B.

Application of 180-day Rule

Sec. 3(a)(2), Rule 4 and Sec. 3(a), Rule 8, Revised Rules of the CTA (S.C.
A.M. No. 05-11-07-CTA, Nov. 22, 2005)

Sec. 3(a)(2), Rule 4:

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;

Sec. 3(a), Rule 8:

Who may appeal; period to file petition. – (a) A party adversely affected by a decision, ruling or the
inaction of the Commissioner of Internal Revenue on disputed assessments or claims for refund of
internal revenue taxes, or by a decision or ruling of the Commissioner of Customs, the Secretary of
Finance, the Secretary of Trade and Industry, the Secretary of Agriculture, or a Regional Trial Court in the
exercise of its original jurisdiction may appeal to the Court by petition for review filed within thirty days
after receipt of a copy of such decision or ruling, or expiration of the period fixed by law for the
Commissioner of Internal Revenue to act on the disputed assessments. In case of inaction of the
Commissioner of Internal revenue on claims for refund of internal revenue taxes erroneously or illegally
collected, the taxpayer must file a petition for review within the two-year period prescribed by law from
payment or collection of the taxes. (n)

Lascona Land Co., Inc. v. CIR, CTA Case No. 5777, Jan. 4, 2000

Facts:

On March 27, 1998, the Commissioner issued Assessment Notice No. 0000047- 93-407 against
Petitioner for alleged de;ciency income tax, surcharge, interest and compromise penalty for the
year 1993 in the amount of P753,266.56, resulting from the disallowance of certain items
claimed by Petitioner as deductions from its gross income speci;cally taxes and licenses in the
amount of P323,600.00 and interest expense in the amount of P618,525.99. Petitioner received
a copy of the said assessment on April 1, 1998 and protested the same on April 20, 1998.
Through a letter dated March 3, 1999 and received by Petitioner on March 12, 1999,
Respondent informed Petitioner that while they agree with the arguments advanced in the
latter's letter of protest, they cannot give due course to its request to cancel or set aside the
assessment notice since 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 Reform Act of 1997. This,
according to Respondent, rendered the assessment notice final, executory and demandable.

Petitioner contends that a taxpayer has the choice on whether it should appeal or wait for a
decision by the Commissioner if the latter fails to act on the protest within the 180-days period in
contemplation of Sec. 228: 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 said decision, or from the lapse of one hundred eighty (180) day period; otherwise, the
decision shall become final, executory and demandable.

Issue:

Whether or not the assessment has become final, executory and demandable because of the
failure of Petitioner to appeal to this Court within thirty (30) days from the lapse of the one
hundred eighty-day period mentioned in Section 228 of the Tax Reform Act of 1997.

Ruling:

No. The wordings of Section 228 of the Tax Code clearly provide that it is only the decision not
appealed by the taxpayer that becomes final, executory and demandable. Otherwise, the
authors of the law could have easily included the word assessment as also becoming final,
executory and demandable should the BIR fail to act on the protest within 180 days.

Verily, in cases of inaction, Section 228 of the Tax Code merely gave the taxpayer an option:
first, he may appeal to the Court of Tax Appeals within thirty (30) days from the lapse of the one
hundred eighty (180) day period provided for under the said section, or second, he may wait
until the Commissioner decides on his protest before he elevates his case. This Court believes
that the taxpayer was given this option so that in case his protest is not acted upon within the
180-day period, he may be able to seek immediate relief and need not wait for an indefinite
period of time for the Commissioner to decide. But if he chooses to wait for a positive action
on the part of the Commissioner, then the same could not result in the assessment
becoming final, executory and demandable.