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. 10569 Petitioner, Members : - versus - UY, Chairperson, BACORRO-VILLENA, and CUI-DAVID, JJ. COMMISSIONER OF INTERNAL Promulgated: REVENUE, Respondent. ~ AUG 232022 x-----------------------------------------------------------------------------~~-~~~x JUDGMENT ON COMPROMISE AGREEMENT UY, J.: For resolution is the parties' Compromise Agreement1 attached to the Mediator's Report submitted on June 6, 2022, arising from a successful settlement between the parties before the Philippine Mediation Center- Court of Tax Appeals (CTA). Records show that on July 1, 2021 , petitioner filed a Petition for Review2 docketed as CTA Case No. 10569, praying that judgment be rendered declaring null and void the deficiency income tax assessment under the Final Decision on Disputed Assessments and the Decision of the respondent for taxable year 2013 against petitioner in the amount of P29,911 ,061 .88, inclusive of penalties and interests. The instant case was initially raffled to the Third Division of this Court. On November 24, 2021 , the Court referred the instant case f~ 1 Docket, pp. 339 to 344. 2 Docket, pp. 7 to 44.

JUDGMENT ON COMPROMISE AGREEMENT CTA Case No. I0569 Page 2 of8 mediation at the Philippine Mediation Center-Court of Tax Appeals (PMC-CTA) pursuant to Section II of the Interim Guidelines for Implementing Mediation in the Court of Tax Appeals (or Interim Guidelines). 3 Thereafter, on March 14, 2022, the mediator, (Ret.) Justice Amelia Cotangco-Manalastas, with the conformity of Atty. Gianna Maria C. Comsti and Atty. John Albert M. Bonifacio, on behalf of petitioner, and Atty. Lara Nicole T. Gonzales, on behalf of the Commissioner of Internal Revenue (CIR), filed a Request for Extension (PMC-Form 9}4, requesting for a final extension of thirty (30) days from March 30, 2022 or until April 29, 2022, to give the parties additional time within which to reach an amicable settlement. Said request for extension was granted by the Court on March 22, 2022. 5 On April 25, 2022, both parties filed a Joint Manifestation I Motion6 averring that they have reached a compromise during the mediation proceedings, and praying for the suspension of the court proceedings pending the submission of the National Evaluation Board (NEB) approval and the conclusion of the mediation proceedings. In the Resolution dated May 11, 2022, the Court noted the parties' Joint Manifestation and denied the Motion to suspend court proceedings. Likewise, the Court ordered the PMC-CTA to transmit the Mediator's Report within fifteen (15) days pursuant to paragraph IX (A) of the Interim Guidelines. 7 On June 6, 2022, the PMC-CTA filed with the Court, the Mediator's Report (PMC-CTA Form 5)8 dated May 31, 2022 signed by (Ret.) Justice Amelia R. Cotangco-Manalastas, stating that there has been a "Successful Settlement". Attached thereto, among others are the following: 1.) Compromise Agreement executed on March 4, 2022, signed by Gianna Marie C. Comsti and John Albert M. Bonifacio on behalf of petitioner Holy Angel University, and respondent CIR Caesar ~ 3 Docket, pp. 30 I to 302. 4 Docket, p. 315. 5 Resolution dated March 22, 2022, Docket, pp. 317 to 318. 6 Docket, pp. 304 to 314. 7 Docket, pp. 320 to 321. 8 Docket, p. 322.

JUDGMENT ON COMPROMISE AGREEMENT CTA Case No. 10569 Page 3 of8 R. Dulay, and attested to by (Ret.) Justice Amelia R. Cotangco- Manaslastas;9 2.) Special Power of Attorney dated July 1, 2021 executed by Dr. Luis Maria R. Calingo, petitioner's president authorizing the law firm of Quiason Makalintal Barot Torres Ibarra Sison & Damaso as petitioner's authorized representatives in the mediation proceedings; 10 3.) Special Power of Attorney dated December 27, 2021 executed by Assistant Commissioner James H. Roldan authorizing and appointing namely, Atty. Felix Paul R. Velasco Ill, Atty. Sylvia R. Alma Jose, Atty. Ayesha Hania G. Guiling-Matanog, Atty. Lara NicoleT. Gonzales to appear for and in behalf of the respondent at the mediation proceedings in the PMC-CTA in connection with CTA Case No. 10569; 11 4.) Photocopies of BIR Form No. 0605 and the corresponding eFPS Payment Confirmation evidencing total payment in the amount of P6,646,902.6412 On June 23, 2022, the Court noted the filing of the Mediator's Report and ordered the parties to submit within thirty (30) days from notice, the Certificate of Availment confirming that the compromise agreement was approved by the NEB. 13 Meanwhile, on June 28, 2022, the instant case was transferred to the Second Division of this Court pursuant to CTA Administrative Circular No. 01-2002, reorganizing the Second and Third Divisions of the Court. 14 On July 8, 2022, respondent filed his Compliance15 attaching thereto a certified true copy of the Certificate of Availment dated June 24, 2022, as well as the proof of approval of the majority of the NEB members and the CIR's concurrence thereon, evidencing approval of the compromise agreement. ~ 9 Docket, pp. 329 to 330. 10 Docket, pp. 326 to 327. 11 Docket, p. 325. 12 Docket, pp. 331 to 336. 13 Resolution dated June 23, 2022. Docket. pp. 33 7 to 338. 14 Order dated June 28, 2022, Docket, p. 340. 15 Docket, pp. 341 to 346.

JUDGMENT ON COMPROMISE AGREEMENT CTA Case No. I0569 We shall now proceed to look into the merits of the Compromise Agreement and the documents submitted by the parties in support thereof. The Compromise Agreement reads as follows: "COMPROMISE AGREEMENT Undersigned parties, assisted by their respective counsels, Petitioner HOLY ANGEL UNIVERSITY with address at 1 Holy Angel Avenue corner Sto. Rosario Street, Angeles City, Philippines, represented by herein by the The Law Firm of Quiason Makalintal Barot Torres Ibarra Sison and Damaso, particularly Attys. Benedict R. Tugonon, Gianna Maria C. Comsti or John Albert M. Bonifacio, and Respondent COMMISSIONER OF INTERNAL REVENUE, with address at Room 703 BIR Building, Bureau of Internal Revenue, Diliman, Quezon City, Philippines, represented by the Litigation Division. AGREE as follows: WHEREAS, on July 1, 2021, a Petition for Review was filed by petitioner Holy Angel University challenging the validity of the Decision dated May 17, 2021 issued by respondent Commissioner of Internal Revenue in connection with deficiency tax assessment for taxable year 2013. Under the Decision, petitioner was required to pay basic tax due in the amount of Php16,617,256.60 representing deficiency income tax. 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, petitioner has offered and respondent has accepted the amount of Php6,646,902.64, representing 40% of the basic tax stated in the Decision dated May 17, 2021, as well as the.A assessments. I" �

JUDGMENT ON COMPROMISE AGREEMENT CTA Case No. I 0569 Page 5 of8 IN WITNESS WHEREOF, the Parties hereto have mutually and voluntarily accepted the above stipulations, and sign this Agreement, at Quezon City on this 41h day of March 2022 for the consideration and approval of the Honorable Court. HOLY ANGEL UNIVERSITY (Signed) Petitioner Caesar R. Dulay COMMISSIONER OF INTERNAL REVENUE Respondent By: Benedict R. Tugonon Authorized Representative (Signed) Gianna Maria C. Comsti Authorized Representative (Signed) John Albert M. Bonifacio Authorized Representative ATTESTED: (Signed) Justice Amelia R. Cotangco-Manalastas Mediator" A scrutiny of the subject Compromise Agreement, as well as the documents submitted by the parties in support thereof, shows that the same is in order. Particularly, petitioner paid a total of P6,646,902.64, or forty percent (40%) of the basic tax as per the Final Decision dated May 17, 2021 issued by respondent, and obtained the approval of the NEB, in accordance with Section 204(A) of the National Internal Revenue Code ~

JUDGMENT ON COMPROMISE AGREEMENT CTA Case No. I0569 Page 6 of8 of 1997, as amended. 16 Moreover, the 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. A compromise is a contract whereby the parties, by making reciprocal concessions, avoid litigation or put an end to one already commenced. 17 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. 18 It is an accepted and desirable practice in courts of law and administrative tribunals. 19 Settlement of disputes brought before the courts is, in fact, encouraged. 20 Moreover, a judgment by compromise is a judgment embodying a compromise agreement entered into by the parties in which they 16 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 m1mmum compromise rate equivalent to ten percent (I 0%) 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.OO) 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) 17 Article 2028, Civil Code of the Philippines. ~ 18 Article 1306, Civil Code of the Philippines. 19 California Manufacturing Company, Inc. vs. The City of Las Piiias and the Han. Rizal Y Del Rosario, City Treasurer. G.R. No. 178461. June 22. 2009. citing DMG Industries, �Inc. vs. Philippine American Inve.llmenl.\ Corpora/ions. G.R. No. 174114. July 6, 2007. 2 Conchita A. Sonley vs. Anchor Savings Bank/Equicom Savings Bank, G.R. No. 205623, August 10,2016.

JUDGMENT ON COMPROMISE AGREEMENT CTA Case No. 10569 make reciprocal concessions in order to terminate a litigation already instituted 21 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 obvious purpose of such compromise to settle once and for all the issues involved and bar all future disputes and controversies.22 WHEREFORE, in light of the foregoing considerations, the Compromise Agreement dated March 4, 2022, entered into by the parties 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 "< JEAN MARI~.Itc>RRo--VILLENA kruttbt- LANEE S. CUI-DAVID Associate Justice 21 Jose Diaz Jr., eta/., vs. Salvador Va/nciano. Jr., eta/., G.R. No. 209376, December 6, 2017. 22 Id

JUDGMENT ON COMPROMISE AGREEMENT CTA Case No. 10569 Page 8 of8 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~P.UY 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 case was assigned to the writer of the opinion of the Court's Division. Presiding Justice