2014 Bar Examinations

TAXATION
I.
On March 27, 2012, the Bureau of Internal Revenue (BIR) issued a notice of assessment
against Blue Water Industries Inc. (BWI), a domestic corporation, informing the latter of its
alleged deficiency corporate income tax for the year 2009. On April 20, 2012, BWI filed a letter
protest before the BIR contesting said assessment and demanding that the same be cancelled
or set aside.
However, on May 19, 2013, that is, after more than a year from the filing of the letter protest,
the BIR informed BWI that the latters letter protest was denied on the ground that the
assessment had already become final, executory and demandable. The BIR reasoned that its
failure to decide the case within 180 days from filing of the letter protest should have prompted
BWI to seek recourse before the Court of Tax Appeals (CTA) by filing a petition for review
within thirty (30) days after the expiration of the 180-day period as mandated by the provisions
of the last paragraph of Section 228 of the National Internal Revenue Code (NIRC). Accordingly,
BWIs failure to file a petition for review before the CTA rendered the assessment final,
executory and demandable. Is the contention of the BIR correct? Explain. (5%)
SUGGESTED ANSWER:
No. Notwithstanding the lapse of the 180-day period, BWI had the option to await the BIRS final
decision on its protest before filing a Petition for Review with the CTA. Pursuant to the case of Lascona
Land Co., Inc. v. Commissioner of Internal Revenue (G.R. No. 171251, March 5, 2012), in case the
Commissioner fails to act on a taxpayers protest within the 180-day period, a taxpayer can either: (i) file
a petition for review with the Court of Tax Appeals within 30 days after the expiration of the 180-day
period; or (ii) await the final decision of the Commissioner on the disputed assessments, and thereafter
appeal such final decision to the CTA within 30 days after the receipt of a copy of such decision.1In the
present case, BWI simply availed itself of the second option.