEIR OFFICIAL CAPACITIES AS OFFICERS OF THE BUREAU OF INTERNAL REVENUE.

Ruling

WHEREFORE, the instant Petition for Review is hereby PARTIALLY GRANTED . Accordingly, the assessments representing deficiency VAT, as well as the surcharges, interests, and compromise penalties imposed thereon, in the aggregate amount of P4,264,397,294.06 for taxable years 2005 and 2006, are hereby CANCELLED and SET ASIDE . However, the assessments for deficiency income tax and Fringe Benefit Tax (FBT) for taxable years 2005 and 2006 are hereby AFFIRMED with MODIFICATIONS . The compromise penalties are cancelled in the absence of mutual agreement between the parties. Accordingly, [PAGCOR] is hereby ORDERED to PAY [the CIR] the following basic deficiency income tax and FBT for taxable years 2005 and 2006, inclusive of the 25% surcharge imposed under Section 248(A)(3) of the NIRC of 1997, as amended: CY 2005 CY 2006 TOTAL INCOME TAX Basic P 98,856,851.52 P 889,270,123.21 P 988,126,974.73 Surcharge 24,714,212.88 222,317,530.80 247,031,743.68 Subtotal P 123,571,064.40 P 1,111,587,654.01 P 1,235,158,718.41 FBT Basic P 32,297,128.28 P 6,017,119.97 P 38,314,248.25 Surcharge 8,074,282.07 1,504,279.99 9,578,562.06 Subtotal P 40,371,410.35 P 7,521,399.96 P 47,892,810.31 TOTAL DEFICIENCY TAX P 163,942,474.75 P 1,119,109,053.97 P 1,283,051,528.72 In addition, [PAGCOR] shall pay deficiency interest at the rate of twenty percent (20%) per annum on the following basic deficiency income taxes and FBT computed from the dates indicated herein until full payment thereof pursuant to Section 249(B) of the NIRC of 1997, as amended: CY 2005 CY 2006 Income Tax P 98,856,851.52 P 889,270,123.21 Computed from April 15, 2006 April 15, 2007 FBT P 32,297,128.28 P 6,017,119.97 Computed from January 25, 2006 January 25, 2007 [PAGCOR] is also liable to pay delinquency interest at the rate of twenty percent (20%) per annum on the accrued deficiency interest which was due for payment on December 31, 2008 and on the following total deficiency taxes, computed from December 31, 2008 until full payment thereof pursuant to Section 249(C) of the NIRC of 1997, as amended: CY 2005 CY 2006 TOTAL INCOME TAX P 123,571,064.40 P 1,111,587,654.01 P 1,235,158,718.41 FBT 40,371,410.35 7,521,399.96 47,892,810.31 TOTAL DEFICIENCY TAX P 163,942,474.75 P 1,119,109,053.97 P 1,283,051,528.72 SO ORDERED.