Title
Supreme Court
Philippine Amusement and Gaming Corp. vs. Bureau of Internal Revenue
Case
G.R. No. 208731
Decision Date
Jan 27, 2016
PAGCOR challenged BIR's FBT assessment, but SC denied due to premature filing, affirming procedural lapses made it final.

Case Summary (G.R. No. 208731)

Factual Background

PAGCOR was assessed with a deficiency fringe benefits tax (FBT) for taxable year 2004 in the amount of ₱48,589,507.65. This arose from its provision of a car plan program for qualifying officers, where PAGCOR shouldered 60% of the car plan costs and officers the remaining 40%, payable over five years. After investigations by the BIR revealed tax deficiencies on several fronts, BIR abandoned claims for VAT-related taxes but proceeded with FBT assessment. PAGCOR received a Final Assessment Notice on January 14, 2008, protested administratively within 30 days to the Regional Director (RD) on January 24, 2008, and subsequently elevated the protest to the Commissioner of Internal Revenue on August 14, 2008. No decision was issued by the BIR on these protests before PAGCOR filed a petition for review with the Court of Tax Appeals on March 11, 2009, alleging inaction.

Court of Tax Appeals First Division Ruling

The CTA First Division ruled in favor of the BIR, holding that while PAGCOR’s administrative protest was timely, its petition before the CTA was filed beyond the 30-day period allowed to appeal from the CIR’s or authorized representative’s decision or inaction. The court emphasized that failure to appeal within the prescribed period renders the tax assessment final, executory, and demandable, thus depriving the court of jurisdiction to hear the case. The CTA further ruled that PAGCOR was not exempt from the payment of FBT under its charter, reasoning that the car plan constituted a personal expense or taxable fringe benefit to employees, and that PAGCOR, as withholding agent, bore direct liability for remittance.

Court of Tax Appeals En Banc Ruling

The CTA En Banc affirmed the First Division’s decision, holding that the protest filed before the Regional Director was valid and that there was no need for PAGCOR to file a second protest with the Commissioner before appealing to the CTA. The En Banc reiterated the timeline under Section 228 of the NIRC: 180 days for the CIR or representative to act on the protest, and 30 days thereafter for the taxpayer to appeal to the CTA in case of denial or inaction. PAGCOR’s protest was deemed pending and undecided when it filed its CTA petition, rendering the petition prematurely filed, thus barring the court from acquiring jurisdiction over the case.

Issues Presented by PAGCOR

  1. Whether the CTA En Banc gravely erred in affirming dismissal of PAGCOR’s petition on grounds of untimeliness;
  2. Whether the CTA En Banc erred in failing to rule on the substantive tax exemption claimed by PAGCOR under its charter, including exemption from the fringe benefits tax;
    a. Whether the car plan provided to officers benefits PAGCOR and is necessary to its business;
    b. Whether, assuming liability, PAGCOR is only liable for the basic tax and not the surcharge and interest.

Respondents’ Position

Respondents argued that PAGCOR’s petition was correctly dismissed for being filed beyond the statutory periods provided by law. They maintained that the provisions of Section 228 and implementing regulations clearly set the procedural requirements for protesting assessments and appealing to the CTA.

Supreme Court’s Analysis on Timeliness

The Supreme Court confirmed that PAGCOR timely filed its initial protest within the 30-day period after receipt of the assessment, but incorrectly elevated the protest to the Commissioner without first waiting for a decision by the Regional Director or his authorized representative—a procedural step mandated by Section 228 and its implementing regulations. Because the Regional Director did not act on the protest, PAGCOR should have awaited the 180-day period to lapse, after which it would have had 30 days to file the petition before the CTA. PAGCOR’s premature filing of its petition on March 11, 2009, i.e., before the CIR’s decision or before the lapse of the 180 days plus the 30-day appeal period, deprived the CTA of jurisdiction, rendering the petition groundless not for untimeliness but for premature filing.

The Court emphasized that there is no provision allowing the taxpayer to appeal directly to the CIR from the RD’s inaction. PAGCOR’s separate protest to the CIR and the filing of the petition before the CTA before proper exhaustion of administrative remedies were inconsistent with the plain language of the law and regulations.

Legal Basis of Court’s Jurisdictional Ruling

Section 228 of the NIRC and Revenue Regulations No. 12-99 clearly establish that:

  • The taxpayer may protest the assessment within 30 days;
  • The Commissioner or authorized representative has 180 days to act on the protest;
  • If denial is made, appeal to the CTA may be taken within 30 days from receipt of such denial;
  • If no action is taken within 180 days, the taxpayer may appeal to the CTA within 30 days following the lapse of such period.

The Court ruled that filing a petition with the CTA before any

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