Cs Garment v. Revenue

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 182399 March 12, 2014 CS GARMENT, INC., Petitioner, vs. COMMISSIONER OF INTERNAL REVENUE, Respondent. SERENO,CJ: Before the Court is a Rule 45 petition for review on certiorari, assailing the respective Decision1 and Resolution2 of the Court of Tax. Appeals (CTA) en bane in EB Case No. 287.

These judgments in turn affirmed the Decision3 and the Resolution4 of the CTA Second Division, which ordered the cancellation of certain items in the 1998 tax assessments against petitioner CS Garment, Inc. (CS Garment or petitioner). Accordingly, petitioner was directed to pay the Bureau of Internal Revenue (BIR) the remaining portion of the tax assessments. This portion was comprised of the outstanding deficiency value-added tax (VAT) on CS Garment's undeclared local sales and on the incidental sale of a motor vehicle; deficiency documentary stamp tax (DST) on a lease agreement; and deficiency income tax as a result of the disallowed expenses and undeclared local sales.

However, while the present case was pending before this Court, CS Garment filed a Manifestation and Motion stating that the latter had availed itself of the government's tax amnesty program under Republic Act No. (R.A.) 9480, or the 2007 Tax Amnesty Law. FACTS We reproduce the narration of facts culled by the CTA en banc5 as follows: Petitioner [CS Garment] is a domestic corporation duly organized and existing under and by virtue of the laws of the Philippines with principal office at Road A, Cavite Ecozone, Rosario, Cavite. On the other hand, respondent is the duly appointed Commissioner of Internal Revenue of the Philippines authorized under law to perform the duties of said office, including, inter alia, the power to assess taxpayers for [alleged] deficiency internal revenue tax liabilities and to act upon administrative protests or requests for reconsideration/reinvestigation of such assessments.

Petitioner is registered with the Philippine Economic Zone Authority (PEZA) under Certificate of Registration No. 89-064, duly approved on December 18, 1989. As such, it is engaged in the business of manufacturing garments for sale abroad. On November 24, 1999, petitioner [CS Garment] received from respondent [CIR] Letter of Authority No. 00012641 dated November 10, 1999, authorizing the examination of petitioner's books of accounts and other accounting records for all internal revenue taxes covering the period January 1, 1998 to December 31, 1998.

On October 23, 2001, petitioner received five (5) formal demand letters with accompanying Assessment Notices from respondent, through the Office of the Revenue Director of Revenue Region No. 9, San Pablo City, requiring it to pay the alleged deficiency VAT, Income, DST and withholding tax assessments for taxable year 1998 in the aggregate amount of ₱2,046,580.10 broken down as follows: Deficiency VAT Basic tax due P 314,194.00 Add: Surcharge 157,097.00 Interest 188,516.00 Total Amount Payable