GR 252965 Lazaro Javier (Digest)
G.R. No. 252965 /G.R. No. 254102, December 7, 2021
SAINT WEALTH LTD., AS REPRESENTED BY DAVID BUENAVENTURA & ANG LAW OFFICES, PETITIONER, VS. BUREAU OF INTERNAL REVENUE, HEREIN REPRESENTED BY HON. CAESAR R. DULAY, IN HIS CAPACITY AS COMMISSIONER OF THE BUREAU OF INTERNAL REVENUE, AND JOHN DOES AND JANE DOES, AS PERSONS ACTING FOR, IN BEHALF, OR UNDER THE AUTHORITY OF RESPONDENTS, RESPONDENTS. AND MARCO POLO ENTERPRISES LIMITED, MG UNIVERSAL LINK LIMITED, OG GLOBAL ACCESS LIMITED, PRIDE FORTUNE LIMITED, VIP GLOBAL SOLUTIONS LIMITED, AG INTERPACIFIC RESOURCES LIMITED, WANFANG TECHNOLOGY MANAGEMENT LTD., IMPERIAL CHOICE LIMITED, BESTBETINNET LIMITED, RIESLING CAPITAL LIMITED, GOLDEN DRAGON EMPIRE LTD., ORIENTAL GAME LIMITED, MOST SUCCESS INTERNATIONAL GROUP LIMITED, AND HIGH ZONE CAPITAL INVESTMENT GROUP LIMITED, PETITIONERS, VS. THE SECRETARY OF FINANCE, IN THE PERSON OF CARLOS G. DOMINGUEZ III AND THE COMMISSIONER OF INTERNAL REVENUE IN THE PERSON OF CAESAR R. DULAY, RESPONDENTS.
FACTS
The cases involve the taxability of Philippine Offshore Gaming Operators (POGOs). Republic Act No. 11590 , which definitively taxes POGOs, had been enacted. The dissenting opinion addresses the validity of tax issuances and the tax liabilities of offshore-based POGO licensees prior to the enactment of RA 11590. The petitioners are offshore-based POGO licensees.
ISSUE
Whether offshore-based POGO licensees are considered “doing business” in the Philippines and are thus subject to Philippine income tax on income from sources within the Philippines prior to the enactment of RA 11590.
RULING
The dissenting opinion of Justice Lazaro-Javier holds that offshore-based POGO licensees are subject to Philippine income tax. The opinion concludes that:
1. Petitioners are foreign corporations “doing business” in the Philippines under the “twin characterization test” established in Mentholatum Co., Inc. v. Mangiliman, which requires continuity of commercial dealings and the performance of acts in progressive prosecution of the business purpose.
2. The Philippines has jurisdiction over petitioners under the “sliding scale test” for determining personal jurisdiction over foreign entities.
3. Consequently, they are taxable as resident foreign corporations under the National Internal Revenue Code (NIRC) on income from sources within the Philippines.
The opinion disagrees with the ponencia’s finding that offshore-based POGO licensees derive no income from sources within the Philippines and therefore cannot be subjected to income tax. It argues that the passage of RA 11590, which explicitly taxes POGOs, does not preclude a ruling on their tax liabilities for the period prior to its enactment.