SUMMARY OF SIGNIFICANT SC DECISIONS (November 2010) By: Atty. Bryan Joseph L.

Mallillin

1. The word zero-rated should be imprinted on invoices and/or official receipts as part of the invoicing requirement. Section 4.108-1 of RR 7-95 neither expanded nor supplanted the Tax Code but merely supplemented what the Tax Code already defined and discussed. In fact, the necessity of indicating zero-rated into VAT invoices/receipts became more apparent when the provisions of the said revenue regulation was later integrated into RA No. 9337, the amendatory law of the 1997 NIRC. Evidently, as it failed to indicate in its VAT invoices and receipts that the transactions were zerorated, petitioner Kepco failed to comply with the correct substantiation requirement for zero-rated transactions. Kepco Philippines Corp. v. Commissioner of Internal Revenue, G.R. No. 181858, November 24, 2010 2. The grant or denial of a motion for postponement is addressed to the sound discretion of the court. The CTA gave enough opportunity for petitioner Milwaukee to present its rebuttal evidence. Records reveal that when Milwaukee requested for resetting on September 5, 2005 and October 26, 2005, its motions were granted by the CTA. As a matter of fact, by January 16, 2006, Milwaukee was already able to partially present its rebuttal evidence. Thus, when the CTA called on Milwaukee to continue its presentation of rebuttal evidence on February 27, 2006, it should have been prepared to do so. It cannot be said that the CTA arbitrarily denied Milwaukees supposed simple request of resetting because it had already given the latter several months to prepare and gather its rebuttal evidence. Accordingly, Milwaukees right to due process was not transgressed. The Court has consistently reminded litigants that due process is simply an opportunity to be heard. Milwaukee Industries Corp. v. Court of Tax Appeals and Commissioner of Internal Revenue, G.R. No. 173815, November 24, 2010 3. There must be a grant of authority before any revenue officer can conduct an examination or assessment, and the revenue officer must not go beyond the authority given. The subject letter of authority (LOA) covered the period 1997 and unverified prior years. For said reason, petitioner CIR acting through its revenue officers went beyond the scope of their authority because the deficiency VAT assessment they arrived at was based on records from January to March 1998 or using the fiscal year which ended in March 31, 1998. Petitioner knew which period should be covered by the investigation, thus, if it wanted or intended the investigation to include the year 1998, it should have done so by including it in the LOA or issuing another LOA. In addition, the coverage of the LOA, particularly the phrase and unverified prior years, violated Section C of Revenue Memorandum Order No. 43-90, which provides that an LOA should cover a taxable
Summary of Significant SC Decisions (November 2010) Page 1 of 2

period not exceeding one taxable year. Commissioner of Internal Revenue v. Sony Philippines, Inc., G.R. No. 178697, November 17, 2010 4. The appellate jurisdiction of the CTA is not limited to cases which involve decisions of the CIR on matters relating to assessments or refunds. At issue is the CTA's jurisdiction on assessments which had become final and unappealable. Petitioner CIR contended that when the law says that the CTA has jurisdiction over other matters (Section 7, RA 1125), it presupposes that the tax assessment has not become final and unappealable. The SC held that the fact that an assessment has become final for failure of the taxpayer to file a protest within the time allowed only means that the validity or correctness of the assessment may no longer be questioned on appeal. However, the validity of the assessment itself is a separate and distinct issue from the issue of whether the right of the CIR to collect the validly assessed tax has prescribed. This issue of prescription, being a matter provided for by the NIRC, is well within the jurisdiction of the CTA to decide. Commissioner of Internal Revenue v. Hambrecht & Quist Philippines, Inc., G.R. No. 169225, November 17, 2010

Summary of Significant SC Decisions (November 2010)

Page 2 of 2