Travellers International Hotel Group, Inc. v. Commissioner of Internal Revenue

SPECIAL THIRD DIVISION [C.T.A. CASE NO. 9275. March 12, 2019.] TRAVELLERS INTERNATIONAL HOTEL GROUP, INC. , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE , respondent . DECISION FABON-VICTORINO , J p : In this Petition for Review, 1 petitioner Travellers International Hotel Group, Inc. seeks to reverse the Final Decision dated January 22, 2016 issued by respondent Commissioner of Internal Revenue (CIR); and that the deficiency income tax assessment issued against it for calendar year (CY) 2011 in the amount of Two Billion Nine Hundred Twenty-Three Million One Hundred Ninety Thousand Nine Hundred Sixty Pesos and 33/100 (P2,923,190,960.33), inclusive of interest, be cancelled and withdrawn. 10/F Newport Entertainment & Commercial Centre, Newport Boulevard, Newport Cybertourism Economic Zone, Pasay City, Philippines. 2 It is registered with the Bureau of Internal Revenue (BIR), with Taxpayer Identification No. 246-099-058-000. 3 On the other hand, respondent is the Commissioner of the Bureau of Internal Revenue (BIR) with the power to decide disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties imposed in relation thereto or other matters arising under the National Internal Revenue Code (NIRC) or other laws or portions thereof administered by the BIR. He holds office at the BIR National Office Building, Agham Road, Diliman, Quezon City. Petitioner is authorized by the Philippine Amusement and Gaming Corporation (PAGCOR) to establish and operate casinos within the latter's regulatory and licensing authority under Presidential Decree (PD) No. 1869, as amended, otherwise known as the PAGCOR Charter. 4 In the course of its operation during the CY 2011, petitioner earned gaming revenue (net of promotional allowances) in the amount of P24,020,363,866.00. 5 During the same CY, petitioner paid PAGCOR the total amount of P1,261,989,212.93, representing five percent (5%) franchise tax from its income from casino and gaming operations. 6 On June 17, 2015, petitioner received from the BIR Large Taxpayers Audit Division 2 a Preliminary Assessment Notice (PAN) with attached Details of Discrepancies, assessing it of deficiency income tax (IT), value-added tax (VAT), expanded withholding tax (EWT), withholding tax on compensation (WTC), final tax (FT), documentary stamp tax (DST), and compromise penalties for CY 2011 in the aggregate amount of P3,049,432,893.44, inclusive of interest and penalties. 7 On June 23, 2015, petitioner paid the amount of P109,795,888.16, representing a portion of the assessed deficiency IT, deficiency VAT, EWT, WTC, final tax, DST, and compromise penalties in the respective amounts of P12,185,946.22, P10,908,142.85, P61,098,451.35, P10,417,722.79, P2,249,335.91, P12,496,289.04, and P440,000.00. The payment corresponding to the deficiency IT allegedly did not cover the assessment on income from gaming operations under petitioner's Provisional License, the subject of the instant petition. 8 On July 2, 2015, petitioner filed its Reply to the PAN controverting the IT assessment on the revenues derived from its gaming operations under its Provisional License with PAGCOR. 9 On August 4, 2015, petitioner received a Formal Letter of Demand (FLD) with attached Details of Discrepancies and Assessment Notices (FAN) dated July 31, 2015, finding it still liable for deficiency IT for CY 2011 in the total amount of P2,865,027,340.45, 10 computed as follows: INCOME TAX Taxable Income/(loss) per ITR Add: Taxable income from provisional gaming license P5,706,914,316.00 Taxable Income per investigation 5,706,914,314.00 Basic Income Tax Due (30%) 1,712,074,294.80 Less: Allowable tax credits/payments Creditable tax withheld per return P9,432,052.00 Income tax payments 7,048,067.00 Sub-total 16,480,119.00 Less: Excess MCIT over RCIT carried over to succeeding period P16,480,119.00 - Total Basic Deficiency Income Tax Due 1,712,074,294.80 Add: Interest (04.16.12 to 08.28.15) 1,152,953,045.65 TOTAL AMOUNT DUE P2,865,027,340.45 On September 3, 2015, petitioner protested the FLD/FAN on the ground that the deficiency IT assessment had no merit, hence, should be cancelled and withdrawn. 11 On October 9, 2015, petitioner received the Final Decision on Disputed Assessment (FDDA) dated October 7, 2015, holding that it still failed to refute the validity of the deficiency IT assessment. 12 Petitioner then filed a Request for Reconsideration of the FDDA with respondent on November 6, 2015, 13 which was denied with finality in the Final Decision dated January 22, 2016 received by petitioner on January 26, 2016. 14 Hence, the instant Petition for Review 15 filed on February 24, 2016. In his Answer, 16 respondent states that the assessment for deficiency IT for CY 2011 issued against petitioner has factual and legal bases pursuant to Sections 27 and 32 of the Tax Code, contrary to petitioner's claim. Further, RMC Nos. 8-2012 and 33-2013 are valid BIR Regulations and cannot be subject of an indirect attack by petitioner. Citing the case of British American Tobacco vs. Camacho, et al. , 17 respondent opines that the issue on the validity of the said BIR issuances cannot be passed upon by the Court as the jurisdiction thereof lies with the ordinary courts. Respondent further states that it is imperative for petitioner to prove that its income from gaming operations is exempt from income tax. Petitioner cannot claim the same exemption from income tax accorded to PAGCOR merely on the ground that it is its licensee and contractee. Respondent also points out that the assessment was issued within the prescriptive period to assess as it was within the extended period agreed upon by the parties. For respondent, the partial payment effected by petitioner clearly demonstrate the latter's admission that the subject assessment as well as the subsequent Waiver executed by the parties were valid and binding between the parties, lest payment would not have been made. acEHCD Lastly, it is upon petitioner to establish that the assessment he issued was erroneous. After the pre-trial conference, the parties filed their Joint Stipulation of Facts and Issues 18 on the basis of which a Pre-Trial Order 19 was issued on January 11, 2017. To prove its case, petitioner presented two (2) witnesses, namely: (1) its Chief Legal Officer, Maria Georgina A. Alvarez; and (2) its Assistant Director for Financial Accounting Dexter R. Moya. Maria Georgina A. Alvarez testified 20 that as petitioner's Chief Legal Officer, she is responsible in: (a) ensuring that petitioner complies with relevant laws, legal reportorial requirements, and agreements entered into, such as the PAGCOR Provisional License; (b) ensuring that legal research is timely made so that petitioner is updated of relevant legal and jurisprudential developments; and (c) ensuring that corporate books and records are regularized and kept. She also recommends legal strategy, policy, and course of action in legal matters, negotiate, draft and finalize contracts, agreements, pleadings and other documents; and represent petitioner in legal actions. According to the witness, the instant case is petitioner's judicial appeal assailing respondent's Final Decision on the assessment against it for alleged deficiency IT in the aggregate amount of P2,923,190,960.33. Respondent assessed petitioner deficiency IT on the revenues earned from its gaming operations for CY 2011, although the same were exempt from income tax under the law. She explained that petitioner, as a licensee authorized by PAGCOR to establish and operate gaming establishments, is entitled to income tax exemption on its gaming revenues under Section 13 (2) (b) of PD No. 1869. The Provisional License issued by PAGCOR to petitioner on June 2, 2008, confirmed that the income tax exemption provided under PD No. 1869, or the PAGCOR Charter, shall apply to the activities of petitioner under the Provisional License. Under Sections 20, 21 and 23 of Article IV of the Provisional License, petitioner is required to remit to PAGCOR License Fees which shall be in lieu of all taxes on the income component of its gross gaming revenues, as condition to its establishment and operation of casinos. The License Fees were inclusive of the 5% Franchise Tax, which were due and payable quarterly to the national government by PAGCOR. The witness further testified that being a licensee, petitioner is regarded by PAGCOR as its affiliate with respect to the gaming operations under its Charter, and as such, similarly exempt from income tax on earnings derived from operations conducted under PAGCOR's franchise. Per the FLD dated July 31, 2015, respondent assessed petitioner on the basis of RMC No. 8-2012, which according to the witness, are mere excerpts of the Supreme Court's pronouncement in the case of PAGCOR v. BIR (G.R. No. 172087) dated March 15, 2011 [2011 PAGCOR case] . Petitioner protested the FLD rejecting the applicability of RMC No. 8-2012 on account of the clarificatory pronouncement of the Supreme Court in PAGCOR v. BIR (G.R. No. 215427) dated December 10, 2014 [2014 PAGCOR case] , confirming that PAGCOR's gaming revenues are exempt from income tax. Notwithstanding the recent ruling of the Supreme Court, respondent issued the FDDA dated October 7, 2015, reiterating the deficiency IT assessment but this time invoking RMC No. 33-2013, which set forth his own interpretation of the Supreme Court's pronouncement in the 2011 PAGCOR case without taking into account petitioner's arguments citing the Supreme Court's Decision in the 2014 PAGCOR case . Respondent subsequently denied petitioner's bid for reconsideration in his Letter dated January 22, 2016 saying that the FDDA was actually anchored on Sections 27 and 32 of the Tax Code. In view of this development, petitioner elevated its case with the Court via the instant Petition for Review filed on February 24, 2016 praying for the reversal of the Final Decision dated January 22, 2016 on the following grounds, to wit: (a) respondent's deficiency IT assessment against petitioner is contrary to Section 13 (2), PD No. 1869, as amended; (b) respondent's FLD failed to state the legal basis of the deficiency IT assessment; (c) respondent's right to assess petitioner for deficiency IT for CY 2011 has prescribed; and (d) respondent's finding that petitioner has deficiency IT for CY 2011 lacks legal and factual bases. Petitioner's Assistant Director for Financial Accounting Dexter R. Moya testified 21 that he handles matters pertaining to tax investigations/audits including liaison with external consultants and tax officers and reviews and files corporate tax returns. On account of his position, he dealt with the BIR with respect to the examination of petitioner's books of accounts for CY 2011. On June 17, 2015, petitioner received from BIR Large Taxpayers Service a PAN, assessing petitioner of deficiency taxes for CY 2011 in the aggregate amount of P3,049,872,893.44, broken down as follows: Nature of taxes Amount Income Tax (IT) P2,952,047,011.79 Value-Added Tax (VAT) 10,933,022.94 Expanded Withholding Tax (EWT) 61,237,356.57 Withholding Tax on Compensation (WTC) 10,441,407.13 Final Tax (FT) 2,254,449.70 Documentary Stamp Tax (DST) 12,519,645.31 Compromise Penalties 440,000.00 Total P3,049,872,893.44 On June 23, 2015, petitioner paid the BIR the total amount of P109,795,888.16, representing a portion of the assessed IT and paid in full the assessments for VAT, EWT, WTC, FT, and DST, inclusive of penalties and interests, as evidenced by the various Payment Forms (BIR Form No. 0605) and their corresponding eFPS Confirmation Notices. The witness further declared that after petitioner paid the said amount, petitioner protested the PAN impugning the IT assessment on its revenues from gaming operations in the amount of P5,706,914,316.00. Thereafter, petitioner received the FLD with attached Details of Discrepancies, dated July 31, 2015, demanding payment of the deficiency IT for 2011 in the amount of P2,865,027,340.45, inclusive of updated interest, but cancelling the assessed deficiency VAT, EWT, WTC, FT, DST, and compromise penalties, as well as a portion of the IT assessment. SDHTEC On September 3, 2015, petitioner filed its protest against the FLD invoking its tax exempt status on its gaming revenues pursuant to Section 13 (2) of PD No. 1869. Such protest was however denied in the FDDA dated October 7, 2015. Its Request for Reconsideration filed on November 6, 2015 suffered the same fate as indicated in the Final Decision dated January 22, 2016, as respondent sustained its finding against petitioner for CY 2011. Witness Moya also testified that per respondent's audit, petitioner's alleged taxable gaming revenues for CY 2011, after allocating cost and expense, amounted to P5,706,914,316.00, computed as follows: Gaming Revenue (net of promotional allowances) P24,020,363,866.00 Less: Direct Costs 8,449,755,180.02 Gross Income from gaming revenues P15,570,608,685.98 Less: Allowable Deductions 9,863,694,369.98 Taxable Income from provisional gaming license 85,706,914,316.00 Petitioner confirms that the amount of P24,020,363,866.00 represents its income from gaming operations net of promotional allowances as reported in its Audited Financial Statements for CY 2011. In any event, petitioner believes that the said amount is exempt from regular income tax. Besides, respondent failed to consider petitioner's net loss of P378,552,074.00 for CY 2011 in computing its alleged IT liability. Respondent also failed to take into account petitioner's available credits for the 2% Minimum Corporate Income Tax (MCIT) amounting to P23,128,648.00, which should have reduced the alleged deficiency IT for CY 2011. After its last witness, petitioner rested and formally offered its documentary evidence 22 on May 2, 2017, all of which were admitted in the Court's Resolution 23 dated May 29, 2017. When called to present evidence, respondent's counsel manifested that he had none. 24 The instant case was deemed submitted for decision on March 27, 2018, 25 after the parties filed their respective memoranda. THE ISSUES The parties fielded the following issues for this Court's resolution: I. WHETHER PETITIONER'S GAMING REVENUE IS EXEMPT FROM INCOME TAX. II. WHETHER OR NOT THE DEFICIENCY INCOME TAX ASSESSMENT FOR CY 2011 LACKS LEGAL BASIS. III. ASSUMING FOR THE SAKE OF ARGUMENT THAT PETITIONER IS NOT ENTITLED TO INCOME TAX EXEMPTION ON GAMING REVENUES, WHETHER OR NOT PETITIONER'S TIMELY PAYMENT OF THE 5% FRANCHISE TAX PRECLUDES THE IMPOSITION OF INTEREST AND PENALTIES ON THE INCOME TAX ON GAMING REVENUES. THE COURT'S RULING It is imperative for the Court to first determine its competence to take cognizance of the instant Petition for Review before addressing the merits of the alleged deficiency IT assessment. The Court of Tax Appeals (CTA) has jurisdiction to rule on the constitutionality or validity of RMC Nos. 8-2012 and 33-2013: Respondent claims that the Court has no jurisdiction to rule on the legality or validity of an administrative issuance. Allegedly, RMC Nos. 8-2012 and 33-2013 are valid BIR Regulations, hence, petitioner should not be allowed to collaterally attack the same via the instant petition. A separate action to assail the said issuances should be filed with the proper court having jurisdiction on the matter. The Court does not agree. As a highly specialized Court, the CTA can only take cognizance of matters that are evidently within its jurisdiction as conferred in Republic Act No. 1125, as amended by Republic Act No. 9282, which provides in part as follows: SEC. 7. Jurisdiction . The CTA shall exercise: (a) Exclusive appellate jurisdiction to review by appeal, as herein provided: (1) Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments , refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue ; (2) Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relations thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue, where the National Internal Revenue Code provides a specific period of action, in which case the inaction shall be deemed a denial; (Emphasis supplied) The present case mainly involves a disputed assessment of deficiency IT on petitioner's income from gaming operations under its Provisional License issued by PAGCOR. Incidental thereto, petitioner questions the validity of RMC No. 33-2013 for allegedly being violative of the non-impairment clause of the Philippine Constitution. Let it be emphasized that a grant of jurisdiction, in the absence of prohibitive legislation, implies the necessary and usual incidental powers essential to effectuate it, and, subject to existing laws and constitutional provisions, every regularly constituted court has power to do all things that are reasonably necessary for the administration of justice within the scope of its jurisdiction and for the enforcement of its judgments and mandates. Hence, demands, matters or questions ancillary or incidental to, or growing out of, the main action, and coming within the above principles, may be taken cognizance of by the court and determined, since such jurisdiction is in aid of its authority over the principal matter, even though the court may thus be called on to consider and decide matters which, as original causes of action, would not be within its cognizance. 26 Thus, this Court may take cognizance not only of the main action, which is the assessment, but also the validity of the RMC on which the said assessment was based. This is the clear pronouncement of the Supreme Court in The Philippine American Life and General Insurance Company vs. The Secretary of Finance and the Commissioner of Internal Revenue , 27 to wit: Evidently, City of Manila can be considered as a departure from Ursal in that in spite of there being no express grant in law, the CTA is deemed granted with powers of certiorari by implication. Moreover, City of Manila diametrically opposes British American Tobacco to the effect that it is now within the power of the CTA, through its power of certiorari , to rule on the validity of a particular administrative rule or regulation so long as it is within its appellate jurisdiction. Hence, it can now rule not only on the propriety of an assessment or tax treatment of a certain transaction, but also on the validity of the revenue regulation or revenue memorandum circular on which the said assessment is based . (Emphasis supplied) Timeliness of the filing of the Petition for Review: Section 228 28 of the National Internal Revenue Code (NIRC) of 1997, as amended, provides that a taxpayer adversely affected by the decision of the Commissioner of Internal Revenue may appeal to the Court of Tax Appeals (CTA) within thirty (30) days from receipt of the said decision; otherwise, the same shall become final, executory and demandable. AScHCD Evidence show that petitioner received the Final Decision dated January 22, 2016 on January 26, 2016, denying its Request for Reconsideration. Thus, petitioner had thirty (30) days from such receipt, or until February 25, 2016, within which to appeal respondent's adverse decision. Evidently, the instant Petition for Review was seasonably filed on February 24, 2016, vesting the Court the jurisdiction to hear and determine the same pursuant to Section 7 (a) (1) of Republic Act (RA) No. 1125, as amended by RA No. 9282. 29 Petitioner, as licensee of PAGCOR, is not liable for income tax on its gaming revenues: Under Section 13 (2) of PD No. 1869, as amended, PAGCOR was accorded special privileges such as tax exemption from income and other taxes, whether local or national, save only for the five percent (5%) franchise tax on gross revenues or earnings. The provision reads: SECTION 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. (b) Others : The exemption 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. x x x (Emphases supplied) The provision explicitly granted PAGCOR exemption from the payment of corporate income tax and other taxes, including any form of charges, fees or levies (with the exception of the 5% franchise tax on gross revenues or earnings) with respect to its income from gaming operations and such tax exemption inure to the benefit of and extend to other entities with whom PAGCOR or operator has any contractual relationship in connection with the operations of the casino[s] authorized to be conducted under the former's Charter . In other words, it is not only PAGCOR that is exempt from paying income and other taxes, whether local or national, but also PAGCOR's licensees and franchisees. However, the enactment of Republic Act (RA) No. 9337 30 on May 24, 2005 created a ripple as certain sections of the NIRC of 1997 were amended. Section 1 of RA No. 9337, which amended Section 27 (C) of the NIRC of 1997 removed PAGCOR from the enumeration of Government-owned and Controlled Corporations (GOCCs) that are exempt from payment of corporate income tax , to wit: (c) Government-owned or Controlled Corporations, Agencies or Instrumentalities . The provisions of existing special general laws to the contrary notwithstanding, all corporations, agencies, or instrumentalities owned and controlled by the Government, except the Government Service and Insurance Corporation (GSIS), the Social Security System (SSS), the Philippine Health Insurance Corporation (PHIC), and the Philippine Charity Sweepstakes Office (PCSO) , shall pay such rate of tax upon their taxable income as are imposed by this Section upon corporations or associations engaged in similar business, industry, or activity, . . . (Emphases supplied) The Supreme Court clarified this matter in the case of Philippine Amusement and Gaming Corporation (PAGCOR) vs. The Bureau of Internal Revenue, et al. , 31 ruling that the benefit of 5% franchise tax in lieu of all other taxes imposed on PAGCOR still stands as to its income derived from gaming operations , while, income from operation of other related services are subject to income tax. The pertinent part of the ruling reads: Given that petitioner's Charter is not deemed repealed or amended by R.A. No. 9337, petitioner's income derived from gaming operations is subject only to the five percent (5%) franchise tax, in accordance with P.D. 1869, as amended . With respect to petitioner's income from operation of other related services, the same is subject to income tax only. The five percent (5%) franchise tax finds no application with respect to petitioner's income from other related services, in view of the express provision of Section 14(5) of P.D. 1869, as amended, x x x (Boldfacing supplied) Significantly, the Supreme Court, in the same case, ordered the BIR to cease and desist in the implementation of RMC No. 33-2013 insofar as it imposes (1) corporate income tax on PAGCOR's income derived from its gaming operations; and (2) franchise tax on PAGCOR's income from other related services, the Final Arbiter said it best: In view of the foregoing disquisition, respondent, therefore, committed grave abuse of discretion amounting to lack of jurisdiction when it issued RMC No. 33-2013 subjecting both income from gaming operations and other related services to corporate income tax and five percent (5%) franchise tax. This unduly expands our Decision dated March 15, 2011 without due process since the imposition creates additional burden upon petitioner. Such act constitutes an overreach on the part of the respondent, which should be immediately struck down, lest grave injustice results. More, it is settled that in case of discrepancy between the basic law and a rule or regulation issued to implement said law, the basic law prevails, because the said rule or regulation cannot go beyond the terms and provisions of the basic law. AcICHD In fine, we uphold our earlier ruling that Section 1 of R.A. No. 9337, amending Section 27 (C) of R.A. No. 8424, by excluding petitioner from the enumeration of GOCCs exempted from corporate income tax, is valid and constitutional. In addition, we hold that: 1. Petitioner's tax privilege of paying five percent (5%) franchise tax in lieu of all other taxes with respect to its income from gaming operations, pursuant to P.D. 1869, as amended, is not repealed or amended by Section 1(c) of R.A. No. 9337; 2. Petitioner's income from gaming operations is subject to the five percent (5%) franchise tax only; and 3. Petitioner's income from other related services is subject to corporate income tax only. In view of the above-discussed findings, this Court ORDERS the respondent to cease and desist the implementation of RMC No. 33-2013 insofar as it imposes: (1) corporate income tax on petitioner's income derived from its gaming operations; and (2) franchise tax on petitioner's income from other related services . In the more recent case of Bloomberry Resorts and Hotels, Inc. vs. Bureau of Internal Revenue , 32 the Supreme Court declared in no uncertain terms that the tax benefit being enjoyed by PAGCOR also extends to its contractees and licensees, thus: As the PAGCOR 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 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 PAGCOR or operator has any contractual relationship in connection with the operations of the casino(s) authorized to be conducted under this Franchise, so it must be that all contractees and licensees of PAGCOR, upon payment of the 5% franchise tax, shall likewise be exempted from all other taxes, including corporate income tax realized from the operation of casinos . For the same reasons that made us conclude in the 10 December 2014 Decision of the Court sitting En Banc in G.R. No. 215427 that PAGCOR is subject to corporate income tax for 'other related services,' we find it logical that its contractees and licensees shall likewise pay corporate income tax for income derived from such 'related services.' (Emphases supplied) caITAC Following the pronouncement of the Supreme Court in Bloomberry Resorts and Hotels, Inc. vs. Bureau of Internal Revenue , 33 petitioner's income from its provisional gaming license is subject only to the 5% franchise tax, and shall be exempted from the 30% corporate income tax under Section 27 (C) of the NIRC of 1997, as amended. Thus, the deficiency IT assessment on petitioner's income from gaming operations under its Provisional License with PAGCOR has no basis in law and jurisprudence. In view of the above findings, discussions on the other issues raised by the parties are no longer necessary. WHEREFORE , the Petition for Review filed by Travellers International Hotel Group, Inc. on February 24, 2016, is hereby GRANTED . The Final Decision dated January 22, 2016, issued by respondent Commissioner of Internal Revenue is hereby REVERSED . Accordingly, the deficiency Income Tax assessment issued against petitioner for calendar year 2011 in the aggregate amount of Two Billion Nine Hundred Twenty-Three Million One Hundred Ninety Thousand Nine Hundred Sixty Pesos and Thirty-Three Centavos (P2,923,190,960.33), inclusive of interest, is CANCELLED and SET ASIDE . SO ORDERED. (SGD.) ESPERANZA R. FABON-VICTORINO Associate Justice Ma. Belen M. Ringpis-Liban, J. , concurs. Footnotes 1. Docket, pp. 10-29. 2. Par. 1, Stipulated Facts, Joint Stipulation of Facts and Issues (JSFI), docket, p. 839. 3. Par. 2, Stipulated Facts, JSFI, docket, p. 839. 4. Par. 4, Stipulated Facts, JSFI, docket, p. 840. 5. Par. 5, Stipulated Facts, JSFI, docket, p. 840. 6. Par. 16, Stipulated Facts, JSFI, docket, p. 842; Exhibit "P-3", docket, pp. 938-939. 7. Par. 6, Stipulated Facts, JSFI, docket, p. 840. 8. Par. 7, Stipulated Facts, JSFI, docket, p. 840; Exhibit "P-10", docket, pp. 993-1006. 9. Par. 8, Stipulated Facts, JSFI, docket, p. 840. 10. Par. 9, Stipulated Facts, JSFI, docket, pp. 840-841; Exhibit "P-4", docket, pp. 940-944. 11. Par. 10, Stipulated Facts, JSFI, docket, p. 841; Exhibit "P-5", docket, pp. 945-952. 12. Par. 11, Stipulated Facts, JSFI, docket, p. 841; Exhibit "P-6", docket, p. 964. 13. Par. 12, Stipulated Facts, JSFI, docket, p. 841; Exhibit "P-7", docket, pp. 969-982. 14. Par. 13, Stipulated Facts, JSFI, docket, pp. 841-842; Exhibit "P-8", docket, pp. 983-985. 15. Docket, pp. 10-38. 16. Docket, pp. 182-190. 17. G.R. No. 163583, August 20, 2008. 18. Docket, pp. 839-851. 19. Docket, pp. 853-862. 20. Exhibit "P-29", docket, pp. 420-431. 21. Exhibit "P-30", docket, pp. 599-615. 22. Docket, pp. 880-888. 23. Docket, pp. 1200-1201. 24. Minutes of February 20, 2018 hearing, docket, p. 1211. 25. Resolution, docket, p. 1258. 26. The City of Manila, et al. vs. Hon. Caridad H. Grecia-Cuerdo, et al. , G.R. No. 175723, February 4, 2014. 27. G.R. No. 210987, November 24, 2014. 28. SEC. 228. Protesting of Assessment . When the Commissioner or his duly authorized representative finds that proper taxes should be assessed, he shall first notify the taxpayer of his findings: Provided, however, That a pre-assessment notice shall not be required in the following cases: x x x The taxpayers shall be informed in writing of the law and the facts on which the assessment is made; otherwise, the assessment shall be void. Within a period to be prescribed by implementing rules and regulations, the taxpayer shall be required to respond to said notice. If the taxpayer fails to respond, the Commissioner or his duly authorized representative shall issue an assessment based on his findings. Such assessment may be protested administratively by filing a request for reconsideration or reinvestigation within thirty (30) days from receipt of the assessment in such form and manner as may be prescribed by implementing rules and regulations. Within sixty (60) days from filing of the protest, all relevant supporting documents shall have been submitted; otherwise, the assessment shall become final. If the protest is denied in whole or in part, or is not acted upon within one hundred eighty (180) days from submission of documents, the taxpayer adversely affected by the decision or inaction may appeal to the Court of Tax Appeals within thirty (30) days from receipt of the said decision , or from the lapse of the one hundred eighty (180)-day period; otherwise, the decision shall become final, executory and demandable. (Emphasis supplied) 29. Sec. 7. Jurisdiction . The CTA shall exercise: (a) Exclusive appellate jurisdiction to review by appeal, as herein provided: (1) Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal, revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue; x x x. 30. An Act Amending Sections 27, 28, 34, 106, 107, 108, 109, 110, 111, 112, 113, 114, 116, 117, 119, 121, 148, 151, 236, 237 and 288 of the National Internal Revenue Code of 1997, as amended, and for Other Purposes. 31. G.R. No. 215427, December 10, 2014. 32. G.R. No. 212530, August 10, 2016. 33. See Note 32, supra .