HOLY ANGEL UNIVERSITY v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SECOND DIVISION ********* HOLY ANGEL UNIVERSITY, CTA Case No. 10542 Petitioner, Members: -versus- UY, Chairperson, BACORRO-VILLENA, and CUI-DAVID, JJ. COMMISSIONER OF INTERNAL Promulgated: REVENUE, JANZ5 ZOZJ Respondent. x------------------------------------------------------------------------------------------ ------x JUDGMENT ON COMPROMISE AGREEMENT UY, J.: For resolution is the parties' Joint Omnibus Motion [Judgment Based on Compromise AgreementP filed on November 11 , 2022, praying that the parties' Judicial Compromise Agreement be approved by the Court. In support of their joint motion, the parties attached the following : 1) Judicial Compromise Agreement executed by Atty. Benedict R. Tugonon , petitioner's authorized representative and Hon . Lilia Catris Guillermo as the Commissioner of Internal Revenue �2 1 2) Secretary's Certificate dated November 4, 2021 executed by Atty. Elfren P. Hipolito, Jr., petitioner's Corporate Secretary authorizing the law firm of Quiason Makalintal Barot Torres~ 1 Docket, pp. 444 to 447. 2 Docket, pp. 448 to 453.

JUDGMENT ON COMPROMISE AGREEMENT CTACaseNo. 10542 Page 2 of9 Ibarra Sison & Damaso, or any of its lawyers as petitioner's authorized representatives to enter and to sign compromise agreements; 3 3) PCevhoiondtfeoirncmcoiapntigieostnotaolafpnadSyImRPeanFyt ominrmetnhteNaoAm.coku0nn6ot0wo5lfe, Pd2ge,mF1Pe1nS7t,89PR4a.e4yc0me;4eipnt,t 4) Cf(aoCmerorotcmiufoipenmrdtopomrfoitPmsru5eies,S2e9e4stcte,lo7etpt3mlye6em.n6eto0)nffitnorortheftaeliaxtstaiobiCnnleectoroytmiepfiaeceratitt2taeio0x1nl2eioa.r5f'bsilaitApievpsaliicilnmateitohnnet The Compromise Agreement reads as follows: "JUDICIAL COMPROMISE AGREEMENT KNOW ALL MEN BY THESE PRESENTS: ("AgrTeheims entJ"U) DmIaCdIAeLexecCuOteMdP, RbyOManISdEbetwAeGeRn:EEMENT dtoArheofnefpmigcrleeaeelwsseaHetsstiOcn1otCLcafHoiYtttiohyrvp,leeyAo,PRNarAahneGtiTgilpoiEepTunlLpYbAild.nicUvueBelNsoyEn,fIuNVotrhereEEgepcDRaroPnIeSCrhisnIzTTieeleinYprdRtpSe.ai(ndt"ToneT.dUbsARGy,eXowxOPistiisNtAahatirOYnuiopEgtNhrSRi;onut"rcnri)ezid,peeeaatdr,l -and- (RDC"eBiolivmmIReamn"Tn)ui,s,hese,wiointNQheBaurU,tepioRzrnoiHEnanOcAlipNUaO. lCffLiiOotcyIfeFL,fiIcAeBINrueCaiTlptdAErienTRBsgRuNe,IrnSAetaAeLudgGhUaoRmIfELbLVyInEERtReNorMUanthdaEOe,l (collectively, the "PARTIES"); ~ Ff(Mo"oFrilrlLimtoOhnaWe-Fl HAOaLElNenleRte"tg)EeedrAHdaoSutedfn, dedDfrtiAehecmedpierainlBEnc2yiIdg7Rh,wint2eiics0teohs1num6FeefTdionhtraaotltoxuhAseatashtmnsaedexoasuTbsnFAlmtieviXneeyPgneAtHatoYrNuE2noE0Rdti1irgce2haed,t 3 Docket, pp. 461 to 462. 4 Docket, pp. 454 to 459. 5 Docket, p. 477.

JUDGMENT ON COMPROMISE AGREEMENT CTA Case No. 10542 Page 3 of9 Ninety-six Pesos and Twelve Centavos (P8, 118,596.12), inclusive of interest and penalty; WHEREAS, the BIR issued to the TAXPAYER a Final ODdHeeucfctniocidsiberieenordcny4,Foi2ifnnt0yc1-on6Dminifeseopr uTttahthxeeodutasamaxAnaosdbuslneeEtsinyisggemhatertonH2t0us1En2dig(,r"heFftdoDrDMTthAwilel"ieo)nnatlydle-aFgftoieevudder Pesos and Seventeen Centavos (P8,559,824.17), inclusive of interest and penalty; WHEREAS, TAXPAYER filed an appeal through request for reconsideration on November 23, 2016; WHEREAS, the BIR issued to the TAXPAYER a DaFfofiefvuicrermisHiiPnougennsdtohdrseeadteFadFDnidfDAtyAp-Snriailennve1de6nT,dthei2roee0unc2st1ianCngfdoernpEtataihygvemhotsetanHxt(aPuobn8fld,e5Ere5iygd9eh,a8Tt r2wM42e.il10nli71oty)2n-, inclusive of interest and penalty; aCCDgaoivasmiisenimosWtnNiHsotso.EhfieRo1tnhE0eeA5Br4SICR2o,,ofutperIhnetnenttoietdflreiTnnTdAgaaXlx"bPRHAeAeofpovYlpryeEeenaRuAtlshene"ig(n,"seCHtdliTotouAncUt"oek)nrde,aitvebseedlaerenskaiSitsnyaegccCtoivtTonhsnAde. reversal of the FDDA, and the cancellation of the FLO; WHEREAS, the TAXPAYER, pursuant to mediation ps2u2rob, cm2e2iet2tdeifdnograsthperboeapfloolersgeaeldtfhodereafiCcmioeiucnractbyloteafxseTatastlxseemsAsepmnpteednaatlstceod(n"MtCaTainrAec"hd) in the FLO and FDDA; WHEREAS, the BIR has evaluated the TAXPAYER'S pcaornompeponrsdoaml tofisoerliattoimgaaictlilaoobnwleiamssmetpetlredomivaitedenetdtaaxnincdotblhleeecliteiCovnievsial ntChdaotadlaesojuotdofictphiauelt Philippines, serves the interest of the Government; WHEREAS, the PARTIES have agreed to enter into an of the Civil decision of on judicial public order4 rv amicable settlement pursuant to the provisions \ Code of the Philippines, jurisprudence, relevant the Honorable CTA, and relevant laws compromise without contravening laws, morals, and public policy;

JUDGMENT ON COMPROMISE AGREEMENT CTA Case No. 10542 Page 4 of9 WHEREAS, the Honorable CTA has issued rulings allowing judicial compromises similar to the instant case; apanrbedojuvpedWumicttHieiannElgtRioliaEtningAeadeStni,odnthc,teoashPaeaA,vpReroTutaIrpEagoScrnet,eefddo,rteettrhoxmepseapnmusriicpavanoebdsleaynodcsf oeamntvtudloetiitudioaitnhnllgeys hereinafter set forth; NOW THEREFORE, for and in consideration of the foregoing premises, the PARTIES hereto have agreed as follows: soMNeffiintelltileroeetnydS-teFhOacoenntudieoratnHhbPeou1ev.nsBeJdoI-urRsmeddeihacnanSitsadieolavnCeceFocndoemtretpyepcteanrdosCeTmet,hhnieosttauehtvsoeAoatasnmlTdopA(PuaEX2nyiP,gmt1.Ahe1tIYnn7HEt,o8Ruor9dnf4edT.hrr4weat0oods) ("Judicial Compromise Amount"). Af1Cao0ngTrd5rAt4ehs2eeStu.moebTaecmbhptneepiitotrPonfaauvbAnlla2lyyRe.l TsaSotiIongufEdnbStrhemeaedunlilnsdbHddseyoeoirotnrchtanouaermkatJePoebuAnltdteohtRgsepTCmerITHeEerAfqoSnounrtmiisnroebhrdyaaaClnblTbCylbAyeoeamCnHCsdTuopaAbnrsaomoe.llmrTiaatNthibcesoitldssee. Agreement in the said case. ATuupnhgotirsinleeASfcimngeoarecmeltniepaotlmpenspteihornaon3tlvl.asolahEnnaafldlnyfl edtcthfattueekilvrrefemiiltlamyienftfeaefentorictofrtneomatbhnfaydeintthhbeAieinngdHfcroeoortehcnvmeeeonreaaPanbnnAtldte.Rs eTCTfIafTEhenAicSsd.t undertaking of the PARTIES hereto. faBafw2iunpn0IilatRlyp1yhlr6daoau,rnSvapnidtemapwdhclreeaipontrollilvtgeoFafadmnDktloaheeDcbnisnusy4dAtm.ttAohcdegDeatanehrnettxeHeescleeidoevacmnleuslOpionertremracgnoabtavtobaliytbblensheieydsbeorCentdhFTs4oree,eLAfliqOv2Huoote0-hoifFfrr1eentA6htdooNtishraPtaitonshAAdbdeeaRgleftrtTfeTAheeCdIAegceETtrXmSiAAevDPeeep.eAlnmruycUiltYipespatEo2inohno7nRntedn,, dated April 16, 2021. Section 5. Authority to Enter Compromise Agreement. The BIR, through Commissioner Lilia Catris ~

JUDGMENT ON COMPROMISE AGREEMENT CTA Case No. 10542 Page 5 of9 Guillermo warrants that she 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 of the Honorable CTA. The TAXPAYER warrants that Atty. Benedict R. Tugonon 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 the CTA Case No. 10542, and all other cases that may have stemmed from or arisen from CTA Case No. 10542 ("CTA Case"). Upon approval by the court, the BIR recognizes the full satisfaction of the supposed tax liability of the TAXPAYER in connection with the CTA Case 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 Case No. 10542. Section 7. Disapproval of this Agreement by the Honorable CTA. In the event that this Agreement is disapproved by the Honorable CTA, the PARTIES agree to a curing period of sixty (60) days from receipt of the Order/Resolution disapproving this Agreement. During such curing period, the PARTIES mutually agree to perform any and all acts necessary to rectify or correct the deficiency, defect or imperfection which caused its disapproval, and re- submit the rectified or corrected Agreement for approval of the Honorable CTA. However, in case the deficiency, defect or imperfection is not or cannot be rectified or corrected within the said curing period, or still not approved by the Honorable CTA after it is rectified or corrected by the PARTIES: 1. The amount already paid by the TAXPAYER to the BIR shall be deemed a tax credit which may be applied against internal revenue taxes for which the TAXPAYER may be directly liable, as allowed under existing rules and regulations; and 2. The proceedings of CTA Case No. 10542 shall continue and the discussions pursuant to the disapproved Agreement cannot be used by the~

JUDGMENT ON COMPROMISE AGREEMENT CTA Case No. I0542 Page 6 of9 PARTIES in said proceeding unless consent of the other party be obtained. Section 8. No Admission of Liability. The execution of this Agreement shall not constitute or be interpreted in any way as an admission or acknowledgement of error or liability by the PARTIES. Section 9. Non-Performance. The PARTIES agree that the failure of any PARTY to comply with any of the terms and conditions of this Agreement shall entitle the aggrieved PARTY to file an appropriate motion with the Honorable CTA for the immediate implementation and execution of the terms and conditions of this Agreement or the judgment or order of the Honorable CTA approving the same. Section 10. Signatures and Counterparts. This Agreement may be signed in counterparts, each of which when executed and delivered shall constitute a duplicate original, but all of which shall be taken together as a single instrument. Until and unless each party has received a counterpart hereof signed by the other party hereto, the Agreement shall have no effect and no party shall have any right or obligation hereunder. IN WITNESS WHEREOF, the PARTIES hereto have mutually and voluntarily agreed to the foregoing stipulations and have hereunto signed these presents at the date and place indicated above. HOLY ANGEL UNIVERSITY BUREAU OF INTERNAL REVENUE By: (Signed) (Signed) ATTY. BENEDICT R. TUGONON LILIA CATRIS GUILLERMO Authorized Representative Commissioner" We resolve. A scrutiny of the subject Judicial Compromise Agreement, as well as the documents submitted by the parties in support thereof, shows that the same are in order. Particularly, petitioner paid a total of P2, 117,894.40, or forty percent (40%) of the basic income tax deficiency of t-5,294,736.60 as per the Formal Letter of Demand and Assessment Notice (Assessmen~

JUDGMENT ON COMPROMISE AGREEMENT CTA Case No. I0542 Page 7 of9 No. 21A-R-1209156970) dated April 27, 2016, and obtained the approval of the NEB, in accordance with Section 204(A) of the National Internal Revenue Code of 1997, as amended.6 Moreover, the compromise agreement was 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. A compromise is a contract whereby the parties, by making reciprocal concessions, avoid litigation or put an end to one already commenced. 7 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. 8 Such means of dispute settlement is an accepted, even desirable and encouraged, practice in courts of law and administrative tribunals.9 Moreover, a judgment by compromise is a judgment embodying a compromise agreement entered into by the parties in which they make reciprocal concessions in order to terminate a litigation already instituted. 10 A compromise approved by final order of the court has the force of res judicata between the parties, and cannot and should not be disturbed except for vices of consent or forgery, it being the obviou;.o 6 Section 204. Authority ofthe 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 (PI ,000,000.00) 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." (Emphasis supplied) 7 Article 2028, Civil Code of the Philippines. 8 Article 1306, Civil Code of the Philippines. 9 Asset Pool A (i\PV-AMC) vs. Clark Development Corp., G.R. No. 205915, November 10, 2015. 10 Jose Diaz Jr., eta/., vs. Salvador Valenciano, Jr., eta/., G.R. No. 209376, December 6, 2017.

JUDGMENT ON COMPROMISE AGREEMENT CTA Case No. 10542 Page 8 of9 purpose of such compromise to settle once and for all the issues involved and bar all future disputes and controversies. 11 WHEREFORE, in light of the foregoing considerations, the Judicial Compromise Agreement is hereby APPROVED and this Judgment on Compromise Agreement is hereby rendered in accordance therewith. The parties are enjoined to faithfully comply with all the terms and conditions of the aforesaid Compromise Agreement. Accordingly, the instant case is now deemed CLOSED AND TERMINATED. SO ORDERED. ER~P.UY Associate Justice WE CONCUR: JEAN LAN~~A$u..v~c~U'I-JD.A.VID Associate Justice ATTESTATION I attest that the conclusions in the above Judgment on Compromise Agreement were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division ER~.UY Associate Justice II Jd.

JUDGME;NT ON COMPROMISE AGREEMENT CTA Case No. !0542 Page 9 of9 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 case was assigned to the writer of the opinion of the Court. Presiding Justice