PHILIPPINE AMUSEMENT AND GAMING CORPORATION

VS. BUREAU OF INTERNAL REVENUE

ISSUE:
Is Republic Act 9337 constitutional insofar as it excluded
PAGCOR from the enumeration of GOCCs exempt from the
payment of corporate income tax?
HELD:
YES. The original exemption of PAGCOR from corporate
income tax was not made pursuant to a valid classification based
on substantial distinctions so that the law may operate only on
some and not on all. Instead, the same was merely granted due
to the acquiescence of the House Committee on Ways and
Means to the request of PAGCOR.

The argument that the withdrawal of the exemption also violates

the non-impairment clause will not hold since any franchise is
subject to amendment, alteration or repeal by Congress.
However, the Court made it clear that PAGCOR remains exempt
from payment of indirect taxes and as such its purchases remain
not subject to VAT, reiterating the rule laid down in the Acesite
case.