TAMBUNTING PAWNSHOP, INC. v. COMMISSIONER OF INTERNAL REVENUE. G.R. No. 179085.

January 21, 2010

FACTS:

Petitioner was issued an assessment for deficiency VAT for the taxable year of 1999. Petitioner, after
his protest with the CIR merited no response, it filed a Petition for Review with the CTA raising that
pawnshops are not subject to VAT under the NIRC and that pawn tickers are not subject to
documentary stamp tax.

The CTA ruled that petitioner is liable for the deficiency VAT and the documentary stamp tax.

The petitioner argues that a pawnshop is not enumerated as one of those engaged in sale or exchange
of services in Section 108 of the National Internal Revenue Code and citing the case of Commissioner
of Internal Revenue v. Michel J. Lhuillier Pawnshops, Inc. as basis.

ISSUE:
(1) Whether petitioner is liable for the deficiency VAT.
(2) Whether the petitioner is liable for the documentary stamp tax. 

RULING:

(1) YES UNTA. But deferred during that time and beginning 2004 up to the present, by virtue of
R.A. No. 9238, petitioner is no longer liable for VAT but it is subject to percentage tax on
gross receipts from 0% to 5%, as the case may be.

The Court cited the case of First Planters Pawnshop, Inc. v. Commissioner of Internal Revenue. In that
case the Court ruled that pawnshops should have been treated as non-bank financial intermediaries
from the very beginning, subject to the appropriate taxes provided by law.

With the enactment of R.A. No. 9238 in 2004, the services of banks, non-bank financial
intermediaries, finance companies, and other financial intermediaries not performing quasi-banking
functions were specifically exempted from VAT, 28 and the 0% to 5% percentage tax on gross
receipts on other non-bank financial intermediaries was reimposed under Section 122 of the Tax Code
of 1997.

At the time of the disputed assessment, that is, for the year 2000, pawnshops were not subject
to 10% VAT under the general provision on "sale or exchange of services" as defined under
Section 108 (A) of the Tax Code of 1997, which states: "'sale or exchange of services' means the
performance of all kinds of services in the Philippines for others for a fee, remuneration or
consideration . . . ." Instead, due to the specific nature of its business, pawnshops were then
subject to 10% VAT under the category of non-bank financial intermediaries.

Coming now to the issue at hand — Since petitioner is a non-bank financial intermediary, it is subject
to l0% VAT for the tax years 1996 to 2002; however, with the levy, assessment and collection of VAT
from non-bank financial intermediaries being specifically deferred by law, then petitioner is not
liable for VAT during these tax years . But with the full implementation of the VAT system on non-
bank financial intermediaries starting January 1, 2003, petitioner is liable for 10% VAT for said tax
year. And beginning 2004 up to the present, by virtue of R.A. No. 9238, petitioner is no
longer liable for VAT but it is subject to percentage tax on gross receipts from 0% to 5%, as
the case may be.

  In the foregoing case, since the imposition of VAT on pawnshops, which are non-bank financial
intermediaries, was deferred for the tax years 1996 to 2002, petitioner is not liable for VAT
for the tax year 1999.

(2) NO. Sections 195 of the NIRC provides that on the pledge of personal property, there shall be
collected a documentary stamp tax. The Court held in Michel J. Lhuillier Pawnshop, Inc. v.
Commissioner of Internal Revenue  that the documentary stamp tax is an excise tax on the exercise of
a right or privilege and that pledge is among the privileges, the exercise of which is subject to
documentary stamp taxes. For purposes of taxation, pawn tickets are proof of an exercise of a taxable
privilege of concluding a contract of pledge.

G.R. No. 182737 Case Digest

G.R. No. 182737, March 2, 2016
Silicon Phils., Inc.
vs CIR

Facts:

Silicon is engaged in the business of designing, developing, manufacturing and exporting integrated
circuit components, registered as a VAT taxpayer with BIR by virtue of its sale of goods and services
with a permit to print accounting documents like sales invoice and official receipts.

Later, Silicon sought to recover the VAT it paid on imported capital goods and applied for tax
credit/refund. Because of the continuous inaction of CIR, Silicon filed petitions for review before the
CTA.

CTA 2nd Division consolidated all their claims and dismissed the petitions for lack of merit.

It ruled that pursuant to Section 112 of the National Internal Revenue Code (NIRC), the refund/tax
credit of unutilized input VAT is allowed (a) when the excess input VAT is attributable to zero-rated or
effectively zero-rated sales; and (b) when the excess input VAT is attributable to capital goods
purchased by a VAT-registered person.

In order to prove zero-rated export sales, a VAT-registered person must present the following: (1) the
sales invoice as proof of the sale of goods; (2) the export declaration or bill of lading/airway bill as
proof of actual shipment of the goods from the Philippines to a foreign country; and (3) bank credit
advice or certificate of remittance or any other document proving payment for the goods in acceptable
foreign currency or its equivalent in goods and services.

The CTA Second Division found that petitioner presented nothing more than a certificate of inward
remittances for the entire year 2001, in compliance with the third requirement only. That being the
case, petitioner's reported export sales in the total amount of P2,444,167,418.4028 cannot qualify as
VAT zero-rated sales.

On the other hand, a taxpayer claiming a refund/tax credit of input VAT paid on purchased capital
goods must prove all of the following: (1) that it is a VAT-registered entity; (2) that it paid input VAT
on capital goods purchased; (3) that its input VAT payments on capital goods were duly supported by
VAT invoices or official receipts; (4) that it did not offset or apply the claimed input VAT payments on
capital goods against any output VAT liability; and (5) that the administrative and judicial claims for a
refund were filed within the two-year prescriptive period.
The CTA Second Division found that petitioner was able to prove the first and the fifth requisites for
the pertinent quarters of the year 2001.

However, petitioner was not able to prove the fourth requisite with regard to the claimed input VAT
payments for the 3rd and the 4th quarters of 2001. The evidence purportedly showing that it had not
offset or applied the claimed input VAT payment against any output VAT liability was denied admission
as evidence for being a mere photocopy.

Petitioner also failed to prove the second and the third requisite with regard to the claimed input VAT
payment for the 2nd quarter of 2001. Specifically, it failed to prove that the purchases were capital
goods.

Silicon filed a petition for review with CTA En Banc after its motion reconsideration was also denied by
the division.

CTA En Banc affrimed the findings of the division. Thus this petition with SC.

Issues:
(1) WON the CTA erred in denying petitioner’s claim for refund of its excess/unutilized input VAT
derived from importation of capital goods due to its failure to prove the existence of zero-rated export
sales
(2) WON the CTA erred in finding that petitioner failed to comply with the requirements of a valid
claim for refund/tax credit of input VAT paid on its importation of capital goods
(3) WON the input VAT on the alleged non-capital goods are still refundable because they are
attributable to the zero-rated sales
ALL NOT ANSWERED BY SC BECAUSE CTA HAD NO JURISDICTION

Ruling:
Under the NIRC, the administrative claim of a VAT registered person for the issuance by respondent of
tax credit certificates or the refund of input taxes paid on zero-rated sales or capital goods imported
may be made within two years after the close of the taxable quarter when the sale or
importation/purchase was made.

In the case of petitioner, its administrative claim for the 2nd quarter of the year 2001 was filed on 16
October 2001, well within the two-year period provided by law. The same is true with regard to the
administrative claims for the 3rd and the 4th quarters of 2001, both of which were filed on 4
September 2002.

Upon the filing of an administrative claim, respondent is given a period of 120 days within which to (1)
grant a refund or issue the tax credit certificate for creditable input taxes; or (2) make a full or partial
denial of the claim for a tax refund or tax credit. Failure on the part of respondent to act on the
application within the 120-day period shall be deemed a denial.

Note that the 120-day period begins to run from the date of submission of complete documents
supporting the administrative claim. If there is no evidence showing that the taxpayer was required to
submit — or actually submitted — additional documents after the filing of the administrative claim, it
is presumed that the complete documents accompanied the claim when it was filed.

Considering that there is no evidence in this case showing that petitioner made later submissions of
documents in support of its administrative claims, the 120-day period within which respondent is
allowed to act on the claims shall be reckoned from 16 October 2001 and 4 September 2002.

Whether respondent rules in favor of or against the taxpayer - or does not act at all on the
administrative claim - within the period of 120 days from the submission of complete documents, the
taxpayer may resort to a judicial claim before the CTA.

The judicial claim for the 4th quarter of 2001, while filed within the period 10 December 2003 up to 6
October 2010, cannot find solace in BIR Ruling No. DA-489-03. The general interpretative rule allowed
the premature filing of judicial claims by providing that the "taxpayer-claimant need not wait for the
lapse of the 120-day period before it could seek judicial relief with the CTA by way of Petition for
Review." The rule certainly did not allow the filing of a judicial claim long after the expiration of the
120+30 day period.

As things stood, the CTA had no jurisdiction to act upon, take cognizance of, and render
judgment upon the petitions for review filed by petitioner. For having been rendered without
jurisdiction, the decision of the CTA Second Division in this case - and consequently, the decision of
the CTA En Banc - is a total nullity that creates no rights and produces no effect.

Fishwealth Canning Corp. v. CIR, G.R. No. 179343, 21 January 2010

Topic: Filing of Appeal

Facts:
The Commissioner of Internal Revenue (respondent), by Letter of Authority dated May 16, 2000,
ordered the examination of the internal revenue taxes for the taxable year 1999 of Fishwealth Canning
Corp. (petitioner). The investigation disclosed that petitioner was liable in the amount of
P2,395,826.88 representing income tax, value added tax (VAT), withholding tax deficiencies and other
miscellaneous deficiencies. Petitioner eventually settled these obligations on August 30, 2000.

On August 25, 2000, respondent reinvestigated petitioner's books of accounts and other records of
internal revenue taxes covering the same period for the purpose of which it issued a subpoena duces
tecum requiring petitioner to submit its records and books of accounts. Petitioner requested the
cancellation of the subpoena on the ground that the same set of documents had previously been
examined.

As petitioner did not heed the subpoena, respondent thereafter filed a criminal complaint against
petitioner, which complaint was dismissed for insufficiency of evidence.

Respondent sent, on August 6, 2003, petitioner a Final Assessment Notice of income tax and VAT
deficiencies for the taxable year 1999, which assessment petitioner contested by letter of September
23, 2003. Respondent thereafter issued a Final Decision on Disputed Assessment dated August 2,
2005, which petitioner received on August 4, 2005, denying its letter of protest, apprising it of its
income tax and VAT liabilities.

Respondent added that if petitioner disagreed, it may appeal to the Court of Tax Appeals (CTA) "within
thirty (30) days from date of receipt hereof, otherwise our said deficiency income and value-added
taxes assessments shall become final, executory, and demandable."

Instead of appealing to the CTA, petitioner filed, on September 1, 2005, a Letter of Reconsideration
dated August 31, 2005.

By a Preliminary Collection Letter dated September 6, 2005, respondent demanded payment of

petitioner's tax liabilities, 9 drawing petitioner to file on October 20, 2005 a Petition for Review 10
before the CTA.

Respondent argued, among other things, that the petition was filed out of time which argument the
First Division of the CTA upheld and accordingly dismissed the petition.

Issue:
WON the CTA En Banc erred in holding that the petition filed before the CTA First Division as well as
that filed before it was filed out of time

Ruling:
NO. Petition lacks merit.

Under Sec. 228 of the 1997 Tax Code, if the protest is denied in whole or in part, or is not acted
upon within one hundred eighty (180) days from submission of documents, the taxpayer adversely
affected by the decision or inaction may appeal to the Court of Tax Appeals within thirty (30)
days from receipt of the said decision, or from the lapse of the one hundred eighty (180)-
day period; otherwise, the decision shall become final, executory and demandable.

In the case at bar, petitioner's administrative protest was denied by Final Decision on Disputed
Assessment dated August 2, 2005 issued by respondent and which petitioner received on August 4,
2005. Under the above-quoted Section 228 of the 1997 Tax Code, petitioner had 30 days to appeal
respondent's denial of its protest to the CTA.

Since petitioner received the denial of its administrative protest on August 4, 2005, it had until
September 3, 2005 to file a petition for review before the CTA Division. It filed one, however, on
October 20, 2005, hence, it was filed out of time. For a motion for reconsideration of the denial of the
administrative protest does not toll the 30-day period to appeal to the CTA.

Tambunting Pawnshop, Inc. v. CIR, G.R. No. 179085, 21 January 2010

Topic: Pawnshops not anymore subject to VAT

Facts:
Petitioner was issued an assessment for deficiency VAT for the taxable year of 1999. Petitioner, after
his protest with the CIR merited no response, it filed a Petition for Review with the CTA raising that
pawnshops are not subject to VAT under the NIRC and that pawn tickers are not subject to
documentary stamp tax.

The CTA ruled that petitioner is liable for the deficiency VAT and the documentary stamp tax.

The petitioner argues that a pawnshop is not enumerated as one of those engaged in sale or exchange
of services in Section 108 of the National Internal Revenue Code and citing the case of Commissioner
of Internal Revenue v. Michel J. Lhuillier Pawnshops, Inc. as basis.

Issue:
(1) Whether petitioner is liable for the deficiency VAT.
(2) Whether the petitioner is liable for the documentary stamp tax. 

Ruling
(1) YES UNTA. But deferred during that time and beginning 2004 up to the present, by virtue of
R.A. No. 9238, petitioner is no longer liable for VAT but it is subject to percentage tax on
gross receipts from 0% to 5%, as the case may be.

The Court cited the case of First Planters Pawnshop, Inc. v. Commissioner of Internal Revenue. In that
case the Court ruled that pawnshops should have been treated as non-bank financial intermediaries
from the very beginning, subject to the appropriate taxes provided by law.

With the enactment of R.A. No. 9238 in 2004, the services of banks, non-bank financial
intermediaries, finance companies, and other financial intermediaries not performing quasi-banking
functions were specifically exempted from VAT, 28 and the 0% to 5% percentage tax on gross
receipts on other non-bank financial intermediaries was reimposed under Section 122 of the Tax Code
of 1997.

At the time of the disputed assessment, that is, for the year 2000, pawnshops were not subject
to 10% VAT under the general provision on "sale or exchange of services" as defined under
Section 108 (A) of the Tax Code of 1997, which states: "'sale or exchange of services' means the
performance of all kinds of services in the Philippines for others for a fee, remuneration or
consideration . . . ." Instead, due to the specific nature of its business, pawnshops were then
subject to 10% VAT under the category of non-bank financial intermediaries.

Coming now to the issue at hand — Since petitioner is a non-bank financial intermediary, it is subject
to l0% VAT for the tax years 1996 to 2002; however, with the levy, assessment and collection of VAT
from non-bank financial intermediaries being specifically deferred by law, then petitioner is not
liable for VAT during these tax years . But with the full implementation of the VAT system on non-
bank financial intermediaries starting January 1, 2003, petitioner is liable for 10% VAT for said tax
year. And beginning 2004 up to the present, by virtue of R.A. No. 9238, petitioner is no
longer liable for VAT but it is subject to percentage tax on gross receipts from 0% to 5%, as
the case may be.

  In the foregoing case, since the imposition of VAT on pawnshops, which are non-bank financial
intermediaries, was deferred for the tax years 1996 to 2002, petitioner is not liable for VAT
for the tax year 1999.

(2) NO. Sections 195 of the NIRC provides that on the pledge of personal property, there shall be
collected a documentary stamp tax. The Court held in Michel J. Lhuillier Pawnshop, Inc. v.
Commissioner of Internal Revenue  that the documentary stamp tax is an excise tax on the exercise of
a right or privilege and that pledge is among the privileges, the exercise of which is subject to
documentary stamp taxes. For purposes of taxation, pawn tickets are proof of an exercise of a taxable
privilege of concluding a contract of pledge.

Silicon Philippines v. CIR, G.R. No. 182737, 2 March 2016

Topic: Claim for tax refund or issuance of tax credit certificates corresponding to

petitioner's excess/unutilized input value-added tax (VAT)

Facts:
Silicon is engaged in the business of designing, developing, manufacturing and exporting integrated
circuit components, registered as a VAT taxpayer with BIR by virtue of its sale of goods and services
with a permit to print accounting documents like sales invoice and official receipts.

Later, Silicon sought to recover the VAT it paid on imported capital goods and applied for tax
credit/refund. Because of the continuous inaction of CIR, Silicon filed petitions for review before the
CTA.

CTA 2nd Division consolidated all their claims and dismissed the petitions for lack of merit.

It ruled that pursuant to Section 112 of the National Internal Revenue Code (NIRC), the refund/tax
credit of unutilized input VAT is allowed (a) when the excess input VAT is attributable to zero-rated or
effectively zero-rated sales; and (b) when the excess input VAT is attributable to capital goods
purchased by a VAT-registered person.

In order to prove zero-rated export sales, a VAT-registered person must present the following: (1) the
sales invoice as proof of the sale of goods; (2) the export declaration or bill of lading/airway bill as
proof of actual shipment of the goods from the Philippines to a foreign country; and (3) bank credit
advice or certificate of remittance or any other document proving payment for the goods in acceptable
foreign currency or its equivalent in goods and services.

The CTA Second Division found that petitioner presented nothing more than a certificate of inward
remittances for the entire year 2001, in compliance with the third requirement only. That being the
case, petitioner's reported export sales in the total amount of P2,444,167,418.4028 cannot qualify as
VAT zero-rated sales.

On the other hand, a taxpayer claiming a refund/tax credit of input VAT paid on purchased capital
goods must prove all of the following: (1) that it is a VAT-registered entity; (2) that it paid input VAT
on capital goods purchased; (3) that its input VAT payments on capital goods were duly supported by
VAT invoices or official receipts; (4) that it did not offset or apply the claimed input VAT payments on
capital goods against any output VAT liability; and (5) that the administrative and judicial claims for a
refund were filed within the two-year prescriptive period.

The CTA Second Division found that petitioner was able to prove the first and the fifth requisites for
the pertinent quarters of the year 2001.

However, petitioner was not able to prove the fourth requisite with regard to the claimed input VAT
payments for the 3rd and the 4th quarters of 2001. The evidence purportedly showing that it had not
offset or applied the claimed input VAT payment against any output VAT liability was denied admission
as evidence for being a mere photocopy.

Petitioner also failed to prove the second and the third requisite with regard to the claimed input VAT
payment for the 2nd quarter of 2001. Specifically, it failed to prove that the purchases were capital
goods.

Silicon filed a petition for review with CTA En Banc after its motion reconsideration was also denied by
the division.

CTA En Banc affirmed the findings of the division. Thus this petition with SC.

Issue:
(1) WON the CTA erred in denying petitioner’s claim for refund of its excess/unutilized input VAT
derived from importation of capital goods due to its failure to prove the existence of zero-rated export
sales

(2) WON the CTA erred in finding that petitioner failed to comply with the requirements of a valid
claim for refund/tax credit of input VAT paid on its importation of capital goods

(3) WON the input VAT on the alleged non-capital goods are still refundable because they are
attributable to the zero-rated sales
ALL NOT ANSWERED BY SC BECAUSE CTA HAD NO JURISDICTION

Ruling:
Under the NIRC, the administrative claim of a VAT registered person for the issuance by respondent of
tax credit certificates or the refund of input taxes paid on zero-rated sales or capital goods imported
may be made within two years after the close of the taxable quarter when the sale or
importation/purchase was made.

In the case of petitioner, its administrative claim for the 2nd quarter of the year 2001 was filed on 16
October 2001, well within the two-year period provided by law. The same is true with regard to the
administrative claims for the 3rd and the 4th quarters of 2001, both of which were filed on 4
September 2002.

Upon the filing of an administrative claim, respondent is given a period of 120 days within which to (1)
grant a refund or issue the tax credit certificate for creditable input taxes; or (2) make a full or partial
denial of the claim for a tax refund or tax credit. Failure on the part of respondent to act on the
application within the 120-day period shall be deemed a denial.

Note that the 120-day period begins to run from the date of submission of complete documents
supporting the administrative claim. If there is no evidence showing that the taxpayer was required to
submit — or actually submitted — additional documents after the filing of the administrative claim, it
is presumed that the complete documents accompanied the claim when it was filed.

Considering that there is no evidence in this case showing that petitioner made later submissions of
documents in support of its administrative claims, the 120-day period within which respondent is
allowed to act on the claims shall be reckoned from 16 October 2001 and 4 September 2002.

Whether respondent rules in favor of or against the taxpayer - or does not act at all on the
administrative claim - within the period of 120 days from the submission of complete documents, the
taxpayer may resort to a judicial claim before the CTA.

The judicial claim for the 4th quarter of 2001, while filed within the period 10 December 2003 up to 6
October 2010, cannot find solace in BIR Ruling No. DA-489-03. The general interpretative rule allowed
the premature filing of judicial claims by providing that the "taxpayer-claimant need not wait for the
lapse of the 120-day period before it could seek judicial relief with the CTA by way of Petition for
Review." The rule certainly did not allow the filing of a judicial claim long after the expiration of the
120+30 day period.

As things stood, the CTA had no jurisdiction to act upon, take cognizance of, and render
judgment upon the petitions for review filed by petitioner. For having been rendered without
jurisdiction, the decision of the CTA Second Division in this case - and consequently, the decision of
the CTA En Banc - is a total nullity that creates no rights and produces no effect.