Republic of the
Supreme Court
THIRD DIVISION
|
LASCONA LAND CO., INC., Petitioner, - versus - COMMISSIONER OF INTERNAL REVENUE,
Respondent. |
G.R. No. 171251 Present: VELASCO, JR., J., Chairperson, PERALTA, ABAD,
VILLARAMA, JR.,* and
MENDOZA, JJ. Promulgated: March 5, 2012 |
x----------------------------------------------------------------------------------------x
D E C I S I O N
PERALTA, J.:
Before
this Court is a Petition for Review on Certiorari
under Rule 45 of the Rules of Court seeking the reversal of the Decision[1]
dated October 25, 2005 and Resolution[2]
dated January 20, 2006 of the Court of Appeals (CA) in CA-G.R. SP No. 58061
which set aside the Decision[3]
dated January 4, 2000 and Resolution[4]
dated March 3, 2000 of the Court of Tax Appeals (CTA) in C.T.A. Case No. 5777
and declared Assessment Notice No. 0000047-93-407 dated March 27, 1998 to be
final, executory and demandable.
The
facts, as culled from the records, are as follows:
On
March 27, 1998, the Commissioner of Internal Revenue (CIR) issued Assessment
Notice No. 0000047-93-407[5]
against Lascona Land Co., Inc. (Lascona) informing the latter of its alleged
deficiency income tax for the year 1993 in the amount of P753,266.56.
Consequently,
on
x x x x
Subject: LASCONA LAND CO., INC.
1993
Deficiency Income Tax
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 your
request to cancel or set aside the assessment notice issued to your client for
the reason that the 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 become final,
executory and demandable.
In view of the foregoing, please
advise your client to pay its 1993 deficiency income tax liability in the
amount of P753,266.56.
x x x x (Emphasis ours)
On
The
CIR, however, maintained that Lascona's failure to timely file an appeal with
the CTA after the lapse of the 180-day reglementary period provided under
Section 228 of the National Internal Revenue Code (NIRC) resulted to the
finality of the assessment.
On
The
CIR moved for reconsideration. It argued
that in declaring the subject assessment as final, executory and demandable, it
did so pursuant to Section 3 (3.1.5) of Revenue Regulations No. 12-99 dated
If the Commissioner or his duly
authorized representative fails to act on the taxpayer's protest within one
hundred eighty (180) days from date of submission, by the taxpayer, of the
required documents in support of his protest, the taxpayer may appeal to the
Court of Tax Appeals within thirty (30) days from the lapse of the said 180-day
period; otherwise, the assessment shall become final, executory and demandable.
On
Dissatisfied,
the CIR filed an appeal before the CA.[9]
In
the disputed Decision dated
Lascona
moved for reconsideration, but was denied for lack of merit.
Thus,
the instant petition, raising the following issues:
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
COMMISSIONER IS NOT MANDATORY.
II
THE
COURT OF APPEALS SERIOUSLY ERRED WHEN IT HELD THAT THE ASSESSMENT HAS BECOME
FINAL AND DEMANDABLE BECAUSE, ALLEGEDLY, THE WORD DECISION IN THE LAST
PARAGRAPH OF SECTION 228 CANNOT BE STRICTLY CONSTRUED AS REFERRING ONLY TO THE
DECISION PER SE OF THE COMMISSIONER, BUT SHOULD ALSO BE CONSIDERED
SYNONYMOUS WITH AN ASSESSMENT WHICH HAS BEEN PROTESTED, BUT THE PROTEST ON
WHICH HAS NOT BEEN ACTED UPON BY THE COMMISSIONER.[10]
In a nutshell, the core issue to be resolved is: Whether the
subject assessment has become final, executory and demandable due to the
failure of petitioner to file an appeal before the CTA within thirty (30) days
from the lapse of the One Hundred Eighty (180)-day period pursuant to Section
228 of the NIRC.
Petitioner Lascona, invoking Section 3,[11]
Rule 4 of the Revised Rules of the Court of Tax Appeals, maintains that 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 180-day period;
or (2) await the final decision of the Commissioner on the disputed assessment
even beyond the 180-day 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 Commissioner failed to act on its protest
within the 180-day period, it had the option to await for the final decision of
the Commissioner on the protest, which it did.
The petition is
meritorious.
Section 228 of the
NIRC is instructional as to the remedies of a taxpayer in case of the inaction
of the Commissioner on the protested assessment, to wit:
SEC. 228. Protesting of
Assessment. − x x x
x x x x
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 request for
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 (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. (Emphasis supplied).
Respondent,
however, insists that in case of the inaction by the Commissioner on the
protested assessment within the 180-day reglementary period, petitioner should
have appealed the inaction to the CTA. Respondent
maintains that due to Lascona's failure to file an appeal with the CTA after
the lapse of the 180-day period, the assessment became final and executory.
We do not agree.
In RCBC v. CIR,[12]
the Court has held that in case the Commissioner failed to act on the disputed
assessment within the 180-day 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 180-day period; or (2) await
the final decision of the Commissioner on the disputed assessments and appeal
such final decision to the Court of Tax Appeals within 30 days after receipt of
a copy of such decision.[13]
This is consistent
with Section 3 A (2), Rule 4 of the Revised Rules of the Court of Tax Appeals,[14]
to wit:
SEC. 3. Cases within the
jurisdiction of the Court in Divisions. The Court in Divisions shall
exercise:
(a) Exclusive original or appellate jurisdiction to review by
appeal the following:
(1) Decisions of
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 matters arising under the National Internal Revenue Code or
other laws administered by the Bureau of Internal Revenue;
(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 matters arising under the National Internal Revenue Code or
other laws administered by the Bureau 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 day-period 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 day-period abovementioned, the taxpayer may appeal such final
decision to the Court under Section 3(a), Rule 8 of these Rules; and
Provided, still further, 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 two-year period under
Section 229 of the National Internal Revenue Code;
(Emphasis ours)
In arguing that the
assessment became final and executory by the sole reason that petitioner failed
to appeal the inaction of the Commissioner within 30 days after the 180-day
reglementary period, respondent, in effect, limited the remedy of Lascona, as a
taxpayer, under Section 228 of the NIRC to just one, that is - to appeal the
inaction of the Commissioner on its protested assessment after the lapse of the
180-day period. This is incorrect.
As early as the
case of CIR v. Villa,[15]
it was already established that the word "decisions" in paragraph 1,
Section 7 of Republic Act No. 1125, quoted above, has been interpreted to mean
the decisions of the Commissioner of
Internal Revenue on the protest of
the taxpayer against the assessments. Definitely,
said word does not signify the assessment itself. We quote what this Court said
aptly in a previous case:
In the first place, we
believe the respondent court erred in holding that the assessment in question
is the respondent Collector's decision or ruling appealable to it, and that
consequently, the period of thirty days prescribed by section 11 of Republic
Act No. 1125 within which petitioner should have appealed to the respondent
court must be counted from its receipt of said assessment. Where a taxpayer questions an assessment and asks the Collector to
reconsider or cancel the same because he (the taxpayer) believes he is not
liable therefor, the assessment becomes a "disputed assessment" that
the Collector must decide, and the taxpayer can appeal to the Court of Tax
Appeals only upon receipt of the decision of the Collector on the disputed
assessment, . . . [16]
Therefore, as in
Section 228, when the law provided for the remedy to appeal the inaction of the
CIR, it did not intend to limit it to a single remedy of filing of an appeal after
the lapse of the 180-day prescribed period. Precisely, when a taxpayer
protested an assessment, he naturally expects the CIR to decide either
positively or negatively. A taxpayer cannot be prejudiced if he chooses to wait
for the final decision of the CIR on the protested assessment. More so, because
the law and jurisprudence have always contemplated a scenario where the CIR
will decide on the protested assessment.
It must be
emphasized, however, that in case of the inaction of the CIR on the protested
assessment, while we reiterate − the taxpayer has two options, either:
(1) file a petition for review with the CTA within 30 days after the expiration
of the 180-day period; or (2) await the final decision of the Commissioner on
the disputed assessment and appeal such final decision to the CTA within 30
days after the receipt of a copy of such decision, these options are
mutually exclusive and resort to one bars the application of the other.
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 thirty days after
receipt of a copy of such decision or ruling, even after the expiration of the
180-day period fixed by law for the Commissioner of Internal Revenue to act on
the disputed assessments.[17]
Thus, Lascona, when it filed an appeal on
Finally, the CIR
should be reminded that taxpayers cannot be left in quandary by its inaction on
the protested assessment. It is
imperative that the taxpayers are informed of its action in order that the
taxpayer should then at least be able to take recourse to the tax court at the
opportune time. As correctly pointed out by the tax court:
x x x to adopt the interpretation of the respondent will not only
sanction inefficiency, but will likewise condone the 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's failure to appeal before us within
the thirty (30) day period.[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 authorities and the taxpayers so that
the real purpose of taxation, which is the promotion of the common good, may be
achieved.[20] Thus, even
as we concede the inevitability and indispensability of taxation, it is a
requirement in all democratic regimes that it be exercised reasonably and in
accordance with the prescribed procedure.[21]
WHEREFORE, the petition is GRANTED. The Decision dated
SO
ORDERED.
DIOSDADO
M. PERALTA
Associate Justice
WE CONCUR:
PRESBITERO J. VELASCO, JR.
Associate Justice
Chairperson
ROBERTO A. ABAD MARTIN S. VILLARAMA, JR.
Associate Justice Associate Justice
JOSE CATRAL
Associate
Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Courts Division.
PRESBITERO
J. VELASCO, JR.
Associate Justice
Third Division, Chairperson
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution and the
Division Chairpersons Attestation, I certify that the conclusions in the above
Decision had been reached in consultation before the case was assigned to the
writer of the opinion of the Courts Division.
RENATO C. CORONA
Chief
Justice
* Designated
as an additional member in lieu of Associate Justice Estela M. Perlas-Bernabe,
per Raffle dated
[1] Penned by Associate Justice Estela M. Perlas-Bernabe (now a member of this Court), with Associate Justices Remedios Salazar-Fernando and Hakim S. Abdulwahid, concurring, rollo, pp. 13-20.
[2]
[3] Rollo, pp. 111-118.
[4]
[5]
[6]
[7]
[8]
[9]
[10]
[11] SEC.
3. Cases within the jurisdiction of the
Court in Divisions. The Court in Divisions shall exercise:
(a)
Exclusive original or appellate jurisdiction to review by appeal the following:
x x x
(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 matters arising under the National
Internal Revenue Code or other laws administered by the Bureau 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 day-period 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 day-period abovementioned, the taxpayer may appeal such final
decision to the Court under Section 3(a), Rule 8 of these Rules; and Provided,
still further, 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 two-year period under Section 229 of the
National Internal Revenue Code; (December 15, 2005)
[12]
G.R. No. 168498,
[13]
[14] A.M. No. 05-11-07-CTA,
[15] 130 Phil. 3 (1968).
[16]
[17] Rule 8, Sec. 3 (a).
[18] Rollo, p. 103.
[19]
[20] Commissioner v. Algue, Inc., 241 Phil. 829, 830 (1988).
[21]