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COMMISSIONER OF INTERNAL REVENUE, Petitioner, -versus- TRUSTWORTHY PAWNSHOP, INC., Respondent. |
G.R.
No. 149834 Present: *pUNO, J., Chairperson, Sandoval-Gutierrez, AZCUNA, and GARCIA,
JJ. Promulgated: |
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SANDOVAL-GUTIERREZ, J.:
At
bar is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of
Civil Procedure, as amended, assailing the Decision[1] dated
The
undisputed facts are:
Trustworthy
Pawnshop, Inc. (respondent Pawnshop) is a domestic corporation engaged in the
pawnshop business.
On March 11,
1991, the Commissioner of Internal Revenue (CIR) issued Revenue Memorandum
Order (RMO) No. 15-91, classifying the pawnshop business as “akin to the
lending investor’s business activity” and subjecting both to the 5% lending
investor’s tax based on their gross income, pursuant to then Section 116 of the
National Internal Revenue Code (NIRC) of 1977, as amended.
This RMO was
clarified by Revenue Memorandum Circular (RMC) No. 43-91 dated May 27, 1991, mandating
inter alia that
pawnshop operators “shall become liable to the lending investor’s tax on their
gross income beginning January 1, 1991;” that “(s)ince
the deadline for the filing of percentage tax return and the payment of the tax
on lending investors covering the first quarter of 1991 has already lapsed,
taxpayers are given up to June 30, 1991 within which to pay the said tax
without penalty;” that if the tax is paid after said date, “the corresponding
penalties shall be assessed and computed from April 21, 1991;” and that since
pawnshops are considered lending investors, they are also subject to
documentary stamp taxes.
Pursuant to
these issuances, the Bureau of Internal Revenue (BIR), Revenue Region No. 7, P2,108,335.19,
inclusive of surcharges and interests. In
addition to that amount, a compromise penalty of P93,000.00 was also imposed.
Feeling
aggrieved, respondent Pawnshop, on
Its protest not
having been acted upon, respondent Pawnshop elevated the matter to the Office
of petitioner CIR.
On
On
WHEREFORE,
in view of all the foregoing, the instant petition for review is hereby GRANTED.
Revenue Memorandum Order No. 15-91 and Revenue Memorandum Circular
No. 43-91, insofar as they classify pawnshops as lending investors subject to 5% lending investor’s tax, are hereby
declared NULL and VOID for being
contrary to law and the Constitution. Accordingly,
Assessment Notice No. 81-PT-13-94-97-6-73, dated
SO ORDERED.
The CTA ruled, among others, that for taxation purposes, a pawnshop
business cannot be classified as a lending investor as both are subject to
different tax treatments. Thus, they may
not be treated alike for the purpose of imposing the 5% lending investor’s tax.
On
Undaunted,
petitioner CIR filed with the Court of Appeals a Petition for Review under Rule
43 of the 1997 Rules of Civil Procedure, as amended, docketed as CA-G.R. SP No.
59250. On
Petitioner
CIR now comes to us through the instant Petition for Review on Certiorari,
alleging that the Court of Appeals erred in holding that pawnshops are not subject
to the 5% lending investor’s tax under then Section 116 of the NIRC of 1977, as
amended.
In
his Comment, the Solicitor General prays that CIR’s petition
be granted and the assailed Decision of the Court of Appeals be reversed and
set aside, and a new one be rendered ordering respondent Pawnshop to pay the
deficiency lending investor’s tax in question.
Respondent
Pawnshop, in its Comment and Reply, vehemently disputes the positions of both
the petitioner CIR and the Solicitor General, praying that the challenged
Decision be affirmed.
The sole issue
for our resolution is whether pawnshops are considered lending investors under the provisions of the NIRC of 1977, as
amended, for the purpose of subjecting the former to the 5% lending investor’s
tax.
We uphold the
challenged Decision of the Court of Appeals affirming that of the CTA. The question raised for our resolution is
not a novel one.
In
Commissioner of Internal Revenue v. Michael J. Lhuillier
Pawnshop,[6] we were confronted
with a similar issue: “Are pawnshops included in the term lending investors for the purpose of imposing the 5% percentage tax
under then Section 116 of the National Internal Revenue Code of 1977, as
amended by Executive Order No. 273?” We
answered the question in the negative, holding that while pawnshops are indeed engaged
in the business of lending money, they cannot be deemed “lending investors” for
the purpose of imposing the 5% lending investor’s tax. Such ruling is anchored on the following reasons:
First. Under Section 192, paragraph 3, sub-paragraphs (dd) and (ff) of the NIRC of 1997, prior to its amendment by E.O. No. 273, as well as Section 161, paragraph 2, sub-paragraphs (dd) and (ff) of the NIRC of 1986, pawnshops and lending investors were subjected to different tax treatments, thus:
(3) Other
Fixed Taxes. – The following fixed
taxes shall be collected as follows, the amount stated being for the whole
year, when not otherwise specified:
x
x x
(dd) Lending
Investors –
1. In chartered cities and first
class municipalities, one thousand pesos;
2.
In second and
third class municipalities, five hundred pesos;
3.
In fourth and
fifth class municipalities and municipal districts, two hundred fifty pesos: Provided,
That lending investors who do business as such in more than one province shall
pay a tax of one thousand pesos.
x x x
(ff) Pawnshops,
one thousand pesos.
Second. Congress never intended pawnshops to be treated in the same way as
lending investors. Section 116 of
the NIRC of 1977, as renumbered and rearranged by E.O. No. 273, was basically
lifted from Section 175 (formerly Sec. 209, NIRC of 1977, as amended by P.D.
1739,
Sec. 175. Percentage tax on dealers in securities, lending investors. – Dealers in
securities shall pay a tax equivalent to six percent (6%) of their gross
income. Lending investors shall pay a tax equivalent to five percent (5%)
of their gross income. (As amended by P.D. No. 1739, P.D. No. 1959, and P.D.
No. 1994).
We
note that the definition of lending
investors found in Section 157 (u) of the NIRC of 1986 is not found in the
NIRC of 1977, as amended by E.O. No. 273, where Section 116 invoked by the CIR
is found. However, as emphasized
earlier, both the NIRC of 1986 and NIRC of 1977 dealt with pawnshops and
lending investors differently. Verily then, it was the intent of Congress to
deal with both subjects differently. Hence,
we must likewise interpret the statute to conform to such legislative intent.
Third.
Section 116 of the NIRC of 1977, as
amended by E.O. No. 273, subjects to percentage tax dealers in securities and
lending investors only. There is no
mention of pawnshops. Under the maxim expressio unius est exclusio alterius,
the mention of one thing implies the exclusion of another thing not mentioned. Thus, if a statute enumerates the things upon
which it is to operate, everything else must necessarily and by implication be
excluded from its operation and effect (Vera v. Fernandez, L-31364,
March 30, 1979, 89 SCRA 199, 203). This rule, as a guide to probable
legislative intent, is based upon the rules of logic and natural workings of
the human mind (Republic v. Estenzo, L-35376, September 11, 1980, 99 SCRA
651, 656).
Fourth. The BIR had ruled several times prior to the issuance of RMO No. 15-91
and RMC No. 43-91 that pawnshops were not subject to the 5% percentage tax
imposed by Section 116 of the NIRC of 1977, as amended by E.O. No. 273. This was even admitted by the CIR in RMO No.
15-91 itself. Considering that Section
116 of the NIRC of 1977, as amended, was practically lifted from Section 175 of
the NIRC of 1986, as amended, and there being no change in the law, the
interpretation thereof should not have been altered.
x x x
x x x R.A. No. 7716
(An Act Restructuring the Value-added Tax (VAT) System, Widening Its Tax
Base and Enhancing Its Administrative, and for These Purposes Amending and
Repealing the Relevant Provisions of the National Internal Revenue Code, as
amended, and for Other Purposes.) repealed
Section 116 of NIRC of 1977, as amended, which was the basis of RMO No. 15-91
and RMC No. 43-91, thus:
x x x
Since Section 116 of the NIRC of 1977,
which breathed life on the questioned administrative issuances, had already
been repealed, RMO 15-91 and RMC 43-91, which depended upon it, are deemed
automatically repealed. Hence, even
granting that pawnshops are included within the term lending investors, the assessment from
Adding to the invalidity of RMC No. 43-91 and RMO No. 15-91 is the absence of publication. While the rule-making authority of the CIR is not doubted, like any other government agency, the CIR may not disregard legal requirements or applicable principles in the exercise of quasi-legislative powers.
x x x
RMO No. 15-91 and RMC No. 43-91 cannot be viewed simply as implementing rules or corrective measures revoking in the process the previous rulings of past Commissioners. Specifically, they would have been amendatory provisions applicable to pawnshops. x x x. The due observance of the requirements of notice, hearing, and publication should not have been ignored.
x x x
In view of the foregoing, RMO No. 15-91 and RMC No. 4391 are hereby declared null and void. Consequently, Lhuillier is not liable to pay the 5% lending investor’s tax.[7] (Underscoring supplied)
Under the principle
of stare decisis et non quieta movere (follow past precedents and do not disturb
what has been settled),[8] it
is our duty to apply our previous ruling in Commissioner of Internal Revenue
v. Michael J. Lhuillier Pawnshop to the
instant case. Once a case has been
decided one way, any other case involving exactly the same point at issue, as in
the case at bar, should be decided in the same manner.[9]
In
fine, we find no reversible error committed by the Court of Appeals in
rendering its assailed Decision.
WHEREFORE,
the petition is DENIED. The
Decision dated
SO
ORDERED.
ANGELINA SANDOVAL-GUTIERREZ
Associate Justice
WE
CONCUR:
(On leave)
REYNATO S. PUNO
Associate Justice Chairperson |
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RENATO C. CORONA Associate Justice |
ADOLFO S. AZCUNA Associate Justice |
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CANCIO C. GARCIA Associate Justice |
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I
attest that the conclusions in the above Decision were reached in consultation
before the case was assigned to the writer of the opinion of the Court's
Division.
ANGELINA
SANDOVAL-GUTIERREZ
Associate Justice
Acting Chairperson, Second Division
Chief Justice
* On leave.
[1] Penned by Justice Presbitero J. Velasco, Jr. (now a Member of this Court) and concurred in by Justice Ruben T. Reyes (now Presiding Justice) and Justice Juan Q. Enriquez; Rollo, pp. 18-29.
[2] Per Resolution dated March 29 of the Court of Tax Appeals, Petition, Rollo, p. 10.
[6] G.R. No. 150947,
[7] Ibid, pp. 185-189.
[8] J.M. Tuason
& Co., Inc. v. Mariano, No. L-33140,
[9]
Pines City Educational Center v.
National Labor Relations Commission, G.R. No. 96779,