Case Digest (G.R. No. 150947)
Facts:
Commissioner of Internal Revenue v. Michel J. Lhuillier Pawnshop, Inc., G.R. No. 150947, July 15, 2003, Supreme Court First Division, Davide Jr., J., writing for the Court.Petitioner Commissioner of Internal Revenue (CIR) sought review of the Court of Appeals’ 20 November 2001 decision in CA G.R. SP No. 62463, which had affirmed the Court of Tax Appeals’ (CTA) 13 December 2000 decision cancelling an assessment of P3,360,335.11 against respondent Michel J. Lhuillier Pawnshop, Inc. (Lhuillier) for alleged deficiency percentage tax for 1994. The case reached the Supreme Court by petition for review on certiorari under Rule 45.
On 11 March 1991 the CIR issued Revenue Memorandum Order No. 15-91 classifying pawnshops as subject to the 5% lending investor’s percentage tax under then Section 116 of the National Internal Revenue Code (NIRC) of 1977; this was clarified by Revenue Memorandum Circular No. 43-91 (27 May 1991) which set January 1, 1991 as the effective cut-off and revoked prior BIR rulings. Pursuant to those issuances, on 11 September 1997 the Bureau of Internal Revenue issued Assessment Notice No. 81-PT-13-94-97-9-118 against Lhuillier for alleged deficiency percentage tax for 1994.
Lhuillier administratively protested (3 October 1997), arguing among others that the Tax Code did not expressly impose the 5% percentage tax on pawnshops, that the CIR lacked power to amend law by issuance, and that the RMO/RMC were invalid or class legislation. After the protest went unacted upon, the BIR issued a warrant of distraint and levy (12 October 1998). Lhuillier invoked Section 228 of the Tax Reform Act of 1997 and filed a “Notice and Memorandum on Appeal” with the CTA (11 November 1998), docketed CTA Case No. 5690.
The CIR moved to dismiss for lack of action on the protest; the CTA denied the motion and, after hearings, granted Lhuillier’s motion for a writ of preliminary injunction (30 June 1999). On 13 December 2000 the CTA declared RMO No. 15-91 and RMC No. 43-91 null and void insofar as they classified pawnshops as lending investors and cancelled the assessment. The CIR appealed to the Court of Appeals, which affirmed the CTA decision on 20 November 2001. The CIR then fil...(Pro-only)
Issues:
- Did the Supreme Court have jurisdiction to entertain the petition for review on certiorari?
- Are RMO No. 15-91 and RMC No. 43-91 valid administrative issuances implementing Section 116 of the NIRC of 1977, as amended?
- Are pawnshops “lending investors” for purposes of imposing the 5% percentage tax under Section 116 of the NIRC of 1977, as amended?
- Is publication (and related notice/hearing requirements) necessary for the vali...(Pro-only)
Ruling:
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Ratio:
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Doctrine:
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