GREAT EASTERN RESINS PHILS. INDUSTRIAL COMPANY, INC. v. COMMISSIONER OF INTERNAL REVENUE

1111111111111111111111 1111111111 111111111111111111111111111111111111111111111111 CTA Form No.8 25-000335-0027 REPUBLIC OF THE PIDLIPPINES COURT OF TAX APPEALS QUEZON CITY FIRST DIVISION CTA CASE NO. 11890 GREAT EASTERN RESINS PHILS. INDUSTRIAL COMPANY, INC., Petitioner, NOTICE OF JUDGEMENT -versus- ON COMPROMISE AGREEMENT COMMISSIONER OF INTERNAL REVENUE, Respondent. To: OFFICE OF THE SOLICITOR GENERAL 134 Amorsolo Street, Legaspi Village Makati City ATTY. LEONARDO B. USITA Bureau of Internal Revenue Revenue Region No. 7B Legal Division, 25th Floor, The Podium West Tower ADB Avenue, Ortigas Center, Mandaluyong City LA YUG CELICIOUS-SY & VILLA PANDO Unit 503, 5th Floor, The Linden Suites 37 San Miguel Avenue, Ortigas Center 1600 Pasig City GREETINGS: You are hereby notified by these presents that on August 27, 2026, a Judgment on Compromise Agreement was rendered in the above-entitled case, copy of which is attached hereto. Quezon City, Philippines, September 2, 2026. .. Atty. Mari_a J~ Chan-Te Executive "- ourt III

RE PUBLIC OF THE PHILIPPINES COU RT OF TAX APPEALS QUEZON CITY First Division GREAT EASTERN RESINS CTA Case No. 11890 PH ILS. INDUSTRIAL COMPANY, INC. Petitioner, Members: -versus- RINGPIS-LIBAN, P.J, & Chairperson, REYES-FAJARDO, and COMMISSIONER OF INTERNAL ANGELE S,JJ REVENUE, Respondent. X-------------------------- ------- -------------------X JUDGMENT ON COMPROMISE AGREEMENT RINGPIS-LIBAN, f.: Before the Court are the following motions for resolution: (1) the Omnibus Motion: (i) To Take Cognizance of the Certificate of Availment (Compromise Settlement) dated February 10, 2026 and (ii) To Declare the Case Closed and Terminated (Omnibus Motion) ftled by petitioner Great E astern Resins Phils. Industrial Company, Inc. (Great Eastern Resins) on March 3, 2026; and (2) the Joint Motion to Render Judgment Based on Compromise Agreement Qoint Motion) filed jointly by both parties on July 15, 2026. On March 27, 2025, petitioner Great Eastern Resins received the Final D ecision of the Commissioner o f Internal Revenue (CIR) on its Request for Reconsideration of the Final Decision on Disputed Assessment (FDDA) dated January 20, 2025, covering alleged deficiency income tax for the taxable year 2010 in the aggregate amount of P1,153,026.48, inclusive of interest, under Assessment No. 045-B055-10 (FDDA) dated Febmary 21,2020. On April 25, 2025, petitioner timely filed its Petition for Review before this Court, contesting the validity of the FDDA.

JUDGMENT ON COMPROMISE AGREEMENT CTA Case No. 11890 O n i\!Iay 15, 2025, without admitting guilt, petitioner flied a Request for Approval on Offer of Compromise Settlement on Final Decision on Disputed Assessment for Taxable Year 2010 with the Regional Evaluation Board (REB) of tl1e Bureau o f Internal Revenue (BIR) of Revenue Region No. 7B, on the ground of reasonable doubt as to the validity of the assessment. In connection therewith, petitioner paid P1 77 ,030.52, representing forty percent (40%) of the basic assessed income tax of P442,576.31, via the electronic filing and payment system (eFPS) on June 26, 2025. On Februaty 10, 2026, the CIR, through Regional Director Atty. Wrenolph D. Panganiban of BIR Revenue Region No. 7B-East NCR, issued the Certificate of Availment (Compromise Settlement) (Certificate of Availment) under C.AC No. 201700019418, certifying that the REB had approved petitioner's application for compromise settlement of its deficiency income tax liability under Assessment No. 045-B055-10 (FDD ) for taxable year 2010. Petitioner received the Certificate of Availment on Febmaty 18, 2026. On March 3, 2026, petitioner flied the Omnibus Motion praying that the Court take cognizance of the Certificate of Availment and declare the case closed and terminated. O n May 26, 2026, tl1e Court issued a Resolution holding the Omnibus i\!Iotion in abeyance, and directing: (a) respondent CIR to file a Comment on the Omnibus Mo tion within fifteen (15) days from receipt; and (b) both parties to file a Joint i\!Iotion to Render Judgment Based on Compromise Agreement, together with all documents required for the Court's scm tiny of the compromise settlement, within thirty (30) days from the filing of respondent's Comment or the lapse of the period to file the same. In compliance with the May 26, 2026 Resolution, the parties jointly filed the instant Joint Motion on July 15, 2026, attaching thereto the following d ocume nts: • BIR Form No. 0605 (Payment Form) with eFPS Payment D etails (Annex "A"); • Certificate of A vailment (Compromise Settlement) dated Feb mary 10, 2026 (Annex "B "); and • Compromise Agreement dated July 14, 2026, with Secretary's Certificate (Annex "C"). The Compromise Agreement was executed on July 14,2026 in Pasig City by and between Great E astern Resins, represented by Atty. Madeline L. Zialcita- Villapando of Layug Celicious-Sy & Villapando (pursuant to the Secretary's Certificate dated July 7, 2026 executed by Corporate Secretary Rodolfo Lee Jr.),

JUDGMENT ON COMPROMISE AGREEMENT CTA Ca se No. 11890 and the BIR - Revenue Region No. 7B, represented by Regional Director Atty. \Y./ renolph D. Panganiban. THE COURT'S RULING In Republic of the Philippines v. Heirs of Cru~ et aL,1 the Supreme Court held that approval of a compromise agreement is not a ministerial act - courts are bound to strictly scmtinize compromise agreements before approval to ensure compliance with law and applicable procedural m les. The Court now subjects the Compromise Agreement and its supporting documents to that scm tiny. The pertinent provisions of the Compromise Agreement dated July 14, 2026 read: WHEREAS, the TAXPAYER received, on March 27, 2025, the Final Decision of the Commissioner o f Internal Revenue on the Request for Reconsideration of the Final D ecision on Disputed Assessment ("Final D ecision") dated January 20, 2025, covering the alleged deficiency income tax for taxable year 2010 in the aggregate amount of P1 ,153,026.48, inclusive of interest, as follows: T ax Type Basic Interest Amount Due I ncom e Tax p 442,576.31 p 710,450.17 p 1'153,026.48 WHEREAS, the TAXPAYER, without admitting guilt, filed a Reques t fo r A pproval o n O ffer o f Compromise Se ttlem ent on Final D ecision on Disputed Assessment for taxable year 2010 ("Request for Approval on Offer of Compromise Settlement") with the Regional Evaluation Board of the BIR on May 15,2025, on the ground of reasonable doub t as to the validity of the assessments; XXX SECTION 1. Compromise Amount. In order to settle the above-mentioned case, the TAXPAYER has o ffered and the BIR has accepted the total payment of P177 ,030.52 ("Compromise Amount"), an amount equivalent to forty percent (40%) of the basic assessed tax of P442,576.31. The Compromise Amount has already been paid via electronic filing and payment system (eFPS) on June 26, 2025. SE CT ION 2. Subm ission to the Honorable CTA. This greement fully signed by the PART IE S shall be submitted for 1 G.R. No. 20895 6, Oct ober 17, 2018.

JUDGMENT ON COMPROM ISE AGREEMENT CTA Case No. 11890 the approval of the First Division of the H onorable CTA in CTA Case No. 11890. T he PARTIES undertake to perform any and all acts, and submit any and all documents required by the Honorable CTA to be able to render a Judgment by Compromise Agreement in the said case. SECTION 3. Effectivity of the Agreement. This Agreement shall take effect and bind the PARTIES upon approval by the Honorable CTA. XXX SECTION 6. Full and Final Settlement. This Agreement is executed by the PARTIES for the purpose of amicably settling and ending C f.A Case No. 11890. The BIR recognizes the full satisfaction of the supposed tax liability of the TAXPAYER in connection with CTA Case No. 11890 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. 11890. T he authority of the CIR to compromise internal revenue tax liabilities is governed by Section 204(A) of the National Internal Revenue Code (NIRC) of 1997,2 which provides: 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: (1) A reasonable doubt as to the validity of the claim against the taxpayer exists; or (2) The financial pos1t1on 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. 2 Republic Act No. 8424, as amended .

JUDGMENT ON COMPROMISE AGREEMENT CTA Case No. 11890 Page 5 of7 Where the basic tax involved exceeds One million pesos (P1 ,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. Under Section 204(A) of the NIRC, three requisites must be satisfied before the Court may approve a compromise agreement: • First - the application must be grounded on either doubtful validity of the assessment or financial incapacity of the taxpayer; • Second - the compromise amount paid must meet the prescribed minimum rate (40% of the basic assessed tax for doubtful validity; 10% for financial incapacity); and • Third - where the basic tax exceeds P1 ,000,000.00 or where the settlement is below tl1e minimum rate, approval of the National Evaluation Board (NEB) is required. As to the first requisite, the ground invoked is the doubtful validity of the assessment. The Compromise Agreement expressly recites that petitioner flled its Request for Approval on Offer of Compromise Settlement "on the ground of reasonable doubt as to the validity of the assessments. " The Certificate of Availment likewise confirms this ground. The first requisite is satisfied. As to the second requisite, the deficiency income tax assessed against petitioner for taxable year 2010 consists of a basic assessed tax of P442,576.31, exclusive of interest of P710,450.17. The minimum compromise rate for doubtful validity is forty percent (40%) of the basic assessed tax. The verification is as follows: Tax Type Basic Deficiency Tax Minimum Compromise Compromise Amount Assessed Rate Paid Income Tax P442,576.31 40% P1 77 ,030.52 The compromise amount of P177 ,030.52, equivalent to exactly forty percent (40%) of the basic assessed income tax of P442,576.31, was paid via eFPS on June 26, 2025, as confirmed by BIR Form No. 0605 (Reference No. 292500066643376; Payment Transaction No. 259833203; Security Bank Corporation, Bank Code 027000). The second requisite is satisfied. As to the third requisite, the basic tax involved- P442,576.31 - does not exceed the P1,000,000.00 threshold requiring NEB approval. Accordingly, REB approval suffices. The Certificate of Availment dated February 10, 2026,

JUDGMENT ON COMPROMISE AGREEMENT CTA Case No. 11890 Page 6 of7 issued in BIR Form No. 2342 (CAC No. 201700019418) by the CIR through Regional Director Atty. \Vrenolph D. Panganiban of BIR Revenue Region No. 7B-East NCR, confi1ms that the REB approved the compromise settlement under Assessment o. 045-BOSS-10 (FDDA) in accordance with Revenue Regulations No. 30-2002,33 as amended. The third requisite is satisfied. With the faithful observance of all the requisites under Section 204(A) of the N IRC, the Court approves the Compromise Agreement dated July 14, 2026. In view of the rendition o f Judgment on Compromise Agreement, the Omnibus Motion flied by petitioner on March 3, 2026 - which sought judicial recognition of the compromise settlement and the closure of this case - is rendered moot and academic. WHE REFORE, the parties' J oint 1\IIotion to Render Judgment Based on Compromise Agreement is GRANTED. Accordingly, the Compromise Agreement dated July 14, 2026 executed by petitioner Great Eastern Resins Phils. Industrial Company, Inc. and the Bureau of Internal Revenue - Revenue Region No. 7B is APPROVED. The parties are strictly enjoined to faithfully comply with all the terms and conditions of the Compromise Agreement. The Omnibus 1\IIo tion filed on March 3, 2026 is hereby declared MOOT AND ACADE MIC. This case is now deemed CLOSE D and TERMINATED. SO ORDE RED . ~ . ~/ ---. MA. BE LEN M. RINGPIS-LIBAN Presiding Justice WE CONCU R: ~ ~ f.~ . f~'"tk MARIAN rw Q<. RE~:FAJ.trRDO Associate j~tstice HENRY/JeGELES Associate Justice 3 As amended by Revenue Regulations No . 8-2004.

JUDGMENT ON COMPROM ISE AGREEMENT CTA Case No . 11890 CE RTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above Judgment were reached in consultation before the case was assigned to the writer o f the opinion of the Court. ~. ~ 1'--- MA. BELEN M. RINGPIS-LIBAN Presiding Justice