I.

ASIA INTERNATIONAL AUCTIONEERS, INC v CIR

GR NO. 179115, September 26, 2012

FACTS:
AIA is duly organized corporation operating within the Subic Special Economic
Zone. It is engaged in the importation of used motor vehicles and heavy equipment
which it sells to the public through auction. The former received a Formal letter of
demand dated July 9, 2004 from CIR containing assessment for deficiency value
added tax and excise tax in the amounts of P102,535,520.00 and P 4,334,715.00,
respectively, or a total amount of P 106,870,235.00, inclusive of penalties and
interest, for auction sales conducted on February 5, 6, 7, and 8, 2004. Prompted AIA
to file a letter protest through registered mail on August 30, 2004 to CIR but latter
did not act on the protest. Thus, AIA filed petition for review before CTA. CTA first
division ruled in favour of CIR, granting its motion to dismiss the case. CTA en Banc
affirms the ruling of the CTA first division.
ISSUE:
i.

ii.

Government Argument:
CIR argued that AIA is disqualified under Section 8 (a) of RA 9480 from
availing itself of the Tax Amnesty Program because it is deemed a
withholding agent for deficiency taxes.
Taxpayer Argrument:
AIA contended that BIR issued a Certification of Qualification in favour to
them, stating that it has availed and is qualified for Tax amnesty for the
Taxable Year 2005 and prior years pursuant to RA 9480 otherwise known
as the Tax amnesty Act of 2007

Whether AIAs availment of the Tax Amnesty Program under RA 9480 the
outstanding deficiency taxes of it are deemed fully satisfied
HELD:
Yes. A tax amnesty is a general pardon or the intentional overlooking by the State
of its authority to impose penalties on persons otherwise guilty of violating a tax
law. It partakes of an absolute waiver by the government of its right to collect what
is due it and to give tax evaders who wish to relent a chance to start with a clean
slate.
The Tax Amnesty Program under RA 9480 may be availed of by any person except
those who are disqualified under Section 8 thereof, to wit:
Section 8. Exceptions. The tax amnesty provided in Section 5 hereof shall not
extend to the following persons or cases existing as of the effectivity of this Act:
(a) Withholding agents with respect to their withholding tax liabilities; x x x
xxxx

The argument that AIA is "deemed" a withholding agent for these deficiency taxes is
fallacious.
Indirect taxes, like VAT and excise tax, are different from withholding taxes. In
indirect taxes, the incidence of taxation falls on one person but the burden thereof
can be shifted or passed on to another person, such as when the tax is imposed
upon goods before reaching the consumer who ultimately pays for it. On the other
hand, in case of withholding taxes, the incidence and burden of taxation fall on the
same entity, the statutory taxpayer. The burden of taxation is not shifted to the
withholding agent who merely collects, by withholding, the tax due from income
payments to entities arising from certain transactions 27and remits the same to the
government.
More so, RA 9480 does not exclude from its coverage taxpayers operating within
special economic zones. As long as it is within the bounds of the law, a taxpayer has
the liberty to choose which tax amnesty program it wants to avail.
Personal End Note:
A tax amnesty, much like a tax exemption, is never favored or presumed in law. The
grant of a tax amnesty, similar to a tax exemption, must be construed strictly
against the taxpayer and liberally in favor of the taxing authority.

II.

ANGELES UNIVERSITY FOUNDATION v CITY OF ANGELES

GR NO. 189999, June 27, 2012

FACTS:
Petitioner Angeles University Foundation AUF is an educational institution and
was converted into a non-stock, non-profit education foundation under the
provisions of RA no. 6055. Petitioner applied for a building permit to the
Respondents City Treasurer for the construction of an 11-storey building of Angeles
University Foundation Medical Center. Further, petitioner through letters claimed
that it is exempted from the payment of the building permit and local clearances
fees, citing legal opinions rendered by the DOJ. However, the respondents refuse to
issue the building permit. Thus, petitioner paid under protest amounting to 826,
662.99. Petitioner formally requested the respondents to refund the fees it paid
under protest. Respondent City Treasurer denied the claim of refund. Hence,
petitioner filed a complaint before RTC seeking the refund of the said amount. RTC
ruled in favour of the petitioner, that it is exempted from the payment of the
building permit and other fees and finding respondent to reimburse the said amount
to petitioner. The Court of Appeals, however, reversed the ruling of the RTC, holding
that while petitioner is a tax-free entity, it is not exempt from the payment of
regulatory fees. Furthermore, that under R.A. No. 6055, petitioner was granted
exemption only from income tax derived from its educational activities and real
property used exclusively for educational purposes.

ISSUE:
i.

Government Argument:

Respondents argue that petitioner is not exempt from the payment of the
building permit and related fees since the only exemptions provided in
the National Building Code are public buildings and traditional indigenous family
dwellings. They also point out that a building permit is classified under the term
fee. A fee is generally imposed to cover the cost of regulation as activity or
privilege and is essentially derived from the exercise of police power.
ii.

Taxpayer Argument:

Petitioner stresses that the tax exemption granted to educational stock

corporations which have converted into non-profit foundations was broadened to
include any other charges imposed by the Government as one of the incentives for
such conversion. These incentives necessarily included exemption from payment of

building permit and related fees as otherwise there would have been no incentives
for educational foundations if the privilege were only limited to exemption from
taxation, which is already provided under the Constitution
(1) whether petitioner is exempt from the payment of building permit and related
fees imposed under the National Building Code
(2) whether the parcel of land owned by petitioner which has been assessed for
real property tax is likewise exempt.
HELD:
No. R.A. No. 6055 granted tax exemptions to educational institutions like petitioner
which converted to non-stock, non-profit educational foundations. Section 8 of said
law provides:
SECTION 8. The Foundation shall be exempt from the payment of all taxes, import
duties, assessments, and other charges imposed by the Government on
all income derived from or property, real or personal, used exclusively for the
educational activities of the Foundation
Exempted from the payment of building permit fees are: (1) public buildings and (2)
traditional indigenous family dwellings. Not being expressly included in the
enumeration of structures to which the building permit fees do not apply,
petitioners claim for exemption rests solely on its interpretation of the term other
charges imposed by the National Government in the tax exemption clause of R.A.
No. 6055.
No. Petitioner failed to discharge its burden to prove that its real property is
actually, directly and exclusively used for educational purposes. While there is no
allegation or proof that petitioner leases the land to its present occupants, still there
is no compliance with the constitutional and statutory requirement that said real
property is actually, directly and exclusively used for educational purposes. The
respondents correctly assessed the land for real property taxes for the taxable
period during which the land is not being devoted solely to petitioner educational
activities
Personal End Note:
A charge is broadly defined as the price of, or rate for, something, while the word
fee pertains to a charge fixed by law for services of public officers or for use of a
privilege under control of government.
Note that the other charges mentioned in Sec. 8 of R.A. No. 6055 is qualified by the
words imposed by the Government on all x x x property used exclusively for the

educational activities of the foundation. Building permit fees are not impositions on
property but on the activity subject of government regulation. While it may be argued
that the fees relate to particular properties, i.e., buildings and structures, they are
actually imposed on certain activities the owner may conduct either to build such
structures or to repair, alter, renovate or demolish the same. This is evident from
the provisions of the National Building Code. Since building permit fees are not
charges on property, they are not impositions from which petitioner is exempt.

III.

LUNG CENTER OF THE PHILIPPINES v QUEZON CITY

GR No. 144104, June 29, 2004

FACTS:
Petitioner Lung Center of the Philippines is a non-stock and non-profit entity
by virtue of PD no. 1823. It owns a parcel of land covered by TCT of the Registry of
Deeds of QC. In the middle of the lot, the hospital was erected and the big space at
the ground floor is being leased to private parties for canteen and small stores and
to medical practitioners who use the same as their private clinic. On the right side
of the building was leased for commercial purposes to a private enterprise known as
Elliptical orchids and Garden Center. The petitioner accepts paying and non-paying
patients and also renders services to out-patient. Both the land and the hospital
building of the petitioner were assessed for real property taxes by the City Assessor
of Quezon City. Thus, Petitioner filed a claim for exemption from real property taxes
as it is a charitable institution. However, it was denied. CA affirm the decision of the
Central Board of Assessment Appeals of QC (CBAA) that it is not exempt from real
property taxes in reason that it was not a charitable institution and that its real
properties were not actually, directly and exclusively used for charitable purposes.
ISSUE:
i.

ii.

Government Argument:
Petitioner is not a charitable institution and the subject property is not
actually, directly and exclusively used for charitable purposes. Hence,
their real property is not exempt from the payment of real estate taxes
under PD no.
Taxpayer Argument:

It averred that a minimum of 60% of its hospital beds are exclusively used for charity
patients and that the major thrust of its hospital operation is to serve charity patients. The
petitioner contends that it is a charitable institution and, as such, is exempt from real
property taxes as accordance to Section 2 of PD No. 1823

Whether the real properties of the petitioner are exempt from real property taxes

HELD: No. The real properties of the petitioner are not exempt from real property
taxes. It is no doubt that petitioner is a charitable institution. As a general principle, a
charitable institution does not lose its character as such and its exemption from taxes simply because
it derives income from paying patients, whether out-patient, or confined in the hospital, or receives
subsidies from the government, so long as the money received is devoted or used altogether to the
charitable object which it is intended to achieve; and no money inures to the private benefit of the
persons managing or operating the institution
Even if petitioner is a charitable institution, however, those portions of its real property that are leased
to private entities are not exempt from real property taxes as these are not actually, directly and
exclusively used for charitable purposes.Under 1987 Constitution, in order to be entitled to the
exemption, the petitioner is burdened to prove, by clear and unequivocal proof, that (a) it is a
charitable institution; and (b) its real properties are ACTUALLY, DIRECTLY andEXCLUSIVELY used for
charitable purposes.

Personal End Note

The settled rule in this jurisdiction is that laws granting exemption from tax are
construed strictissimi juris against the taxpayer and liberally in favor of the taxing power. Taxation is
the rule and exemption is the exception. The effect of an exemption is equivalent to an
appropriation. Hence, a claim for exemption from tax payments must be clearly shown and based on
language in the law too plain to be mistaken.[26]

IV.

REPUBLIC v CITY OF PARANAQUE

GR No. 191109, July 18, 2012

FACTS:
The Public Estate Authority is a government corporation created by virtue of
PD no. 1084 and by virtue of EO no. 525 issued by then President Ferdinand Marcos,
PEA was designated as the agency primarily responsible for all reclamation projects
on behalf of the Government. Then President GMA issued EO No. 380 transforming
PEA into PRA which shall perform all the powers and functions of the PEA relating to
reclamation activities. By virtue of its mandate, PRA reclaimed several portions of
the foreshore areas of Manila Bay, including those located in Paranque City which
issued warrants of levy on PRAs reclaimed properties as based on assessment for
delinquent real property taxes for tax years 2001 and 2002. Hence, PRA filed a case
to RTC which ruled in favor of the respondent as PRA was not exempt from payment
of real property taxes because it was a GOCC under PD no. 1084.
ISSUE:
i.

Government Argument:

City of Paranaque, respondent, argues that PRAs very own charter

declared it to be a GOCC and that is has entered into several thousands of
contracts where it represented itself to be a GOCC. Hence, not exempted
from the payment of real property tax
ii.

Taxpayer Argument:
PRA argues that it is not a GOCC under Administrative Code neither is it a
GOCC under the 1987 Constitution because it is not required to meet the
test of economic viablitiy. Instead, it is a governmental instrumentality
vested with corporate powers and performing an essential public service.
Further, as an incorporated instrumentality of the national Government, it
is exempt from payment of real property taxes when the beneficial use of
the real property is granted to a taxable person.

Whether PRA exempted from the payment of real property tax

HELD:
Yes. PRA is exempted from the payment of real property tax. Under Corporation
Code, Two requisites must concur before one may be classified as a stock corporation, namely: (1)
that it has capital stock divided into shares; and (2) that it is authorized to distribute dividends and
allotments of surplus and profits to its stockholders. If only one requisite is present, it cannot be
properly classified as a stock corporation. As for non-stock corporations, they must have members and
must not distribute any part of their income to said members
In the case at bench, PRA is not a GOCC because it is neither a stock nor a non-stock corporation. It
cannot be considered as a stock corporation because although it has a capital stock divided into no par
value shares, it is not authorized to distribute dividends, surplus allotments or profits to stockholders.
PRA cannot be considered a non-stock corporation either because it does not have members.
PRA is not a GOCC either under the Introductory Provisions of the Administrative Code or under Section
16, Article XII of the 1987 Constitution. Hence, PRA was not organized either as a stock or a non-stock
corporation. Neither was it created by Congress to operate commercially and compete in the private
market. Instead, PRA is a government instrumentality vested with corporate powers and performing an
essential public service. Being an incorporated government instrumentality, it is exempt from payment
of real property tax.
Moreover, the subject reclaimed lands are still part of the public domain, owned by the State and,
therefore, exempt from payment of real estate taxes,
Personal End Note:
The government-owned or controlled corporations created through special charters are those that
meet the two conditions prescribed in Section 16, Article XII of the Constitution.
The first condition is that the government-owned or controlled corporation must be established for the
common good. The second condition is that the government-owned or controlled corporation must
meet the test of economic viability.

The test of economic viability applies only to government-owned or controlled corporations that
perform economic or commercial activities and need to compete in the market place. Being essentially
economic vehicles of the State for the common good meaning for economic development purposes
these government-owned or controlled corporations with special charters are usually organized as
stock corporations just like ordinary private corporations.

V.

CIR v St. Lukes Medical Center

GR No. 195909, September 26, 2012

FACTS:
St. Lukes Medical Center is a hospital organized as a non stock and non-profit
corporation. St. Lukes filed an administrative protest with the BIR against the
deficiency tax assessments for the year 1998, comprised of deficiency income tax,
value-added tax, and withholding tax on compensation and expanded withholding
tax. CTA ruled that St. Luke is a non-stock and non-profit charitable institution
covered by Section 30(E) and (G) of the NIRC which would exempt all income
derived by St. Luke's from services to its patients, whether paying or non-paying. It
further ruled, that Section 27(B) of the present NIRC does not apply to St. Luke's.
ISSUE:
i.

Government Argument:
The BIR argued before the CTA that Section 27(B) of the NIRC, which
imposes a 10% preferential tax rate on the income of proprietary nonprofit hospitals, should be applicable to St. Luke's. Moreover, the hospital's
board of trustees, officers and employees directly benefit from its profits
and assets.

ii.

Taxpayer Argument;
St. Luke's claimed that its income does not inure to the benefit of any
individual. St. Luke's maintained that it is a non-stock and non-profit
institution for charitable and social welfare purposes under Section 30(E)
and (G) of the NIRC. It argued that the making of profit per se does not
destroy its income tax exemption.

Whether St. Luke is liable to its tax deficiency

HELD:
Yes. Section 27(B) of the NIRC imposes a 10% preferential tax rate on the income of
(1) proprietary non-profit educational institutions and (2) proprietary non-profit
hospitals. The only qualifications for hospitals are that they must be proprietary and
non-profit. "Proprietary" means private, following the definition of a "proprietary
educational institution" as "any private school maintained and administered by
private individuals or groups" with a government permit. "Non-profit" means no net
income or asset accrues to or benefits any member or specific person, with all the

net income or asset devoted to the institution's purposes and all its activities
conducted not for profit.
"Non-profit" does not necessarily mean "charitable." To be a charitable institution,
however, an organization must meet the substantive test of charity. Charitable
institutions, however, are not ipso facto entitled to a tax exemption. The
Constitution exempts charitable institutions only from real property taxes.
There is no dispute that St. Luke's is organized as a non-stock and non-profit
charitable institution. However, this does not automatically exempt St. Luke's from
paying taxes. To be exempt from real property taxes, Section 28(3), Article VI of the
Constitution requires that a charitable institution use the property "actually, directly
and exclusively" for charitable purposes and "operated exclusively" for social
welfare.
St. Luke's is a corporation that is not "operated exclusively" for charitable or social
welfare purposes insofar as its revenues from paying patients are concerned. An
institution under Section 30(E) or (G) does not lose its tax exemption if it earns
income from its for-profit activities. Such income from for-profit activities, is merely
subject to income tax, at the preferential 10% rate pursuant to Section 27(B).
St. Luke's fails to meet the requirements under Section 30(E) and (G) of the NIRC to
be completely tax exempt from all its income. However, it remains a proprietary
non-profit hospital under Section 27(B) of the NIRC as long as it does not distribute
any of its profits to its members and such profits are reinvested pursuant to its
corporate purposes. St. Luke's, as a proprietary non-profit hospital, is entitled to the
preferential tax rate of 10% on its net income from its for-profit activities.
Therefore, respondent St. Luke is liable for deficiency income tax in 1998 under
Section 27(B) of the NIRC.
Personal Note:
The requirements for a tax exemption are specified by the law granting it. The
power of Congress to tax implies the power to exempt from tax. Congress can
create tax exemptions, subject to the constitutional provision that "[n]o law granting
any tax exemption shall be passed without the concurrence of a majority of all the
Members of Congress."

VI.

DIAGEO PHIL, Inc v CIR

GR No. 183553, November 12, 2012

FACTS:
Petitioner Diageo Philippines, Inc. (Diageo) is a domestic corporation
organized and existing under the laws of the Republic of Philippines and it is
registered with the Bureau of Internal Revenue (BIR) as an excise tax taxpayer.
Diageo purchased raw alcohol from its supplier for use in the manufacture of its
beverage and liquor products. The supplier imported the raw alcohol and paid the
related excise taxes thereon before the same were sold to the petitioner. Within two
(2) years from the time the supplier paid the subject excise taxes, Diageo filed with
the BIR an applications for tax refund/issuance of tax credit certificates
corresponding to the excise taxes which its supplier paid but passed on to it as part
of the purchase price of the subject raw alcohol invoking Section 130(D) of the Tax
Code. However, respondent CIR did not act to it. Hence, Petitioner Diageo files a
petition for review before the CTA. CTA ruled in favor of the CIR because Diageo is
not the real party in interest to file claim for refund.
ISSUE:
i.

Government Argument:
CIR argued that Diageos lack of legal personality to institute the claim for
refund because it was not the one that paid the alleged excise taxes but
its supplier.

ii.

Taxpayer Argument:
Diageo claims to be a real party in interest entitled to recover the subject
refund or tax credit because it stands to be benefited or injured by the
judgment in this suit. It contends that the tax privilege under Section
130(D) applies to every exporter provided the conditions therein set forth
are complied with, namely, (1) the goods are exported either in their
original state or as ingredients or part of any manufactured goods or

products; (2) the exporter submits proof of exportation; and (3) the
exporter likewise submits proof of receipt of the corresponding foreign
exchange payment
Whether Diageo has the legal personality to file aclaim for refund or tax credit for
the excise taxes paid by its supplier on the raw alcohol it purchased and used in the
manufacture of its exported goods.
HELD:

Excise taxes partake of the nature of indirect taxes. The right to claim a refund or
be credited with the excise taxes belongs to its supplier. The phrase "any excise tax
paid thereon shall be credited or refunded" requires that the claimant be the same
person who paid the excise tax.
No.

Indirect taxes are defined as those wherein the liability for the payment of the tax
falls on one person but the burden thereof can be shifted to another person. When
the seller passes on the tax to his buyer, he, in effect, shifts the tax burden, not the
liability to pay it, to the purchaser as part of the price of goods sold or services
rendered.
Accordingly, when the excise taxes paid by the supplier were passed on to Diageo,
what was shifted is not the tax per se but an additional cost of the goods sold. Thus,
the supplier remains the statutory taxpayer even if Diageo, the purchaser, actually
shoulders the burden of tax.
Personal Note:
The proper party to question, or seek a refund of, an indirect tax is the statutory
taxpayer, the person on whom the tax is imposed by law and who paid the same
even if he shifts the burden thereof to another. Excise taxes imposed under Title VI
of the Tax Code are taxes on property which are imposed on "goods manufactured
or produced in the Philippines for domestic sales or consumption or for any other
disposition and to things imported." Though excise taxes are paid by the
manufacturer or producer before removal of domestic products from the place of
production or by the owner or importer before the release of imported articles from
the customshouse, the same partake of the nature of indirect taxes when it is
passed on to the subsequent purchaser.

CIR v Pilipinas Shell Petroleum

GR No. 188497 April 25, 2012

FACTS:
Respondent is engaged in the business of procession, treating and refining
petroleum for the purpose of producing marketable products and the subsequent
sale thereof. Respondent filed to the BIR a claim for refund or tax credit in
representing excise taxes it allegedly paid on sales and deliveries of gas and fuel
oils to various international carriers. However petitioner BIR did not act on the
claim. Thus, respondent filed a petition for review before CTA. CTAs First division
ruled that respondent is entitled to the refund of excise taxes. CTA En Banc affirm

the ruling of CTAs First Division pointed out the specific exemption mentioned
under Section 135 of the NIRC of 1997 of petroleum products carriers such as
respondents clients.
ISSUE:
i.

Government Argument:
BIR argues that the respondent must shoulder the excise taxes it
previously paid on petroleum products which it later sold to international
carriers because it cannot pass on the tax burden to the said international
carriers which have been granted exemption under NIRC. Considering that
respondent failed to prove an express grant of right to a tax refund such
claim cannot be implied, hence it must be denied.

ii.

Taxpayer Argument:
Respondent maintains that since petroleum products sold to qualified
international carriers are exempt from excise tax, no taxes should be
imposed on the article, to which the goods the tax attaches, whether in
the hands of international carriers or the petroleum manufacturer or
producer.

Whether taxpayer argument is correct

HELD:
No. The statutory taxpayer, the local manufacturer of the petroleum products who is
directly liable for the payment of excise tax on the said goods, is the proper party to
seek a tax refund. Thus, a foreign airline company who purchased locally
manufactured petroleum products for use in its international flights, as well as
foreign oil company who likewise bought petroleum products from local
manufacturers and later sold these to international carriers, have no legal
personality to file a claim for tax refund or credit of excise taxes previously paid by
the local manufacturers even if the latter passed on the said buyers the tax burden
in the form of additional amount in the price.
An excise tax is a tax on the manufacturer and not on the purchaser, and there
being no express grant under NIRC of exemption from payment of excise tax to local
manufacturers of petroleum products sold to international carriers, and absent any
provision in the Code authorizing the refund or crediting such excise taxes paid, it
should be construed as prohibiting the shifting of the burden of the excise tax to the
international carriers who buys the said product to local manufacturers. Said
provisions merely allows the international carriers to purchase said product w/out
excise tax component as an added cost in the price fixed by the manufacturers or
distributors/sellers. Consequently, the oil companies which sold such petroleum

products to Intl carriers are not entitled to a refund of excise taxes previously paid
on the goods.
Tax refunds are in the nature of tax exemptions which result loss of revenue for
government. Upon the person claiming an exemption from tax payments rests
burden of justifying the exemption by words too plain to be mistaken and
categorical to be misinterpreted, it never presumed nor be allowed solely on
ground of equity.

the
the
too
the

Personal End Note:

Excise tax, as the term used in the NORC, refer to taxes applicable to certain
specified goods or articles manufactured or produced in the Philippines for domestic
sales or consumption or for any other disposition and to things imported in the
Philippines. These taxes are imposed in addition to the VAT. An excise tax is
basically an indirect tax. Indirect taxes are taxes wherein the liability for the
payment of the tax falls on one person but the burden thereof can be shifted or
passed on to another person such as when the tax is imposed upon goods before
reaching the consumer ultimately pays for it.

PAGCOR v BIR
GR No. 172087, March 15, 2011
FACTS:
PAGCOR, simultaneous to its creation, P.D. No. 1067-B , supplementing P.D. No. 1067-A, was
issued exempting PAGCOR from the payment of any type of tax, except a franchise tax of five percent
(5%) of the gross revenue. Thereafter, P.D. No. 1399 was issued expanding the scope of PAGCOR's
exemption. However, PAGCOR's tax exemption was removed through P.D. No. 1931, but it was later
restored by a Letter of Instruction No. 1430. R.A. No. 8424, otherwise known as the National Internal
Revenue Code of 1997, which provides that government-owned and controlled corporations (GOCCs)
shall pay corporate income tax, except petitioner PAGCOR, the Government Service and Insurance
Corporation, the Social Security System, the Philippine Health Insurance Corporation, and the
Philippine Charity Sweepstakes Office. took effect. But with the enactment of R.A. No. 9337, certain
sections of the National Internal Revenue Code of 1997 were amended. The particular amendment is
excluding PAGCOR from the enumeration of GOCCs that are exempt from payment of corporate income
tax, Thus, PAGCOR assail the constitutionality of RA no. 9337.
ISSUE:

i.

Government Argument:
Under Section 1 of R.A. No. 9337, amending Section 27 (c) of the National Internal Revenue
Code of 1977, petitioner is no longer exempt from corporate income tax as it has been
effectively omitted from the list of GOCCs that are exempt from it.

ii.

Taxpayer Argument:
Petitioner argues that such omission is unconstitutional, as it is violative of its right to
equal protection of the laws under Section 1, Article III of the Constitution.

Whether or not PAGCOR is still exempt from corporate income tax with the enactment of R.A. No. 9337
HELD:

No. Taxation is the rule and exemption is the exception. The burden of proof rests upon the party
claiming exemption to prove that it is, in fact, covered by the exemption so claimed. In this case,
PAGCOR failed to prove that it is still exempt from the payment of corporate income tax, considering
that Section 1 of R.A. No. 9337 amended Section 27 (c) of the National Internal Revenue Code of 1997
by omitting PAGCOR from the exemption. The legislative intent is to require PAGCOR to pay corporate
income tax; hence, the omission or removal of PAGCOR from exemption from the payment of corporate
income tax. It is a basic precept of statutory construction that the express mention of one person,
thing, act, or consequence excludes all others as expressed in the familiar maxim expressio unius est
exclusio alterius.27 Thus, the express mention of the GOCCs exempted from payment of corporate
income tax excludes all others. Not being excepted, petitioner PAGCOR must be regarded as coming
within the purview of the general rule that GOCCs shall pay corporate income tax, expressed in the
maxim: exceptio firmat regulam in casibus non exceptis. 28
Personal End note:
As a rule, tax exemptions are construed strongly against the claimant. Exemptions must be shown to
exist clearly and categorically, and supported by clear legal provision. 26