CASE DIGEST: LASCONA LAND CO., INC. vs. CIR. G.R. No. 171251. March 05, 2012

FACTS:

On March 27, 1998, CIR issued Assessment Notice against Lascona informing the latter of its alleged deficiency income tax for the year 1993. Consequently, on April 20, 1998, Lascona filed a letter protest, but was denied by the CIR on March 3, 1999. Lascona appealed to CTA on April 12, 1999. The latter nullified the subject assessment but such decision was set aside by CA upon appeal by the CIR.

TAXPAYER'S ARGUMENTS:

Lascona alleged that the CIR erred in ruling that the failure to appeal to the CTA within 30 days from the lapse of the 180 day period rendered the assessment final and executory, that in cases of inaction by the CIR on the protested assessment, Section 228 of the NIRC provided two options for the taxpayer: (1) appeal to the CTA within 30 days from the lapse of 180 day period, or (2) wait until the CIR decides on his protest before he elevates the case. Lascona maintains the 2nd option.

GOVERNMENT'S ARGUMENTS:

The CIR argued that in declaring the subject assessment as final, executory and demandable, it did so pursuant to Section 3 (3.1.5) of RR 12-99; that taxpayer may appeal to CTA within 30 days from lapse of said 180 day period if the CIR fails to act on the protest, otherwise, the assessment shall become final, executory and demandable.

ISSUE:

Whether the subject assessment has become final, executory and demandable due to the failure of petitioner to file an appeal before the CTA within 30 days from the lapse of the 180 day period.

RULING:

No. The court reiterated that Section 228 of the NIRC did not intend to provide a single remedy to a taxpayer in case of the inaction of the CIR. The remedies as held are mutually exclusive and resort to  one bars another. Since Lascona opted to wait for the final decision of the CIR on the protested assessment, it then has the right to appeal such decision to the court by filing a petition for review, even after the expiration of the period fixed by law for the CIR to act on the disputed assessments. Thus, the appeal filed by Lascona before the CTA after its receipt of the letter from the CIR, was timely made as it was filed within the reglementary period. The court also emphasized the importance of taxes as the life blood of the government but their collection must be in accordance with law.

PERSONAL END NOTES:

Section 228 of the NIRC provides two remedies for taxpayers in cases of inaction of the CIR:

1. File a petition for review before the CTA; or

2. Wait for the final decision of the CIR and appeal such decision within 30 days from receipt.

In this case, the taxpayer was given two options as mentioned above. When Lascona opt to wait for the final decision of the CIR as mentioned in remedy number two above, it was barred to resort from filing petition for review with the CTA.

If the taxpayer chooses the first option, the taxpayer will file his appeal within 30 days from the lapse of the 180 day waiting period. Otherwise, the assessment will become final, executory and demandable.

However, if the taxpayer chooses the second option, the taxpayer will wait for the decision of the CIR, regardless whether the decision comes out beyond the 180 day period. The inaction of the taxpayer while waiting will not make the assessment final. From the date that the taxpayer received the decision, they may now appeal within 30 days from that day, otherwise, the decision will attain finality.