SUMMARY OF SIGNIFICANT SC DECISIONS (March- May 2010)

By: Atty. Bryan Joseph L. Mallillin

1. The period to assess and collect taxes may only be extended upon a written agreement
between the CIR and the taxpayer executed before the expiration of the three-year period.
RMO 20-90 (April 4, 1990) and RDAO 05-01 (August 2, 2001) lay down the procedure for the
proper execution of the waiver. A perusal of the waivers executed by respondents accountant
reveals its infirmities, such as absence of the notarized written authority of Pasco to sign the waiver
in behalf of respondent, failure to indicate the date of acceptance, among others. Due to the defects
in the waivers, the period to assess or collect taxes was not extended. Consequently, the assessments
were issued by the BIR beyond the three-year period and are void. Commissioner of Internal
Revenue v. Kudos Metal Corporation, G.R. No. 178087, May 5, 2010
* Doctrine reiterated in the case of Avon Products Manufacturing, Inc. v. Commissioner of Internal Revenue,
C.T.A. Case No. 7038, May 13, 2010 for failure to furnish the taxpayer copies of the signed waivers.

2. Only in highly meritorious cases may the rules for perfecting an appeal be brushed aside.
In the instant case, RA 9282 took effect on April 23, 2004, while petitioner filed its Petition for
Review on Certiorari with the CA on August 24, 2004, or four months after the effectivity of the
law. However, in the instant case, procedural rules must be disregarded as the government cannot
be allowed to collect deficiency VAT from petitioner considering that the government has no right
at all to collect or to receive the same. Although a client is bound by the acts of his counsel,
including the latters mistakes and negligence, a departure from this rule is warranted where such
mistake or neglect would result in serious injustice to the client. TFS Incorporated Vs.
Commissioner of Internal Revenue, G.R. No. 166829, April 19, 2010
3. It is incumbent upon the taxpayer to reflect in his return the income upon which any
creditable tax is required to be withheld at the source.
A perusal of respondents 1994 Annual Income Tax Return shows that the gross income was
derived solely from sales of services. Thus, based on the entries in the return, the income derived
from rentals and sales of real property upon which the creditable taxes were withheld were not
included in respondents gross income as reflected in its return. Since no income was reported, it
follows that no tax was withheld. Respondent likewise failed to present all the Certificates of
Creditable Tax Withheld at Source as required under Section 10 of Revenue Regulation No. 6-85.
Certifications issued by respondent cannot be considered in the absence of the Certificates of
Creditable Tax Withheld at Source. Commissioner of Internal Revenue v. Far East Bank &
Trust Company, G.R. No. 17385, March 15, 2010

Summary of Significant SC Decisions (March- May 2010)

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4. It is axiomatic in pleadings and practice that no new issue in a case can be raised in a
pleading which by due diligence could have been raised in previous pleadings.
The CIR did not argue in his Answer that Toshiba had no right to the credit/refund of its input
VAT payments because the latter was VAT-exempt and its export sales were VAT-exempt
transactions. The Pre-Trial Brief of the CIR was equally bereft of such allegations or arguments.
The CIR likewise chose not to present any evidence at all during the trial before the CTA, and also
waived the submission of a Memorandum. The CIR had waited until the CTA already rendered its
Decision before asserting in his Motion for Reconsideration that Toshiba was VAT-exempt and its
export sales were VAT-exempt transactions. Upon the failure of the CIR to timely plead and prove
before the CTA its defenses or objections, the CIR is deemed to have waived the same. Toshiba
Information Equipment (Phils.), Inc. v. Commissioner of Internal Revenue, G.R. No. 157594,
March 9, 2010

Summary of Significant SC Decisions (March- May 2010)

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