A Philippine Supreme Court has upheld its decision declaring that Bloomberry Resorts and Hotels, Inc.’s (Bloomberry) is exempted from paying corporate income tax as a franchisee of the Philippine Amusement and Gaming Corporation (Pagcor).
The Manila Times reported that the high tribunal has enjoined the country’s Bureau of Internal Revenue from implementing a memorandum circular that imposed corporate income taxes on Pagcor’s and its franchisees’ earnings.
Bloomberry operates Solaire Resort & Casino.
It pointed out that under Presidential Decree (PD) No. 1869 or the Pagcor Charter, the state regulator should only pay the five percent franchise tax on its gross revenues “in lieu of all taxes of any kind or form, as well as fees, charges or levies of whatever nature, which necessarily include corporate income tax.”
“There was no need for Congress to grant tax exemption to [Pagcor] with respect to its income from gaming operations as the same is already exempted from all taxes of any kind or form, income or otherwise, whether national or local, under its Charter, save only for the five percent franchise tax,” it added.
Even Bloomberry’s parent company, Sureste Properties, Inc., is exempted, according to the SC, since it is extended to Pagcor’s licensees.
“Bloomberry and its parent company, Sureste Properties, Inc., own and operate Solaire Resort & Casirto. Thus, being one of its licensees, petitioner only pays Pagcor license fees, in lieu of all taxes, as contained in its provisional license and consistent with the PAGCOR Charter or Presidential Decree (PD) No. 1869, which provides the exemption from taxes of persons or entities contracting with PAGCOR in casino operations,” the SC said.
The case stemmed from BIR’s issuance of revenue memorandum circular (RMC) No. 33-2013 which declared that Pagcor, in addition to the five percent franchise tax imposed on its gross revenue under Section 13(2) of PD No. 1869, is likewise subject to corporate income tax under the National Internal Revenue Code (NIRC).
RMC No. 33-2013 was issued pursuant to Republic Act (RA) 9337 which amended Section 27(C) of the NIRC, thus, removing PAGCOR from the enumeration of government-owned and controlled corporations exempt from paying corporate income tax.
In June 2014, Bloomberry had questioned the validity of the BIR’s RMC 33-2013 which declared that PAGCOR’s income from operations and licensing of gambling firms is now subject to corporate income tax under the National Internal Revenue Code (NIRC).
Bloomberry pointed out in its petition that the tax bureau, in issuing the circular, overstepped its authority by ruling contrary to a law’s intent.
“Indeed, administrative issuances must not override, supplant or modify the law, but must remain consistent with the law they intend to carry out. Only Congress can repeal or amend the law,” BRHI said.
