Philippine Amusement and Gaming Corporation (PAGCOR) v.

Bureau of Internal Revenue (BIR)

GR No. 172087 / March 15, 2011

Facts:
PAGCOR is a government-owned and controlled corporation (GOCC) created by Presidential Decree (PD)
1067-A2 in 1977. Later PD 1067-B3 was enacted exempting it from payment of any type of tax except
franchise tax of five percent from its gross revenue. PD 1869 consolidated all tax exemption PAGCOR
had on customs duties, taxes, and other imposts on importations as well as on income and other taxes.
In 1998, Republic Act 8424 was enacted exempting PAGCOR, together with the Government Service
Insurance System, Social Security System, Philhealth, and Philippine Charity Sweepstakes Office from
corporate income tax. Upon amendment of said law under RA 9337, PAGCOR was excluded from those
exempted of corporate income tax. Petitions for certiorari and prohibition as to the constitutionality of
said law were raised before the Supreme Court but the constitutionality was upheld. And so, BIR issued
Revenue Regulations (RR) No. 16-2005 specially identifying PAGCOR as one of the franchises subject to
the ten percent VAT on its gross receipts. Hence, the petition for certiorari assailing the constitutionality
of RA 9337 and RR No. 16-2005.

Issues:
Whether or not PAGCOR is still exempt from corporate income tax and VAT in the enactment of RA
9337.

Held:
No, PAGCOR is no more exempt from corporate income tax. When RA 9337 omitted PAGCOR from
among those exempted to pay corporate income tax, it became required to pay said tax. Under the
statutory construction principle of expression unius est exclusion alterius, the express mention of one
person, thing, act, or consequence excludes all others. The express mention of the GOCCs exempted on
paying the corporate income tax excludes PAGCOR from such privilege. Also, it cannot assail the
constitutionality of RA 9337 under equal protection of laws because the basis for its previous exemption
thereon was from its request to be exempted and not from a valid classification based on substantial
distinctions to be covered by its protection. It cannot also assail its constitutionality on the basis on non-
impairment provision of the Constitution because government franchise is subject to amendment,
alteration, or repeal by Congress. RA 9337 is that amendment. However, RR No. 16-2005 is
unconstitutional for being contrary to RA 9337. The said law does not provide that PAGCOR shall be
subjected to VAT. RA 9337 actually exempts certain transactions from VAT when provided under special
laws like PD 1869. It exempts from VAT entities and individuals who transacts with PAGCOR on its casino
operations. And since the tax exemption was extended to them, it follows that PAGCOR is exempted
from VAT also. Such manner of charging the VAT does not make PAGCOR liable to VAT. RR No. 16-2005
is null and void for being contrary to RA 9337.