SUMMARY OF SIGNIFICANT CA AND SC CASES (November- December 2009)

By: Bryan Joseph L. Mallillin

1. When the term sale is made to include certain transactions for the purpose of imposing a tax, these same transactions should be included in the term sale when considering the availability of an exemption or tax benefit from the same revenue measures. In granting the tax benefit to VAT-registered zero-rated or effectively zero-rated taxpayers, Section 112(A) of the NIRC does not limit the definition of sale to commercial transactions in the normal course of business. Conspicuously, Section 106(B) of the NIRC, which deals with the imposition of the VAT, does not limit the term sale to commercial sales, rather it extends the term to transactions that are deemed sale. It is undisputed that during the fourth quarter of 2002, petitioner transferred to NPC all the electricity that was produced during the trial period. The fact that it was not transferred through a commercial sale or in the normal course of business does not deflect from the fact that such transaction is deemed as a sale under the law. San Roque Power Corporation v. Commissioner of Internal Revenue, G.R. No. 180345, November 25, 2009. 2. The failure of a taxpayer to interpose the requisite appeal to the Secretary of Justice is fatal to its complaint for a refund. Records reveal that appellant San Fernando failed to interpose an appeal from Local Ordinance No. 75, which imposed business tax on service establishments. The said ordinance was passed and approved but no question on the legality or validity of said ordinance was ever raised within thirty days from its effectivity before the Secretary of Justice, in accordance with Section 187 of the Local Government Code. Hence, appellant, as taxpayer, is under obligation to pay taxes pursuant to a municipal ordinance which remained undisputed. San Fernando Integrated Services and Equipment Corporation v. Municipal Treasurer of San Fernando, Cebu, CA- G.R. CEB CV No. 01044, December 3, 2009 3. To be considered as capital goods or properties, three requisites must concur. First, useful life of goods or properties must exceed one year; second, said goods or properties are treated as depreciable assets under Section 34 (f) of NIRC of 1997 and; third, goods or properties must be used directly or indirectly in the production or sale of taxable goods and services. Information contained in a general ledger is gathered from source documents such as account vouchers, purchase orders and sales invoices. In case of variance between the source document and the general ledger, the former is preferred. From petitioner KEPCOs evidence, the account vouchers specifically indicate that the disallowed purchases were recorded under inventory accounts, instead of depreciable accounts. That petitioner failed to indicate under its fixed assets or depreciable assets account, goods and services allegedly purchased pursuant to the rehabilitation and maintenance of Malaya Power Plant Complex, militates

against its claim for refund. Petitioner has proffered no explanation why the disallowed items were not listed under depreciable asset accounts. KEPCO Philippines Corporation v. Commissioner of Internal Revenue, G.R. No. 179356, December 14, 2009