Lascona v CIR

Jan. 4, 2000
CTA
Short Version:
Lascona protested some assessments on income tax with the CIR. The CIR failed to
act on the request within 180 days, but Lascona did not raise the protest to the
CTA within 30 days from there. Thus, the CIR claimed, the assessment had become
final.
The CTA disagreed. The lapse of the 180 day period merely gives an option
to the taxpayer whether to immediately raise the petition to the CTA or to wait for
the CIR to act on the request. Lascona had merely chosen the latter.
Facts:
The CIR assessed Lascona Land Corporation for deficiencies in income taxes,
surcharges, interests and compromise penalties for 1993, in the amount of P753k,
resulting from disallowances of certain items claimed as deductions from its gross
income, i.e. gross income taxes and licenses and interest expenses.
While the BIR claimed to agree with the arguments proferred by Lascona, it
said that it could not give due course to its request because it had not been
elevated to the CTA in accordance with Sec. 228 of the NIRC. The CIR had not
acted upon the case for 180 days, and Lascona did not appeal within 30 days from
the lapse of the 180-day period. Thus, the CIR claims, the assessment had become
final and executory. Hence this appeal.
Issues:
WON the assessment had become final, executory and demandable because of the
failure of Lascona to appeal to the CTA within 30 days from the lapse of the 180
day period mentioned in Sec. 228. (No)
Ratio:
Section 228 reads:
Section 228. Protesting of Assessment . .- When the Commissioner orhis duly authorized
representative finds that proper taxes should be assessed, he shall first notify the taxpayer of his
findings: x x x.
The taxpayers shall be informed in writing of the law and the facts on which the assessment is
made; otherwise, the assessment shall be void. Within a period to be prescribed by implementing
rules and regulations, the taxpayer shall be required to respond to said notice. If the taxpayer fails to
respond, the Commissioner or his duly authorized representative shall issue an assessment based on
his findings.
Such assessment may be protested administratively by filing a requestfor reconsideration or
reinvestigation within thirty (30) days from receipt of the assessment in such form and manner as
may be prescribed by implementing rules and regulations. Within sixty (60) days from filing of the
protest, all relevant supporting documents shall have been submitted; otherwise, the assessment
shall become final.
If the protest is denied in whole or in part, or is not acted upon within one hundred eighty
(180) days from submission of documents, the taxpayer adversely affected by the decision or inaction
may appeal to the Court of Tax Appeals within thirty (30) days from,receipt of the said decision, or
from the lapse of the one hundred eighty (180) day period; otherwise, the ,decision shall become
final, executory and demandable."

The argument of Lascona is that the failure of the BIR to act on the request
within the 180 day period does not make the assessment final and executory.
Instead, it claims, it has an option to appeal the CTA or continue with the
proceedings in the administrative level. However, once a decision is rendered by
the Commissioner, there are 30 days to appeal from the from the receipt of the
decision.
This argument is based on an interpretation of Sec. 228 to the effect that
either of 2 events can trigger the 30 day period within which to appeal, namely:
1. Commissioner denies the protest, or
2. Commissioner does not act on the protest within 180 days.
The SC agreed with Lascona. Only the decision not appealed by a taxpayer
becomes final, executor and demandable. Otherwise, the authors of the law would
have included assessment as also becoming final, executory and demandable
along with the decision.
Thus, inaction on the part of the CIR for 180 days merely gives the taxpayer
a choice of remedies:
1. Appeal to the CTA within 30 days from the 180 day period provided by
law, or
2. Wait until the Commissioner decides before he elevates the case to the
CTA.
If the protest is not acted on within 180 days, he may seek immediate relief
and need not wait for an indefinite period of time for the Commissioner to decide.
However, if chooses to wait, then the same does not result in the assessment
becoming final, executor, and demandable. To rule otherwise would sanction
inefficiency and condone the BIRs inaction.
Petition granted.