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    65 Commissioner of Internal Revenue v. Puregold Duty Free, Inc

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    Puregold operated in the Clark Special Economic Zone and paid preferential 5% taxes based on tax exemption certificates. However, the Supreme Court later invalidated the relevant section of an executive order, withdrawing the tax treatment. Congress then passed a tax amnesty law to protect businesses affected by the ruling. While the Bureau of Internal Revenue still imposed taxes, the Court of Tax Appeals and Supreme Court ruled in Puregold's favor, finding that the Supreme Court's prior ruling could not be applied retroactively based on the doctrine of operative fact.

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    65 Commissioner of Internal Revenue v. Puregold Duty Free, Inc

    Uploaded by

    j
    407 views2 pages
    Puregold operated in the Clark Special Economic Zone and paid preferential 5% taxes based on tax exemption certificates. However, the Supreme Court later invalidated the relevant section of an executive order, withdrawing the tax treatment. Congress then passed a tax amnesty law to protect businesses affected by the ruling. While the Bureau of Internal Revenue still imposed taxes, the Court of Tax Appeals and Supreme Court ruled in Puregold's favor, finding that the Supreme Court's prior ruling could not be applied retroactively based on the doctrine of operative fact.

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    65 Commissioner of Internal Revenue v. Puregold Duty Free, Inc

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    Puregold operated in the Clark Special Economic Zone and paid preferential 5% taxes based on tax exemption certificates. However, the Supreme Court later invalidated the relevant section of an executive order, withdrawing the tax treatment. Congress then passed a tax amnesty law to protect businesses affected by the ruling. While the Bureau of Internal Revenue still imposed taxes, the Court of Tax Appeals and Supreme Court ruled in Puregold's favor, finding that the Supreme Court's prior ruling could not be applied retroactively based on the doctrine of operative fact.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    407 views2 pages

    65 Commissioner of Internal Revenue v. Puregold Duty Free, Inc

    Uploaded by

    j
    Puregold operated in the Clark Special Economic Zone and paid preferential 5% taxes based on tax exemption certificates. However, the Supreme Court later invalidated the relevant section of an executive order, withdrawing the tax treatment. Congress then passed a tax amnesty law to protect businesses affected by the ruling. While the Bureau of Internal Revenue still imposed taxes, the Court of Tax Appeals and Supreme Court ruled in Puregold's favor, finding that the Supreme Court's prior ruling could not be applied retroactively based on the doctrine of operative fact.

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    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
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    ## 65 Commissioner of Internal Revenue v.

    AUTHOR: Janet
    Puregold Duty Free, Inc. Notes:
    G.R. No 202789
    TOPIC: Effect of Declaration of
    Unconstitutionality
    PONENTE: Velasco, Jr., J

    CASE LAW/ DOCTRINE:


    Doctrine of Operative Fact
    -which recognizes that a judicial declaration of invalidity may not necessarily obliterate all the effects
    and consequences of a void act prior to such declaration.

    Emergency Recit:
    Puregold is engaged in the sale of various consumer goods exclusively within the Clark Special
    5
    Economic Zone (CSEZ). certificates were issued pursuant to Sec. 5 of Executive Order No. (EO) 80,
    extending to business enterprises operating within the CSEZ all the incentives granted to enterprises
    within the Subic Special Economic Zone (SSEZ) under RA 7227, otherwise known as the "Bases
    Conversion and Development Act of 1992. Thus, Puregold only paid the preferential tax of 5%.
    However, in a latter ruling (Coconut Oil case), the SC annulled the tax incentives of Sec. 5 EO 80.
    Thereafter, Congress enacted RA 9399 to grant tax amnesty to those affected by the SC ruling.
    Puregold complied with the requirements of the tax amnesty but the BIR still imposed taxes. The CTA
    ruled in favor of Puregold. The SC also ruled in favor of Puregold.

    FACTS:
    Puregold is engaged in the sale of various consumer goods exclusively within the
    Clark Special Economic Zone (CSEZ).
    5
    o Certificates were issued pursuant to Sec. 5 of Executive Order No. (EO) 80, extending
    to business enterprises operating within the CSEZ all the incentives granted to
    enterprises within the Subic Special Economic Zone (SSEZ) under RA 7227, otherwise
    known as the "Bases Conversion and Development Act of 1992."
    Notably, Sec. 12 of RA 7227 provides duty-free importations and exemptions of
    businesses within the SSEZ from local and national taxes.

    In accordance with the tax exemption certificates granted to respondent Puregold, it filed its
    Annual Income Tax Returns and paid the five percent (5%) preferential tax, in lieu of all other
    national and local taxes for the period of January 1998 to May 2004.
    On July 25, 2005, in Coconut Oil Refiners v. Torres, however, this Court annulled the adverted
    Sec. 5 of EO 80, in effect withdrawing the preferential tax treatment heretofore enjoyed by all
    businesses located in the CSEZ.

    On November 7, 2005, then Deputy Commissioner for Special Concems/OIC-Large Taxpayers


    Service of the Bureau of Internal Revenue (BIR) Kim Jacinto-Henares issued a Preliminary
    Assessment Notice regarding unpaid VAT and excise tax on wines, liquors and tobacco
    products imported by Puregold from January 1998 to May 2004. In due time, Puregold
    protested the assessment.

    Congress enacted RA 9399, specifically to grant a tax amnesty to business enterprises


    10
    affected by this Court's rulings in John Hay People's Coalition v. Lim and Coconut Oil
    Refiners. Under RA 9399, availment of the tax amnesty relieves the qualified taxpayers of any
    civil, criminal and/or administrative liabilities arising from, or incident to, nonpayment of taxes,
    duties and other charges
    BIR still imposed such taxes.
    CTA: held that Puregold is entitled to tax amnesty

    ISSUE(S):
    Whether or not the SC Ruling in the Coconut oil case can be retroactively applied to obliterate the effect of Sec
    5 EO 80
    RATIO:
    No. It cannot be applied retroactively.
    This Court is duty-bound to protect the basic expectations taken into account by businesses under
    relevant laws, such as RA 9399. For this reason, this Court subscribes to the doctrine of operative
    fact, which recognizes that a judicial declaration of invalidity may not necessarily obliterate all the
    effects and consequences of a void act prior to such declaration

    DISSENTING/CONCURRING OPINION(S):

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