G.R. No. 150947 July 15, 2003
DAVIDE, JR., C.J.:
Topic: Art. 2, Civil Code of the Phil.
FACTS:
1. On 11 March 1991, petitioner Commission of Internal Revenue issued Revenue Memorandum Order (RMO) No. 15-91 which was later clarified by RMO No. 43-91 imposing a 5% lending investor's tax on the gross income of pawnshops. Such tax can be paid until 30 June 1991, the corresponding penalties shall be assessed and computed from 21 April 1991.
2. On 11 September 1997, the Bureau of Internal Revenue (BIR) issued an assessment notice to MLhuillier demanding payment of deficiency percentage tax in the sum of P3,360,335.11 for 1994 inclusive of interest and surcharges.
3. MLhuillier then filed an administrative protest with the Office of the Revenue Regional Director contending that neither the Tax Code nor the VAT Law expressly imposes 5% percentage tax on the gross income of pawnshops and RMO No. 15-91 is not implementing any provision of the Internal Revenue laws but is a new and additional tax measure on pawnshops, which only Congress could enact. Since the protest was not acted upon by the CIR, Lhuillier raised it to Court of Tax Appeals.
4. CTA rendered a decision declaring (1) RMO No. 15-91 and RMC No. 43-91 null and void insofar as they classify pawnshops as lending investors subject to 5% percentage tax; and (2) Assessment Notice No. 81-PT-13-94-97-9-118 as cancelled, withdrawn, and with no force and effect
5.The CIR is now before this Court via this 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.
6. Lhuillier likewise asserts that RMO No. 15-91 and RMC No. 43-91 are not implementing rules but are new and additional tax measures, which only Congress is empowered to enact. Besides, they are invalid because they have never been published in the Official Gazette or any newspaper of general circulation.
ISSUE:
Is publication necessary for the validity of RMO No. 15-91 and RMC No. 43-91?
RULING:
YES. It is necessary. RMO No. 15-91 and RMC No. 43-91 would have been amendatory provisions applicable to pawnshops. Without these disputed CIR issuances, pawnshops would not be liable to pay the 5% percentage tax, considering that they were not specifically included in Section 116 of the NIRC of 1977, as amended. In so doing, the CIR did not simply interpret the law. Since the CIR ignored the due observance of the requirements of notice, hearing, and publication, RMO No. 15-91 and RMC No. 43-91 are hereby declared NULL and VOID.
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