BIR Ruling [DA-297-97]

September 1, 1997 BIR RULING [DA-297-97] The Regional Director Revenue Region No. 13 Cebu City Madam: This is in response to the two (2) areas of concerns indicated in your Summary Report of Staff Meeting Discussions requiring attention and/or action by the Assistant Commissioner, Legal Service, viz. : Re: Section 2 (2.2) of RR No. 5-97 (inconsistent with Sec. 13 of RMC 2-96:) inconvenient on the part of the taxpayer Section 2 (2.2) of Revenue Regulations No. 5-97 clearly provides that loose documentary stamps shall be allowed to be used only when the amount of documentary stamp tax due on the taxable document/transaction does not exceed P10.00. On the other hand, Section 4 of Revenue Regulations No. 9-94 provides that if the amount of the documentary stamp tax due on the taxable document is ten pesos (P10.00) or more, the documentary stamp tax shall be paid by the taxpayer at the time the act is done or transaction had, and instead of affixing actual documentary stamps on the face of the taxable document, the information shown on the evidence of payment of the documentary stamp tax due on the document, that is, the official receipt number of the evidence of payment, date of payment, amount paid and the name of the payor, shall be written on the face of or on any suitable space in the document. Accordingly, since the rate of documentary stamp tax on warehouse receipts has been increased to P15.00 beginning 1996 pursuant to Section 189 of the Tax Code, as amended by R.A. No. 7660, actual documentary stamps need not be affixed on the warehouse receipt but instead the official receipt number of the evidence of payment, date and amount paid shall be indicated on the stub or duplicate copy of the same. CTIDcA Re: Taxability of pawnshop operators; Legal advice if the 5% tax on pawnshop operators can now be enforced This question has been answered by the former ACIR, Alicia P. Clemeno, in her letter dated February 10, 1995 addressed to the Regional Director of Revenue Region No. 4, by inviting attention to RMC No. 47-92 dated September 22, 1992, the pertinent portion of which was quoted therein, to wit: "In the Resolution of the Court of Appeals dated September 22, 1992, the respondent Judge Andres B. Reyes, Jr. is temporarily restrained from proceeding further in Civil Case No. 849-92 until further orders from the said Court of Appeals, to wit: "MEANWHILE, in order to maintain the status quo and so that the present petition may not be rendered moot and academic, the respondent judge is hereby temporarily restrained from proceeding further in Civil Case No. 849-92 until further orders from this Court. SO ORDERED." "In view of the foregoing, the implementation of Revenue Memorandum Order No. 15-91 and Revenue Memorandum Circular No. 43-91 can be continued against other pawnshop owners/operators without violating the writ of preliminary injunction issued by the RTC, San Mateo, Rizal, as aforesaid Judge Andres B. Reyes, Jr. is temporarily restrained by the Court of Appeals from proceeding further in Civil Case No. 849-92 SM until further orders from said Court. "It is, therefore, reiterated that all investigating units shall investigate and assess the lending investor's tax due from pawnshops within the statutory 3-year period in accordance with this Circular as well as RMO No. 15-91 and RMC 43-91." cAHITS The ACIR's letter in clarifying the aforesaid, further states that: "Although RMC 47-92 was issued prior to the promulgation of the aforesaid decision of the Court of Appeals dismissing this Bureau's petition for certiorari and prohibition, the same is still in full force and effect since the decision is under appeal to the Supreme Court (G.R. No. 113459), hence, not yet final and executory. Furthermore, it is to be noted that the decision did not order the lifting of the Resolution dated September 22, 1992 temporarily restraining respondent judge from proceeding further in Civil Case No. 849-92. The implication is that respondent judge is still prohibited from continuing with the proceedings, including the enforcement of the writ of preliminary injunction issued by him, in spite of the decision. "Accordingly, pursuant to RMC 47-92, that Office should continue investigating and assessing the lending investor's tax and documentary stamp tax due from pawnshop operators" Based on the foregoing, that Office (Revenue Region No. 13) should enforce the collection of the 5% lending investors tax against pawnshop operators, covering the period from 1991 to 1995 imposed under then Section 116 of the Tax Code including the corresponding documentary stamp taxes, within the 3-year statutory period provided for under Section 203 of the same Code, as amended by B.P. Blg. 700. It must be emphasized, however, that beginning 1996, pawnshop operators became subject to the 10% value-added tax pursuant to Section 102 (a) of the Tax Code, as amended by R.A. No. 7716, as further amended by R.A. No. 8241. Please be guided accordingly. Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV OIC, Assistant Commissioner (Legal Service)