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G.R.No.171251

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RepublicofthePhilippines
SUPREMECOURT
Manila
THIRDDIVISION
G.R.No.171251March5,2012
LASCONALANDCO.,INC.,Petitioner,
vs.
COMMISSIONEROFINTERNALREVENUE,Respondent.
DECISION
PERALTA,J.:
BeforethisCourtisaPetitionforReviewonCertiorariunderRule45oftheRulesofCourtseekingthereversalof
theDecision1datedOctober25,2005andResolution2datedJanuary20,2006oftheCourtofAppeals(CA)in
CAG.R. SP No. 58061 which set aside the Decision3 dated January 4, 2000 and Resolution4 dated March 3,
2000oftheCourtofTaxAppeals(CTA)inC.T.A.CaseNo.5777anddeclaredAssessmentNoticeNo.0000047
93407datedMarch27,1998tobefinal,executoryanddemandable.
Thefacts,asculledfromtherecords,areasfollows:
On March 27, 1998, the Commissioner of Internal Revenue (CIR) issued Assessment Notice No. 000004793
4075 against Lascona Land Co., Inc. (Lascona) informing the latter of its alleged deficiency income tax for the
year1993intheamountofP753,266.56.
Consequently,onApril20,1998,Lasconafiledaletterprotest,butwasdeniedbyNorbertoR.Odulio,Officerin
Charge(OIC),RegionalDirector,BureauofInternalRevenue,RevenueRegionNo.8,MakatiCity,inhisLetter6
datedMarch3,1999,whichreads,thus:
xxxx
Subject:LASCONALANDCO.,INC.
1993DeficiencyIncomeTax
Madam,
Anent the 1993 tax case of subject taxpayer, please be informed that while we agree with the
arguments advanced in your letter protest, we regret, however, that we cannot give due course to
yourrequesttocancelorsetasidetheassessmentnoticeissuedtoyourclientforthereasonthatthe
case was not elevated to the Court of Tax Appeals as mandated by the provisions of the last
paragraph of Section 228 of the Tax Code. By virtue thereof, the said assessment notice has
becomefinal,executoryanddemandable.
Inviewoftheforegoing,pleaseadviseyourclienttopayits1993deficiencyincometaxliabilityinthe
amountofP753,266.56.
xxxx(Emphasisours)
OnApril12,1999,LasconaappealedthedecisionbeforetheCTAandwasdocketedasC.T.A.CaseNo.5777.
LasconaallegedthattheRegionalDirectorerredinrulingthatthefailuretoappealtotheCTAwithinthirty(30)
daysfromthelapseofthe180dayperiodrenderedtheassessmentfinalandexecutory.
TheCIR,however,maintainedthatLascona'sfailuretotimelyfileanappealwiththeCTAafterthelapseofthe
180dayreglementaryperiodprovidedunderSection228oftheNationalInternalRevenueCode(NIRC)resulted
tothefinalityoftheassessment.
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OnJanuary4,2000,theCTA,initsDecision,7nullifiedthesubjectassessment.Itheldthatincasesofinactionby
theCIRontheprotestedassessment,Section228oftheNIRCprovidedtwooptionsforthetaxpayer:(1)appeal
totheCTAwithinthirty(30)daysfromthelapseoftheonehundredeighty(180)dayperiod,or(2)waituntilthe
Commissionerdecidesonhisprotestbeforeheelevatesthecase.
The CIR moved for reconsideration. It argued that in declaring the subject assessment as final, executory and
demandable,itdidsopursuanttoSection3(3.1.5)ofRevenueRegulationsNo.1299datedSeptember6,1999
whichreads,thus:
IftheCommissionerorhisdulyauthorizedrepresentativefailstoactonthetaxpayer'sprotestwithinonehundred
eighty(180)daysfromdateofsubmission,bythetaxpayer,oftherequireddocumentsinsupportofhisprotest,
thetaxpayermayappealtotheCourtofTaxAppealswithinthirty(30)daysfromthelapseofthesaid180day
periodotherwise,theassessmentshallbecomefinal,executoryanddemandable.
On March 3, 2000, the CTA denied the CIR's motion for reconsideration for lack of merit.8 The CTA held that
RevenueRegulationsNo.1299mustconformtoSection228oftheNIRC.Itpointedoutthattheformerspokeof
anassessmentbecomingfinal,executoryanddemandablebyreasonoftheinactionbytheCommissioner,while
thelatterreferredtodecisionsbecomingfinal,executoryanddemandableshouldthetaxpayeradverselyaffected
bythedecisionfailtoappealbeforetheCTAwithintheprescribedperiod.Finally,itemphasizedthatincasesof
discrepancy,Section228oftheNIRCmustprevailovertherevenueregulations.
Dissatisfied,theCIRfiledanappealbeforetheCA.9
InthedisputedDecisiondatedOctober25,2005,theCourtofAppealsgrantedtheCIR'spetitionandsetaside
theDecisiondatedJanuary4,2000oftheCTAanditsResolutiondatedMarch3,2000.Itfurtherdeclaredthat
thesubjectAssessmentNoticeNo.000004793407datedMarch27,1998asfinal,executoryanddemandable.
Lasconamovedforreconsideration,butwasdeniedforlackofmerit.
Thus,theinstantpetition,raisingthefollowingissues:
I
THE HONORABLE COURT HAS, IN THE REVISED RULES OF COURT OF TAX APPEALS WHICH IT
RECENTLY PROMULGATED, RULED THAT AN APPEAL FROM THE INACTION OF RESPONDENT
COMMISSIONERISNOTMANDATORY.
II
THECOURTOFAPPEALSSERIOUSLYERREDWHENITHELDTHATTHEASSESSMENTHASBECOME
FINALANDDEMANDABLEBECAUSE,ALLEGEDLY,THEWORD"DECISION"INTHELASTPARAGRAPH
OFSECTION228CANNOTBESTRICTLYCONSTRUEDASREFERRINGONLYTOTHEDECISIONPER
SE OF THE COMMISSIONER, BUT SHOULD ALSO BE CONSIDERED SYNONYMOUS WITH AN
ASSESSMENTWHICHHASBEENPROTESTED,BUTTHEPROTESTONWHICHHASNOTBEENACTED
UPONBYTHECOMMISSIONER.10
Inanutshell,thecoreissuetoberesolvedis:Whetherthesubjectassessmenthasbecomefinal,executoryand
demandableduetothefailureofpetitionertofileanappealbeforetheCTAwithinthirty(30)daysfromthelapse
oftheOneHundredEighty(180)dayperiodpursuanttoSection228oftheNIRC.
PetitionerLascona,invokingSection3,11Rule4oftheRevisedRulesoftheCourtofTaxAppeals,maintainsthat
in case of inaction by the CIR on the protested assessment, it has the option to either: (1) appeal to the CTA
within 30 days from the lapse of the 180day period or (2) await the final decision of the Commissioner on the
disputed assessment even beyond the 180day period in which case, the taxpayer may appeal such final
decision within 30 days from the receipt of the said decision. Corollarily, petitioner posits that when the
Commissionerfailedtoactonitsprotestwithinthe180dayperiod,ithadtheoptiontoawaitforthefinaldecision
oftheCommissionerontheprotest,whichitdid.
Thepetitionismeritorious.
Section 228 of the NIRC is instructional as to the remedies of a taxpayer in case of the inaction of the
Commissionerontheprotestedassessment,towit:
SEC.228.ProtestingofAssessment.xxx
xxxx
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Withinaperiodtobeprescribedbyimplementingrulesandregulations,thetaxpayershallberequiredtorespond
tosaidnotice.Ifthetaxpayerfailstorespond,theCommissionerorhisdulyauthorizedrepresentativeshallissue
anassessmentbasedonhisfindings.
Such assessment may be protested administratively by filing a request for reconsideration or reinvestigation
within thirty (30) days from receipt of the assessment in such form and manner as may be prescribed by
implementingrulesandregulations.
Within sixty (60) days from filing of the protest, all relevant supporting documents shall have been submitted
otherwise,theassessmentshallbecomefinal.
If the protest is denied in whole or in part, or is not acted upon within one hundred eighty (180) days from
submissionofdocuments,thetaxpayeradverselyaffectedbythedecisionorinactionmayappealtotheCourtof
TaxAppealswithin(30)daysfromreceiptofthesaiddecision,orfromthelapseoftheonehundredeighty(180)
dayperiodotherwisethedecisionshallbecomefinal,executoryanddemandable.(Emphasissupplied).
Respondent, however, insists that in case of the inaction by the Commissioner on the protested assessment
within the 180day reglementary period, petitioner should have appealed the inaction to the CTA. Respondent
maintainsthatduetoLascona'sfailuretofileanappealwiththeCTAafterthelapseofthe180dayperiod,the
assessmentbecamefinalandexecutory.
Wedonotagree.
InRCBC v. CIR,12 the Court has held that in case the Commissioner failed to act on the disputed assessment
within the 180day period from date of submission of documents, a taxpayer can either: (1) file a petition for
review with the Court of Tax Appeals within 30 days after the expiration of the 180day period or (2) await the
final decision of the Commissioner on the disputed assessments and appeal such final decision to the Court of
TaxAppealswithin30daysafterreceiptofacopyofsuchdecision.13
ThisisconsistentwithSection3A(2),Rule4oftheRevisedRulesoftheCourtofTaxAppeals,14towit:
SEC.3.CaseswithinthejurisdictionoftheCourtinDivisions.TheCourtinDivisionsshallexercise:
(a)Exclusiveoriginalorappellatejurisdictiontoreviewbyappealthefollowing:
(1)DecisionsoftheCommissionerofInternalRevenueincasesinvolvingdisputedassessments,refundsof
internalrevenuetaxes,feesorothercharges,penaltiesinrelationthereto,orothermattersarisingunder
theNationalInternalRevenueCodeorotherlawsadministeredbytheBureauofInternalRevenue
(2)InactionbytheCommissionerofInternalRevenueincasesinvolvingdisputedassessments,refundsof
internalrevenuetaxes,feesorothercharges,penaltiesinrelationthereto,orothermattersarisingunder
theNationalInternalRevenueCodeorotherlawsadministeredbytheBureauofInternalRevenue,where
theNationalInternalRevenueCodeorotherapplicablelawprovidesaspecificperiodforaction:Provided,
thatincaseofdisputedassessments,theinactionoftheCommissionerofInternalRevenuewithintheone
hundred eighty dayperiod under Section 228 of the National Internal revenue Code shall be deemed a
denial for purposes of allowing the taxpayer to appeal his case to the Court and does not necessarily
constitute a formal decision of the Commissioner of Internal Revenue on the tax case Provided, further,
that should the taxpayer opt to await the final decision of the Commissioner of Internal Revenue on the
disputed assessments beyond the one hundred eighty dayperiod abovementioned, the taxpayer may
appealsuchfinaldecisiontotheCourtunderSection3(a),Rule8oftheseRulesandProvided,stillfurther,
that in the case of claims for refund of taxes erroneously or illegally collected, the taxpayer must file a
petition for review with the Court prior to the expiration of the twoyear period under Section 229 of the
NationalInternalRevenueCode
(Emphasisours)
Inarguingthattheassessmentbecamefinalandexecutorybythesolereasonthatpetitionerfailedtoappealthe
inactionoftheCommissionerwithin30daysafterthe180dayreglementaryperiod,respondent,ineffect,limited
theremedyofLascona,asataxpayer,underSection228oftheNIRCtojustone,thatistoappealtheinaction
oftheCommissioneronitsprotestedassessmentafterthelapseofthe180dayperiod.Thisisincorrect.
AsearlyasthecaseofCIRv.Villa,15itwasalreadyestablishedthattheword"decisions"inparagraph1,Section
7ofRepublicActNo.1125,quotedabove,hasbeeninterpretedtomeanthedecisionsoftheCommissionerof
Internal Revenue on the protest of the taxpayer against the assessments. Definitely, said word does not signify
theassessmentitself.WequotewhatthisCourtsaidaptlyinapreviouscase:
In the first place, we believe the respondent court erred in holding that the assessment in question is the
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respondent Collector's decision or ruling appealable to it, and that consequently, the period of thirty days
prescribedbysection11ofRepublicActNo.1125withinwhichpetitionershouldhaveappealedtotherespondent
courtmustbecountedfromitsreceiptofsaidassessment.Whereataxpayerquestionsanassessmentandasks
the Collector to reconsider or cancel the same because he (the taxpayer) believes he is not liable therefor, the
assessmentbecomesa"disputedassessment"thattheCollectormustdecide,andthetaxpayercanappealtothe
CourtofTaxAppealsonlyuponreceiptofthedecisionoftheCollectoronthedisputedassessment,...16
Therefore,asinSection228,whenthelawprovidedfortheremedytoappealtheinactionoftheCIR,itdidnot
intend to limit it to a single remedy of filing of an appeal after the lapse of the 180day prescribed period.
Precisely,whenataxpayerprotestedanassessment,henaturallyexpectstheCIRtodecideeitherpositivelyor
negatively.AtaxpayercannotbeprejudicedifhechoosestowaitforthefinaldecisionoftheCIRontheprotested
assessment.Moreso,becausethelawandjurisprudencehavealwayscontemplatedascenariowheretheCIR
willdecideontheprotestedassessment.
Itmustbeemphasized,however,thatincaseoftheinactionoftheCIRontheprotestedassessment,whilewe
reiteratethetaxpayerhastwooptions,either:(1)fileapetitionforreviewwiththeCTAwithin30daysafterthe
expirationofthe180dayperiodor(2)awaitthefinaldecisionoftheCommissioneronthedisputedassessment
and appeal such final decision to the CTA within 30 days after the receipt of a copy of such decision, these
optionsaremutuallyexclusiveandresorttoonebarstheapplicationoftheother.
Accordingly, considering that Lascona opted to await the final decision of the Commissioner on the protested
assessment, it then has the right to appeal such final decision to the Court by filing a petition for review within
thirtydaysafterreceiptofacopyofsuchdecisionorruling,evenaftertheexpirationofthe180dayperiodfixed
bylawfortheCommissionerofInternalRevenuetoactonthedisputedassessments.17Thus,Lascona,whenit
filedanappealonApril12,1999beforetheCTA,afteritsreceiptoftheLetter18datedMarch3,1999onMarch
12,1999,theappealwastimelymadeasitwasfiledwithin30daysafterreceiptofthecopyofthedecision.
1 w p h i1

Finally, the CIR should be reminded that taxpayers cannot be left in quandary by its inaction on the protested
assessment.Itisimperativethatthetaxpayersareinformedofitsactioninorderthatthetaxpayershouldthenat
leastbeabletotakerecoursetothetaxcourtattheopportunetime.Ascorrectlypointedoutbythetaxcourt:
xxxtoadopttheinterpretationoftherespondentwillnotonlysanctioninefficiency,butwilllikewisecondonethe
Bureau's inaction. This is especially true in the instant case when despite the fact that respondent found
petitioner's arguments to be in order, the assessment will become final, executory and demandable for
petitioner'sfailuretoappealbeforeuswithinthethirty(30)dayperiod.19
Taxes are the lifeblood of the government and so should be collected without unnecessary hindrance. On the
other hand, such collection should be made in accordance with law as any arbitrariness will negate the very
reason for government itself. It is therefore necessary to reconcile the apparently conflicting interests of the
authoritiesandthetaxpayerssothattherealpurposeoftaxation,whichisthepromotionofthecommongood,
maybeachieved.20Thus,evenasweconcedetheinevitabilityandindispensabilityoftaxation,itisarequirement
inalldemocraticregimesthatitbeexercisedreasonablyandinaccordancewiththeprescribedprocedure.21
WHEREFORE,thepetitionisGRANTED.TheDecisiondatedOctober25,2005andtheResolutiondatedJanuary
20, 2006 of the Court of Appeals in CAG.R. SP No. 58061 are REVERSED and SET ASIDE. Accordingly, the
Decision dated January 4, 2000 of the Court of Tax Appeals in C.T.A. Case No. 5777 and its Resolution dated
March3,2000areREINSTATED.
SOORDERED.
DIOSDADOM.PERALTA
AssociateJustice
WECONCUR:
PRESBITEROJ.VELASCO,JR.
AssociateJustice
Chairperson
MARTINS.VILLARAMA,JR.*
AssociateJustice

ROBERTOA.ABAD
AssociateJustice

JOSECATRALMENDOZA
AssociateJustice
ATTESTATION
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I attest that the conclusions in the above Decision had been reached in consultation before the case was
assignedtothewriteroftheopinionoftheCourtsDivision.
PRESBITEROJ.VELASCO,JR.
AssociateJustice
ThirdDivision,Chairperson
CERTIFICATION
PursuanttoSection13,ArticleVIIIoftheConstitutionandtheDivisionChairpersonsAttestation,Icertifythatthe
conclusionsintheaboveDecisionhadbeenreachedinconsultationbeforethecasewasassignedtothewriterof
theopinionoftheCourtsDivision.
RENATOC.CORONA
ChiefJustice

Footnotes
* Designated as an additional member in lieu of Associate Justice Estela M. PerlasBernabe, per Raffle

datedFebruary29,2012.
1 Penned by Associate Justice Estela M. PerlasBernabe (now a member of this Court), with Associate

JusticesRemediosSalazarFernandoandHakimS.Abdulwahid,concurring,rollo,pp.1320.
2Id.at21.
3Rollo,pp.111118.
4Id.at119120.
5Id.at102.
6Id.at103.
7Id.at111118.
8Id.at119120.
9Id.at121134.
10Id.at30.
11SEC.3.CaseswithinthejurisdictionoftheCourtinDivisions.TheCourtinDivisionsshallexercise:

(a)Exclusiveoriginalorappellatejurisdictiontoreviewbyappealthefollowing:
xxx
(2) Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments,
refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other
mattersarisingundertheNationalInternalRevenueCodeorotherlawsadministeredbytheBureau
of Internal Revenue, where the National Internal Revenue Code or other applicable law provides a
specific period for action: Provided, that in case of disputed assessments, the inaction of the
Commissioner of Internal Revenue within the one hundred eighty dayperiod under Section 228 of
theNationalInternalrevenueCodeshallbedeemedadenialforpurposesofallowingthetaxpayerto
appeal his case to the Court and does not necessarily constitute a formal decision of the
CommissionerofInternalRevenueonthetaxcaseProvided,further,thatshouldthetaxpayeroptto
await the final decision of the Commissioner of Internal Revenue on the disputed assessments
beyond the one hundred eighty dayperiod abovementioned, the taxpayer may appeal such final
decisiontotheCourtunderSection3(a),Rule8oftheseRulesandProvided,stillfurther,thatinthe
caseofclaimsforrefundoftaxeserroneouslyorillegallycollected,thetaxpayermustfileapetition
for review with the Court prior to the expiration of the twoyear period under Section 229 of the
NationalInternalRevenueCode(December15,2005)
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12G.R.No.168498,April24,2007,522SCRA144.
13Id.at153.
14A.M.No.051107CTA,November22,2005.
15130Phil.3(1968).
16Id.at6.(Emphasissupplied.)
17Rule8,Sec.3(a).
18Rollo,p.103.
19Id.at117.
20Commissionerv.Algue,Inc.,241Phil.829,830(1988).
21Id.at836.
TheLawphilProjectArellanoLawFoundation

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