Lascona Land Co vs Commissioner of Internal Revenue

FACTS: On March 27, 1998, the CIR issued a formal assessment notice (FAN) to Lascona Land Co., Inc. demanding the company to pay P753,266.56 income taxes. Lascona filed a protest on April 20, 1998. CIR promulgated its decision on March 3, 1999. Lascona received a copy of the decision on March 12, 1999. On April 12, 1999, Lascona appealed the decision to the Court of Tax Appeals. The CIR moved for the dismissal of the appeal on the ground that under a revenue regulation issued by the Bureau of Internal Revenue (RR No. 12-99), if the CIR or its representative failed to act on a protest within the 180-day period the taxpayer may appeal within 30 days from the lapse of the 180-day period to the CTA otherwise, the decision shall become final and executor and that Lascona having failed to appeal within the said period, CTA has no jurisdiction over the case

ISSUE: Whether or not the contention of the CIR is correct.

HELD: No. The SC ruled that the revenue regulation to which the CIR anchored its contention is invalid. Section 228 of the National Internal Revenue Code provides that a taxpayer has two remedies if the CIR failed to act on his protest within the 180-day period, to wit;

1) the taxpayer adversely affected by the decision may appeal to the CTA within 30 days from receipt of the decision, or

2) may appeal to the CTA within 30 days from the lapse of the one hundred eighty (180)-day period.

From the above provision, the taxpayer was given two options in case CIR failed to act on their claim. First is to appeal to the CTA within 30 days from the lapse of the 180 day period; or second, wait for the CIR to issue the decision and then appeal, if adverse, to the CTA within 30 days from the receipt of the decision by the taxpayer

In the case at bar, Lascona waited for the CIR to decide on the case and it did not appeal within 30 days from the lapse of the 180-day period. Lascona received the adverse decision of the CIR on March 12, 1999. It appealed on April 12, 1999 which is still within the 30-day period to appeal to the CTA.

The revenue regulation in question is invalid because in effect, it limited the remedy provided for by the law. Section 228 of the NIRC prevails over the said revenue regulation. The said revenue regulation cannot validly take away the option of the taxpayer to continue waiting, even after the lapse of the 180 day period, for the CIR to decide on the case and just appeal, within 30 days from receipt, if the CIR’s ruling is adverse.