MELCO RESORTS LEISURE (PHP) CORPORATION v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY ENBANC MELCO RESORTS LEISURE CTA EB NO. 2958 (PHP) CORPORATION, (CTA Case Nos. 10236' 10271 ' 10294 & 10359) Petitioner, -versus - COMMISSIONER OF INTERNAL CTA EB NO. 2959 REVENUE, (CTA Case Nos. 10236' 10271 ' 10294 & 10359) Respo nd en t. Present: X- - - - - - - - - - - - - - - - - - - - - - - - - - X RINGPIS-LIBAN, Acting P.J., COMMISSIONER OF INTERNAL MANAHAN, REVENUE, BACORRO-VILLENA' MODESTO-SAN PEDRO, Petitioner' REYES-FAJARDO, CUI-DAVID, -versus- FERRER-FLORES, and MELCO RESORTS LEISURE ANGELES, Jl. (PHP) CORPORATION' Respo nd ent. X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - -){ DECISION RINGPIS-LIBAN, L_: The Case/

DECISION CTA EB Nos. 2958 & 2959 (CTA Case Nos. 10236, 10271, 10294 & 10359) Before the Court are the following: 1) Petition for Review1 flied by Melco Resorts Leisure (PHP) Corporation ("MRLC"), docketed as CL-\ EB No. 2958, which prays for the reversal of the Decision2 elated February OS, 2024 ("[\ssailcd Decision") and Resolution3 elated July 11, 2024 ("Assailed Resolution") promulgated by the Court of Tax Appeals ("CTN') Special First Division, and that judgment be rendered: a. Declaring ~IRI ,C entitled to a refund or tax credit in the aggregate amount of Php 192,435,633.14 representing erroneously and illegally paid value-added tax ("VAT") on its purchases of capital goods, domestic purchases of goods (other than capital goods) and services, importation of goods (other than capital goods) and purchases of services rendered by non-residents, which arc passed on by its suppliers and arc related to revenues from gaming operations for the 1'' to 4'h quarters of taxable year 2018; and b. Ordering the Commissioner of Internal Revenue ("CIR") to refund or issue a tax credit certificate in the aggregate amount of Php192,435,633.14; and 2) Petition for Review" filed by the CIR, docketed as CT\ EB No. 2959, which prays for the reversal and setting aside of the "\ssailcd Decision and Assailed Resolution, and the issuance of a new decision denying the original petition for review for lack of merit. The Parties J\IRLC is a domestic corporation organized and existing under the laws of the Philippines. It is engaged in the business of developing and operating tourist facilities, including hotel casino entertainment complexes with hotel, retail and amusement areas and tl1emed development components, without being engaged in retail trade, and to engage in casino gaming activities. It is a VAT-registered taxpayer under tax identification number (TIN) / VAT Registration No. 008-362-871-00000. 5~ Rollo (CTA EB No. 2958), pp. 53-85. 2 Penned by Associate Justice Catherine T. Manahan with Separate Concurring Opinion of Presiding Justice Roman G. Del Rosario and Dissenting Opinion of Associate Justice Marian Ivy F. Reyes-Fajardo. Docket, pp. 1063-1093. 3 !d., pp. 1134-1146. 4 Rollo (CTA EB No. 2959), pp. 7-17. Docket, Decision dated February 05, 2024, p. 1064.

DECISION CTA EB Nos. 2958 & 2959 (CTA Case Nos. 10236, 10271, 10294 & 10359) On the other hand, the CIR is the duly appointed commissioner of the Bureau of Internal Revenue ("BIR") and is empowered to exercise the powers and perform the duties of his office, including, the power to decide disputed assessments, refunds of internal revenue taxes, fees and other charges, penalties imposed in relation thereto, or other matters arising under the ~ational Internal Revenue Code ("NIRC") of 1997, as amended. The CIR holds office at the BIR National Office Building located at BIR Road, Diliman, Quezon City.6 The Facts The facts as found by the Special First Division arc as follows: "These arc consolidated Petitions for Review flied by :\Ielco Resorts and Leisure Corporation praying for the refund or issuance of a tax credit certificate (TCC) in the total amount of [Php]192,435,633.14, representing erroneously or illegally collected input value-added tax (VXl) on purchases of capital goods, domestic purchases of goods (other than capital goods) and services, importations of goods (other than capital goods), and purchases of services rendered by non-residents, passed on by its suppliers and directly attributable or allocable to revenues from gaming operations for the four (4) quarters of taxable year (T\) 2018, detailed as follows: CTA Case Nos. Amounts Periods covered 10236 [Php]61 ,415,651.17 1" quarter of 2018 10271 [Vhp]31 ,467,212.22 2"" quarter of 2018 10294 [Php ]43,553,115.94 3'" quarter of 2018 10359 [Vhp ]55,999,653.81 4'h quarter of 2018 XXX XXX XXX [J\IRLC] filed administrative claims for refund or tax credit of erroneously and illegally paid V},T on purchases attributable or allocable to its revenues from gaming operations for the four (4) quarters of TY 2018, with the Large Taxpayers Service of the BIR, on the following dates: For the period covered (Taxable year 2018) Date of filing 1" quarter November 27, 2019 6 I d., Decision dated February 05, 2024, p. 1064.

DECISION CTA EB Nos. 2958 & 2959 (CTA Case Nos. 10236, 10271, 10294 & 10359) 2nd quarter March 2, 2020 3rd quarter J\Iay 29, 2020 August 4, 2020 4'h quarter Subsequently, [i\IIU~CJ received on "\ugust 20, 2020 and November 26, 2020, the letters from the BIR dated June 26, 2020 and September 18, 2020, respectively, denying its administrative claim for Vc\T refund for the 3'd and 4'h quarters ofTY 2018. XXX XXX XXX For CTA Case No. 10236: On December 27, 2019, [MRLCJ filed a Petition for Review, praying that judgment be rendered declaring [i\fRLC] entitled to a refund or tax credit in the amount of [PhpJ61,415,651.17, representing erroneously or illegally collected input V"\T on purchases of capital goods, domestic purchases of goods (other than capital goods) and services, importations of goods (other than capital goods) and purchases of services rendered by non-residents, attributable or allocable to revenues from gaming operations for the 1" quarter of TY 2018; and ordering respondent to grant [i\IRLC] a refund or tax credit in the said amount. The case was raffled to the Court's First Division and docketed as Court of Tax Appeals (CTA) Case No. 10236. XXX XXX XXX For CTA Case No. 10271: On i\Iarch 26, 2020, [MRLC] flied a Petition for Review, praying that judgment be rendered declaring [1\IRLCJ entitled to a refund or tax credit in the amount of [Php]31,467,212.22, representing erroneously or illegally collected input VAT on purchases of capital goods, domestic purchases of goods (other than capital goods) and services, importations of goods (other than capital goods) and purchases of services rendered by non- residents, attributable or allocable to revenues from gaming operations for the 2"d quarter of TY 2018; and ordering respondent to grant [i\IRLC] a refund or tax credit in tl1e said amount of [Php]31,467,212.22. The case was raffled to the Court's Third Division and was docketed as CTA Case No. 10271. XXX XXX

DECISION CTA EB Nos. 2958 & 2959 (CTA Case Nos. 10236, 10271, 10294 & 10359) For CTA Case No. 10294: On June 30, 2020, [fviRLCJ filed a Petition for Review, praying that judgment be rendered granting [l\IRLC]'s refund or tax credit in the amount of Whp]43,553,115.94, representing erroneously or illegally collected input VAT on purchases of capital goods, domestic purchases of goods (other than capital goods) and services, importations of goods (other than capital goods) and purchases of services rendered by non-residents, attributable or allocable to revenues from gaming operations for the 3'd quarter of TY 2018. The case was raffled to this Court's Second Division, and docketed as CT~-\ Case No. 10294. XXX XXX XXX For CTA Case No. 10359: On September 30, 2020, [fviRLCJ filed a Petition for Review, praying that judgment be rendered granting [MRLCJ's refund or tax credit in the amount of [Php]55,999,653.81, representing erroneously or illegally collected input VAT on purchases of capital goods, domestic purchases of goods (other than capital goods) and services, importations of goods (other than capital goods) and purchases of services rendered by non- residents, attributable or allocable to revenues from gaming operations for the 4'h quarter of TY 2018. The case was raffled to the Court's First Division, and was docketed as CTA Case No. 10359." The Ruling ofthe Special First Division On February 05, 2024, the CTA Special First Division promulgated the "\ssailed Decision partially granting the Petition for Review, to wit: "WHEREFORE, in light of the foregoing considerations, the consolidated Petitions for Review filed by [fviRLC] is PARTIALLY GRANTED. .Accordingly, [the CIR] 1s hereby ORDERED TO REFUND or ISSUE A TAX CREDIT CERTIFICATE (TCC) to [MRLCJ the reduced amount of Whp]3,720,321.72, ;-/ 7 Id., Decision dated February 05, 2024, pp. 1063-1068.

DECISION CTA EB Nos. 2958 & 2959 (CTA Case Nos. 10236, 10271, 10294 & 10359) representing the input tax paid on importation of goods for the four (4) quarters of 2018. SO ORDERED."8 On February 27, 2024, the CIR filed a "Motion for Partial Reconsideration (Re: Decision dated 5 February 2024)"9 while ,'viRLC filed a "Motion for Reconsideration [of Decision dated February 5, 2024)"10 on March 01, 2024. Both were denied by the CT"-\ Special First Division in the },ssailed Resolution, to wit: "WHEREFORE, premises considered, [the CIR's] Jvfotion for Pattial Recon.rideratiotl (Re: Deci.rion dated 5 Febmary 2024) flied on February 27, 2024 and [i\IRLC's] Motion for Remmideration [of Deci.rion dated Febmao' 5, 2024] flied on March 1, 2024 are DENIED for lack of merit. _Accordingly, the Decision of the Court in the above- captioned case dated Februaty 5, 2024 is hereby AFFIRMED. SO ORDERED."11 The Proceedings in the Court ofTax Appeals En Bane On July 30, 2024, i\IRLC filed a "Motion for Extension of Time to File Petition for Review" 12, docketed as CTc\ EB l\io. 2958, which the court granted in a Minute Resolution 13 on I\ugust 01, 2024. On I\ugust 15, 2024, MRLC flied its "Petition for Review"14� Meanwhile, the CIR filed a ").Iotion for Extension to File Petition for Review"15 on July 31, 2024, docketed as CT"-\ EB No. 2959, praying for an additional fifteen (15) days or until "-\ugust 16, 2024 within which to file the petition for review. The Court granted the same in a Minute Resolution16 dated August 02, 2024. ~ 8 /d., Decision dated February 05, 2024, p. 1086. 9 Jd., pp.� 1094-1103. 10 /d., pp. 1104-1117. 11 Id., Resolution dated July 11, 2024, p. 1142. 12 Rollo (CTA EB No. 2958), pp. 1-4. Record shows that Melee Resorts Leisure (PHP) Corporation received the Assailed Resolution on July 16, 2024; Docket, p. 1133. 13 Id., p. 52. 14 /d., pp. 53-85. 15 Rollo (CTA EB No. 2959), pp. 1-5 Record shows that the Commissioner of Internal Revenue received the Assailed Resolution on July 17, 2024; Docket, p. 1133. 16 /d., p. 6.

DECISION CTA EB Nos. 2958 & 2959 (CTA Case Nos. 10236, 10271, 10294 & 10359) On August 16, 2024, the CIR filed his "Petition for Review" 17 On "August 21, 2024, a Minute Resolution18 was issued consolidating CTA EB No. 2958 with CTA EB No. 2959. Thereafter, on October 02, 2024, the Court issued a i\Iinute Resolution 19 ordering 1) the CIR to file his comment on l\IRLC's "Petition for Review" in CL\ EB No. 2958, within ten (10) days from notice; and 2) MRLC to file its comment on the CIR's "Petition for Review" in CL\ EB No. 2959, \v"ithin the same period. i\IRLC filed its "Comment/Opposition [Re: Petition for Review dated August 15, 2024]"2n ("Comment/Opposition") on October 15, 2024, while the em. failed to file his comment.21 On January 15, 2025, a Minute Resolution was issued noting the MRLC's Comment/Opposition and the Records Verification Report, and submitting the instant cases for decision. Assignment of Errors iviRLC raised the following issues in CL\ EB No. 2958: 1) Whether the CL-\ Special First Division erred in ruling that l\IRLC is not entitled to the refund of input VAT erroneously or illegally passed on by its supplier notwithstanding the ruling that i\IRLC is exempt from input Vc\T on purchases that are attributable to its gaming operations pursuant to Section 13(2)(B), in relation to Section 13(2)(A) of Presidential Decree ("P.D.") No. 186922, as amended by Republic c\ct ("R.c\"") No" 948723;; / 17 ld., pp. 7-17. 1s Rollo (CTA EB No. 2958), p. 141. 19 !d., p. 142. 20 ld., pp. 143-157. 21 !d., Records Verification Report dated November 06, 2024, p. 159. 22 Consolidating and Amending Presidential Decree Nos. 1067-A, 1067-B, 1067-C, 1399 and 1632, Relative to the Franchise and Powers of the Philippine Amusement and Gaming Corporation (PAGCOR), July 11, 1983. 23 An Act Further Amending Presidential Decree No. 1869, otherwise Known as PAGCOR Charter, June 20, 2007.

DECISION CTA EB Nos. 2958 & 2959 (CTA Case Nos. 10236, 10271, 10294 & 10359) 2) Whether the CT"\ Special First Division erred in applying Section 112 of the NIRC of 1997, as amended, and disregarding Sections 204 and Section 229 thereof, in holding that ""IRLC is not entitled to the claim for refund; 3) Whether the CL\ Special First Division erred in disregarding Philippine Air!ims IJ. Commissioner of Intema! Reveflue2" ("PAL v. CIR"), and in not holding that a taxpayer conferred with indirect tax exemption by a special law can claim for a refund of the tax erroneously and illegally passed on, notwithstanding that the claimant-taxpayer is not the statutory taxpayer; and 4) Whether the CL\ Special First Division erred in ruling that i\IRLC is not entitled to the full refund or issuance of a tax credit certificate of erroneously and illegally paid VAT on purchases of capital goods, domestic purchase of goods (other than capital goods) and purchases of :;ervices rendered by non-residents, which arc attributable or allocable to revenues from gaming operations of taxable year 2018, for the 1" quarter amounting to Php61,415,651.17, 2"" quarter amounting to Php31,467,212.22, 3'" quarter amountmg to Php43,553,115.94 and 4'h quarter amounting to Php55,999,653.814, or 1n the aggregate amount of Php192,435,633.14. 25 Conversely, the CIR assigned a single assignment of error in its "Petition for Review" in CT[\ ER No. 2959: The CL\ Special First Division erred in ruling that MRLC ts entitled to refund / tax credit in the total amount of Three Million Seven Hundred Twenty Thousand Three Hundred Twenty-One and 72/100 (Php37,720,321.72), representlng unutilizcd input V"\T on its importation of goods otl1er than capital goods, for four taxable quarters of 2018."6 The Arguments of the Parties CTA EB No. 295~ 24 G.R. No. 198759, July 01, 2013. 25 Rollo (CTA EB No. 2958), Petition for Review dated July 29, 2024, Statement of the Issues, pp. 63-64. 26 Rollo (CTA EB No. 2959), Petition for Review dated August 15, 2024, Ground for the Petition, p. 10.

DECISION CTA EB Nos. 2958 & 2959 (CTA Case Nos. 10236, 10271, 10294 & 10359) 1viRLC's m:gpments: i\IIU~C avers that as a Philippine Amusement and Gaming Corporation ("P.:\GCOR") licensee, it should likewise be exempt from direct and indirect VXf. The input VXI' should not have been passed to it from its suppliers on purchases related to its gaming operation. Since the suppliers have erroneously passed input V,\T to i\IRLC when they should not have, i\IRLC is entitled to the refund of erroneously passed on input VAT on its purchases attributable or allocable to its gaming operations. ~~\ccording to MRLC, to rule otherwise will render the tax-exempt incentive granted to it nugatory. MRLC points out that it prays for refund of input V/d' not under Section 112 of tl1e NIRC of 1997, as amended, but under Section 229 thereof, which is a recot,mized recourse outside of the VXr system. This was categorically confirmed in the CL\ En Bane cases of Jt.1efco Resorts Leisure (PHP) C01poration v. Comminioner of Intemaf Reven111F ("2023 iVIeko v. CIR") and ivfefco Reso1ts Leis11re (PHP) Co1poration v. Commissioner ofintemaf Revm11l8 ("2024 ~Meko v. CJR"), which involve the same parties and issues. Citing PAL 11. CIR, i\IIU~C likewise asserts iliat it has the right to claim a tax refund or credit even if it is not the statutory taxpayer, i.e., it only bears ilie economic burden of the passed-on tax. "-\dditionally, i\IRLC contends that under the principle of solutio indebiti, the government had to restore to it the sums representing erroneous payments of taxes. The government is not exempted from the application of the doctrine that no person shall unjustly enrich himself or herself at the expense of another. J\IRLC also mamtams that the Statement of Settlement of Duties and Taxes ("SSDT"), even without the Single /1.dministrative Document ("SAD"), is sufficient proof of the payment of VAT on importation. Hence, MRLC is entitled to the full refund of the input VAT on importation of goods. This is because the details in the S"~\D and the actual importation are duly verified as existing and correct when the SSDT is generated, as the SSDT bears the entry number of the S.:\D. Lastly, MRLC claims that the input V,\T from its purchases of services rendered by non-residents in the amount of Php799,680.22 should also be refunded even though there was no showing that the non-residents who rendered services to MRLC: are V,\T-registered. The mere fact that MRLC is exempt from input V~\T on purchases mat are attributable to its gaming operations necessitates the refund of ilie V.:\T withheld and paid by i'vil~C/V' 27 CTA EB Case No. 2608 (CTA Case No. 9811), July 11, 2023. 28 CTA EB Case No. 2670 (CTA Case Nos. 10029 & 10052), January 09, 2024.

DECISION CTA EB Nos. 2.958 & 2.959 (CTA Case Nos. 10236, 10271, 10294 & 10359) CTA EB No. 2959 The CIR 's arg11ments: The em. submits that i\IlU~C's claim for Vc\T refund I tax credit has no factual and legal basis. Furthermore, the CIR alleges that MRLC, being a mere licensee of PAGCOR, is not entitled to the tax exemption under PD No. 1869 because the said exemption shall inure only to those entities who provide necessary services to Pc\GCOR in connection with the latter's operations of the casinos. Finally, the CIR insists that even assuming that t>IIU"C is exempt from payment of VAT, the proper recourse is not a claim for refund of the erroneously or illegally paid passed-on V1\T against the government, but to seck reimbursement against the seller who shifted the input VAT payment, following Coral Bay Nitkel Co1poration v. Commissioner of Internal Revemrl9 ('Coral Bel)' v. CIR"). lvfRLC's mtmter-at;gument.r: J\IRLC stresses that the instant Petition for Review is a mere reiteration of the arguments raised before the CL\ Special First Division, which have already been resolved and extensively discussed in the "\ssailed Decision. In any case, J\IlU~C declares that the CTA Special First Division has already affirmed that it is exempt from taxes under Section 13(2) of PD No. 1869; hence, it is entitled to the refund of the amount paid. Further, i\IIU "C professes that the cases of Hedco1; Im: v. Commissioner of Internal Revenue30, klaibarara GeotbemJal, Im: v. Commissioner of Intemal Revemt~ 1 , and Coral Bel)l v. CIR which were cited by the CIR arc not applicable in the Instant case. The Ruling of the Court Tin1elinessofPeddons The Court in Division issued the "\ssailed Resolution, denying the CIR's "Motion for Partial Reconsideration (Re: Decision dated 5 February 2024)" an~ 29 G.R. No. 190506, June 13, 2016. 30 CTA Case No. 8875, July 11, 2017. 31 CTA Case Nos. 8871, 8937, 8999 and 9042, August 02, 2017.

DECISION CTA EB Nos. 2958 & 2959 (CTA Case Nos. 10236, 10271, 10294 & 10359) MRLC's ";\lotion for Reconsideration [of Decision dated February 5, 2024)", on July 11, 2024. :VIRLC received said Resolution on July 16, 2024 whereas the CIR received it on July 17, 2024. Pursuant to Rule 4, Section 2(a)(1)32 in relation to Rule 8, Section 3(b)33 of the Revised Rules of the Court of Tax Appeals'" ("RRCL\"), i\IRLC and the CIR had fifteen (15) days from date of receipt of the resolution or until July 31, 2024 and August 01, 2024, respectively, within which to file their petitions for review. On July 30, 2024, MRLC filed a "Motion for Extension of Time to File Petition for Review"35, praying for an extension of fifteen (15) days to file. The Court granted the same in a ,\Iinutc Resolution dated August 01, 2024. On August 15, 2024, MRLC timely filed its "Petition for Review"36. Meanwhile, the C:IR filed a ":VIotion for Extension to File Petition for Review"37 on July 31, 2024, praying for an extension of fifteen (15) days to file. The Court granted the same in a J\Iinute Resolution dated August 02, 2024. On August 16, 2024, the CIH. timely filed his "Petition for Review". l-Ienee, the Court En Banr validly acquired jurisdiction over the two (2) pet1t10ns. \X'e now proceed to the merits of the case. c\t the outset, it must be pointed out that the crux of both petitions is whether J\IRLC: is entitled to a refund or tax credit representing V"\T on its purchases which corresponds to its revenues from gaming operations fo~ 32 Sec. 2. Cases within the jurisdiction of the Court en banc. - The Court en bane shall exercise exclusive appellate jurisdiction to review by appeal the following: (a) Decisions or resolutions on motions for reconsideration or new trial of the Court in Divisions in the exercise of its exclusive appellate jurisdiction over: XXX XXX XXX (1) Cases arising from administrative agencies - Bureau of Internal Revenue, Bureau of Customs, Department of Finance, Department of Trade and Industry, Department of Agriculture; x x x 33 Sec. 3. Who may appeal; period to file petition. - x x x (b) A party adversely affected by a decision or resolution of a Division of the Court on a motion for reconsideration or new trial may appeal to the Court by filing before it a petition for review within fifteen days from receipt of a copy of the questioned decision or resolution. Upon proper motion and the payment of the full amount of the docket and other lawful fees and deposit for costs before the expiration of the reglementary period herein fixed, the Court may grant an additional period not exceeding fifteen days from the expiration of the original period within which to file the petition for review. (Rules of Court, Rule 42, sec. 1a) 34 A.M. No. 05-11-07-CTA, November 22, 2005. 35 Rollo (CTA EB No. 2958), pp. 1-4. 36 Id., pp. 53-85. 37 Rollo (CTA EB No. 2959), pp. 1-5.

DECISION CTA EB Nos. 2958 & 2959 (CTA Case Nos. 10236, 10271, 10294 & 10359) taxable year 2018. c\s such, tlus Court shall proceed to jointly resolve the arguments of MRLC and CIR for being interrelated. PAGCOR's exe1nption fiwn VAT under its Charter The first matter \'Ve shall resolve is whether Pc\GCOR's exemptwn from both direct and indirect taxes under its Charter extends to its contractors and licensees. Section 13(2) of PD No. 186938, as amended by Rz\ No. 948739, exempts PAGCOR from the payment of taxes, including any form of charges, fees and levies (with the exemption of the five percent franchise tax on gross revenues or earnings) with respect to its income from ganling operations, to Wlt: "SECTION 13. Exemptions.- XXX XXX XXX (2) Income a11d 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 Cot1Joration; nor shall any fonn 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 l'ranchise. Such tax shall be due and payable quarterly to tl1e National Government and shall be in lieu of all kinds of taxes, levies. fees or assessments of any kind, nature or description, levied, established or collected by any municipal, provincial, or national government authority. (b) Otben: The exemptions herein granted for earnings derived from the operations conducted under the franchise specifically from the payment of any tax, income of otherwise, as well as any form of charges, fees or levies, shall inure to the benefit of and extend to corporation(s), association(s), agency(ies), or individual(s) with whom the Corporation or operator has any 38 Consolidating and Amending Presidential Decree Nos. 1067-A, 1067-B, 1067-C, 1399 and 1632, Relative to the Franchise and Powers of the Philippine Amusement and Gaming Corporation (PAGCOR), July 11, 1983. 39 An Act Further Amending Presidential Decree No. 1869, Otherwise Known as PAGCOR Charter, June 20, 2007.

DECISION CTA EB Nos. 2958 & 2959 (CTA Case Nos. 10236, 10271, 10294 & 10359) contractual relationship in connection with the operations of the casino(s) authorized to be conducted under this Franchise and to those receiving compensation or other remuneration from the C01poration or operator as a result of essential facilities furnished and/ or technical services rendered to the Corporation or operator."40 In Commissiomr of Internal Rez1enm IJ. Aresite (Philippines) Hotel CoJporatio1141 ("CIR v. Aresite"), it was explained that the above provision gives PAGCOR a blanket exemption to taxes with no distinction on whether the taxes are direct or indirect, vi:;;: "~-\ close scrutiny of the above provisos clearly gives PAGCOR a blanket exemption to taxes with no distinction on whether the taxes are direct or indirect. We are one with the C\ ruling that PAGCOR is also exempt from indirect taxes, like V.�\T, as follows: Under the above provision [Section 13 (2) (b) of P.D. 1869], the term 'Corporation' or operator refers to P"�\GCOR. c\lthough the law docs not specifically mention PAGCOR's exemption from indirect taxes, P"-\GCOR is undoubtedly exempt from such taxes because the law exempts from taxes persons or entities contracting with P~-\GCOR in casino operations. Although, differently worded, the provision clearly exempts PAGCOR from indirect taxes. In fact, it goes one step further by granting tax exempt status to persons dealing with P.-\GCOR in casino operations. The unmistakable conclusion is that PAGCOR is not liable for the [Php]30,152,892.02 '1'.\.T and neither is Acesite as the latter is effectively subject to zero percent rate under Sec. 108 B (3), lL\. 8424. Indeed, by extending the exemption to entltles or individuals dealing with PAGCOR, the legislature clearly granted exemption also from indirect taxes. It must be noted that the indirect tax of VAT, as in the instant case, can be shifted or passed to the buyer, transferee, or lessee of the goods, properties, or services subject to Vc\T. Thus, by extending the tax exemption to entities or individuals dealing with PAGCOR in casino operations, it is exempting PAGCOR from being liable to indirect taxcs."..t-2/ 40 Emphasis and underscoring supplied. 41 G.R. No. 147295, February 16, 2007. " Emphasis supplied.

DECISION CTA EB Nos. 2958 & 2959 (CTA Case Nos. 10236, 10271, 10294 & 10359) Thus, in Philippine Am!IJement and Gaming C01poration (PAGCOR) v. Bureau oflntemal Rez,enue"3 th~ Suprem~ Court cited CIR v. Am-ite and affirmed the rule that this exemption granted to PAGCOR includes V.\T. J\I~anwhile, a review of jurisprudence confirms that PAGCOR's tax exemption extend to its licensees such as MRLC. In B!oomben]! Resolts and Hotels, Inc. !J. Bm'lia/1 of Intemaf Reventte44 ("B!oombenJI v. BIR"), the Supreme Court clarified the taxation of the income from gaming operations derived by PAGCOR's contractees and licensees as follows: "Section 13 of PD No. 1869 evidently states that payment of the 5% franchise tax by P"-\GCOR and its contractees and ficemees exempts them from payment of any other taxes, including corporate income tax, quoted hereunder for ready reference: XXX XXX XXX .As previously recognized, the above-quoted provision providing for the said ex~mption was neither amended nor repealed by any subsequent laws (i.e., Section 1 of R.A No. 9337 which amended Section 27(C) of the NIRC of 1997); thus, it is still in effect. Guided by the doctrinal teachings in resolving the case at bench, it is without a doubt that, like P"\GCOR, its contradees and licemees remain exempted from the payment of corporate income tax and other taxes since the law is clear that said exemption inures to their benefit. XXX XXX XXX .-\s the PAGC:OR Charter states in unequivocal terms that exemptions granted for earnings derived from the operations conducted under the franchise specifically from the payment of any tax, income or otl<envise, as well as any form of charges, fees or levies, shaD inure to the benefit of and extend to corporation(s), association(s), agency(ies), or individual(s) with whom the P,\GCOR or operator has any contractual relationship in connection with the op~rations of the casino(s) authorized to be conducted under this Franchise, so it must be that all contractees and licensees ofPAGCOR, upon payment of the 5% franchise tax, shall likewise be exempted from all other ~ 43 G.R. No. 1720871 March 15, 2011. 44 G.R. No. 212530, August 10, 2016.

DECISION CTA EB Nos. 2958 & 2959 (CTA Case Nos. 10236, 10271, 10294 & 10359) taxes, including corporate mcome tax realized from the operation of casinos. !<or the same reasons that made us conclude in the 10 December 2014 Decision of the Court sitting En Bane in G.R. No. 215427 that Pc\.GCOR is subject to corporate income tax for 'other related services,' we find it logical that its mntractees and lirensees shall likewise pay corporate income tax for income derived from such 'related services.' Simply then, in this case, we adhere to the principle that since the statute is clear and free from ambiguity, it must be giVen its literal meaning and applied without attempted interpretation. This is the plain meaning rule or verba legis, as expressed in the maxim index animi sermo speech is the index of intention. Plainly, too, upon payment of the 5% franchise tax, petitioner's income from its gaming operations of gambling casinos, gaming clubs and other similar recreation or amusement places, and gaming pools, defined within the purview of the aforesaid section, is not subject to corporate income tax."~5 This doctrine in B!oombeny v. BIR was then reiterated in the cases of CommisJioner ofIntenta! Revmm v. Travellers Intemationa! Hotel Group, Im: 46 and Saint )'f/ealt!J, Ltd. v. B11rea11 ofIntemal Revemte"7 From the foregoing, PAGCOR's exemption inures to the benefit of and extend to other entities, such as its contractees and licensees. It follows therefore that J\IRLC, as a PAGCOR licensee is also exempt from paying direct or indirect taxes on its gaming operations, whether local or national, which necessarily includes V [\.T. Legal basis for MRLC's refund or tax credit for its VAT on purchases For purposes of clarity and orderly discussion, We classify the V"\T in J\IRLC's claim for refund into three (3) types, to wit: 1) V.-\T on (a) purchases of capital goods, and (b) domestic purchases of goods (other than capital goods) and services, where i\IRLC is not the statutory taxpayer but on~ -------------------- 45 Emphasis and underscoring supplied. 46 G.R. No. 255487, May 03, 2021 (Resolution). 47 G.R. Nos. 252965 and 254102, December 07, 2021.

DECISION CTA EB Nos. 2958 & 2959 (CTA Case Nos. 10236, 10271, 10294 & 10359) shoulders the burden of taxation (i.e., i\IRLC's suppliers were the ones who filed the VAT return and paid the VAT); 2) V"\T on importation of goods (other than capital goods) where i\IRLC is the statutory taxpayer, (i.e., l\11U~C was the one who remitted the 'VAT to the government); and 3) VAT on purchases of services rendered by non-residents, where i\IRLC withheld the VAT from its payments to its suppliers. The Court shall discuss below whether MRLC: IS entitled to a VI\T refund or tax credit for each type of purchase. VAT 011 p11nl;a.res of '-a,vital goods. and domestirpunbases ofgoods (other tban ra,Pital goods! and services The VAT pertained to under the first category is an indirect tax. In such instances, the burden of the tax is shifted from the seller to the purchaser of the goods or services, notwithstanding the fact that it was the seller who paid the tax to the government. "\s expounded in CommiSJiomr of Internal Revenue v. Philippine Long Distance Telephone Co.: "On the other hand, indirect taxes arc those that are demanded, in the first instance, from, or are paid by, one person in the expectation and intention that he can shift the burden to someone else. Stated clscwise, indirect taxes arc 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 who ultimately pays for it. 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. To put the situation in graphic terms, by tacking the VAT due to the selling price, the seller remains the person primarily and legally liable for the payment of the tax. \'Vhat is shifted only to the intermediate buyer and ultimately to the final purchaser is the burden of the tax. Stated differently, a seller who is directly and legally liable for payment of an indirect tax, such as the VAT on goods or services, is not necessarily the person who ultimately bears the burden of the same tax. It is the final ,;-./

DECISION CTA EB Nos. 2958 & 2959 (CTA Case Nos. 10236, 10271, 10294 & 10359) purchaser or end-user of such goods or services who, although not directly and legally liable for the payment thereof, ultimately bears the burden of the tax. "48 Having confirmed from the previous discussion that i\IRLC, as a licensee of Pc\GCOR, is exempt from Vc\T, 1\IRLC is correct in its claim that its suppliers should not have passed on to it the VAT component of its purchases of capital goods and goods (other than capital goods) and services. Conversely, 1\fRLC should not have paid for the Y.c\T portion of the purchase price from its suppliers. And yet, in the case at bar, MRLC did; thus, its claim for refund or tax credit. 1\IRLC however is not entitled to a refund or tax credit of the VAT for the first type of purchases. In a recent case49 involving the same parties and issue, the Supreme Court categorically ruled that MRLC: was not entitled to the refund or the issuance of tax credit certificate for passed-on V"',.T, under either Section 112 of the NIRC: of 1997, as amended, (refund of excess and unutilized input VAT) or Section 204(c) in relation to Section 229 (recovery of erroneously paid or illegally collected taxes). Excess and unutilized input \'AT is only refundable under Section 112 of the NIRC: of 1997, as amended, in two (2) instances -when tl1e taxpayer is engaged in zero-rated or effectively zero-rated sales50 or the taxpayer cancelled its VAT registration due to retirement from or cessation of business. Section 112 reads: "SEC:. 112. Refunds or Tax Credits ofInput Tax. - A. Zero-&ted or Ejfectivef)� Zero-&ted Sales. - Any VAT-registered person, whose sales are zero-rated or effectively zero-rated may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax: Proz,ided, howezJer, That in the case of zero-rated s a l / ---------------- 48 Emphasis supplied. 49 Me/co Resorts Leisure (PHP) Corporation v. Commissioner of Internal Revenue, G.R. No. 271261, April 02, 2025. so See Commissioner of Internal Revenue v. Toledo Power Company, G.R. Nos. 195175 & 199645, August 10, 2015.

DECISION CTA EB Nos. 2958 & 2959 (CTA Case Nos. 10236, 10271, 10294 & 10359) under Section 106(A)(2)(a)(1), (2) and (b) and Section 108(B)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of the Bangko Sentra! ng Pi!ipinas (BSP): Provided, jinther, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods of properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales: Pro1;ided, final!)�, That for a person making sales that are zero-rated under Section 108(B)(6), the mput taxes shall be allocated ratably between his zero- rated and non-zero-rated sales. B. Canre!!ation of VAT Registration. ~A person whose registration has been cancelled due to retirement from or cessation of business, or due to changes in or cessation of status under Section 106(C) of this Code may, --.vit!1in two (2) years from the date of cancellation, apply for the issuance of a tax credit certificate or cash refund for any unused input tax which may be used in payment of his other internal revenue taxes or apply for refund for any unused input tax. XXX XXX x x x " 51 Both conditions arc not present in the instant case. At the time the claim for refund was filed, i\IRLC has not yet been dissolved nor is it in the process of dissolution. Moreover, as found by the court a q11o, MRLC is engaged in tl1e business of developing and operating tourist facilities, including hotel casino entertainment complexes with hotel, retail and amusement areas and tl1emed development components, without being engaged in retail trade, and to engage in casino gaming activities. These activities arc not considered zero-rated or effectively zero-rated sales under the relevant provisions52 of the Tax Code. Instead, J\IRLC's sales are VAT exempt under Section 109(1)(K)51 of the NIRC of 1997, as amended. This is because sale transactions of MRLC, just _,..,/ 51 Emphasis and underscoring supplied. 52 Sections 106(A)(2) and 108(6) of the National Internal Revenue Code of 1997, as amended. 53 SEC. 109. Exempt Transactions. -

DECISION CTA EB Nos. 2958 & 2959 (CTA Case Nos. 10236, 10271, 10294 & 10359) like the sale transactions of PAGCOR, arc exempt from VAT following Section 13(2) ofPD No. 1869, as amended by RA No. 9487. Therefore, for not being zero-rated or effectively zero-rated sales, 1\IRLC's claim for refund or tax credit of the alleged unutilized input VAT under Section 112 cannot prosper. 5" i\Ieanwhile, l\IRLC's claim for refund or tax credit under Section 204(c) in relation to Section 229 of the NIRC of 1997, as amended, must also fail. l'or the grant of refund under the said provisions, there must be first and foremost an erroneous payment or illegal collection of the passed-on V1\T. .-\n erroneous or illegal tax is defined as one levied without statutory authority, or upon property not subject to taxation or by some officer having no authority to levy the tax, or one which is some other similar respect is illegal. 55 Sections 204(c) and 229 read: "SEC. 204. Authority of the Commissioner to Compromise, Abate and Refund or Credit Taxes. XXX XXX XXX (C) Credit or rej1111d taxes erromo11sb or i!!egalb' rereived orpenalties 211;posed witbottt a?ltbority, refund the value of internal revenue stamps when they are returned in good condition by the purchaser, and, in his discretion, redeem or change unused stamps that have been rendered unfit for use and refund their value upon proof of destruction. No credit or refund of taxes or penalties shall be allowed unless the taxpayer files in writing \Vith the Commissioner a claim for credit or refund within two (2) years after the payment of the tax or penalty as provided under Section 229 of this Code: Provided, however, That a return ftled showing an overpayment shall be considered as a written claim for credit or refund: Provided, further, that the Commissioner shall process and decide the refund under this provision within one hundred eighty (180) days from date of submission of complete documents/"" (1) Subject to the provisions of Subsection (2) hereof, the following transactions shall be exempt from the VAT: XXX XXX XXX (K) Transactions which are exempt under international agreements to which the Philippines is a signatory or under special laws, except those under Presidential Decree No. 529[.] 54 See Commissioner of Internal Revenue v. Alminera Resources Corporation, G.R. No. 236325, September 16, 2020. 55 Commissioner ofInternal Revenue v. Pilipinas Shell Petroleum Corporation, G.R. No. 188497, April 25, 2012.

DECISION CTA EB Nos. 2958 & 2959 (CTA Case Nos. 10236, 10271, 10294 & 10359) in support of the application filed: Provided, furthermore, That should the Commissioner deny, in full or in part, the claim for refund, the Commissioner shall state the legal and/ or factual basis for the denial: Provided, finally, That failure on the part of any official, agent, or employee of the BIR to process and decide on the application within the one hundred eighty (180)-day period shall be punishable under Section 269 of this Code. XXX XXX xxx'' "SEC. 229. Recovery of Tax Erroneously or IUegaUy Collected - No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, of any sum alleged to have been excessively or in any manner wrongfully collected without authority, or of any sum alleged to have been excessively or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress. XXX XXX "'\s pointed out by the Supreme Court recently in iVIeko Resotts Leisure if (PHP) Corporation lJ. CoJJJIJJi.uiouer Internal RezJeJute57 , there was no erroneous or illegal payment in this case because being exempted from V"-\T, the input V"'\T that may have been passed on to J\IRLC by its suppliers should be treated as part of purchase price or cost (i.e., expense), following Sections 4.109-1 and 4.110-4 of Revenue Regulations58 No. 16-05. For V"'\T-exempt entities, the input vxr on the purchases is added to the cost of sales of goods or services. J<ollowing tlus logic, the Supreme Court did not grant MRLC's refund claim, notwithstanding its argument that the ruling in Pi!ipinas v. CIR should apply. Instead, it is tl1e suppliers who erroneously paid the VAT to the government, not the person to whom the tax was passed on as part of the purchase price (i.e., J\IRLC), who are allowed to file the judicial claim under Section 229. The case of CIR v. Aresite is instructive. There, Acesite (Plulippines) Hotel Cmpmation ("I\cesitc") catered food and beverages to PAGCOR through the hotel's restaurant outlets. Acesite mistakenly paid VAT on tl~ 56 Emphasis supplied. 57 G.R. No. 271261, April 02, 2025. 58 Consolidated Value-Added Tax Regulations of 2005, September 01, 2005.

DECISION CTA EB Nos. 2958 & 2959 (CTA Case Nos. 10236, 10271, 10294 & 10359) transactions, and when it tried to shift the VXf toPAGCOR, the latter refused to pay on account of its tax-exempt status. Since the sales to PAGCOR, as a Vc\T exempt entity, are considered effectively zero-rated under Section 102(b)(3) of the 1977 Tax Code, as amended (now Section 108(B)(3)59 of the NIRC of 1997, as amended), Acesite's claim for VAT refund was granted. Similarly, in A1amia Penim11la Hotel, Inc. IJ. CommiJJioner of Intema! Re!Jemte60 ("i\ianila Pmii!JIIia ?J. CJR"), the Supreme Court granted the erroneous payment by Manila Peninsula Hotel of VAT in connection with the room accommodations and food and beverage services it performed to Delta Air's pilots and cabin crew during flight layovers in the Philippines. Delta Air is engaged in international air transport operations, and the transactions between Manila Peninsula Hotel and Delta },ir are zero-rated under Section 108(B)(4)61 of the Tax Code. Alamia Penimula v. CIR does not involve Pc\.GCOR licensees or contractees. Regardless, considering that it likewise deals with the erroneous payment of V;\T by a seller in connection with a zero-rated/ effectively zero- rated sale, the said case is analogous in the case at bar and therefore may be applied here. In summary, i\flU~C is not entided to refund or tax credit of passed-on VAT in relation to its purchases of capital goods and domestic purchases of goods (other than capital goods) and services. VAT 011 ii1Jportation ~( goodJ (otber tba11 capita!goods I With respect to the second type of purchases - input VXf paid by l\IRLC on its importation of goods other than capital goods for taxable year/'"' 59 SEC. 108. Value-Added Tax on the Sale ofServices, Including Digttal Services, and the Use or Lease ofProperties. XXX XXX XXX (B) Transactions Subject to Zero Percent (0%} Rate- The following services performed in the Philippines by VAT- registered persons shall be subject to zero percent (0%) rate. XXX XXX XXX (3) Services rendered to persons or entities whose exemption under special laws or international agreements to which the Philippines is a signatory effectively subjects the supply of such services to zero percent (0%) rate[.] 60 G.R. No. 229338, April 17, 2024. 61 SEC. 108. Value-Added Tax on the Sale ofServices, Including Digital Services, and the Use or Lease of Properties. XXX XXX XXX (B) Transactions Subject to Zero Percent {0%} Rate- The following services performed in the Philippines by VAT- registered persons shall be subject to zero percent (0%) rate. XXX XXX XXX (4) Services rendered to persons engaged in international shipping or international air transport operations, including leases of property for use thereof: Provided, That these services shall be exclusive for international shipping or air transport operations [.]

DECISION CTA EB Nos. 2958 & 2959 (CTA Case Nos. 10236, 10271, 10294 & 10359) 2018, \X'c find basis for the refund thereof pursuant to Section 204(C) 111 relation to Section 229 of the NIRC of 1997, as amended. From the said provisions, the following rec1uisites must be established by a taxpayer for a claim for refund to prosper, to wit: 1) There must be an erroneous or illegal collection of tax, or a penalty collected without authority, or sum excessively or wrongfully collected; 2) The claim for refund has been duly filed with the CIR, within two (2) vears after the payment of tax or penalty; and 3) The suit or proceeding is instituted with this Court within two (2) years from the date of payment of tax or penalty. For the first req11isite, the Court E11 Bane finds that there was erroneous payment of the V"-\.T. "-\s pointed out by the Special First Division, it is the importer who shall pay the twelve percent (12%) \'1\T on the importation of goods under Section 107(A) of the NIRC of 1997, as amended- "SEC. 107. Value-Added Tax on Importation of Goods.- (A) In General - There shall be levied, assessed and collected on every importation of goods a value-added tax equivalent to twelve percent (12%) based on the total value used by the Bureau of Customs in determining tariff and customs duties plus customs duties, excise taxes, if any, and other charges, such tax to be paid by the importer prior to the release of such goods from customs custody: Provided, That where the customs duties are determined on the basis of the quantity or volume of the goods, the value-added tax shall be based on the landed cost plus excise taxes, if any." Once again, ""lRLC is exempt from paying VAT under Section 13(2) of the PA.GCOR Charter. Since MRLC mistakenly paid the VAT as importer, it is entitled to the refund of the amount paid. As for the second a11d third req11i.<ites, MRLC was able to establish that it timely filed both its administrative and judicial refund claims, as follows: Taxable Date Filed End of the I Administrative I Judicial

DECISION CTA EB Nos. 2958 & 2959 (CTA Case Nos. 10236, 10271, 10294 & 10359) Quarter of and Paid- 2-year i Claim Claim 2018 Quarterly Prescriptive ' VAT Return Period 1" Quarter December December 21, November 27, December 2nd C::?_uarter 21 , 2018 6 2020 2019 63 27 ' 201964 3'J Quarter " March 26, 4'h Quarter December December 21, J\Iarch 02, 21,201865 2020 202066 202067 December December 21, May 29, 202069 June 30, 21, 201868 2020 202070 January 25, January 25, [\ugust 04, September 2019 71 30 202073 2021 2020'" ' From the foregoing, MRLC's administrative claims and judicial claims for the four (4) quarters of 2018 were timely filed within the two-year prescriptive period. Regarding the computation of the refundable amount, We affirm the Special First Division's finding that there were valid disallowances and that MRLC is entitled to the refund or issuance of tax credit only in the amount of Php3,720,321.72, representing VAT paid on the importation of goods other than capital goods for the four (4) quarters of 2018. The Court E11 Ba11r echoes the Special First Division's declaration on t11e matter, to wit: "Based on the report of the Independent Certified Public c\ccountant (ICPc\), [1\!RLC's] valid input taxes on importation of goods other than capital goods for the four (4) quarters of TY 2018 amounted to [Php]6,222,788.72. xxx Upon further verification however, the Court finds that an additional disallowance of [Php]2,502,467.00 is in order. xxx _,../ 62 Docket (CTA Case No. 10236), Amended Quarterly Value-Added Tax Return (BIR Form No. 2550-Q), Exhibit "P-11", pp. 364-365. 63 !d., Application for Tax Credits/Refunds (BIR Form No. 1914), Exhibit "P-25", p. 396. 64 !d., Petition for Review, pp. 7-23. 65 !d., Amended Quarterly Value-Added Tax Return (BIR Form No. 2550-Q), Exhibit "P-15", pp. 376-377. 66 !d., Application for Tax Credits/Refunds (BIR Form No. 1914), Exhibit "P-26", p. 409. 67 Docket (CTA Case No. 10271), Petition for Review, pp. 10-32. 68 Docket (CTA Case No. 10236), Amended Quarterly Value-Added Tax Return (BIR Form No. 2550-Q), Exhibit "P-19", pp. 384-385. 69 !d., Application for Tax Credits/Refunds (BIR Form No. 1914), Exhibit "P-27", p. 422. 70 Docket (CTA Case No. 10294), Petition for Review, pp. 7-31. 71 Docket (CTA Case No. 10236), Quarterly Value-Added Tax Return (BIR Form No. 2550-Q), Exhibit "P-23", pp. 392-393. 72 !d., Application for Tax Credits/Refunds (BIR Form No. 1914), Exhibit "P-28", p. 436. 73 Docket (CTA Case No. 10359), Petition for Review, pp. 6-31.

DECISION CTA EB Nos. 2958 & 2959 (CTA Case Nos. 10236, 10271, 10294 & 10359) Combined with the disallowances found by the IC:PA, the total disallowances are now computed at [Php]9,332,913.28, leaving a valid input tax in the amount of [Php]3,720,321.72. xxx In sum, petitioner is entitled to the refund in the amount of [Php]3,720,321. 72.... "7" i\IRLC insists however that even without the S,-\D, the SSDT constitutes sufficient proof of the payment of V1\T on importation. ,-\s such, MRLC is entitled to the full refund of the input V,""T on importation of goods. MRLC's argument fails to persuade. The SSDT and SAD arc two different documents. The Sr\D contams the necessary details required by law while by SSDT serves as proof that the customs duties and taxes were duly paid during the period. \Vithout the S1\D, the Court cannot reasonably verify or link a payment of customs duties and taxes recorded in the SSDT to the specific import declaration of the goods subject of the case. In fact, this Court in Phi!ex i\1ining Co1poration v. CommiJJiomr of Intemal Reven!le75 considered the SSDT and SAD collectively (and not the SSDT alone) as sufficient substantiation for input V" \T on importations. VAT Oil ,PJtrcbaseJ of JerviceJ rendered ~v non-reJidentJ i\fuch like the first type of purchases, MRT ,C's claim for refund in relation to VAT input taxes from purchases of services rendered by non- residents (i.e., vxr withheld from payment of services to non-residents) is also untenable. The same cannot be refunded under Section 112 of the NIRC of 1997, as amended. 1\.s already indicated, J\IRLC has not yet retired or ceased its business operations. Nor is 1\IRLC engaged in zero-rated or effectively zero- rated sales by virtue of its tax-exempt status as a licensee ofP"-\.GCOR. \Vithout showing that tl1e non-residents who rendered such service to MRLC arc VAT- registered, the same cannot be pronounced as V"""T zero-rated sale under Section 108(B)(2)'6 of the NIRC of 1997, as amended./ 74 Docket (CTA Case No. 10236), Decision dated February 05, 2024, pp. 1084-1086. 75 CTA EB No. 2497 (CTA Case No. 10037), September 29, 2022. 76 SEC. 108. Value-Added Tax on the Sale ofServices, Including Digital Services, and the Use or Lease ofProperties. XXX XXX XXX {B) Transactions Subject to Zero Percent {0%) Rate- The following services performed in the Philippines by VAT- registered persons shall be subject to zero percent (0%) rate. XXX XXX XXX

DECISION CTA EB Nos. 2.958 & 2.959 (CTA Case Nos. 102.36, 102.71, 102.94 & 10359) Page 2.5 of 2.7 There was also no erroneous payment under Sections 204(C) and 229 of the NIRC of 1997, as amended. \V'ithholding tax is not an internal revenue or local tax, but a mode of collecting tax in advance-'7 The nature of a withholding tax is explained in LG Electronics Pbilippi11es, lilt ?J. Commissioner ofli!temal Revenue78, viz.: "In the operation of the withholding tax system, the payee is the taxpayer, the person on whom the tax is imposed, while the payor, a separate entity, acts no more than an agent of the government for the collection of the tax in order to ensure its payment. Obviously, the amount thereby used to settle tl1e tax liability is deemed sourced from the proceeds constitutive of the tax base. ''79 Not being a tax in the strictest sense, l\!RLC's tax-exempt status as a licensee of Pc\GCOR cannot excuse it from remitting VAT wimhcld from its non-resident suppliers. Even PAGCOR's liability itself as a withholding agent is not covered by the tax exemptions under its Chat1er. This was me principle enunciated in in the case of CommiSJiomr of IHtemal Rwenm JJ. Secretary of Justice80 where the assessment of Final Withholding Tax on Fringe Benefits ("FBT") was upheld. Withheld VAT from non-resident suppliers are akin to I'BT which are treated as final taxes withheld by the payor for the payee. Considering all these pronouncements, We find no sufficient basis for both l\IRLC's and the CIR's assertions in their respective petitions. To summarize, J\IlU~C is not entitled to its claim for refund or issuance of a tax credit certificate for the passed-on VAT on its purchases of capital goods, and domestic purchases of goods (other than capital goods) and services, as well as the withheld VAT for its purchases of services rendered by non-residents. i\IRLC is only entitled to be refunded of the VAT it paid on its importation of goods (other than capital goods) amounting to Php3,720,321.7;:...- (2.) Services other than those mentioned in the preceding paragraph, rendered to a person engaged in business conducted outside the Philippines or to a nonresident person not engaged in business who is outside the Philippines when the services are performed, the consideration for which is paid for in acceptable foreign currency and accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP) [.] 77 Commissioner of Internal Revenue v. Commission on Elections, G.R. Nos. 2.44155 & 2.47508, May 11, 2021. 78 G.R. No. 165451, December 03, 2.014. 79 Emphasis and underscoring supplied. 80 G.R. No. 165451, December 03, 2.014.

DECISION CTA EB Nos. 2958 & 2959 (CTA Case Nos. 10236, 10271, 10294 & 10359) There being no reversible error committed by the court a quo, \'\le find no cogent reason to reverse or modify the I\ssailed Decision and Assailed Resolution. ACCORDINGLY, the instant Petitions for Review filed by Melco Resorts Leisure (PHP) Corporation and the Commissioner of Internal Revenue are DENIED for lack of merit. SO ORDERED. (L,,~ 4 ' - WE CONCUR: MA. BELEN M. RINGPIS-LIBAN Associate Justice c~�?-~ CATHERINE T. MANAHAN "-\ssociate Justice JEAN MARl WI~ . BACORRO-VILLENA (On Leave) MARIA ROWENA MODESTO-SAN PEDRO Associate Justice (I maintain my Dzssenting Opinion ifl the Assailed Decision and Resolution ifl CTA Case Nos. 10236, 10271, 10294 at!d 10359) MARIAN IVY F. REYES-FAJARDO Associate Justice /Jru~u"Mli LAJ4l:ff~1CUI~BAVID i\ssociate Justice

DECISION CTA EB Nos. 2958 & 2959 (CTA Case Nos. 10236, 10271, 10294 & 10359) co&~c.:'� s Associate Justice /JJL HENRY S. ANGELES Associate Justice CERTIFICATION Pursuant to "\rticle VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the cases were assigned to the writer of the opinion of the Court. - t. ~... 7 MA. BELEN M. RINGPIS-LIBAN I\cting Presiding Justice