DMCI HOLDINGS, INC. v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OFTAX APPEALS QUEZON CITY SPECIAL THIRD DIVISION DMCI HOLDINGS, INC., CTA Case No. 10784 Petitioner, -versus- Members: REYES-FAJARDO, Chairperson, and ANGELES, IL COMMISSIONER OF Promulgated: INTERNAL REVENUE, JU[ 1 4 2026 Respondent. f.' )(),.,.. .~ - )(- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - )( RESOLUTION REYES-FAJARDO, J.: We resolve petitioner's Motion to Render Judgment Based on Compromise filed on January 12, 2026. It seeks to vacate the Decision promulgated on November 4, 2025, and render judgment based on the perfected compromise, as a necessary consequence of the Certificate of Availment issued by the National Evaluation Board (NEB) pursuant to Revenue Regulations (RR) No. 30-2002. On November 4, 2025, the Court promulgated a Decision1 partially granting petitioner's Petition for Review, to which both parties filed their Motion for Partial Reconsideration.2 On January 12, 2026, petitioner filed a Comment with Motion to Render Judgment Based on Compromise (Motion) .3 Rollo, pp. 1186 - 1258. Id., Respondent's Motion for Partial Reconsideration (Re: Decision p romulga ted on -! Nov.2025) filed on November 17, 2025, pp. 1259 - 1271; Petitioner's Motion for Partial Reconsideration (of the Decision dtd. Nov -!,2025) filed on November 2-!, 2025, pp. 1278 - 1288. ld., pp. 1297- 130-!.

RESOLUTION CT A CASE NO. 1078-! Petitioner, in its Motion, states that on October 22, 2025, the Bureau of Internal Revenue issued a Certificate of Availment,4 signed on respondent's behalf. It claims that the Certificate reflects the approval of its applications for compromise settlement of deficiency taxes for taxable year 2016, in the total amount of P199,283,071.13. Respondent, through its Comment (Re: Motion to Render Judgment Based on Compromise dated 12 January 2026),5 submits that the instant motion may be resolved in light of prior rulings where the Court recognized an approved administrative compromise settlement, even without the execution of a judicial compromise agreement, and considered the case closed and terminated. We grant the Motion. An administrative compronuse settlement, under Section 204(A) of the 1997 National Internal Revenue Code (NIRC),6 as amended, is independent and separate from a judicial compromise agreement. In Commissioner of Internal Revenue (CIR) v. Toledo Power Company,? the Supreme Court emphasized that, under Section 204 of the NIRC, as amended, the CIR and the taxpayer may enter into other forms of settlement to compromise or abate tax liability, viz.: Rollo, p. 1306. 5 ld., pp. 1319 - 1323. 0 SEC. 204. Autlzorihj of tlze Co mmissiouer to Compromise, Abate aud R eftmd or Credit Taxes. - The Commissione r may - (A) Compromise Lhe pay me nt of any internal revenue Lax, when: (1 ) A reasonable d oubt as to the validity of the claim against the taxpayer exists; or (2) The financial position of Lhe taxpa ye r d emonstrates a clea r inability Lo pay the assessed La x. The compromise settlement of any lax liability shall be subject to the following minimum amounts: For cases of fu1ancial incapacity, a m inimum compromise rate equi valent to te n percent (10% ) of the basic assessed ta x; and For othe r cases, a minimum compromise rate eq uivale nt to forty percent (40 %) of the basic assessed lax. Where the bas ic Lax involved exceeds One million pesos (Pl,OOO,OOO) or where the seu.lemen t offered is less tl1an the presc ribed minimum rates, lhe compromise shall be subject to the a pproval of tl1e Eva luation Board w hich shall be composed of tl1e Commissioner and tl1e four (4) Deputy Commissione rs. 7 C.R. No. 259309, February 13, 2023.

RESOLUTION CTA CASE NO. 1078-! Page 3 of-! The NIRC, as amended, provides the proced ure for settlement and compromise of tax disputes including limitations on authority, through the BIR. But the Legislature, in all its wisdom, has never prevented the BIR to use other less formal methods of resolving tax controversy, without going through the tedious process of litigation. This is precisely why the CIR is vested with authority to compromise or abate any tax liability under Section 204, NIRC at any stage of the proceeding, even criminal violations not involving fraud before the same are filed in co urt. As such, the NIRC may enter into informal settlements to write fiuis to any of these cases within the parameters prescribed by law... Under Article 1305 of the Civil Code, "a contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service." On the other hand, Article 1318 of the same code requires the concurrence of the following elements: (1) Consent of the contracting parties; (2) Object certain which is the subject matter of the contract; and (3) Ca use of the obligation which is established ... On this score, Article 1356 of the Civil Code provides that contracts shall be obligatory in whatever form they may have been entered into, provided all the essential requisites for their validity are present. Verily, the informal settlement between the parties is generally binding and cannot be undone except in case of falsity or fraud under Section 248(b) of the NlRC.S Here, petitioner offered a compromise settlement, which was accepted and approved by the NEB and respondent, the object of which is petitioner's deficiency tax assessments for taxable year 2016, for the purpose of settling said d eficiency tax assessments, thereby putting an end to the 2016 tax controversy b etween petitioner and respondent. Thus, with the approval and issuance of the Certificate of A vailment, a compromise settlement between the parties is deemed p e r f e c te d . WHEREFORE, petitioner's Motion to Render Judgment Based on Compromise filed on January 12, 2026 is GRANTED. Accordingly, the Decision promulgated on November 4, 2025 is hereby VACATED. Petitioner's Motion for Partial Reconsideration (of the Decision dtd. Nov 4, 2025) filed on November 24, 2025 and r espondent's Motion for Partial Reconsideration (Re: Decision s Emphasis ours.

RESOLUT I O N CTA CASE NO . 1078-! Page -! of -l promulgated on 4 Nov. 2025) filed on November 17, 2025 are deemed MOOT AND ACADEMIC. CTA Case No. 10784 IS hereby declared CLOSED and TERMINATED. SO ORDERED. ~~r:~ -~~ MARIAN IVf'F. REYl'S-FAJARDO Associate Justice I CONCUR: HENRY /�GELES Associate Justice