ESTATE OF HENRY T. LAO, represented by its Administrator, JOSE T. LAO v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY THIRD DIVISION ESTATE OF HENRY T . LAO, CTA CASE NO. 10562 represented by its Administrator, JOSE T. LAO, Members: Petitioner, MANAHAN, Chairperson, -versus- REYES-FAJARDO, and ANGELES, JJ. COMMISSIONER OF Promulgated: INTERNAL REVENUE, , Respondent. JUN 13 2025 ~ -f- X - - - - - - - - - - - - - - - - - - - - - - - _;).~(}j) ~ �fk_ - - - - - --X RESOLUTION MANAHAN,J.: For this Court's resolution is petitioner's Motion for Reconsideration filed through accredited courier service on January 23, 2025 and received by the Court on January 24, 2025, with respondent's Comment/ Opposition (Re: Motion for Reconsideration dated 23 January 2025) filed on March 12, 2025. For easy reference, the dispositive portion of the assailed Decision1 reads: "WHEREFORE, the insta nt Petition for Review 1s DENIED, for lack of merit. SO ORDERED."2 In its motion, petitioner argues that: (1) the subject Letter of Authority (LOA) was not issued in connection with the judicial settlement of estate proceedings; (2) petitioner availed of the compromise settlement because the subject assets were held hostage through garnishment; (3) the LOA is invalid; (4) the t Docket, Vol. II , pp. 5 24 -540. 2 See Note 1, p . 539. o-n--

RESOLUTION CTA CASE NO . 10562 Page 2 of6 appeal was timely filed; (5) even assuming that the petition was not filed on time, the Final Decision on Disputed Assessment (FDDA) cann ot gain finality becau se of the in validity of th e LOA; and (6) the compromise agreement was properly documented. On the other hand, r espondent counters that: (1) appeal to the Court of Tax Appeals (CTA) is lost and Section 229 of the 1997 National Internal Revenue Code (NIRC) , as amended, may not be availed to defeat the law; (2) the assessment is final; and (3) due process was observed. To encapsulate, the issue to be re solved by the Court is whether petitioner may claim for refund the amou nt paid by virtu e of a compromise agreement with respondent Commissioner of Internal Revenue (CIR) . After careful consideration of the m erits, the Court finds the instant motion unmeritorious. Prefatorily, after revisiting the pieces of evidence s u b m itted by the partie s , particularly respondent's Bureau of Internal Revenue (BIR) Records collectively marked as Exhibit "R-8," the Court agrees with petitioner as to the existence of the documents d enominated as follows: (1) Application for Compromise Settlement;3 and (2) BIR Form No . 2 342 , oth erwise known as "Certificate of Availment (Comprom ise Settlement). 4 However, petitioner's claim for refund must still fail for reasons t h at will be discu ssed below. A final and executory assessment cannot be reviewed through a claim for refund of the amount paid pursuant to a compromise agreement On this score, the Court observes that while petitioner's cau se of action involves a claim for refund, the same essentially disputes th e subj ect Fin al Decision on Disputed Assessment (FDDA) dated May 31 , 2019 by attacking the validity of 3 BIR Records, collectively mar ked as Exhibit "R-8," p p. 7 58-766. 4 See Note 3, p. 77 1 . ~

RESOLUTION CTA CASE NO. 10562 eLA201600007674 LOA-008-2018-00000297 dated September 2 1, 2013. As discussed in the assailed Decision, the Court has jurisdiction over claims for refund of paym ents made in relation to compromise agreements, the latter b ein g part of the "other matters" jurisdiction of the Court. s While the Court h as jurisdiction over claims for refund of paym ents made in relation to compromise agreements, such claim must be anchored on erroneous, excessive, or illegal assessment or collection. In this regard, Section 229 of the 1997 NIRC, as amended , pertinently provides: "SEC. 229. Recovery of Tax Erroneously or Illegally Collected. - No suit or proceeding shall be mainta ined in any court for th e recovery of any national in ternal revenu e tax hereafter alleged to have been erroneously or illegally assessed or collected , or of any penalty claim ed to h ave been collected without authority, of a ny sum a lleged to h ave been exc e ssively or in any manner wrongfully collecte d without au th ority, or of a ny sum a lleged to h ave been excessive ly or in any manner wrongfully collected, until a claim for refund or credit has been duly filed w ith the Commissioner; but s u ch suit or proceeding may be maintained , wh eth er or not such tax, penalty, or sum has been paid under protest or duress. XXX XXX xxx"(Emphasis supplied) I Thus , to successfully prosecute a claim for refund, it is incumbent upon th e claimant to prove t h at ther e is an erroneous, excessive, or illegal assessm ent or collection by the CIR. In this case, a perusal of the records shows that petitioner n either disputed the FDDA b efore the CIR nor filed an appeal before this Court. Instead, petition er opted to avail the ben efits of a compromise. Such failure of petitioner to dispute the assessment before the CIR or to appeal the same before this Court resulted to the finality of th e a ssessm ent. Thus, t h e Court ruled in the assailed Decision that: s See Note 1, pp. 530-532 . ~

RESOLUTION CTA CASE NO. 10562 "The FDDA dated May 31, 2019 is final and executory XXX XXX XXX Again, r ecords reveal that instead of filing a request for reconsideration with the CIR or an appeal, petitioner filed a request to avail compromise settlement for the release of CAR in relation to the judicial settlement of the estate proceedings. In this regard, Section 228 of the 1997 NIRC, as amended, relevantly provides: "SEC. 228. Protesting of Assessment. - When the Commissioner or his duly authorized representative finds that proper taxes should be assessed, he shall first noli(y the taxpayer of his findings : Provided , however, That a pre- assessment notice shall not be required in the following cases: XXX XXX XXX Such assessme nt 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 m anner as may be prescribed by implementing rules and regulations. Within sixty (60) days from filing of the protest, all relevant supporting documen ts 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 adve rsely affected by the d ecision or inaction may appeal to the Court of Tax Appeals within thirty (30) days from receipt of the said decision, or from the lapse of one hundred eighty (180)-day period; otherwise, the decision shall become final, executory and demandable." Here, petitioner fa iled to appeal the FDDA within the statutory period. As provided in Section 228 of the 1997 NIRC, as amended, the failure of a taxpayer to appeal from an assessment on time renders the assessment final, executory~

RESOLUTION CTA CASE NO. 10562 and demandable . Conseque ntly, petitione r is precluded from disputing the correctness of the assessment."6 In addition, the Supreme Court ruled in the case of Breweru Properties, Inc. v. Commissioner qf Internal Revenue7 that a taxpayer is precluded from questioning the validity of a final and executory assessment in the guise of claiming a refund. A claim for refund is not a valid substitute for the lost remedy of appeal to question an FDDA. Thus: "Since pe titioner received the FDDA on 19 September 2012, petitioner had only until 19 October 2012 to file an appeal before the CTA to question the FDDA. Considering that petitioner did not exercise the remedy of a ppeal as provided in Section 228, the FDDA became fina l, executory and demandable. Petitioner is thereby precluded from questioning the legality or validity of the assessment in the guise of claiming a refund of the DST and pen a lties it paid under protest. Simply put, petitione r 's administrative cla im for refund is not a valid substitute for the lost re medy of appeal to question the fina l decision of the CIR on the disputed assessment." Applying the ruling of the Supreme Court in the above- quoted case, petitioner's present claim for refund is not a valid substitute for the lost remedy of appeal to question the subject assessment. Finally, "fAl compromise agreement has the effect of res .judicata on the parties. Compromises are generall.y to be favored and those entered into in good faith cannot be set aside, except when there is mistake, fraud, violence, intimidation, undue influence, or falsity of documents."8 Here , aside from petitioner's bare allegation that the assets involved are being held hostage through alleged illegal garnishment, no other evidence was presented by petitioner to show circumstances of mistake, fraud, violence, intimidation, undue influence, or falsity of documents. To underscore, said Warrant of Garnishment was issued as a matter of course considering the finality of the assessment. 6 See Note 1, pp. 532-534. 7 G.R. No. 239260, M ar ch 6, 2023. s Kepco Philippines Corporation v. Commissioner of Internal Revenue, G.R. Nos. 225750- 5 1, July 28, 2 020. ~

RESOLUTION CTA CASE NO. 10562 Consequently, the Court finds no error when it concluded in the assailed Decision that: "Consequently, the prese nt claim does not involve any national inte rnal revenue tax, p enalty, or sum which have been erroneous ly or illegally collected, as provided under Section 229 of the 1997 NIRC, as amended. The refore, the denial of petitioner's refund claim is in order."9 Considering the foregoing, the Court finds no reason to deviate from the conclusion r eached in the assailed Decision. Hence, the denial of the instant motion is in order. FOR THESE REASONS , the instant Motion for Reconsideration is DENIED, for lack of merit. SO ORDERED. CATHERINE T. MANAHAN Associate Justice WE CONCUR: ~~F.~-~\~ MARIAN 1~. RE~S--FAjARDO Associate Justice J. HENRY ~NGELES Associate Justice 9 See Note 1, p. 539.