G.R. No. 254142 - Spouses Ting vs. Commission on Audit

Case Summary (G.R. No. 254142)

Key Dates

April 17, 2006: PAGCOR files Petition for Review on Certiorari (seeking nullification of RA 9337’s amendment to NIRC Section 27(c))
March 15, 2011: Supreme Court Decision upholds RA 9337’s constitutionality but voids BIR Revenue Regulations No. 16-2005 (10% VAT on PAGCOR)
May 31, 2011: Denial of motions for reconsideration
April 17, 2013: BIR issues Revenue Memorandum Circular No. 33-2013 (RMC 33-2013) treating PAGCOR’s gaming and related-services income as subject to corporate income tax and 5% franchise tax
September 13, 2013: PAGCOR files Motion for Clarification (later treated as new certiorari petition under Rule 65)
November 25, 2014: En Banc resolution re-dockets the Motion for Clarification as a new petition
December 10, 2014: En Banc Decision rendered

Applicable Law

1987 Philippine Constitution
Presidential Decree No. 1869 (PAGCOR Charter), as amended by RA 9487
National Internal Revenue Code of 1997 (RA 8424), as amended by RA 9337
Rule 65, Rules of Court (certiorari)

Procedural History

The Supreme Court treated PAGCOR’s Motion for Clarification as a new petition for certiorari under Rule 65, assigned a new docket number, required payment of appropriate fees, and, upon submission of pleadings, proceeded to resolve the dispute.

Factual Background

PAGCOR originally challenged the withdrawal of its corporate income tax exemption under RA 9337. While the Court upheld that amendment, it prohibited a 10% VAT imposition. Thereafter, the BIR issued RMC 33-2013 interpreting the Decision to require both corporate income tax and the 5% franchise tax on all PAGCOR income streams. PAGCOR sought clarification, contending that gaming-operation income remains subject only to the 5% franchise tax and that only related-services income is subject to corporate income tax.

Issue

Does RA 9337 or RMC 33-2013 repeal or amend PAGCOR’s statutory privilege of paying a 5% franchise tax on gaming-operation income, and can the same income reasonably be taxed under both corporate income tax and franchise tax regimes?

Tax Exemption Under PD 1869 and RA 9337

PD 1869 grants PAGCOR a 5% franchise tax in lieu of all other national or local taxes on its gaming operations. RA 9337 withdrew PAGCOR’s income tax exemption under NIRC Section 27(c) only to the extent it reinstated corporate income tax on income streams not already covered by PD 1869—namely, related services—not on gaming operations which were never subject to income tax.

Harmonization Principle

Statutory construction mandates avoiding conflicts. PD 1869’s special tax regime for gaming operations and RA 9337’s general reinstatement of income tax on non-gaming activities are complementary: gaming income remains under the franchise tax, while related services income bears corporate income tax.

Special versus General Law Doctrine

PD 1869, as a special law governing PAGCOR’s tax treatment, prevails over the general provisions of RA 9337. No express amendment or repea

Case Syllabus (G.R. No. 254142)

Facts

In April 2006, PAGCOR filed a Petition for Review on Certiorari and Prohibition with prayer for a temporary restraining order and/or preliminary injunction, challenging Section 1 of Republic Act No. 9337 insofar as it amended Section 27(C) of the National Internal Revenue Code (NIRC) to exclude PAGCOR from the list of tax-exempt GOCCs.
PAGCOR sought declaration of nullity of the amendment, arguing it withdrew a tax privilege previously enjoyed by PAGCOR under its Charter (P.D. 1869, as amended).
On March 15, 2011, the Supreme Court granted the petition in part: it upheld the validity of R.A. 9337 but struck down BIR Revenue Regulations No. 16-2005 insofar as it subjected PAGCOR to 10% VAT.
Motions for reconsideration by both parties were denied in a May 31, 2011 Resolution.
On April 17, 2013, the BIR issued Revenue Memorandum Circular (RMC) No. 33-2013 to implement the March 15, 2011 Decision and the May 31, 2011 Resolution, declaring PAGCOR’s gaming and related-services incomes subject to both corporate income tax and 5% franchise tax.
PAGCOR’s May 20, 2011 request for reconsideration of RMC No. 33-2013 was denied by the BIR Commissioner.
On September 13, 2013, PAGCOR filed a Motion for Clarification of the March 15, 2011 Decision and prayed for a TRO/preliminary injunction against RMC No. 33-2013.
On November 25, 2014, the Supreme Court En Banc treated that motion as a new petition for certiorari under Rule 65, assigned a new docket, and required payment of docket fees.

Procedural History

G.R. No. 172087: Petition for Review on Certiorari and Prohibition; Decision March 15, 2011; Resolution May 31, 2011 (denial of reconsideration).
RMC No. 33-2013 issued April 17, 2013.
PAGCOR’s Motion for Clarification filed September 13, 2013.
En Banc Resolution November 25, 2014: treat as new Rule 65 petition; re-docket; require fees.
Case submitted for resolution after pleadings and payment of fees.

Issues

Whether PAGCOR’s privilege of paying only 5% fr