COMMISSIONER OF INTERNAL REVENUE v. MARIONNAUD PHILIPPINES, INC.

REPUBLIC OF THE PHILIPPINES Court of Tax Appeals QUEZON CITY ENBANC CO MMI SS IONER OF CTA EB NO. 2403 (CTA Case No. 9615) INTERNAL REVENUE, Present: Petitioner, -vers us- DEL ROSARIO, P.J. , UY, RINGPIS-LIBAN , MANAHAN , BACORRO-VILLE NA, MODESTO-SAN PEDRO, REYES-FAJARDO, and CUI-DAVID, JJ. MARIONNAUD PHILIPPINES, Promulgated: INC., SEP 19 2frl2 Respondent. X--------------------------------------------------------------------------------------- ----------X JUDGMENT ON COMPROMISE AGREEMENT UY, J.: Before this Court is the Joint Manifestation with Motion for Approval of the Compromise Agreement,1 praying for the approval of the Compromise Agreemenf dated December 3, 2021 , signed by Joweehlyn B. Liao, authorized representative of Marionnaud Philippines, Inc. (MPI), and by the Commissioner of Internal Revenue (CIR), with the following attachments: a. Secretary's Certificate dated November 26, 2021 , authorizing Joweehlyn B. Liao to sign the compromise ~ agreement3 1 EB Docket, pp. 124 to 126. 2 EB Docket, pp. 127 to 129. 1 EB Docket, pp. 138 to 139.

JUDGMENT ON COMPROMISE AGREEMENT CTA EB No. 2403 Page 2 of6 b. Original print-outs of BIR Form 0605 and eFPS payment and confirmation with Reference No. 292100044800453, evidencing total payment in the amount of P3,581, 127.72;4 c. Certified true copy of the Certificate of Availment dated June 29, 2022; 5 and d. Certified true copy of the proof of approval of the Compromise Settlement by the majority of the members of the National Evaluation Board (NEB), as well as the concurrence thereon by the CIR.6 The subject Compromise Agreement7 reads as follows: "COMPROMISE AGREEMENT Undersigned parties, assisted by their respective counsels, Petitioner COMMISSIONER OF INTERNAL REVENUE with address at Room 703 BIR Building, Bureau of Internal Revenue, Diliman, Quezon City, Philippines, represented herein by the Commissioner of Internal Revenue, HON. CAESAR R. DULAY, and Respondent MARIONNAUD PHILIPPINES INC., with address at 91h Floor One-Ecom Corporate Center Mall of Asia Complex Pasay City, Philippines, represented by Ms. Joweehlyn B. Liao. AGREE as follows: WHEREAS, on June 15, 2017, a Petition for Review was filed by Petitioner MARIONNAUD PHILIPPINES INC. challenging the validity of the Amended Final Decision on Disputed Assessment (FDDA) issued by Respondent Commissioner of Internal Revenue in connection with deficiency tax assessments for taxable year 2011. Under the Final Decision on Disputed Assessment, Petitioner was required to pay basic tax due in the amount of Ninety-Eight Million Five Hundred Twenty-Eight Thousand Seven Hundred Seven And ;"'0 37/100 Pesos (Php98,528,707.37) representing deficiency taxes inclusive of penalties. 4 EB Docket, pp. 130 to 13 I. 5 EB Docket, p. 146. 6 EB Docket, p. 147. 7 EB Docket, pp. 127 to 129.

JUDGMENT ON COMPROMISE AGREEMENT CTA EB No: 2403 Page 3 of6 WHEREAS, during mediation proceedings before the Philippine Mediation Center - Court of Tax Appeals, the parties successfully reached compromise agreement to avoid prolonged litigation, as authorized by A.M. No. 11-1-05-SC-PHILJA, NOW THEREFORE, in view of the limitation in Section 204 of the 1997 National Internal Revenue Code, respondent has offered and petitioner has accepted the amount of Three Million Five Hundred Eighty-One Thousand One Hundred Twenty-Seven and 72/100 Pesos (Php3,581,127.72), representing Two Hundred Percent (200%) of the basic tax as determined by the CTA-First Division, in its decision dated May 29, 2020. IN WITNESS WHEREOF, the Parties hereto have mutually and voluntarily accepted the above stipulations, and sign this Agreement, at Quezon City on this 3'ct day of December 2021 for the consideration and approval of the Honorable Court. (Sgd.) (Sgd.) CAESAR R. DULAY JOWEEHLYN B. LIAO BUREAU OF INTERNAL REVENUE MARIONNAUD PHILIPPINES, INC. Petitioner Respondent ATTESTED: (Sgd.) (Ret.) Justice AMELIA COTANGCO-MANALASTAS Mediator" A review of the subject Compromise Agreement, as well as the documents submitted by the parties in support thereof, shows that the same are in order. To be specific, MPI paid a total of P3,581,127.72, or 200% of the basic tax stated in the Amended FDDA. At this juncture, this Court notes that the ground relied upon in the subject Compromise Agreement is "Doubtful Validity,"8 wherein the minimum compromise rate should be equivalent to forty percent (40%) of the basic assessed tax, as stated in Section 204(A) of the~ 8 EB Docket, p. 131.

JUDGMENT ON COMPROMISE AGREEMENT CT A EB No. 2403 Page4of6 NIRC of 1997,9 as amended. Thus, the settlement amount of P3,581,127.72, or 200% of the basic tax stated in the Amended FDDA, is compliant with Section 204 (A) of the NIRC of 1997, as amended. It is stressed that the subject Compromise Agreement has been validly executed by the parties, and the terms and conditions specified therein are not contrary to law, morals, good customs, public order, and public policy. Thus, the Court En Bane accepts and approves the same. A compromise is a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already � commenced. 1 Contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided that they are not contrary to law, morals, good customs, public order, or public policy. 11 It is an accepted, even desirable and encouraged, practice in courts of law and administrative tribunals. 12 A compromise agreement intended to resolve a matter already under litigation is a judicial compromise. Having judicial mandate and entered as its determination of the controversy, it has the force and effect of a judgment. It transcends its identity as a mere contract binding only between the parties as it becomes a judgment that is subject to execution in accordance with the Rules of Court. Thus, a compromise agreement that has been made and duly approved by~ 9 Section 204. Authority of the Commissioner to Compromise, Abate, and Refund or Credit Taxes. - The Commissioner may - (A) Compromise the payment of any internal revenue tax, when: (I) A reasonable doubt as to the validity of the claim against the taxpayer exists; or XXX XXX XXX For other cases, a minimum compromise rate equivalent to forty percent (40%) of the basic assessed tax. Where the basic tax involved exceeds One million pesos (PI ,000,000) or where the settlement offered is less than the prescribed minimum rates, the compromise shall be subject to the approval of the Evaluation Board which shall be composed of the Commissioner and the four (4) Deputy Commissioners. 10 Article 2028, Civil Code of the Philippines. 11 Article 1306, Civil Code of the Philippines. 12 California Manufacturing Company. Inc. vs. The City ofLas Piiias and the Hon. Rizal Y Del Rosario, City Treasurer, G.R. No. 178461, June 22,2009, citing DMG Industries, Inc. vs. Philippine American Investments Corporations, G.R. No. 174114, July 6, 2007.

JUDGMENT ON COMPROMISE AGREEMENT CTA EB No: 2403 Page5of6 the court attains the effect and authority of res judicata, although no execution may be issued unless the agreement receives the approval of the court where the litigation is pending and compliance with the terms of the agreement is decreed. 13 WHEREFORE, in light of the foregoing considerations, the Compromise Agreement dated December 3, 2021, entered into by the parties is hereby APPROVED and this Judgment on Compromise Agreement is hereby rendered in accordance therewith. The parties are hereby enjoined to faithfully comply with all the terms and conditions of the aforesaid Compromise Agreement. Accordingly, this case is now deemed CLOSED AND TERMINATED. SO ORDERED. ER~P.UY Associate Justice WE CONCUR: Presiding Justice ~- ~ -:z <..._ MA. BELEN M. RINGPIS-LIBAN Associate Justice t'~' 7-/L--,~tt:--- CATHERINE T. MANAHAN Associate Justice .... LENA 13 !d., citing Viesca vs. Gilinsky, G.R. No. 171698, July 4, 2007.

JUDGMENT ON COMPROMISE AGREEMENT CTA EB No: 2403 Page 6 of6 MARIA ROW v-..:ll'"''.. PEDRO ~ ~f:~-t~ MARIAN IVYfi=. REYEls-FAJ~RDO Associate Justice ln-un'th~ LANEE S. CUI-DAVID Associate Justice