G.R. No. 202789, June 22, 2015.
Commissioner of Internal Revenue vs. Puregold Duty Free, Inc.

FACTS

Respondent Puregold Duty Free, Inc. (Puregold) is a business enterprise engaged in the sale of consumer goods exclusively within the Clark Special Economic Zone (CSEZ). It operated under tax exemption certificates issued by the Clark Development Corporation (CDC), pursuant to Executive Order No. 80, which extended the tax incentives of the Subic Special Economic Zone under Republic Act No. 7227 to enterprises within CSEZ. These incentives included tax and duty-free importation of goods, and Puregold paid a 5% preferential tax in lieu of all other national and local taxes from January 1998 to May 2004. However, on July 25, 2005, the Supreme Court in Coconut Oil Refiners v. Torres annulled Section 5 of E.O. No. 80, effectively withdrawing the preferential tax treatment for CSEZ businesses. Subsequently, the Bureau of Internal Revenue (BIR) issued a Preliminary Assessment Notice to Puregold for unpaid VAT and excise tax on its importations of distilled spirits, wines, and cigarettes from January 1998 to May 2004. While Puregold’s protest was pending, Congress enacted Republic Act No. 9399, which granted a tax amnesty to business enterprises affected by the Supreme Court’s rulings in John Hay People’s Coalition v. Lim and Coconut Oil Refiners. On July 27, 2007, Puregold availed itself of this tax amnesty by filing the necessary requirements and paying the amnesty tax of ₱25,000. Despite this, the BIR issued a formal letter of demand and a Final Decision on Disputed Assessment, asserting that Puregold remained liable for deficiency VAT and excise taxes. Puregold filed a Petition for Review with the Court of Tax Appeals (CTA), arguing its availment of the tax amnesty relieved it of liability. The CTA Second Division ordered the cancellation of the assessment, ruling Puregold properly availed of the amnesty. The CTA en banc upheld this decision.

ISSUE

Whether or not Puregold’s availment of the tax amnesty under Republic Act No. 9399 relieves it of liability for deficiency value-added tax and excise tax on its importations of distilled spirits, wines, and cigarettes for the period January 1998 to May 2004.

RULING

Yes. The Supreme Court denied the petition and affirmed the CTA en banc decision. The Court held that Puregold validly availed of the tax amnesty under R.A. No. 9399 and is consequently relieved of any civil, criminal, and/or administrative liabilities arising from the nonpayment of the subject taxes. The Court found that Puregold, as a registered business enterprise operating within the CSEZ prior to the effectivity of R.A. No. 9399, was precisely among the class of taxpayers the law intended to benefit, having been affected by the Coconut Oil Refiners ruling. The Court rejected the CIR’s argument that the amnesty did not cover the specific taxes under Section 131(A) of the National Internal Revenue Code, ruling that the phrase “all applicable tax and duty liabilities” in R.A. No. 9399 is comprehensive and includes the deficiency VAT and excise taxes in question. The Court further clarified that the exclusions under the proviso of the law refer only to taxes on articles removed from the special economic zone for domestic sale, which was not the case for Puregold’s importations stored and sold within CSEZ. Having fully complied with the conditions of the amnesty by filing the required notice and return and paying the amnesty tax, Puregold is entitled to the immunities and privileges under Section 2 of R.A. No. 9399.