Case Digest (G.R. No. 252965) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
The consolidated petitions, G.R. Nos. 252965 and 254102, were filed by Saint Wealth Ltd., represented by David Buenaventura & Ang Law Offices, and fourteen other offshore-based Philippine Offshore Gaming Operators (POGOs), against the Bureau of Internal Revenue (Commissioner Caesar R. Dulay) and the Secretary of Finance (Carlos G. Dominguez III). They challenged the constitutionality of Sections 11(f) and 11(g) of Republic Act No. 11494 (the Bayanihan 2 Law), Revenue Regulation No. 30-2020, and Revenue Memorandum Circulars No. 64-2020, 102-2017, and 78-2018, which impose a five percent (5%) franchise tax on gross bets or turnovers of offshore gaming licensees and normal income, value-added, and other taxes on non-gaming revenues. Petitioners sought certiorari and prohibition, plus a temporary restraining order and preliminary injunction to halt enforcement. They invoked violations of due process, equal protection, territoriality and uniformity principles of taxation, and the ban Case Digest (G.R. No. 252965) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Antecedents
- 1983 PAGCOR Charter (P.D. No. 1869) consolidated PAGCOR’s franchise, granting it the exclusive right to operate and license casinos, gaming clubs, pools and related places in the Philippines.
- PAGCOR franchise holders pay a 5% franchise tax on gross gaming revenues, in lieu of all other national and local taxes (PAGCOR Charter, Sec. 13).
- 2016 POGO Rules and Regulations issued by PAGCOR to regulate Philippine Offshore Gaming Operators (POGOs), defining offshore gaming and requiring offshore licensees to engage PAGCOR-accredited local agents and service providers for their online gaming operations.
- 2017–2018 BIR issuances (RMC 102-2017; RMC 78-2018):
- Recognized online business as “doing business in the Philippines.”
- Imposed a 5% franchise tax on POGO gross gaming revenues, and normal income tax, VAT and other taxes on non-gaming operations.
- COVID-19–Era Tax Issuances and Petitions
- RMC 46-2020 (May 7, 2020) and RMC 64-2020 (June 24, 2020): conditions and documentary requirements for POGOs’ BIR clearance to resume operations under relaxed quarantine rules.
- Sept. 11, 2020 Bayanihan 2 Law (R.A. 11494) Sec. 11(f),(g):
- Source of COVID-19 recovery funds: 5% franchise tax on POGO gross bets/turnovers.
- Income tax, VAT and other taxes on POGO non-gaming income.
- Collections under (f),(g) to continue beyond the law’s December 19, 2020 expiration, accruing to the General Fund.
- RR 30-2020 (Sept. 30, 2020): implementing Sec. 11(f),(g) of Bayanihan 2.
- Consolidated Petitions filed by offshore-based POGOs:
- Saint Wealth Ltd. (G.R. No. 252965) challenged RMC 64-2020 as unconstitutional (due process, equal protection, situs, uniformity of taxation).
- Marco Polo group (G.R. No. 254102) challenged Sec. 11(f),(g) of Bayanihan 2, RR 30-2020, RMC 102-2017, and RMC 78-2018 (riders, due process, equal protection, territorial principle, situs, uniformity).
- Jan. 5, 2021 TRO enjoined enforcement of the assailed provisions against petitioners.
- Respondents’ Consolidated Comment raised procedural defenses and defended the issuances (presumption of validity; franchise tax as an excise; PAGCOR Charter basis; situs not limiting excise tax; valid classifications; income sourced in PH via servers/service providers).
- Sept. 22, 2021 enactment of R.A. 11590: codified 5% gaming tax on POGO gross gaming revenues (in lieu of other taxes) and 25% income tax on non-gaming income from Philippine sources.
Issues:
- Whether offshore-based POGOs are liable for the 5% franchise tax on gaming operations under Sec. 11(f) of Bayanihan 2 and RR 30-2020.
- Whether offshore-based POGOs are liable for income tax, VAT and other taxes on non-gaming income under Sec. 11(g) of Bayanihan 2 and RR 30-2020.
- Whether RMC 102-2017 and RMC 78-2018 imposing POGO taxes are valid (statutory basis, quasi-legislative power, territoriality, situs of taxation, uniformity).
- Whether Sec. 11(f),(g) of Bayanihan 2 violate the “one subject, one title” rule (riders), due process, equal protection, situs and uniformity principles.
- Whether petitioners demonstrated entitlement to injunctive relief (TRO/preliminary injunction).
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)