Cebu Rosver Pawnshop, Inc. v. Commissioner of Internal Revenue

SPECIAL EIGHTEENTH DIVISION [CA-G.R. SP No. 80046. April 2, 2007.] CEBU ROSVER PAWNSHOP, INC. , petitioner , vs . COMMISSIONER OF INTERNAL REVENUE , respondent . D E C I S I O N ACOSTA , F.P. , J p : Before we could decide on the merits of the appeal by way of a petition for review under Rule 43 of the Revised Rules of Civil Procedure made in the case at bench, Cebu Rosver Pawnshop, Inc. filed a "Manifestation with Motion to Dismiss Based on Settlement Agreement," 1 to which the Commissioner of Internal Revenue represented by the Office of the Solicitor General (OSG) through its Comment 2 offered no objection provided compliance by said pawnshop with the terms and conditions thereof. The Settlement 3 reads as follows: "SETTLEMENT AGREEMENT On Value-Added Tax on Pawnshops For Tax Years 1996 to 2002 (Inclusive) Cebu Ros-Ver Pawnshop, Inc., a member of the Chamber of Pawnbrokers of the Philippines, Inc., engaged in the business of pawnshop, with principal address at 4th Dr. Gorres Lacson Bldg., Colon St. with Tax Identification No. 000-552-114-000, represented herein by its manager, Arnold G. Ignacio and hereinafter referred to as the "PAWNSHOP", hereby offer its Value-Added Tax Liabilities for the tax years 1996 to 2002, inclusive, under the following terms and conditions: I. SCOPE A. This Agreement contemplates and includes: 1. All years with VAT assessments from the Bureau of Internal Revenue (BIR), whether preliminary or final, on gross receipts of pawnshops for tax years 1996 to 2002, inclusive, 2. All years with cases pending with Court of Tax Appeals (CTA), Court of Appeals (CA), and/or Supreme Court (SC), on the VAT liability on the gross receipts of pawnshops for tax years 1996 to 2002, inclusive, 3. All open years from 1996 to 2002, inclusive. B. This Agreement shall exclude: 1. VAT liabilities on gross receipts of pawnshops for tax years 1996 to 2002, inclusive, settled by way of payment or compromises, 2. VAT liabilities on gross receipts of pawnshops for tax years 1996 to 2002, inclusive, investigated which were already paid, hence already closed, and 3. VAT liabilities on gross receipts of pawnshops for such period after taxable year 2002. CTHDcS II. SETTLEMENT AMOUNT: By way of full settlement of the PAWNSHOP's VAT liabilities for tax years 1996 to 2002, inclusive, the PAWNSHOP hereby undertake to pay twenty five percent (25%) of its basic value added tax due for years 1996 to 2002, inclusive where the basic value added tax due shall be computed by multiplying its gross receipts for the period covered by ten percent (10%). Provided, that the payment and Schedule I, a copy of which is attached hereto as Annex "1" for tax years 2000 to 2002, inclusive, shall be due on or before July 15, 2004. Provided further, that the payment and Schedule I for tax years 1996 to 1999, inclusive, shall be due on or before December 15, 2004. III. CONDITIONS, WARRANTIES AND REPRESENTATIONS This Agreement shall become effective and valid only upon the fulfillment of all the following terms and conditions, and provided that PAWNSHOP is in full compliance of the following warranties and representations by the PAWNSHOPS: 1. The PAWNSHOP shall have been registered as a VAT taxpayer. 2. The PAWNSHOP undertakes and warrants to pay VAT on all of its gross receipts as of January 1, 2003. 3. In the event the pawnshop have any existing protest filed with the BIR or ay competent courts for any assessments made by the BIR, the PAWNSHOP undertakes to withdraw and protest. 4. For those tax years with assessments made, the PAWNSHOP herein represents that the execution hereof and the payment of twenty five percent (25%) of the basic VAT assessed is by way of an offer to compromise said tax liabilities under Section 204 of the National Internal Revenue Code of 1997. 5. For those VAT liabilities for tax years 1996 to 2002, inclusive, without any assessment from the BIR, the PAWNSHOP hereby declares that the duly accomplished Schedules are true, correct and complete statement of its gross receipts for the years covered, and the payment of the twenty five percent (25%) of the basic value added tax liabilities as determined in accordance with Section II above is by way of an offer to compromise said tax liabilities. 6. The PAWNSHOP hereby agree that the BIR shall have one (1) year from July 15, 2004 for tax years 2000 to 2002, inclusive, and one (1) year from December 15, 2004 for tax years 1996 to 1999, inclusive, to verify the truth and correctness of the self assessment made by the PAWNSHOP under the immediately preceding subsection. 7. The PAWNSHOP shall attach hereto a certified true copy of its Certificate of Membership with the Chamber of Pawnbrokers of the Philippines, Inc. 8. As settlement for its VAT liabilities for tax years 2000 to 2002, inclusive, the PAWNSHOP shall, on or before July 15, 2004, a. file a duly signed and executed copy of this Agreement with the Revenue District Office having jurisdiction over it, b. file a duly accomplished Schedule 1 for tax years, and c. pay in full the settlement due thereon using BIR form No. 0605 through the Accredited Agent Banks. 9. The BIR shall issue a Revenue Memorandum Circular to direct officials and members of Bureau to desist from conducting investigation and/or issuance of assessments involving lending investors tax imposed on pawnshop in view of the case of the Commissioner of Internal Revenue vs. Michel Lhuillier, G.R. No. 150947. IV. OTHERS. 1. Acceptance of the compromise offer to settle the VAT liabilities of the PAWNSHOP shall be conditional, among others, upon receipt by the BIR of a duly accomplish Schedule 1 for each and every year of tax years 1996 to 2002, inclusive, and payment for each of the said tax years included therein. 2. The BIR shall conduct an evaluation of the assessments subject of this Agreement to confirm/validate the existence of the ground as claimed; and 3. Abide by the provisions of the National Internal Revenue Code, as amended. 4. Deviation from any of the above conditions shall render this Agreement without any force and effect, and any payment made shall be considered as partial settlement of the total VAT liabilities of the PAWNSHOP. xxx xxx xxx. Cebu Ros-Ver Pawnshop, Inc. Pawnshop By (Sgd)______________________ Name: Arnold G. Ignacio Title: Manager ACCEPTED: GUILLERMO L. PARAYNO Commissioner of Internal Revenue, (Sgd) ESTRELLITA S. LOPEZ Revenue District Officer TIN 105-323-697 WE find the said Settlement Agreement executed between Cebu Ros-Ver Pawnshop, Inc. and the Bureau of Internal Revenue pursuant to Memorandum of Agreement dated January 4, 2004, between the Chamber of Pawnbrokers of the Philippines, Inc. and the Bureau of Internal Revenue to be not contrary to law, morals, good customs, public order or public policy. So, we hereby APPROVE the same. WHEREFORE, judgment is rendered approving the Settlement Agreement of the parties, the same not being contrary to law, morals, good customs and public policy, and the parties are hereby ENJOINED to abide and comply strictly with the terms and conditions thereof. IN VIEW OF THE FOREGOING, the Court hereby DISMISSES the instant petition docketed as CA-G.R. SP No. 80046 having become functus oficio . SO ORDERED. Magpale and Cruz, JJ., concur. Footnotes * Acting Junior Member per Office Order No. 16-07-AJM dated March 28, 2007. 1. Dated March 7, 2005; Rollo at p. 289-294 with Annexes. 2. Dated August 10, 2006; Rollo at p. 300-302. 3. Annex "B"; Rollo at p. 277-280 with Annexes.