1. PAGCOR vs. BIR, GR No.

172087, 15 March 2011

FACTS:
With the passage of Republic Act No. (RA) 9337, the Philippine Amusement and
Gaming Corporation (PAGCOR) has been excluded from the list of government-owned
and controlled corporations (GOCCs) that are exempt from tax under Section27(c) of
the Tax Code; PAGCOR is now subject to corporate income tax.
ISSUE:
Is PAGCOR EXEMPTED FROM PAYMENT OF CIT?
The Supreme Court (SC) held that the omission of PAGCOR from the list of tax-exempt
GOCCs by RA 9337 does not violate the right to equal protection of the laws under
Section 1, Article III of the Constitution, because PAGCOR’s exemption from payment
of corporate income tax was not based on classification showing substantial
distinctions; rather, it was granted upon the corporation’s own request to be exempted
from corporate income tax. Legislative records likewise reveal that the legislative
intention is to require PAGCOR to pay corporate income tax. With regard to the issue
that the removal of PAGCOR from the exempted list violates the non-impairment clause
contained in Section 10, Article III of the Constitution which provides that no law
impairing the obligation of contracts shall be passed the SC explained that following its
previous ruling in the case of Manila Electric Company v. Province of Laguna 366 Phil.
428(1999), this does not apply. Franchises such as that granted to PAGCOR partake of
the nature of a grant and is thus beyond the purview of the non-impairment clause of
the Constitution. As regards the liability of PAGCOR to VAT, the SC finds Section
4.108-3 of Revenue Regulations No. (RR) 16-2005, which subjects PAGCOR and its
licensees and franchisees to VAT, null and void for being contrary to the National
Internal Revenue Code (NIRC), as amended by RA 9337. According to the SC, RA
9337 does not contain any provision that subjects PAGCOR to VAT. Instead, the SC finds support to the VAT
exemption of PAGCOR under Section 109(k) of the Tax Code, which provides that
transactions exempt under international agreements to which the Philippines is a
signatory or under special laws [except Presidential Decree No. (PD) 529] are exempt
from VAT. Considering that PAGCOR’s charter, i.e., PD1869 —which grants PAGCOR
exemption from taxes is a special law, it is exempt from payment of VAT.

2. Tolentino vs. Sec. of Finance, GR No. 115455, 25 Aug 1994

FACTS:
Petitioner is questioning the constitutionality of RA 7716, otherwise known as the Expanded
Value-Added Tax Law on various grounds.