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

J� REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SPECIAL FIRST DIVISION MELCO RESORTS LEISURE CTA Case Nos. 10099 & (PHP) CORPORATION, 10176 Petitione r, Members: -versus- DEL ROSARIO, P.J ., Chairperson, MANAHAN, and REYES-FAJARDO, JJ. COMMISSIONER OF Promulga ted: INTERNAL REVENUE, R e s p o n de nt. X - - - - - - - - - - - - - - - - - - - - - - - - - - --"AV.IM//Y{,---...., MANAHAN, J.: In the present consolidated Petitions for Review, petitioner prays for the refund or tax credit of allegedly erroneously or illegally collected input value-added tax (VAT) on its 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, to wit: CTA Case Nos. Amounts Periods covered 10 0 99 P4 3,4 69,9 19. 17 3rd qua rter of 2 01 7 10176 P39 ,220 ,03 1.74 4th qua rter of 2 0 17 THE PARTIES Petitioner Melco Resorts Leisure (PHP) Corporation [formerly, MCE Leisure (Philippines) Corporation] 1s a corporation organized and existing under the laws of the Philippines, with principal address a t Asean cor . Roxas o--

DECISION CTA case Nos. 10099 & 10176 Me/co Resorts Leisure {Php) Corporation vs. Commissioner ofInternal Revenue Boulevard, Barangay Tambo, Paraiiaque City. 1 It is a co- licensee and a holder of a Provisional License, and Regular Casino Gaming Licenses, all issued by the Philippine Amusement and Gaming Corporation (PAGCOR) in accordance with the PAGCOR Charter [Presidential Decree (PD) No. 1869, as amended by Republic Act (RA) No. 9487].2 Respondent, on the other hand, is the duly appointed Commissioner of Internal Revenue (CIR) who holds office at the Bureau of Internal Revenue (BIR) National Office Building located at BIR Ro,ad, Diliman, Quezon City. 3 ANTECEDENTS (ADMINISTRATIVE LEVEL) On March 29, 20 19, petitioner filed an administrative claim for refund or tax credit of erroneously and illegally paid VAT on purchases attributable or allocable to its revenues from gaming operations, for the 3rct quarter of taxable year 2017, amounting to P43,469,919.17. 4 The CIR, however, denied the same in his letter dated April 12, 2019, which was received by petitioner on July 30, 2019.5 On June 28, 2019, petitioner flied another administrative claim for refund or tax credit of erroneously and illegally paid VAT on purchases attributable or allocable to its revenues from gaming operations, for the 4th quarter of taxable year 2017, in the amount of P39,220,031.74. 6 The CIR likewise denied the same in his letter dated September 17, 2019, which was received by petitioner on September 20, 2019.7 1 Par. 1, Stipulation of Facts, Joint Stipulations of Facts and Iss ues {JSFI), Docket (CTA Case No. 10099) - Vol. I, p. 385. Refer also to Exhibit "P- 1", Docket (CTA Case No. 10099)- Vol. I, pp. 187 to 192. 2 Exhibits "P-2", "P-3", "P-4", Docket (CTA Case No . 10099)- Vol. I, p. 193, 194, and 197, respectively. 3 Par. 2, Stipulation of Facts, JSFI, Docket (CTA Case No. 10099) - Vol. I, p. 385. 4 Par. 3, Stipulation of Facts, JSFI , Docket (CTA Case No. 10099) -Vol. I, p . 385; and Exhibits "P-20" and "P-20-1", Docket (CTA Case No. 10099)- Vol. I, pp. 235 to 247. 5 Exhibit "P-22", Docket (CTA Case No. 10099)- Vol. I, pp. 261. 6 Par. 4, Stipulation of Facts, JSFI , Docket (CTA Case No. 10099) -Vol. I, p . 385; and Exhibits "P-21" to "P-21-1", Docket (CTA Case No. 10099)- Vol. I, pp. 248 to 260 . 7 Exhibit "P-23", Docket (CTA Case No. 10099) - Vol. I, p. 262. ~

DECISION CTA Case Nos. 10099 & 10176 Me/co Resorts Leisure {Php) Corporation vs. Commissioner ofInternal Revenue PROCEEDINGS BEFORE THIS COURT For an orderly presentation, the Court deems it proper to separately state the proceedings that took place prior to the consolidation of the present cases. CTA Case No. 10099: Alleging respondent's inaction on its claim for refund amounting to P43,469,919.17, 8 petitioner filed its Petition of Review on July 1, 2019.9 On August 15, 2019, respondent filed a Motion for Extension of Time to File Answer, 10 which the Court granted in the Order dated August 27, 2019,11 thereby giving respondent until September 16, 2019 to file his Answer. Respondent filed the same on September 16, 2019.12 The Pre-Trial Conference was set on November 21, 2019.13 Respondent transmitted the BIR Records for this case on September 25, 2019.14 On November 13, 2019, petitioner filed its Omnibus Motion: I. To Consolidate with CTA Case No. 10176; and II. To Postpone Pre-Trial Conference set on November 21J 2019 at 9:00 A.M. 1s In the Order dated November 20, 2019, 16 the Court ordered respondent to file his comment or opposition to the said Motion To Consolidate, and granted the said Motion To Postpone Pre-Trial Conference, thereby cancelling the scheduled Pre-Trial Conference, until its further orders. sPar. 20, Petitionfor Review, Docket (CTA Case No. 10099)- Vol. I, a t p. 14. 9 Docket (CTA Case No. 10099) - Vol. I, pp. 10 to 30. 10 Docket (CTA Case No. 10099) - Vol. I, pp. 70 to 72. 11 Docket (CTA Case No. 10099) - Vol. I, p. 75. 12 Docket (CTA Case No. 10099) - Vol. I, pp. 79 t o 88. 13 Notice of Pre-Trial Conference d a ted September 24, 20 19, Docket (CTA Case No. 10099) - Vol. I, pp. 90 to 9 1. 14 Docket (CTA Case No. 10099) - Vol. I, pp. 94 to 96. 1s Docket (CTA Case No. 10099) - Vol. I, pp. 102 to 106. . _ / 16 Docket (CTA Case No. 10099) - Vol. I, pp. 12 1 to 122. c:9""'

DECISION CTA case Nos. 10099 & 10176 Me/co Resorts Leisure (Php) Corporation vs. Commissioner ofInternal Revenue Respondent, however, failed to file his comment.17 In the meantime, on November 15, 2019, respondent filed his Pre-Trial Brief 1s In the Resolution dated February 3 , 2020, 19 the Court granted petitioner's Motion To Consolidate with CTA Case No. 10176. CTA Case No. 10176: Appealing the denial of petitioner's refund claim amounting to P39,220,031.74, the Petition for Review for this case was filed by p etitioner on October 1, 20 19.2o On October 30, 2019, respondent filed his Motion for Extension of Time to File Answer,21 which the Court granted in the Order dated November 8, 2019 ,22 thereby giving respondent until December 2, 2019 to file his Answer. Petitioner filed its Motion for Consolidation [with CTA Case No. 10099} on November 13, 2019. 23 Respondent, however, failed to file his comment the r e to.24 Respondent filed his Answer on December 2, 2019, 25 interposing certain special and affirmative defenses, which are substantially the same as those proffered by respondent in CTA Ca se No. 10099. 17 Records Verification dated J a nuary 3, 20 20 issued by this Court 's Judicial Records Division, Docket (CTA Case No. 10099)- Vol. I, p . 129 . 1s Docket (CTA Case No. 10099)- Vol. I, pp. 108 to 110. 19 Docket (CTA Case No. 10099) - Vol. I, pp. 134 to 135. 2o Docket (CTA Case No. 10 176), pp. 6 to 23. 21 Docket (CTA Case No. 10176), pp. 64 to 67. 22 Docket (CTA Case No. 101 76), pp. 69 to 70. 23 Docket (CTA Case No. 10 176), pp. 7 4 to 77. 24 Records Verification dated January 8, 2020 issu ed by the J udicial Records Division of this Court, Docket (CTA Case No. 10 176), p . 102. ~ 2s Docket (CTA Case No. 10 176), pp . 79 to 88. ~

DECISION CTA case Nos. 10099 & 10176 Me/co Resorts Leisure (Php) Corporation vs. Commissioner ofInternal Revenue On December 11, 20 19, respondent filed a Motion to Defer Transmittal of BIR Records,26 which the Court granted in the Resolution dated January 20, 2020.27 In the Resolution dated February 3, 2020,28 the Court consolidated CTA Case No. 10176 with CTA Case No. 10099. After the consolidation of the cases: In the Resolution dated February 17, 2020,29 the Court set the Pre-Trial Conference on April 2, 2020, and directed the parties to submit their respective consolidated Pre-Trial Briefs, and judicial affidavits of their intended witness/es and exhibits. Respondent filed his Pre-Trial Brief on August 20, 2020.30 On the other hand, the Consolidated Pre-Trial Brief for Petitioner was submitted on November 6, 2020.31 The BIR Records for CTA Case No. 10176 was transmitted on November 10, 2020;32 and Respondent's Pre-Trial Brief for the same case was filed on November 11, 2020.33 After three (3) resettings,34 the Pre-Trial Conference was eventually held on March 4, 2021.35 On March 19, 2021, the parties filed their Joint Stipulation of Facts and Issues,36 which the Court approved in its Resolution dated May 26, 2021, 37 thereby deeming the 26 Docket (CTA Case No. 10176), pp. 97 to 100. 27 Docket (CTA Case No. 10176), p. 105. 28 Docket (CTA Case No. 10099) - Vol. I, pp. 107 to 108. 29 Docket (CTA Case No. 10099)- Vol. I, p. 138. 30 Docket (CTA Case No. 10099)- Vol. I, pp. 148 to 151. 31 Docket (CTA Case No. 10099) - Vol. I, pp. 263 to 295 . 32 Docket (CTA Case No. 10099) - Vol. I, pp. 350 to 352. 33 Docket (CTA Case No. 10099) - Vol. I, pp. 354 to 358. 34 Resolution dated June 15, 2020, Docket (CTA Case No. 10099) - Vol. I, p. 147; Notice of Resetting dated September 15, 2020, Docket (CTA Case No. 10099) - Vol. I, p. 164; Resolution d a ted December 9, 2020, Docket (CTA Case No. 10099) - Vol. I, pp. 365 t o 366. 35; Minutes of the h earing held on, and Order dated, March 4, 2021, Docket (CTA Case No. 10099) - Vol. I, pp. 367 to 369, a nd 377 to 383, respectively. 36 Docket (CTA Case No. 10099)- Vol. I, pp. 385 to 4 14. 37 Docket (CTA Case No . 10099) - Vol. I, pp. 441 to 442. ~

DECISION CTA case Nos. 10099 & 10176 Me/co Resorts Leisure {Php) Corporation vs. Commissioner ofInternal Revenue termination of the Pre-Trial. The Pre-Trial Order dated September 27, 2021 was then issued.38 Trial ensued, with both parties presenting and offering their respective documentary and testimonial evidence. Petitioner offered the testimonies of the following individuals, namely: (1) Mr. Julius-Ver De Guzman, 39 petitioner's Financial Controller; (2) Mr. Rafael B. Taladtad, Jr., 40 petitioner's Director for Revenue Audit; and (2) Ms. Madonna Mia S. Dayego, 41 the Court-commissioned independent certified public accountant (ICPA) .42 The Report dated August 12, 2021 of the said !CPA was submitted on October 25, 2021.43 On February 3 , 2022 , p etitioner filed its Formal Offer of Evidence,44 to which respondent filed his Comment (On Petitioner's Formal Offer of Evidence) on February 16, 2022.45 In the Resolution dated April 19, 2022,46 the Court admitted all of petitioner 's offered exhibits. For his part, respondent offered the testimonies of the following Revenue Officers: (1) Mr. Joel M. Aguila, 47 and (2) Ms. Ma . Theresa L. Espino.48 38 Docket (CTA Case No. 10 099) - Vol. I, pp. 5 11 to 53 1. 39 Exhibit "P-3 1", Dock et (CTA Case No. 10099) - Vol. I, pp. 173 to 186; Min u tes of t h e hearing held on, and Order dated, June 15, 2021, Docket (CTA Case No. 10099) - Vol. I, pp. 4 77 to 48 1, and 484 to 487, respectively. 40 Exhibit "P-32", Docket (CTA Case No. 10099) - Vol. I, pp. 301 to 311; Minutes of the h earing h eld on , and Order dated, J une 15, 2 02 1, Docket (CTA Case No. 10099) - Vol. I, pp. 477 to 48 1, and 484 to 487, respectively . 41 Exhibit "P-36", Docket (CTA Case No. 10099) - Vol. I, pp. 6 10 to 6 18; Minutes of the h earing h eld on , and Or der dated, November 23, 202 1, Docket (CTA Case No. 10099) -Vol. II, pp. 62 5 to 629. 42 Oath of Com mission d ated July 8, 2 02 1, Dock et (CTA Case No . 10099) - Vol. I, p. 500; Minutes of the h earing h eld on , a nd Order d a ted , July 8, 202 1, Dock et (CTA Case No. 10099) - Vol. I, p p . 497 to 499, an d 50 1 to 502, resp ectively. 43 Exhibit "P-34", Docket (CTA Case No. 10099)- Vol. I, pp. 533 to 60 1. 44 Docket - Vol. II , pp. 640 to 694. 45 Docket- Vol. II , pp, 76 1 to 763. 46 Docket - Vol. II, pp. 774 to 778. 47 Exhibit "R-9", Docket (CTA Case No . 10099) -Vol. I, pp. 116 to 120; Minutes of the hearing h eld on, and Order dated, June 2 1, 2022, Docket (CTA Case No. 10099) - Vol. II, pp. 779 to 78 1. 48 Exhibit "R- 10", Docket (CTA Case No. 10099)- Vol. I, pp. 155 to 159; Minutes of the hearing h eld on , and Orde~ated, June 2 1, 2022, Docket (CTA Case No. 10099) - Vol. II, pp. 779 to 781. ~

DECISION CTA Case Nos. 10099 & 10176 Me/co Resorts Leisure (Php) Corporation vs. Commissioner ofInternal Revenue On July 1, 2022 , respondent filed his Formal Offer of Evidence,49 to which petitioner filed its Comment [On Respondent's Formal Offer ofEvidence dated June 30, 2022] on July 11, 2022.50 In the Resolution dated August 5, 2022,51 the Court admitted all of respondent's offered exhibits. In the Manifestation da ted September 9 , 2022, 52 respondent stated that he is adopting the arguments he raised in his Answers filed before the Court on September 16, 20 19 and on December 2, 2019 as his Memorandum. On the other hand, the Memorandum for Petitioner was filed on September 12, 2022 .53 This case was submitted for decision on September 23, 2 0 2 2 .54 THE ISSUE STIPULATED BY THE PARTIES The parties stipula ted the following issue for this Court's resolution, viz.: "WHETHER PETITIONER IS ENTITLED TO A REFUND OR TAX CREDIT OF ERRONEOUSLY AND ILLEGALLY PAID VAT ON PURCHASES OF CAPITAL GOODS, DOMESTIC PURCHASES OF GOODS (OTHER THAN CAPITAL GOODS) AND SERVICES, IMPORTATION OF GOODS (OTHER THAN CAPITAL GOODS}, AND PURCHASE OF SERVICES RENDERED BY NONRESIDENTS, WHICH ARE ATTRIBUTABLE OR ALLOCABLE TO REVENUES FROM GAMING OPERATIONS, FOR THE 3RD (AND] 4TH QUARTERS OF 2017(,] AMOUNTING TO P43 ,469,919 .17 AND P39,220 ,031.74, RESPECTIVELY, OR IN THE AGGREGATE AMOUNT OF P8 2,689 ,950.91."55 49 Docket (CTA Case No. 10099) - Vol. II, pp. 78 1 to 785. 50 Docket (CTA Case No. 10099) - Vol. II, pp. 787 to 788. 5 1 Docket (CTA Case No . 10099) - Vol. II , pp. 790 to 791. 52 Docket (CTA Case No. 10099) - Vol. II, pp. 792 to 794 . 53 Docket (CTA Case No. 10099) - Vol. II, pp. 796 to 83 1. 54 Resolution dated September 23, 2022, Docket (CTA Case No. 10099) - Vol. II, p. 833. 55 Stipulation of Issue, JSFI, Docket (CTA Case No. 10099), p. 386. ~

DECISION CTA case Nos. 10099 & 10176 Me/co Resorts Leisure (Php) Corporation vs. Commissioner ofInternal Revenue Petitioner's arguments: Petitioner argues that Section 13(2)(b), in relation to Section 13(2)(a), of PD No. 1869, as amended, grants PAGCOR licensees/contractees exemption from taxes on its gaming- related operations; that the VAT passed on to petitioner on its purchases related or allocable to gaming operations is contrary to the express provision of Section 13(2)(b), in relation to Section 13(2)(a), of PD No. 1869, as amended, and, hence , erroneously or illegally paid; that petitioner, to whom the economic burden of the input tax is shifted, is allowed to claim a tax refund or issuance of tax credit certificate as PD No. 1869, as amended, clearly grants PAGCOR and its licensees an exemption from both direct and indirect taxes, such as VAT; and that petitioner timely filed its claim for refund or issuance of tax credit certificate of its erroneously and illegally paid VAT, arising from the 3rct and 4th quarters for taxable year 2017, pursuant to Sections 204 and 229 of the 1997 National Internal Revenue Code (NIRC), as amended. Respondent's counter-arguments: Respondent contends that petitioner, being a mere licensee of PAGCOR, is not entitled to the tax exemption under PD No. 1869; that petitioner's reliance on the theory that Section 13(2)(B), in relation to Section 13(2)(A), of PD No. 1869, exempts it from payment of income taxes, is misplaced; that even on the assumption that petitioner is exempt from payment of VAT, petitioner cannot claim a refund from respondent; and that the recourse of the petitioner is not to claim the same from the respondent but from its suppliers. THE COURT'S RULING The present consolidated Petitions for Review are denied. Petitioner, as a PAGCOR licensee, is NOT exempt from taxes, including VAT, pursuant to Section 13(2) of PD No. 1869, as amended. ~

DECISION CTA Case Nos. 10099 & 10176 Me/co Resorts Leisure (Php) Corporation vs. Commissioner ofInternal Revenue It is noteworthy that what is being claimed for refund in the aggregate amount of P82,689,950 .91 represents alleged VAT passed-on to petitioner on its purchases related or allocable to its gaming operations. Apropos, it is elementary that taxes are classified into direct or indirect, depending on who pays or bears the burden thereof. A direct tax is one where the person supposed to pay the tax really pays it, without transferring the burden to someone else.56 On the other hand, an indirect tax is one where the tax is imposed upon goods before reaching the consumer who ultimately pays for it, not as a tax, but as part of the purchase price.57 Relative thereto, it must be emphasized that the VAT is a tax on consumption, an indirect tax that the provider of goods and services may p a ss on to the latter's customers.58 Petitioner invokes Section 13(2) of PD No. 1869 59, as amended, as basis for its supposed indirect tax exemption, to wit: "SEC. 13 . Exemptions.- XXX XXX XXX (2) Income and other taxes. - (a) Franchise Holder: No tax of any kind or form, income or otherwise, as well as fees, charges or levies of whatever nature, whether National or Local, shall be assessed and collected under this Franchise from the Corporation; nor shall any form of tax or charge attach in any way to the earnings of the Corporation, except a Franchise Tax of five (5%) percent of the gross revenue or earnings derived by the Corporation from its operation under this Franchise. Such tax shall be due and payable quarterly to the National Government and shall be in lieu of all kinds of taxes, levies, fees or assessments of any kind, nature or description, levied, established or collected by any municipal, provincial, or national government authority. 56 Maceda vs. Macaraig, Jr., et al., G.R. No. 88291, Jun e 8, 1993. 57 Id.. 58 Panasonic Communication Imaging Corporation of the Philippines vs. Commissioner of Internal Revenue, G.R. No. 178090, February 8, 20 10. 59 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 CORPORATI ON (PAGCOR). ~

DECISION CfA Case Nos. 10099 & 10176 Me/co Resorts Leisure {Php) Corporation vs. Commissioner ofInternal Revenue (b) Others: The exemptions herein granted for earnings derived from the operations conducted under the franchise specifically from the payment of any tax, income or 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 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 Corporation or operator as a result of essential facilities furnished and/or technical services rendered to the Corporation or operator. The fee or remuneration of foreign entertainers contracted by the Corporation or operator in pursuance of this provision shall be free of any tax. XXX XXX XXX." (Emphases and underscoring added) Based on the foregoing provision, it is clear that PAGCOR is exempt from the payment of any tax, whether national or local, except for a franchise tax at the rate of 5�/o of the gross revenue or earning derived by it from its operation under PD No. 1869; and that the said tax exemption inures to the benefit of and extend: (1) to corporations, associations, agencies, or individuals with whom .PAGCOR or operator has any contractual relationship in connection with the operation of casino(s) authorized under PD No. 1869; and (2) to those receiving compensation or other remuneration from PAGCOR or operator as a result of essential facilities furnished and/or technical services rendered to PAGCOR or operator. In other words, PD No. 1869 lays down the imposition of a five percent (5�/o) franchise tax of the gross revenues or earnings derived from its operations conducted under the Franchise, which shall be due and payable 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. 60 Since the payment of the said five percent (5�/o) franchise tax shall be ((in lieu of all kinds of taxes", the tax exemption privilege being enjoyed by PAGCOR is dependent on such payment. 60 Refer to Philippine Amusement and Gaming Corporation (PAGCOR} us. The Bureau of Internal Re venue, et al. , G .R. No. 2 15427 , December 10, 2014. ~

DECISION CTA Case Nos. 10099 & 10176 Me/co Resorts Leisure {Php) Corporation vs. Commissioner ofInternal Revenue Relative thereto, it is already settled that PAGCOR 1s exempt from payment of indirect taxes, like VAT.61 In Bloomberry Resorts and Hotels, Inc. vs. Bureau of Internal Revenue, 62 the Supreme Court ruled that all contractees and licensees of PAGCOR, upon payment of the 5�/o franchise tax, shall likewise be exempted from all other taxes,63 including VAT. However, in Thunderbird Pilipinas Hotels and Resorts, Inc. vs. Commissioner of Internal Revenue, 64 the Supreme Court clarified that the abovementioned exemptions do not apply to a PAGCOR licensee authorized to operate its own casino, as follows: A more deliberate reading of Section 13(2)(b) of Presidential Decree No. 1869 and the amendments under Republic Act No. 9487 provides more formidable support for the conclusion in this case. The amendments merely pertained to giving PAGCOR the authority to issue licenses for casino operations. Had Congress also intended to extend the tax exemptions to PAGCOR licensees, it could have easily done so by expanding Section 13(2)(b) and adding words such as "licensees of PAGCOR" and the like. There must be a positive provision, not merely a vague implication, of the law creating that exemption. Presidential Decree No. 1869 was issued to centralize the operation of casinos into one corporate entity, PAGCOR. Section 1 states: SECTION 1. Declaration of Policy. - It is hereby declared to be the policy of the State to centralize and integrate all games of chance not heretofore authorized by existing franchises or permitted by law in order to attain the following objectives: (a) To centralize and integrate the right and authority to operate and conduct games of chance into one corporate entity to be controlled, administered and supervised by the Government; 61 Commissioner of Internal Revenue vs. Acesite (Philippines} Hotel Corporation, G.R. No. 147205, February 16, 2007. 62 G.R. No. 2 12530, August 10, 2016. 63 Id. 64G.R. No. 211327, November 11, 2020. ~

DECISION CTA Case Nos. 10099 & 10176 Me/co Resorts Leisure (Php) Corporation vs. Commissioner ofInternal Revenue (b) To establish and operate clubs and casinos for amusement and recreation, including sports gaming pools (basketball, football, lotteries, etc.) and such other forms of amusement and recreation including games of chance, which may be allowed by law within the territorial jurisdiction of the Philippines and which will: (1) generate sources of additional revenue to fund infrastructure and socio- CIVIC projects, such as flood control programs, beautification, sewerage and sewage projects, Tulungann ng Bayan Centers, Nutritional Programs, Population Control and such other essential public services; (2) create recreation and integrated facilities which will expand and improve the country's existing tourist a ttractions; and (3) minimize, if not totally eradicate, the evils, malpractices and corruptions that are normally prevalent in the conduct and operation of gambling clubs and casinos without direct government involvement. (emphasis supplied) Thus, when the tax exemptions were granted under Section 13 of Presidential Decree No. 1869, the legislature contemplated a scenario where the casino operations would be centralized under the sole and exclusive authority of PAGCOR. Under Section 13(2)(a), PAGCOR was granted tax exemption on earnings derived from its casino operations. This tax exemption was, under Section 13(2)(b), also extended to entities that have a contractual relationship with PAGCOR in connection with its operation of casinos. In other words, the clause "operations of the casino(s) authorized to be conducted under this Franchise" under Section 13(2)(b) referred to casinos operated by PAGCOR itself. The legislature, then, could not have envisioned that the clause would cover casinos operated by PAGCOR licen sees since, at that time, PAGCOR had the sole and exclusive authority to operate casinos. Had that been its intention, Congress should have unequivocally provided in the amendatory law, Republic Act No. 9487, that tax exemptions extend to PAGCOR licensees.~

DECISION CfA Case Nos. 10099 & 10176 Me/co Resorts Leisure (Php) Corporation vs. Commissioner ofInternal Revenue As stated earlier, it is a settled rule that tax exemptions are strictly construed and must be couched in clear language. This Court has held that "if an exemption is found to exist, it must not be enlarged by construction, since the reasonable presumption is that the state has granted in express terms all it intended to grant at all. Again, the ruling in Acesite is more applicable. There, this Court construed Section 13(2) of Presidential Decree No. 1869 to resolve the issue of "whether PAGCOR's tax exemption privilege includes the indirect tax of VAT to entitle Acesite to zero percent (0%) [value-added tax] rate." Upon examining Section 13(2), this Court ruled that PAGCOR is exempt from both direct taxes (under paragraph a) and indirect taxes (under paragraph b). It categorically explained that "the proviso in [Presidential Decree No.] 1869, extending exemption to entities or individuals dealing with PAGCOR in casino operations, is clearly to proscribe any indirect tax, like [value-added tax], that may be shifted to PAGCOR." Ultimately, the tax exemptions granted under Section 13 were primarily meant to favor only PAGCOR, and not any other entity. Thus, following this Court's pronouncement in Acesite, we construe Section 13(2)(b) of Presidentia l Decree No. 1689 to mean that the tax exemption of PAGCOR extends only to those individuals or entities that have contracted with PAGCOR in connection with PAGCOR's casino operations. The exemption does not include private entities that were licensed to operate their own casinos. (emphasis in the originan This was further clarified in Revenue Memorandum Circular (RMC) No. 32-2022, which provides: ... For VAT purposes, however, the ruling of the Court in CIR v. Acesite (Philippines) Hotel Corporation, as further clarified by the Court in the recent case of Thunderbird Pilipinas Hotel & Resorts, Inc. v. CIR, is instructive. There, the Court clarified that PAGCOR, pursuant to its Charter, is also exempt from indirect tax, like VAT, on its gaming operations. The tax exemption of PAGCOR extends only to those individuals or entities that have contracted with PAGCOR (PAGCOR Contractees and not Licensees) in connection with PAGCOR's gaming operations. This is to proscribe any indirect tax, like VAT, that may be shifted to PAGCOR. Thus, pursuant to Acesite and Thunderbird rulings, for PAGCOR Licensees, their revenues from gaming operations, tPJ(..--

DECISION CTA Case Nos. 10099 & 10176 Me/co Resorts Leisure {Php) Corporation vs. Commissioner ofInternal Revenue involving sale of goods and/or services in the course of trade or business, are generally subject to VAT. In the event, however, that they have also contracted with PAGCOR in connection with the latter's gaming operations, then, the goods they provided and/or services performed to PAGCOR in relation to such gaming operations are subject to zero percent (0%) VAT pursuant to Sections 106(A)(2)(b) a nd 108(B)(3 ) of the NIRC of 1997, as amended. In the instant case, petitioner is a licensee of PAGCOR, thus, PAGCOR's exemption does not inure to its benefit. Petitioner has no legal personality to file the subject refund c laim.s. Even assum1ng arguendo that petitioner enJoys PAGCOR's exemptions, it is still not entitled to the refund since the alleged VAT passed on by petitioner's suppliers and paid by petitioner cannot be said to have been erroneously or illegally collected. Likewise, petitioner has no legal personality to file the subject refund claims. In Philippine Airlines, Inc. us. Commissioner of Internal Revenue (PAL case),65 the Supreme Court held as follows : ".. .the propriety of a tax refund claim is hinged on the kind of exemption which forms its basis. If the law confers an exemption from both direct or indirect taxes, a claimant is entitled to a tax refund even if it only bears the economic burden of the applicable tax. On the other hand, if the exemption conferred only applies to direct taxes, then the statutory taxpayer is regarded as the proper party to file the refund claim. XXX XXX XXX ...given the foregoing direct and indirect tax exemptions under its franchise, and applying the principles as above-discussed, PAL is endowed with the legal standing to file the subject tax refund claim, notwithstanding the fact that it is not the statutory taxpayer as contemplated by law." 65 G.R. No. 198759 , July 1, 2013. ~

DECISION CfA Case Nos. 10099 & 10176 Me/co Resorts Leisure (Php) Corporation vs. Commissioner ofInternal Revenue The legal standing of a person to file a refund claim would depend on the tax exemption being enjoyed by the said person. If the law confers a direct or indirect tax exemption, a claimant is entitled to a tax refund even if it only bears the economic burden of the applicable tax. On the other hand, if the exemption conferred only applies to direct taxes, then the statutory taxpayer is regarded as the proper party to file the refund claim. In this case, pursuant to Section 13(2) of PD No. 1869, as amended, and as shown by the evidence presented herein, the direct and indirect tax exemptions of PAGCOR do not extend to petitioner, as a licensee of PAGCOR. However, petitioner anchors the filing of the instant claim for refund of the alleged erroneously collected and paid input VAT on Sections 204 and 229 of the 1997 NIRC, as amended, which read as follows: "SEC. 204. Authority of the Commissioner to Compromise/Abate and Refund or Credit Taxes. - The Commissioner may - XXX XXX XXX (C) Credit or refund taxes erroneously or illegally received or penalties imposed without authority, 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 re fund their value upon proof of destruction. No credit or refund of taxes or penalties shall be allowed unless the taxpayer files in writing with the Commissioner a claim for credit or refund within two (2) years after the payment of the tax or penalty: Provided, however, that a return filed showing an overpayment shall be considered as a written claim for credit or refund." (Emphasis added) "SEC. 229 . Recovery of Tax Erroneously or fllegally Collected. -No suit or proceeding sh a ll be m a intain ed 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, 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 I!?K---

DECISION CTA Case Nos. 10099 & 10176 Me/co Resorts Leisure {Php) Corporation vs. Commissioner ofInternal Revenue proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress. In any case, no such suit or proceeding shall be filed after the expiration of two (2) years from the date of payment of the tax or penalty regardless of any supervening cause that may arise after payment: Provided, however, That the Commissioner may, even without a written claim therefor, refund or credit any tax, where on the face of the return upon which payment was made, such payment appears clearly to have been erroneously paid." (Emphases added) Parenthetically, the foregoing provisions allow the recovery of taxes erroneously or illegally collected. An "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 aspect is illegal. 66 Notably, erroneous or wrongful payment includes excessive payment because they all refer to payment of taxes not legally due.67 With the application of Section 229, the rules relative to legal standing to file refund claims are further qualified, specifically those involving the refund of passed on VAT or input VAT. In Coca-Cola Bottlers Philippines, Inc. vs. Commissioner of Internal Revenue,68 the Supreme Court ruled as follows: "Petitioner, in advancing its claim for refund or tax credit, cannot rely on Section 229 of the 1997 NIRC, as amended. Time and again, the Court had consistently ruled on the inapplicability of Section 229 to claims for the recovery of unutilized input VAT. In Commissioner of Internal Revenue v. San Roque Power Corporation (San Roque},69 the Court explained that input VAT is not 'excessively' collected as understood under Section 229 because at the time the input VAT is collected, the amount paid is correct and proper. If said input VAT is in fact 'excessively' collected as understood under Section 229, 66 Commissioner of Internal Revenue vs. Pilipinas Shell Petroleum Corporation, G.R. No. 188497, April 25, 2012 , citing the definition provided in BLACK'S LAW DICTIONARY, Fifth Edition, p. 486. 67 Commissioner of Internal Revenue vs. San Roque Power Corporation, et seq., G.R. Nos. 187485, 196113, and 197156, February 12, 2013. 68 G.R. No. 222428, February 19, 2018. 69 703 Phil. 300, 365 (2013), G.R. Nos. 187485, 196113 & 197156, February 12, 2013 . ~

DECISION CfA Case Nos. 10099 & 10176 Me/co Resorts Leisure (Php) Corporation vs. Commissioner ofInternal Revenue then it is the person legally liable to pay the input VAT, and not the person to whom the tax is passed on and who is applying the input VAT as credit for his own output VAT, who can file the judicial claim for refund or credit outside the VAT system. The Court, in San Roque, expla ined as follows: III. 'Excess' Input VAT and 'Excessively' Collected Tax The input VAT is not 'excessively' collected as understood under Section 229 because at the time the input VAT is collected the amount paid is correct and proper. The input VAT is a tax liability of, and legally paid by, a VAT-registered seller of goods, properties or services used as input by anoth er VAT-registered person in the sale of his own goods, properties, or services. This tax liability is true even if the seller passes on the input VAT to the buyer as part of the purchase price. The second VAT-registered person, who is not legally liable for the input VAT, is the one who applies the input VAT as credit for his own output VAT. If the input VAT is in fact 'excessively' collected as understood under Section 229, then it is the first VAT-registered person - the taxpayer who is legally liable and who is deemed to have legally paid for the input VAT - who can ask for a tax refund or credit under Section 229 as an ordinary refund or credit outside of the VAT System. In such event, the second VAT-registered taxpayer will have no input VAT to offset against his own output VAT. In a claim for refund or credit of 'excess' input VAT under Section llO(B) and Section 112(A), the input VAT is not 'excessively' collected as understood under Section 229. At the time of payment of the input VAT the amount paid is the correct and proper amount. Under the VAT System, there is no claim or issue that the input VAT is 'excessively' collected, that is, that the input VAT paid is more than what is legally due. The person legally liable for the input VAT cannot claim that h e overpaid the input VAT by the mere existence of an 'excess' input VAT. The term 'excess' input VAT simp ly m eans that the input VAT availa ble as credit exceeds the output VAT, not that the input VAT is excessively collected because it is more than wh at is legally due. Thus, the ~

DECISION CTA Case Nos. 10099 & 10176 Me/co Resorts Leisure (Php) Corporation vs. Commissioner ofInternal Revenue taxpayer who legally paid the input VAT cannot claim for refund or credit of the input VAT as 'excessively' collected under Section 229. xxxx x x x Only the person legally liable to pay the tax can file the judicial claim for refund. The person to whom the tax is passed on as part of the purchase price has no personality to file the judicial claim under Section 229. xxxx Any suggestion that the 'excess' input VAT under the VAT System is an 'excessively' collected tax under Section 229 may lead taxpayers to file a claim for refund or credit for such 'excess' input VAT under Section 229 as an ordinary tax refund or credit outside of the VAT System. Under Section 229, mere payment of a tax beyond what is legally due can be claimed as a refund or credit. There is no requirement under Section 229 for an output VAT or subsequent sale of goods, properties, or services using materials subject to input VAT. From the plain text of Section 229, it is clear that what can be refunded or credited is a tax that is 'erroneously, xxx illegally, xxx excessively or in any manner wrongfully collected.' In short, there must be a wrongful payment because what is paid, or part of it, is not legally due. As the Court held in Mirant, Section 229 should 'apply only to instances of erroneous payment or illegal collection of internal revenue taxes.' Erroneous or wrongful payment includes excessive payment because they all refer to payment of taxes not legally due. Under the VAT System, there is no claim or issue that the 'excess' input VAT is 'excessively or in any manner wrongfully collected.' In fact, if the 'excess' input VAT is an 'excessively' collected tax under Section 229, then the taxpayer claiming to apply such 'excessively' collected input VAT to offset his output VAT may have no legal basis to make such offsetting. The person legally liable to pay the input VAT can~

DECISION CTA Case Nos. 10099 & 10176 Me/co Resorts Leisure {Php) Corporation vs. Commissioner ofInternal Revenue claim a refund or credit for such 'excessively' collected tax, and thus there will no longer be any 'excess' input VAT. This will upend the present VAT System as we know it." (Emphases and underscoring added) It is clear from the foregoing that input VAT is not 'excessively' collected as understood under Section 229 because at the time the input VAT is collected, the amount paid is correct and proper. Moreover, even if said input VAT is in fact 'excessively' collected as understood under Section 229, then it is the person legally liable to pay the input VAT, and not the person to whom the tax is passed on and who is applying the input VAT as credit for his or her own output VAT, who can file the judicial claim for refund or credit outside the VAT system. In this case, it is noteworthy that petitioner is a VAT- registered person. 70 Correspondingly, the VAT passed on to petitioner by its suppliers are input VAT. 7 1 As such, the aggregate amount of the present claims, i.e., P82,689,950.91, cannot be treated as 'excessively' collected as understood under Section 229 of the 1997 NIRC, as amended, and thus, may not be refunded by petitioner thereunder. As a corollary, there is no showing that the same amount being claimed for refund is in fact 'excessively' collected as understood under the same Section 229. But even if it was shown to be so, the same is still of no moment, and petitioner cannot still be entitled to refund the said amount. In other words, whether or not the amount being refunded in the present cases may be considered as, or is shown to be, excessively collected under Section 229 of the 1997 NIRC, as amended, the result is the same: petitioner is not entitled to the refund of the said aggregate amount. 70 Exhibit "P-5", Docket (CTA Case No. 10099) - Vol. I, pp. 198 to 199. 7 1 "The term 'input tax' means the value-added tax due from or p a id by a VAT-registered person in the course of his trade or bus iness on importation of goods or loca l purchase of goods or services, including lease or u se of property, from a VAT- registered person." [Section 110 (A)(3), NIRC of 1997, as amendedl ~

DECISION ~ CTA case Nos. 10099 & 10176 Me/co Resorts Leisure (Php) Corporation vs. Commissioner ofInternal Revenue It must be emphasized that actions for tax refund or credit, as in the present case, are in the nature of tax exemptions. As such, they are regarded as derogation of sovereign authority and to be construed strictissimi juris against the person or entity claiming the refund.72 Petitioner has the burden of proof to establish its entitlement thereto. Having failed to discharge the said burden of proof, the present refund claims must perforce be denied. WHEREFORE, in light of the foregoing considerations, the present consolidated Petitions for Review are DENIED for lack of merit. SO ORDERED. Associate Justice WE CONCUR: Presiding Justice ~ &w f. ~--f:~ ,~ (Wit~ �Jisse nting Opinion) MARIAN IVY F. REYES-FAJARDO Associate Justice n Commissioner of Internal Revenue us. S.C. Johnson & Son, Inc., G.R. No. 127 105, June 25, 1999.

DECISION CTA Case Nos. 10099 & 10176 Me/co Resorts Leisure (Php) Corporation vs. Commissioner ofInternal Revenue CERTIFICATION Pursuant to Article 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. Presiding Justice

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SPECIAL FIRST DIVISION MELCO RESORTS LEISURE CTA Case Nos. 10099 & 10176 (PHP) CORPORATION, Men1bers: Petitioner, Pr DEL ROSARIO, Chnirperson, - versus - MANAHAN, and REYES-FAJARDO, JL COMMISSIONER OF Promulgated: INTERNAL REVENUE, Respondent. X--- --- -------- - - - - - - - - - - - - - - - - - - - REYES-FAJARDO, J. : With due res pect to n1y esteemed co lleagu e Associate Justice Catherine T. Manahan, I dissent fron1 the n1ajority opinion for the reasons discussed in the ensuing paragraphs. Bloomberry Resorts nnri Hotels, In c. "ll. Burenu of lntenwl ReiJenue, represented by Connuissioner l<i111 5. jncinto1 settled tha t the inc01.11e tax exen1ption of the Philippine An1usement and Gaining Corporation ("PAGCOR") ex tends to its licensees and conrractees. The Supreme Court discussed as follows: Section 13 of PO No. 1869 ev idently s ta tes tha t pa yn1ent of the 5% franchise tax by PAGCOR and its contractees and licensees exempts them from pa yment of any other taxes, including co rporate income tax, quoted hereund er for read y reference: Sec. 13. Exemptions. - (2) In come and othe r taxes. - (a) Fra nchi se Hold er: No tax of any kind or form, income or G. R. No . 212530, Aug ust 10, 2016.

DISSENTING OPINIO N CTA Case Nos. 10099 & 10176 otherwise, as well as fees, charges or levies of whatever nature, whether National or Local, shall be assessed and collected under this Franchise from the Corporation; nor shall any form of tax or charge attach in any way to the earnings of the Corporation, except a Franchise Tax of five (5rYo) percent of the gross revenue or earnings derived by the Corporation from its operation under this Franchise. Such tax shall be due a nd payable qua rterly to the National Gov ernment and shall be in lie u of a ll kin ds of taxes, levies, fees or assessments of any k ind, nature o r d esc ri ption, lev ied , es ta blished or co llec ted by any municipal, prov incial, or na tional government a uthority. (b) Others: The exe mption herein grante d for earnings derived from the operations conducted under the franchise specifically from the payment of any tax, income or 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 h as any co ntractu al 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 Corporation or operator as a result of essential faciliti es furnis h ed and/or technical serv ices rend ered to the Corporation or operator. 2 As prev iously recogni zed, the above-qu oted prov ision prov iding for the said exem ptio n was neither a mended nor repea led by any subsequent laws (i.e. Sec tion 1 of R.A. No. 9337 w hich amende d Sectio n 27(C) of the NIRC of 1 997); th us, it is still in effect. Guided by the doctrinal teachings in resolv ing the case at bench, it is without a doubt th at, like PAGCOR, its contractees and licensees remain exempted from the payment of corporate income tax a nd other taxes sin ce th e law is clea r that said exe mption inures to their benefit. ~ Based on the foregoi ng, it is clear tha t pursu ant to Section 13(2)(a) and (b) of PD No. 1869: (1) the inco me of PAGCOR fron1 gaming opera tions is subjec t to fi ve percent (5%) franchise tax; (2) upon payn1ent of the five percent (5 %) franchise tax, PAGCOR's incmne fron1 its gam ing operations are exen1pt for all other taxes; (3) the tax regime or incentive of PAGCOR inures to the benefi t of and Emphasis supp lied . 3 Em phasis s u pplied .

DfSSENTlNG OPINION CTA Case Nos. 10099 & 10176 ex tend to a ll its contrac tees and licensees upo n s how ing of the pay ment of the five percent (5 %) franchise tnx. True, Thullrierbird Pilipinns Hotels nnrt Resorts, Inc. v. Co111111ission.er of Jnternn/ Revenue4 he ld in 2020 that PAGCOR's incon1e tax exemptions only extend to entities or individuals in a conh�actual rela ti onship with PAGCOR in connection with its casino opera tion s and not to PAGCOR licensees. However, in the more r ecent case of Snint Wenlth Ltrf. 11. Burenu of Internnl Revenue,5 the Supreme Court En Bnnc r eiterated the doctrine laid down in Bloomberry a nd h eld tha t PAGCOR's licensees are only liable to pay a five percent (5 %) franchise tax for inco1ne d erived fron1 its gaming operations. To w it: Clearly, both law an d jurisprudence mandate that PAGCOR's licensees are only liable to pay a fi ve percent (5%) franchise tax for income derived from its gaming opera tions. However, a plain reading of the PAGCOR Charter and the ruling in Bloo111herry shows that the liability of paying the five percent (5 %) franchise tax only applies to PAGCOR's licensees ,,vhich arc connected to the operations of casinos and other related amusement places. Stated differen tl y, the payment of this five percent (51'l'o) franchise tax only applies to PAGCOR licensees which operate casinos and other related amusement places, and excludes those licensees who derive profit from other means, such as POGOs. Thus, POGOs, including offshore-based POGO licensees, are not taxed under the PAGCOR Charter.6 In ruling in a bove n1anner, the Supren1e C o urt En Bnnc has clearly overturne d its Third Div is io n 's previous ruling in Thllnderbi rd and r everte d to the original doctrine in Bloomberry. It s hould be em phasized that the doctrine stnre rlecisis et non qu ietn IIJovere, as embod.ied in A rticle 8 of the C ivil Code of the Philippines/ enjoins adherence to judicial precedents and requires courts in a counh�y to follow the ru le established in a decision of the Supren1e Court thereof. As a 1natter of necessar y judicial practice, courts should adhere to that principle and appl y it to a ll future cases G.R. No. 211327, November 11 ,2020. G.R. Nos. 252965 & 25'-1"102, December 7, 2021. I> Emphasis supplied. ART. 8. Judicial d ec isi on~ applying or interpreting lhe laws or the Conslihttion shall for m a pari of the lega l system of the Philippines.

DISSE lT I lG OPI IO CTA Case Nos. 10099 & 10176 Page-l of 5 in w hich the facts are subs tantiall y the san1e .s Thus, w ith res pec t to the question of whether or n o t PAGCOR's tax exemptio n unde r its C har ter inures to the ben efit of its contrac tees and licen sees, the doctrine in Blool/lbern; as reitera ted in Snin t Wenlt/1 Ltri. must be applie d. H ere, petitioner was able to show tha t it is a licen see of P AGCOR. Petitioner is one of the corpora tions con1posin g the Con sortium, w hich was g ranted the Gaming License dated April 29, 2015 issued by P AGCOR for the period from Decen1ber 12, 2008 until Jul y 11, 2033.9 Petitioner also proved tha t the five percent (5 %) franchi se tax was pa id a nd re mitte d by PAGCOR to the BIR as ev ide nced by the fol low ing : a ) PAGCO I~ Ce rtJjicntioJL dnted October 8, 2019, IO b) PAGCOR Certificatio n dn ted July 8, 2019,11 c) Stnte71lent of Fmnchise Tnx /~e111i ttnnces for cnlenrinr yenr 2017 issued by PAGCOR, 12 d) PAGCOR's BII~ Fom1 No. 2553 (l~etu rn of Percentnge Tnx Pnynble uuder Specinl Lnws) for tile 3rt1 qunrter of 2017, l3 and e) PAGCOR's B/ 1~ For111 No. 2553 (Return of Percentage Tnx Pnynble under Special Lnws) for the 4111 qunrfer of 2017,14 amon g others. On the issue of pe titioner's lega l s tanding to fi le the s ubject tax refund clain1s, PILilippille Airlines, Inc. v. Couuuissioner of lnternnl Revenue15 h e ld tha t the pro prie ty of a tax refund clain1 is hinged on the kind of exem p tion w hich fonns its basis. Thus, if the law confers a n exemption fron1 both direct or indirect taxes, a c la iman t is enti tled to a tax r efund even if it o nl y bears th e eco n om ic burden o f th e applicable tax. On the o ther h and, if the exen1ption conferred only s Contntissioner of In lema/ Revel/lie v. !IIS/1/or Life Assurnnce Co. Lid., G.R . No. '197192, June 4, 2014. 9 Exh ibit " P-3", Docket - Vol. I p. 42. Refer also to Forma l O f fer of Evidence, Docket- Vol. II, p. 642. 10 Exhibit "P-26", Docket- Vol. I p. 335. Refer also to For mal Offer of Ev idence, Docket- Vol. II, p. 657-661. II Ex hi bit "P-26", Docket- Vol. I p. 336. Refer also to Forma l OffE'r of Evid ence, Docket- Vol. II, p . 657-661. 12 Exhibit "P-28", Docket- Vol. I p. 337. Refer also to Formal O f fer of Ev id ence, Docket- Vol. II , p. 657-661. 13 Exhibi t "P-29", Docket - Vol. I p. 338. Refer also to Formal Offer of Evidence, Docket- Vol. II, p. 657-661 . 14 Exhibit " P-30", Docket- Vol. I p. 344 . Refer also to For mal Offer o f Evidence, Docket- Vol. II, p. 657-661. 15 G.R. o. 198759, July 1, 2013.

� DISSE TI G OPI 10 C rA Cose I OS. 10099 & 10 176 applies to direc t taxes, then the statutory taxpayer is regard ed as the proper party to file the refund claim. 16 In this case, Section 13(2)(a) of PD No. 1869 provides that the fi ve percent (5 %) franchise tax on the gross revenues or earnings deri ved by PAGCOR fron1 its operations conducted under the franchise, which shall be due and payable in lieu of all kinds of taxes, levies, fees or assessn1ents of any kind, nature or description, levied, established or collected by any 1nunicipal, provincial or na tionaI govern1nent authority. 17 C learl y, PD lo. 1869 g rants PAGCOR an exe n1 ption from both d irec t and indirect taxes. The sa me tax exemption inures to the benefit of pe titioner, a PAGCOR licensee, as prov ided und er Section 13(2)(a) and (b) of PD No. 1869, gnnng petitioner a lega l sta nd ing to fil e the s ubject tax refund claims. Accordingly, I SUBMIT that petitioner should be allowed to refund the an1ount of input value-added tax it paid for its purchases ath�ibutable to revenues for its garning operations for the third quarter of taxable year 2017 to the ex tent that it has proven its entitlement thereto. ~ ~ F.~-~�~ MARIAN IV�JF. REYES'-FAJA:RDO Associa te Justice 16 Pl1ilippine Airlines, In c. v. Co111111issioner ~{ lntemnl Revenue, G. R. No. 198759, July 1, 201 3. 17 Philippine A IIIIISelll ellf nud Gn111ing Corporntio11 (PAGCOR) v. Tile 811 ren 11 c~( lutemnl Reve1111e, et nl., G.R. to. 21 5-!27, Dece mbe r 10, 201-t.