G.R. No. 182399 , March 12, 2014
CS GARMENT, INC., Petitioner, vs. COMMISSIONER OF INTERNAL REVENUE, Respondent.

FACTS

Petitioner CS Garment, Inc., a PEZA-registered enterprise, received deficiency tax assessments from the BIR for the year 1998 covering VAT, Income Tax, DST, and Expanded Withholding Tax totaling ₱2,046,580.10. Petitioner protested the assessments. The CIR failed to act on the protest within the prescribed period, prompting petitioner to file a Petition for Review before the CTA. The CTA Second Division partially granted the petition, cancelling the deficiency expanded withholding tax assessment and partially cancelling the DST assessment, but upheld the deficiency VAT and income tax assessments. The CTA en banc affirmed this decision. While the case was pending before the Supreme Court, CS Garment filed a Manifestation and Motion stating it had availed itself of the tax amnesty under Republic Act No. 9480 (the 2007 Tax Amnesty Law), submitting supporting documents including a Notice of Availment, SALN, Tax Amnesty Return, and proof of payment of ₱250,000. The Office of the Solicitor General objected, arguing the availment was premature and that petitioner was disqualified because a judgment had already been rendered in favor of the BIR prior to the amnesty availment.

ISSUE

Whether petitioner CS Garment, Inc. is entitled to the benefits of the tax amnesty under R.A. 9480, thereby absolving it from the deficiency tax liabilities affirmed by the CTA.

RULING

Yes. The Supreme Court granted the petition and set aside the CTA en banc Decision. The Court ruled that CS Garment had duly complied with the requirements for availing the tax amnesty under R.A. 9480. It submitted the required documents, including a sworn Statement of Assets, Liabilities, and Net Worth (SALN) and a Tax Amnesty Return, and paid the amnesty tax of ₱250,000. The Court held that the OSG’s objection, based on BIR Revenue Memorandum Circular No. 19-2008 which disqualified cases where a judgment was rendered in favor of the BIR prior to amnesty availment, was invalid. The Court reiterated its ruling in Philippine Banking Corporation v. Commissioner of Internal Revenue that such a disqualification, not found in the law itself (R.A. 9480) or its implementing rules (DOF Department Order No. 29-07), constituted an unauthorized amendment and could not prevail. Since CS Garment’s availment was made before the judgment of the CTA en banc became final and executory, and it complied with all statutory conditions, it is entitled to the immunities and privileges under the tax amnesty law, which include the extinguishment of its deficiency tax liabilities for the year 1998.