Professional Documents
Culture Documents
JOHN DOE and JANE DOE, who are persons acting for, in
behalf, or under the authority of Respondent. Public and
private respondents.
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* EN BANC.
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PERALTA, J.:
For resolution of this Court is the Petition for Certiorari
and Prohibition1 with prayer for the issuance of a
Temporary Restraining Order and/or Preliminary
Injunction, dated April 17, 2006, of petitioner Philippine
Amusement and Gaming Corporation (PAGCOR), seeking
the declaration of nullity of Section 1 of Republic Act (R.A.)
No. 9337 insofar as it amends Section 27 (c) of the National
Internal Revenue Code of 1997, by excluding petitioner
from exemption from corporate income tax for being
repugnant to Sections 1 and 10 of Article III of the
Constitution. Petitioner further seeks to prohibit the
implementation of Bureau of Internal Revenue (BIR)
Revenue Regulations No. 16-2005 for being contrary to law.
The undisputed facts follow.
PAGCOR was created pursuant to Presidential Decree
(P.D.) No. 1067-A2 on January 1, 1977. Simultaneous to its
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xxx
(2) Income and other taxes.—
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7 Emphasis supplied.
8 An Act Amending the National Internal Revenue Code, as Amended, and for
Other Purposes.
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9 Emphasis supplied.
10 An Act Amending Sections 27, 28, 34, 106, 107, 108, 109, 110, 111,
112, 113, 114, 116, 117, 119, 121, 148, 151, 236, 237, and 288 of the
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12 See Abakada Guro Party List v. Ermita, 506 Phil. 1; 469 SCRA 1
(2005).
13 Revenue Regulations No. 16-2005 states: “Pursuant to the
provisions of Secs. 244 and 245 of the National Internal Revenue Code of
1997, as last amended by Republic Act No. 9337 (Tax Code), in relation to
Sec. 23 of the said Republic Act, these Regulations are hereby
promulgated to implement Title IV of the Tax Code, as well as other
provisions pertaining to Value-Added Tax (VAT). These Regulations
supersedes Revenue Regulations No. 14-2005 dated June 22, 2005.”
346
I
WHETHER OR NOT RA 9337, SECTION 1 (C) IS NULL AND
VOID AB INITIO FOR BEING REPUGNANT TO THE EQUAL
PROTECTION [CLAUSE] EMBODIED IN SECTION 1,
ARTICLE III OF THE 1987 CONSTITUTION.
II
WHETHER OR NOT RA 9337, SECTION 1 (C) IS NULL AND
VOID AB INITIO FOR BEING REPUGNANT TO THE NON-
IMPAIRMENT [CLAUSE] EMBODIED IN SECTION 10,
ARTICLE III OF THE 1987 CONSTITUTION.
III
WHETHER OR NOT RR 16-2005, SECTION 4.108-3,
PARAGRAPH (H) IS NULL AND VOID AB INITIO FOR BEING
BEYOND THE SCOPE OF THE BASIC LAW, RA 8424,
SECTION 108, INSOFAR AS THE SAID REGULATION
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I
SECTION 1 OF R.A. NO. 9337 AND SECTION 13 (2) OF P.D.
1869 ARE BOTH VALID AND CONSTITUTIONAL
PROVISIONS OF LAWS THAT SHOULD BE HARMONIOUSLY
CONSTRUED TOGETHER SO AS TO GIVE EFFECT TO ALL
OF THEIR PROVISIONS WHENEVER POSSIBLE.
II
SECTION 1 OF R.A. NO. 9337 IS NOT VIOLATIVE OF
SECTION 1 AND SECTION 10, ARTICLE III OF THE 1987
CONSTITUTION.
III
BIR REVENUE REGULATIONS ARE PRESUMED VALID AND
CONSTITUTIONAL UNTIL STRICKEN DOWN BY LAWFUL
AUTHORITIES.
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20 Emphasis supplied.
351
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21 Emphasis supplied.
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22 Emphasis supplied.
23 National Power Corporation v. Province of Isabela, G.R. No. 165827,
June 16, 2006, 491 SCRA 169, 180.
24 Id.
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31 The Constitution, Art. XII, Sec. 11. No franchise, certificate, or any other
form of authorization for the operation of a public utility shall be granted except to
citizens of the Philippines or to corporations or associations organized under the
laws of the Philippines at least sixty per centum of whose capital is owned by such
citizens, nor shall such franchise, certificate or authorization be exclusive in
character or for a longer period than fifty years. Neither shall any such
franchise or right be granted except under the condition that it shall be
subject to amendment, alteration, or repeal by the Congress when the
common good so requires. The State shall encourage equity participation in
public utilities by the general public. The participation of foreign investors in the
governing body of any public utility enterprise shall be limited to their
proportionate share in its capital, and all the executive and managing officers of
such corporation or association must be citizens of the Philippines. (Emphasis
supplied.)
32 Emphasis supplied.
33 366 Phil. 428; 306 SCRA 750 (1999).
34 Id., at p. 438; p. 761. (Emphasis supplied.)
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“[R.A. No. 9337], SEC. 6. Section 108 of the same Code (R.A.
No. 8424), as amended, is hereby further amended to read as
follows:
SEC. 108. Value-Added Tax on Sale of Services and Use
or Lease of Properties.—
(A) Rate and Base of Tax.—There shall be levied,
assessed and collected, a value-added tax equivalent to ten
percent (10%) of gross receipts derived from the sale or
exchange of services, including the use or lease of
properties: x x x
xxxx
(B) Transactions Subject to Zero Percent (0%)
Rate.—The following services performed in the Philippines
by
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37 Emphasis supplied.
360
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38 Emphasis supplied.
39 G.R. No. 147295, February 16, 2007, 516 SCRA 93, 101, citing
Commissioner of Internal Revenue v. John Gotamco & Sons, Inc., 148
SCRA 36 (1987).
361
xxxx
PAGCOR is exempt from payment of indirect taxes
It is undisputed that P.D. 1869, the charter creating PAGCOR,
grants the latter an exemption from the payment of taxes. Section
13 of P.D. 1869 pertinently provides:
Sec. 13. Exemptions. —
xxxx
(2) Income and other taxes.—(a) Franchise Holder: No tax of
any kind or form, income or otherwise, as well as fees, charges or
levies of whatever nature, whether National or Local, shall be
assessed and collected under this Franchise from the Corporation;
nor shall any form of tax or charge attach in any way to the
earnings of the Corporation, except a Franchise Tax of five (5%)
percent of the gross revenue or earnings derived by the
Corporation from its operation under this Franchise. Such tax
shall be due and payable quarterly to the National Government
and shall be in lieu of all kinds of taxes, levies, fees or
assessments of any kind, nature or description, levied, established
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