3M PHILIPPINES , INC. v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES Court of Tax Appeals QUEZON CITY ENBANC 3M PHILIPPINES, INC., CTA EB NO. 2134 Petitioner, (CTA Case Nos. 9213 & 9214) -versus- COMMISSIONER OF INTERNAL REVENUE, Respondent. X ------------------------------------------------------------------- X COMMISSIONER OF INTERNAL CTA EB NO. 2135 REVENUE, {CTA Case Nos. 9213 & 9214) Petitioner, Present: DEL ROSARIO, P.J., UY, RINGPIS-LIBAN, -versus- MANAHAN, BACORRO-VILLENA, MODESTO-SAN PEDRO, REYES-FAJARDO, and CUI-DAVID, JJ. 3M PHILIPPINES, INC., Promulgated : R espon den t. X --------------------------------------------------------------------------------------------I-------------------------- X JUDGMENT ON COMPROMISE AGREEMENT MODESTO-SAN PEDRO, J.: For the Court's resolution is the parties ' Joint Motion for Judgment Based on Compromise Agreement ("Joint Motion"), filed on 2 1 December 2021. 1f.-' 1 Records for CTA EB 2134, Vol. 3, pp. 1189-1218.

JUDGMENT ON COMPROMISE AGREEMENT CTA EB CASE NOS. 2134 & 2135 (CTA Case Nos. 9213 & 9214) On 20 September 2019, 3M Philippines, Inc. ("3M") filed a Petition for Review2 asking the Court En Bane to set aside the deficiency tax assessments for which the Court in Division found 3M to be liable. This case was docketed as CTA EB 2134. The said assessment was composed of the following: Basic Value Added Expanded Withholding TOTAL Tax ("VAT") Withholding Tax Tax ("WTC;;) I' 8,467,142.94 2,116,785.74 I' 4,849,804.66 ("EWT''l I' 2,094,229.35 3,667,249.55 I' 1,523, 109.93 1'159,231.95 Add: 25% Surcharge 1,212,451.17 380,777.23 523,557.34 20% Deficiency Interest 1,593,909.35 p 17 004.319.53 VAT: From Jan. 26,2015 to Nov. 3,667,249.55 5, 2015[ 1'4,849,804.66 X 20% X 1,159,231.95 1380/365 days] EWT: From Jan. 17,2012 to Nov. 5, 2015 [1'1,523,108.93 x 20% x 1389/365 days] WTC: From Jan. 17,2015 to Nov. 1,593,909.35 5, 2015 [1'2,094,229.35 X 20% X 13 89/365 days1 Total Amount Due, Nov. 5 2015 p 9 729 505.38 p 3,063 118.11 p 4 211 696.04 Add: 20% Deficiency Interest from Nov. 6, 2015 to Nov. 28, 2015 VAT: [1'4,849,804.66 x 61' 120.38 6!,120.38 20% x23/365 davs1 112,6I8.42 19,195.35 26,393.03 EWT: [1'1,523,108.93 x 20% 19,195.35 x 23/365 davsl 38,603.68 WTC: [1'2,094,229.5 x 20% x 26,393.03 23/365 davs1 53,078.91 20% Deliquency Interest from Nov. 6, 20I5 to Nov. 28, 20I5 VAT: [1'9,729,505.38 x 20% x I I2,618.42 23/365 davs1 ' EWT: [1'3,063,118.11 x 20% x ' I 23/365 days1 38,603.68 I I WTC: [1'4,211,696.04 X 20% X 23/365 days1 53,078.91 ' Total Amount Due, Nov. 28, 2015 p 9 913, 244.63 1'3,120,914.14 P4 291 167.98 1'17,325 329.75 1,523, I08.93 2,666,738.17 Less: Payments made under 4,189 847.10 protest Amount Still Due Nov. 28 2015 p 9 913, 244.63 p 1,597 808.21 PI 624 429.81 PI3,135 482.65 Add: 20% Deficiency Interest 2,030,274.39 :.t 2,030,274.39 from Nov. 29, 20I5 to Dec. 3I, 20\7 (1'8,849,804.66 X 20% X 764/365 days 2 RecordsforCTAEB2134, Vols. l-3,pp.l-1124.

JlJDGMENT ON COMPROMISE AGREEMENT CTA EB CASE NOS. 2134 & 2135 (CTA Case Nos. 9213 & 9214) 20% Deliquency Interest from 4,073,064. I7 644,694.25 646,765.92 4,073,064. I7 Nov. 29,2015 to Dec. 31,2017 1'16,016,583.19 1'2,242 502.46 1'2 271 195.73 644 694.25 VAT: [1'9,729,505.8 x20% x 764/365 days] ' EWT: [(1'3,063,118.33- 646,765.92 1,523, I08) X 20% 764/365 days 1'20 530 281.38 WTC: [(1'4,211,696.04- 2,666,738.17) x 20% x764/365 days] Total Amount Still Due as of Dec. 31,2017 Meanwhile, on 9 February 2021, the Commissioner of Internal Revenue ("CIR") filed a Petition for Review3 appealing the cancellation by the Court in Division of certain assessment items in the Final Decision on Disputed Assessment ("FDDA"). This case was docketed as CTA EB 2135. In a Resolution, dated 9 October 2019,4 this Court En Bane consolidated CTA EB 2135 with CTA EB 2134. On 12 November 2019, the Court En Bame issued a Resolution ordering the parties to file a Comment on the other party's respective Petition for Review.5 In compliance thereto, 3M filed its Comment through registered mail on 2 December 2019,6 while the CIR opted not to file any Comment.7 In a Resolution, dated 10 February 2020, the Court En Bane referred the case to mediation.8 However, on 9 February 2021, this Court submitted the instant case for Decision due to the Report of (Ret.) Judge Leticia E. Sablan stating that mediation was unsuccessful.9 Thereafter, 3M filed a Manifestation with Motion alleging that the parties are still in the process of finalizing a Compromise Agreement. 10 The Court En Bane then deferred the issuance of a Decision on the instant case.11 On 21 December 2021, the parties submitted their Joint Motion. Attached thereto was the Judicial Compromise Agreement ("JCA") entered into by the parties on 15 December 2021 12 and the corresponding proofs of payment of the compromise amount totalling Thirteen Million Thirty Tw~ 3 Records for CTA EB 2135, pp. 6-68. 4 Records for CTA EB 2134, Vol. 3, pp. I 125. 5 ld.,pp. 1126-1127. 6 /d.,pp. 1128-1152. 7 See Resolution, dated 10 February 2020, id., pp.ll54-1157. 8 Ibid. 9 Records forCTA EB 2134, Vol. 3, pp. 1177-1179. 10 !d., pp. 1179-1184. 11 See Resolution dated 12 November 2021, id., pp. 1185-1188. 12 Annex "A", Joint Motion, id., pp. 1192-1198.

JliDGMENT ON COMPROMISE AGREEMENT CTA EB CASE NOS. 2134 & 2135 (CTA Case Nos. 9213 & 9214) Thousand Eight Hundred Seventy Nine Pesos (Php13,032,879.00, broken down as follows: Tax Type eFPS Ref. No. Date of Payment Total Payment13 EWT 291500013323551 14 27 November 2015 15 p 1,523, 108.93 Income Tax 291500013323425 16 27 November 2015 17 28 November 2015 19 1,606,068.49 WTC 291500013323868 18 28 November 201521 2,666,73 8.17 Documentary Stamp Tax 291500013323883 20 405,902.41 ("DST") 28 November 201523 Miscellaneous Charges 29150001332387722 2 September 2021 25 215,000.00. ("MC") 29210004344385424 2 September 2021 27 1,185,104.00 EWT 29210004344389726 2 September 2021 29 1,502,433.00 WTC 292100043443 79428 3,928,524.00 VAT p 13,032,879.00 TOTAL The relevant portions of the JCA are quoted here: "WHEREAS, the BIR issued to the TAXPAYER a Formal Letter of Demand ("FLO") dated January 12, 2015, assessing the Taxpayer alleged deficiency income tax, value-added tax, withholding tax - expanded, withholding tax - compensation, withholding tax - final, withholding tax - final VAT, documentary stamp tax, with interest and penalties for taxable year ending December 31, 20 II; WHEREAS, on February 10, 2015, the TAXPAYER then filed with the BIR its Protest dated February 10,2015 disputing the FLO; WHEREAS, the BIR issued a FINAL DECISION ON DISPUTED ASSESSMENT ("FOOA"), received by the taxpayer on November 5, 2015, which denied the Protest filed by the TAXPAYER but reducing the assessment into an aggregate amount ofPhP45,023,806.45) 13 Difference in amount due to the increase in interest. 14 Annexes "A" and "A-1 ", JCA, Records for CTA EB 2134, Vol. 3, pp. 1199-1200. 15 Ibid. 16 Annexes "A-2" and "A-3", id., pp. 1201-1202. 17 Ibid. 18 Annexes"B" and "B-1 ", id., pp. 1203-1204. 19 Ibid. 20 Annexes "B-2" and "B-3'', id., pp. 1205-1206. 21 Ibid. 22 Annexes "B-4" and "B-5'', id., pp. 1207-1208. 23 Ibid. 24 Annexes "C" to "C-2", id., pp. 1209-1211. 25 Ibid. 26 Annexes "C-3" to "C-5", id., pp. 1212-1214. 27 Ibid. 28 Annexes "C-6" to "C-9", id., pp. 1215-1218. 29 Ibid.

JUDGMENT ON COMPROMISE AGREEMENT CTA EB CASE NOS. 2134 & 2135 (CTA Case Nos. 9213 & 9214) Page 5 ofl2 WHEREAS, the TAXPAYER instituted an action against the BIR entitled "3M Philippines Inc. vs. Commissioner of Internal Revenue", docketed as CTA Case Nos. 9213 & 9214, before Second Division of the Court of Tax Appeals ("CTA"), seeking the reversal of the FDDA, and the cancellation of the FLD; WHEREAS, after due trial, the CTA- Second Division issued a Decision dated January 30, 2019, which partially denied the Petition for Review in CTA Case Nos. 9213 & 9214. Both parties filed their respective motions for reconsideration on the Decision. After consideration, the CTA - Second Division issued an Amended Decision dated June 19, 2019. Thereafter, both parties filed their respective motions for reconsideration on the Amended Decision. The CTA- Second Division thereafter issued its Resolution dated August 27, 2019, which denied both motions for reconsideration. Ultimately, the CTA - Second Division ruled in CTA Case Nos. 9213 & 9214 that the TAXPAYER is liable for (i) deficiency value-added tax on Additional Taxable Income per Amended ITR - PhP3,100,00.00 and Disallowed Input Tax Due on Invoicing Requirements - PhP4,477,804.66; (ii) deficiency withholding tax - expanded and withholding tax - compensation for failure to adduce arguments further from those already discussed by the Court; and (iii) related surcharge and interest. WHEREAS, the TAXPAYER being dissatisfied with the decision of the CTA - Second Division in CTA Case Nos. 9213 & 9214, filed its appeal to the Court of Tax Appeals En Bane, which was docketed as CTA EB Case No. 2134 & 2135 entitled 3M Philippines, Inc. vs. Commissioner oflnternal Revenue, which is currently pending. WHEREAS, while the above Petition for Review before the CTA En Bane is pending, the TAXPAYER submitted to the BIR an amended Proposal for Amicable Settlement dated May 3, 2021 for the tax assessment contained in the FLD and FDDA; WHEREAS, the BIR has evaluated the TAXPAYER'S proposal for amicable settlement and believes that a judicial compromise to allow immediate tax collection and also put an end to litigation as provided in the Civil Code of the Philippines, serves the interest of the Government; WHEREAS, the PARTIES have agreed to enter into an amicable settlement pursuant to the provisions of the Civil Code of the Philippines, jurisprudence, relevant decisions of the Honorable CTA, and relevant laws on judicial compromise without contravening law, morals, public order and public policy; WHEREAS, the Honorable CTA has issued rulings allowing judicial compromises similar to the instant case. WHEREAS, the PARTIES, for the purpose of avoiding and putting an end to a protracted, expensive and mutually prejudicial litigation, have agreed to amicably settle the above-mentioned case, upon terms and conditions hereinafter set forth; NOW, THEREFORE, for and in consideration of the foregoing premises, the PARTIES hereto have agreed as follows)-

JUDGMENT ON COMPROMISE AGREEMENT CTA EB CASE NOS. 2134 & 2135 (CTA Case Nos. 9213 & 9214) Section 1. Judicial Compromise Amount. In order to settle the above-mentioned case, the TAXPAYER has offered the amount of Philippine Pesos: Thirteen Million Thirty - Two Thousand Eight Hundred Seventy-Nine (PhP13,032,879.00). Taxpayer has paid the amount of Philippine Pesos: Three Million One Hundred Twenty-Nine Thousand One Hundred Seventy-Seven and Forty-Two Centavos (PhP3,129,177.42) on 27 November 2015, evidence by BIR Form No. 0605 (Payment Form) attached hereto as Annex "A" to Annex "A-3". In addition to this, Taxpayer also paid the amount of Philippine Pesos: Three Million Two-Hundred Eighty-Seven Thousand Six Hundred Forty and Fifty-Eight Centavos (PhP3,287,640.58) on 28 November 2015, evidenced by BIR Form No. 0605 attached hereto as Annex "B" to Annex "B-5". Taxpayer further paid the amount of Philippine Pesos: Six Million Six Hundred Sixteen Thousand Sixty-One (PhP6,616,000.00) on 02 September 2021, evidenced by BIR Form No. 0605 attached hereto as Annex "C" to Annex "C-8", to complete the compromise amount offered to the BIR. XXX XXX XXX Section 3. Effectivity of the Agreement. This Agreement shall take effect and bind the PARTIES upon approval of the Honorable CTA. This Agreement shall thereafter remain in force and effect until completion and fulfillment of the covenants and undertaking of the PARTIES hereto. Section 4. Deliverables of the PARTIES upon approval of this Agreement by the Honorable CTA. Upon final approval by the Honorable CTA of this Agreement the BIR undertakes to execute and deliver to the Taxpayer any and all documents as may be required to effectively and fully implement the provisions of this Agreement, withdrawing and cancelling the FAN dated January 17, 2015 and- FDDA for the taxable year ended December 31, 20 II. Section 5. Authority to Enter Compromise Agreement. The BIR, through Commissioner Caesar R. Dulay warrants that he has the necessary authority and capacity under the law to enter, sign, and execute this Agreement, and to deliver its implementing documents upon its approval ofthe Honorable CTA. The TAXPAYER warrants that, PATRICIA NICOLE S. QUIBOLOY, is duly authorized by the Board of Directors of the TAXPAYER and has full legal capacity to enter, sign, and execute this Agreement, and to deliver payment of the above-agreed additional amount. Section 6. Full and Final Settlement. This Agreement is executed by the PARTIES for the purpose of amicably settling and ending CTA EB Case Nos. 2134 & 2135. Upon approval by the court, the BIR recognizes the full satisfaction of the supposed tax liability of the TAXPAYER in connection with CTA EB Case Nos. 2134 & 2135 and acknowledges that the TAXPAYER no longer has any tax liability whatsoever based upon, arising from or in connection with the particular subject of CTA EB Case Nos. 2134 & 2135._:i

JUDGMENT ON COMPROMISE AGREEMENT CTA EB CASE NOS. 2134 & 2135 (CTA Case Nos. 9213 & 9214) In a Resolution, dated 22 March 2022, the Court En Bane required the parties to submit proof of the approval by the majority of the members of the Bureau of Internal Revenue's ("BIR") National Evaluation Board ("NEB") of the subject Compromise.30 The CIR then filed a Compliance submitting such proof (i.e., the certified true copy of the Certificate of Availment and the Approval Sheet of the JCA indicating the signature of the majority of the members of the NEB).31 The Court takes NOTE of respondent's Compliance. Considering the foregoing developments, and having found the submissions of the parties to be in accordance with En Bane Resolution No. 7-2021,32 the Court now resolves the Joint Motion. Section 204(A) ofthe National Internal Revenue Code, as amended, ("NIRC'') provides for the authority of the CIR to compromise the payment of any revenue tax, to wit: "SEC. 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 (2) The financial position of the taxpayer demonstrates a clear inability to pay the assessed tax. The compromise settlement of any tax liability shall be subject to the following minimum amounts: For cases of financial incapacity, a minimum compromise rate equivalent to ten percent (10%) of the basic assessed tax; and 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 (Pl,OOO.OOO) 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. xxx" (Emphasis and underscoring, Ours.) Based on the foregoing, a compromise settlement is deemed valid provided that the following requirements are met: 30 Records for CTA EB 2134, Vol. 3, pp. 1219-1223. 31 !d., pp. 1224-1229. 32 22 June 2021.

JUDGMENT ON COMPROMISE AGREEMENT CTA EB CASE NOS. 2134 & 2135 (CTA Case Nos. 9213 & 9214) 1. The application for compromise should be based on either the doubtful validity of respondent's assessment or taxpayer's financial incapacity to pay such assessment; 2. In case the basis of the compromise offer is doubtful validity, the minimum payment of compromise settlement shall be at the rate equivalent to forty percent (40%) of the basic assessed tax, while if the ground is financial incapacity, the minimum payment should be at the rate equivalent to ten percent (10%) of the basic assessed tax; and 3. The approval of the NEB, which is composed of the respondent and his four (4) Deputy Commissioners, if the subject assessment exceeds One Million pesos (Pl,OOO,OOO.OO) or where the settlement offered is less than the prescribed minimum rates. In this case, per the Certificate of Availment submitted by the parties, the JCA entered into is based on doubtful validity of respondent's assessment In order to determine whether the assessment's validity is indeed doubtful, the Court refers to Section 3 of Revenue Regulations ("RR'') No. 30-2002, as amended,33 which enumerates the instances when an assessment's propriety is considered doubtful, to wit: "SECTION 3. Basis For Acceptance of Compromise Settlement. The Commissioner may compromise the payment of any internal revenue tax on the following grounds: I. Doubtful validity of the assessment. - The offer to compromise a delinquent account or disputed assessment under these Regulations on the ground of reasonable doubt as to the validity of the assessment may be accepted when it is shown that: (a) The delinquent account or disputed assessment is one resulting from a jeopardy assessment (For this purpose, "jeopardy assessment" shall refer to a tax assessment which was assessed without the benefit of complete or partial audit by an authorized revenue officer, who has reason to believe that the assessment and collection of a deficiency tax will be jeopardized by delay because of the taxpayer's failure to comply with the audit and investigation requirements to present his books of accounts and/or pertinent records. or to substantiate all or any of the deductions, exemptions, or credits claimed in his return); o}t 33 Revenue Regulations Implementing Sections 7(c), 204(A) and 290 of the National Internal Revenue Code of 1997 on Compromise Settlement of Internal Revenue Tax Liabilities Superseding Revenue Regulations Nos. 6�2000 and 7-2001, 16 December 2002; Revenue Regulations No. 08-04, Revenue Regulations Implementing Sections 7(c), 204 (A) and 290 of the National Internal Revenue Code of 1997 on Compromise Settlement of Internal Revenue Tax Liabilities Superseding Revenue Regulations Nos. 7-2001 and 30-2002, 19 May 2004.

JUDGMENT ON COMPROMISE AGREEMENT CTA EB CASE NOS. 2134 & 2135 (CTA Case Nos. 9213 & 9214) (b) The assessment seems to be arbitrary in nature, appearing to be based on presumptions and there is reason to believe that it is looking in legal and!or factual basis; or (c) The taxpayer failed to file an administrative protest on account of the alleged failure to receive notice of assessment and there is reason to believe that the assessment is lacking in legal and!or factual basis; or (d) The taxpayer failed to file a request for reinvestigation/reconsideration within 30 days from receipt of final assessment notice and there is reason to believe that the assessment is lacking in legal and!or factual basis; or (e) The taxpayer failed to elevate to the Court of Tax Appeals (CTA) an adverse decision of the Commissioner, or his authorized representative, in some cases, within 30 days from receipt thereof and there is reason to believe that the assessment is lacking in legal and/or factual basis; or (f) The assessments were issued on or after January I, 1998, where the demand notice allegedly failed to comply with the formalities prescribed under Sec. 228 of the National Internal Revenue Code of 1997; or (g) Assessments made based on the "Best Evidence Obtainable Rule" and there is reason to believe that the same can be disputed by sufficient and competent evidence; or (h) The assessment was issued within the prescriptive period for assessment as extended by the taxpayer's execution of Waiver of the Statute of Limitations the validity or authenticity of which is being questioned or at issue and there is strong reason to believe and evidence to prove that it is not authentic; or (i) The assessment is based on an issue where a court of competent jurisdiction made an adverse decision against the Bureau, but for which the Supreme Court has not decided upon with finality." (Emphasis and underscoring, Ours.) Clearly, the scenario under Section 3.a of RR No. 30-2002, as amended, is present in this case. Based on 3M's Petition for Review,34 one of the grounds it advanced to prove the invalidity of the assessment is the issue that the Formal Letter of Demand ("FLD") and FDDA are void for being jeopardy assessments. According to 3M, the CIR hastily issued the assessment contained in the FLD to beat the three (3)-year prescriptive period to assess. Allegedly, this circumstance was a result of 3M's refusal to sign a Waiver against prescription of the period to assess. Given this, 3M's claim that the instant assessment is of doubtful validity has basis. The first requisite is thus satisfiedA 34 Petition for Review, Records for CTA EB 2134. Vol. 1, pp. 16-26.

JUDGMENT ON COMPROMISE AGREEMENT CTA EB CASE NOS. 2134 & 2135 (CTA Case Nos. 9213 & 9214) As for the second and third requisites, the judicial compromise amount paid by petitioner totalling to Thirteen Million Thirty Two Thousand Eight Hundred Seventy Nine Pesos (Php13,032,879.00) appears to be compliant with the 40% minimum payment required under Section 204(A) ofthe Tax Code, computed as follows: Tax Type Basic Tax (per 40% of the Basic Tax Income Tax FDDA)35 VAT EWT p 684,788.25 p 273,915.30 WTC FWT 19,970,084.38 7,988,033.75 DST MC 1,523, 108.93 609,243.57 TOTAL 2,666,73 8.17 1,066,695.27 353,689.09 141,475.64 199,871.00 79,948.40 86,000.00 215,000.00 p 10,245,311.93 p 25,613,279.82 Having found the documents in order, the Court finds the Approval Sheet of the NEB and the Certificate of Availment sufficient evidence of the parties' compliance with the second and third requisites, respectively, and the mandate of Section 6 ofRR No. 30-2002, as amended, to wit: "SECTION 6. Approval of Offer of Compromise. - Except for offers of compromise where the approval is delegated to the REB pursuant to the succeeding paragraph, all compromise settlements within the jurisdiction of the National Office (NO) shall be approved by a majority of all the members of the NEB composed of the Commissioner and the four (4) Deputy Commissioners. All decisions of the NEB, granting the request of the taxpayer or favorable to the taxpayer, shall have the consequence of the Commissioner. XXX XXX XXX Provided, however, that if the offer of compromise is less than the prescribed rates set forth in Sec. 4 hereof, the same shall always be subject to the approval of the NEB. xxx" (Emphasis and underscoring, Ours.) Considering the faithful observance by the parties of all the requisites under Section 204(A) of the NIRC, the Court deems it proper to grant the parties' Joint Motion. The parties are reminded that a compromise agreement, once approved by the courts, becomes more than a mere contract; it has the force and effect of a judgment that is subject to execution and attains the effect and authority of res judicata, as discussed by the Supreme Court in the case of Viesca vs. Gilinsky,36 to wit: ), 35 Annex "A", Petition for Review, Records for CTA EB 2134, Vol. I, p. 79; Annex "V", id., pp. 546-564. 36 G.R. No. 171698, 4 July 2007.

JUDGMENT ON COMPROMISE AGREEMENT CTA EB CASE NOS. 2134 & 2135 (CTA Case Nos. 9213 & 9214) Page II ofl2 "A compromise agreement has been described as a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced. A compromise agreement that is intended to resolve a matter already under litigation is normally called a judicial compromise. Once it is stamped with judicial imprimatur, it becomes more than a mere contract binding upon the parties. Having the sanction of the court and entered as its determination of the controversy, it has the force and effect of any other judgment. Such agreement has the force of law and is conclusive between the parties. It transcends its identity as a mere contract binding only upon the parties thereto, for it becomes a judgment that is subject to execution in accordance with the Rules. Thus, a compromise agreement that has been made and duly approved by 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." (Emphasis and underscoring, Ours.) WHEREFORE, premises considered, the parties' Joint Motion for Judgment Based on Compromise Agreement is GRANTED. The submission of the Certificate of Availment (Compromise Settlement) with attached Approval Sheet of the Judicial Compromise Agreement by the National Evaluation Board is DEEMED SUFFICIENT COMPLIANCE with the Resolution, dated 22 March 2022. The Judicial Compromise Agreement, dated 15 December 2021, entered into by the parties is hereby APPROVED. This Judgment on Compromise Agreement is 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. MARIARO stice WE CONCUR: Presiding Justice

JUDGMENT ON COMPROMISE AGREEMENT CTA EB CASE NOS. 2134 & 2135 (CTA Case Nos. 9213 & 9214) ER~.UY Associate Justice ~-~ ___..,~ MA. BELEN M. RINGPIS-LIBAN Associate Justice ~-7. CATHERINE T. MANAHAN Associate Justice ~ 0-VILLENA ~{)j~fr~-~ MARIAN Ivv�fl REYE~-FAJ!tJR.Do Associate Justice LA~lh~.~.4~'"~:UJIrn-DXA,VID Associate Justice CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above Judgment on Compromise Agreement were reached in consultation before the cases were assigned to the writer of the opinion of the Court. Presiding Justic7t.