IMAGENET PHILIPPINES, INC. v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SECOND DIVISION IMAGE NET PHILIPPINES, CTA CASE NO. 10683 INC., Petitioner, Members: -versus- BACORRO-VILLENA, Chairperson, and CUI-DAVID,]].. COMMISSIONER OF ~~:~o-n-de~:� -!w INTERNAL REVENUE, x __ - ___ - - _____ Promulgated: tj.'2J) {J?f7 ______________________ JUDGMENT BASED ON COMPROMISE AGREEMENT BACORRO-VILLENA, J.: On 20 May 2026, the parties moved for cancellation of the presentation of respondent's witness and manifested that they entered into a compromise agreement. The Court ordered the parties to file their joint motion within ten (10) days from the hearing date.1 In compliance thereto, on 29 May 2 the Court received a 2026, "Joint Omnibus Motion with Leave of Court (A) To Suspend or Hold in Abeyance the Proceedings of the Case; and (B) To Approve Judicial Compromise Agreement and To Render Judgment Based Thereon"3 t (Joint Motion) from petitioner Imagenet Philippines, Inc. (petitioner) and respondent Commissioner of Internal Revenue (respondent/CIR), stating that the Bureau of Internal Revenue (BIR) has approved and Minutes ofthe Hearing held on 20 May 2026. Division Docket. Volume VII, p. 3421. Emailed on 29 May 2026, id .� p. 3424. !d., pp. 3425-3465, including attachments.

�' JUDGMENT BASED ON COMPROMISE AGREEMENT CTA Case No. 10683 Imagenet Philippines, Inc. v. Commissioner of Internal Revenue Page 2 of16 x-------------------------------------------------x accepted petitioner's compromise offer to settle the income tax (IT), value-added tax (VAT), expanded withholding tax (WE), withholding tax on compensation (WC), improperly accumulated earnings tax (IE) deficiencies, and compromise penalty (CP) for taxable year (TY) 2016. In the Joint Motion, the parties attached the following documents: 1. Original notarized Judicial Compromise Agreement (JCA) signed by Joper R. Del Rosario (Del Rosario), as petitioner's authorized representative; respondent Commissioner Charlito Martin R. Mendoza (Commissioner Mendoza); and Felix Paul R. Velasco III as witness;4 2. Original Notarized Secretary's Certificate dated 18 February 2026 executed by petitioner's Corporate Secretary, Euney Marie Mata Perez, authorizing Del Rosario to represent petitioner in the execution of the JCA and all other documents related to the instant case;5 3� Certified True Copy (CTC) of the Certificate of Availment (CA) dated 13 April 2026 pertaining to the compromise settlement of petitioner's deficiency tax assessments forTY 2016 in the total amount of PS7,326,191.11, including CP;6 4� CTC of the Judicial Compromise reflecting the settlement amount of P2o,824,106.37 which the National Evaluation Board (NEB) members approved;7 5� Original printout copies of (i) the BIR Email Notification on eFiling of Tax Return for IT amounting to P7,952,273�62, filed on 19 February 2026;8 (ii) the BIR Form No. o6os (Payment Form) for IT amounting to P7,952,273�62, filed on 19 February 2026; 9 t and (iii) the Proof of Payment of IT amounting to P7,952,273�62 through Metrobank Business Online Solutions with payment transaction number 264869713;w 4 !d., pp. 3433-3440. !d., p. 3441. !d., p. 3442. !d., p. 3443. !d., p. 3444. !d., p. 3445. 10 !d., p. 3446.

JUDGMENT BASED ON COMPROMISE AGREEMENT CTA Case No. 10683 Imagenet Philippines, Inc. v. Commissioner of Internal Revenue Page 3 of16 X------------------------------------------------ -X 6. Original printout copies of (i) the BIR Email Notification on eFiling ofTax Return for VAT amounting to P4,890,543�53, filed on 19 February 2026;11 (ii) the BIR Form No. o6os (Payment Form) for VAT amounting to P4,8go,s43�53, filed on 19 February 2026;12 (iii) the Proof of Payment of VAT amounting to P4,890,543�53 through Metrobank Business Online Solutions with payment transaction number 264870187;13 7� Original printout copies of (i) the BIR Email Notification on eFiling of Tax Return for WE amounting to P285,952�73, filed on 19 February 2026;14 (ii) the BIR Form No. o6os (Payment Form) for WE amounting to P285,952�73, filed on 19 February 2026;15 (iii) the Proof of Payment of WE amounting to P285,952.73 through Metrobank Business Online Solutions with payment transaction number 264869466;16 8. Original printout copies of (i) the BIR Email Notification on eFiling of Tax Return for We amounting to P7,487,333�o8, filed on 19 February 2026;17 (ii) the BIR Form No. o6os (Payment Form) for We amounting to P7,487,333.o8, filed on 19 February 2026;18 (iii) the Proof of Payment of we amounting to P7,487,333.o8 through Metrobank Business Online Solutions with payment transaction number 264870412;19 9� Original printout copies of (i) the BIR Email Notification on eFiling of Tax Return for IE amounting to PJ73,003.40, filed on 19 February 2026;20 (ii) the BIR Form No. o6os (Payment Form) for IE amounting to PJ73,003.40, filed on 19 February 2026;21 t (iii) the Proof of Payment of IE amounting to PJ73,003.40 through Metrobank Business Online Solutions with payment transaction number 264869965;" II !d., p. 3447. 12 !d., pp. 3448-3449. 13 !d., p. 3450. 14 !d., p. 3451. 15 !d., pp. 3452-3453. 16 !d., p. 3454. 17 !d., p. 3455. 18 !d., p. 3456. 19 !d., p. 3457. 10 !d., p. 3458. 21 !d., pp. 3459-3460. 22 !d., p. 3461.

JUDGMENT BASED ON COMPROMISE AGREEMENT CTA Case No. 10683 Imagenet Philippines, Inc. v. Commissioner of Internal Revenue Page 4 of16 x-------------------------------------------------x 10. Original printout copies of (i) the BIR Email Notification on eFiling of Tax Return for CP amounting to P3s,ooo.oo, filed on 19 February 2026;23 (ii) the BIR Form No. o6os (Payment Form) for CP amounting to P3s,ooo.oo, filed on 19 February 2026;24 (iii) the Proof of Payment of CP amounting to P3s,ooo.oo through Metrobank Business Online Solutions with payment transaction number 264869136;25 Under A.M. No. n-1-s-SC-PHILJA otherwise known as the Interim Guidelines for Implementing Mediation in the Court of Tax Appeals (Interim Guidelines), upon approval of the compromise agreement, the Court shall render judgment based thereon.26 Moreover, the subject JCA27 likewise states that the same is subject to the approval of this Court; hence, this Judgment Based on Compromise Agreement (JBCA). The subject JCA28 reads as follows: JUDICIAL COMPROMISE AGREEMENT KNOWN ALL MEN BY THESE PRESENTS: This JUDICIAL COMPROMISE AGREEMENT ("Agreement") made and executed, by and between: IMAGENET PHILIPPINES, INC. ("TAXPAYER"), a domestic corporation duly organized and existing under the laws of the Republic of the Philippines, with principal office at 14th Floor, Valero Tower, Valero St., Salcedo Village, Makati City, Philippines, represented by its Authorized Representative, JOPER R. DEL ROSARIO; -and- The BUREAU OF INTERNAL REVENUE ("BIR"), with principal office at Bureau of Internal Revenue, National Office Building, Agham Road, Diliman, Quezon City, t represented by the ,, _J !d., p. 3462. 24 !d., pp. 3463-3464. 25 !d., p. 3465. 26 See Part IX(A) of the Interim Guidelines. 27 See Section 2 of the Judicial Compromise Agreement, Division Docket, Volume VII, p. 3435. 28 Supra at note 4.

JUDGMENT BASED ON COMPROMISE AGREEMENT CTA Case No. 10683 Imagenet Philippines, Inc. v. Commissioner of Internal Revenue Page 5 of16 x----- ------------------------------------------- -x Commissioner, CHARLITO MARTIN R. MENDOZA. (collectively, the "PARTIES"); - Witnesseth That - WHEREAS, the BIRissued to the TAXPAYER a WARRANT OF DISTRAINT AND/OR LEVY ("WDL") dated 18 October 2021 for the alleged deficiency Income Tax in the amount of Twenty Seven Million Seven Hundred Seventy-Eight Thousand Four Hundred Ninety Pesos and 05/100 centavos (Php27,778,490.o5); Value-Added Tax (VAT) in the amount of Seventeen Million Six Hundred Nineteen Thousand Three Hundred Fifty-Five Pesos and 47/100 centavos (Php17,619,J55-47); Expanded Withholding Tax (WE) in the amount of Four Hundred Thirteen Thousand Six Hundred Fifty-Two Pesos and 17/100 centavos (Php413,652.17); Withholding Tax on Compensation (WC) in the amount of Ten Million Eight Hundred Thirty Thousand Nine Hundred Ninety-One Pesos and 41/100 centavos (Php10,830,99L41); Improperly Accumulated Earnings Tax (IE) in the amount of Six Hundred Forty-Eight Thousand Seven Hundred Two Pesos and m/100 centavos (Php648,702.01); and Compromise Penalty (MC) in the amount of Twenty Thousand Pesos (Php2o,ooo.oo). WHEREAS, the TAXPAYER instituted an action against the BIR entitled "Imagenet Philippines, Inc. vs. Commissioner of Internal Revenue", docketed as CTA Case No. 10683, pending before the Honorable Second Division of the Court of Tax Appeals ("CTA"), seeking the cancellation of the WDL; WHEREAS, the TAXPAYER has submitted its proposal to the BIR with the intention to enter into a judicial compromise pursuant to the provisions of the Civil Code of the Philippines, jurisprudence, relevant decisions of the Honorable CTA and relevant laws on judicial compromise; WHEREAS, the Honorable CTA issued Resolution dated 24 January 2024 suspending the proceedings to allow the PARTIES an opportunity to enter into discussions for the possible amicable settlement of the case; WHEREAS, the Honorable CTA has issued rulings allowing judicial compromises similar to this case. WHEREAS, the BIR has evaluated the TAXPAYER'S proposal for amicable settlement and believes that a judicial compromise to t allow immediate tax collection and also put an end to litigation as provided in the Civil Code of the Philippines, serves the interest of the Government;

JUDGMENT BASED ON COMPROMISE AGREEMENT CTA Case No. 10683 Imagenet Philippines, Inc. v. Commissioner of Internal Revenue Page 6 of16 x-------------------------------------------------x WHEREAS, the PARTIES ensure that the terms of the amicable settlement as contained in this Agreement do not circumvent the limitations provided in Section 204 of the National Internal Revenue Code on administrative compromise proceedings; WHEREAS, the PARTIES, for the purpose of avoiding and putting an end to a protracted, expensive and mutually prejudicial litigation, have agreed to amicably settle the above-mentioned case, upon terms and conditions hereinafter set forth; NOW, THEREFORE, for and in consideration of the foregoing premises, the PARTIES hereto have agreed as follows: Section 1. Judicial Compromise Amount. In order to settle the above-mentioned case, the TAXPAYER has offered and the BIR has accepted the amount equivalent to forty percent (4o%) of the Basic Tax assessed in the WDL in the total compromise amount of Twenty Million Eight Hundred Twenty-Four Thousand One Hundred Six Pesos and 36/wo centavos (Php2o,824,106.36) ("Judicial Compromise Amount"). This amount is broken down as follows: Tax Type Basic Tax Due Interest and Total Compromise Surcharge Amount Income Tax VAT WE we IE MC Total Section 2. Submission to the Honorable CTA. This Agreement fully signed by the PARTIES shall be submitted for the approval to the Honorable CTA in CTA Case No. 10683. The 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 only take effect and bind the PARTIES upon approval by the t Honorable CTA. This Agreement shall thereafter remain in force and effect until completion and fulfilhpent of the covenants and undertaking of the PARTIES hereto.

JUDGMENT BASED ON COMPROMISE AGREEMENT CTA Case No. 10683 Imagenet Philippines, Inc. v. Commissioner of Internal Revenue x-------------------------------------------------x Section 4� Deliverables of the PARTIES. The BIR undertakes to execute and deliver to the Taxpayer any and all documents as may be required to effectively and fully implement the provisions of this Agreement, including but not limited to, the Authority to Cancel Assessment withdrawing and cancelling the WDL dated 18 October 2021. Section 5� Authority to Enter Compromise Agreement. The BIR, through Commissioner Charlito Martin R. Mendoza, warrant that he 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 through its Authorized Representatives Joper R. Del Rosario similarly warrants that he is duly authorized by the Board of Directors of the TAXPAYER and has full and legal capacity to enter, sign, and execute this Agreement, and to deliver payment of the Judicial Compromise Amount. Section 6. Full and Final Settlement. This Agreement is executed by the PARTIES for the purpose of amicably settling and ending CTA Case No. 10683. Upon the TAXPAYER's payment of the Judicial Compromise Amount, the BIR recognizes the full satisfaction of the supposed tax liability of the TAXPAYER in connection with the CTA Case No. 10683 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. 10683. 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 (6o) 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 insofar 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 bet 2. The proceedings of CTA Case No. 10683 shall continue and the discussions pursuant to the disapproved Agreement cannot

JUDGMENT BASED ON COMPROMISE AGREEMENT CTA Case No. 10683 Imagenet Philippines, Inc. v. Commissioner of Internal Revenue x------------------------------------------------- x used by the PARTIES in said proceeding unless consent of the other party be obtained. Section 8. Nullification of this Agreement by the Honorable Supreme Court. In the remote event that this Agreement is later nullified by the Honorable Supreme Court, the PARTIES likewise agree to a curing period of sixty (6o) days from receipt of the Order/Resolution nullifying 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 nullification, and re-submit the rectified or corrected Agreement for approval of the Honorable Supreme Court. In case the deficiency, defect or imperfection, however, is not or cannot be rectified or corrected within the said curing period, or still not approved by the Honorable Supreme Court after it is rectified or corrected: 1. The amount insofar 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. 10683 shall continue and the discussions pursuant to the disapproved Agreement cannot be used by the PARTIES in said proceeding unless consent of the other party be obtained. Section 9� 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 10. 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 n. 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 t obligation hereunder. [Signature page follows]

JUDGMENT BASED ON COMPROMISE AGREEMENT CTACase No.10683 Imagenet Philippines, Inc. v. Commissioner of Internal Revenue x-------------------------------------------------x 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. IMAGENET PHILIPPINES, BUREAU OF INTERNAL INC. REVENUE By: By: Signed signed and sealed JOPER R. DEL ROSARIO HON. CHARLITO MARTIN R. Authorized Representative MENDOZA 042140 Commissioner Witnesses: Signed FELIX PAUL R. VELASCO III Head of Revenue Executive Assistant Enforcement and Advocacy Service We resolve. Under Section 204(A) of the National Internal Revenue Code (NIRC) of 1997, as amended, for a compromise agreement grounded on cases other than financial incapacity, the minimum compromise rate is equivalent to forty percent (4o%) of the basic assessed tax; and, in case the basic tax involved exceeds P1 million or where the settlement offered is less than the said prescribed minimum rates, the compromise agreement must be approved by all the members of the NEB, to wit - SEC. 204. Authority of the Commissioner to Compromise, Abate, and Refund or Credit Taxes. XXX XXX XXX 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 (w%) of the basic assessed tax; and t For other cases, a minimum compromise rate equivalent to forty percent (4o%) of the basic assessed tax.

JUDGMENT BASED ON COMPROMISE AGREEMENT CTA Case No. 10683 Imagenet Philippines, Inc. v. Commissioner of Internal Revenue x-------------------------------------------------x Where the basic tax involved exceeds One million pesos (PhP1,ooo.ooo) 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. As provided in the CA,29 the application for compromise is based on the 'doubtful validity of the assessment' pursuant to Section 3.1 of Revenue Regulations (RR) No. 30-2002,30 as amended by RR No. 8-2004.31 The relevant section reads- SEC. 3� BASIS FOR ACCEPTANCE OF COMPROMISE SETTLEMENT. -The Commissioner may compromise the payment of any internal revenue tax on the following grounds: 1. Doubtful validity of the assessment. -The offer to compromise a delinquent account or disputed assessment under these Regulations on the ground of reasonable doubt as to the validity of the assessment may be accepted when it is shown that: (a) The delinquent account or disputed assessment is one resulting from a jeopardy assessment (For this purpose, "jeopardy assessment" shall refer to a tax assessment which was assessed without the benefit of complete or partial audit by an authorized revenue officer, who has reason to believe that the assessment and collection ofa deficiency tax will be jeopardized by delay because of the taxpayer's failure to comply with the audit and investigation requirements to present his books of accounts and/or pertinent records, or to substantiate all or any of the deductions, exemptions, or credits claimed in his return); or (b) The assessment seems to be arbitrary in nature, appearing to be based on presumptions and there is reason to believe that it is lacking in legal and/or factual basis; or 29 (c) The taxpayer failed to file an administrative protest on account t of the alleged failure to receive notice of assessment and there Supra at note 6. 30 Revenue Regulations Implementing Sections 7(c), 204(A) and 290 ofthe Nationallntemal Revenue Code of 1997 on Compromise Settlement of Internal Revenue Tax Liabilities Superseding Revenue Regulations Nos. 6-2000 and 7-200 I. 31 Revenue Regulations Implementing Sections 7(c), 204 (A) and 290 of the National Internal Revenue Code of 1997 on Compromise Settlement of Internal Revenue Tax Liabilities Superseding Revenue Regulations Nos. 7-2001 and 30-2002.

JUDGMENT BASED ON COMPROMISE AGREEMENT CTA Case No. 10683 Imagenet Philippines, Inc. v. Commissioner of Internal Revenue Page 11 of16 x-------------------------------------------------x is reason to believe that the assessment is lacking in legal and/ or factual basis; or (d) The taxpayer failed to file a request for reinvestigation /reconsideration within 30 days from receipt of final assessment notice and there is reason to believe that the assessment is lacking in legal and/or factual basis; or (e) The taxpayer failed to elevate to the Court ofTaxAppeals (CTA) an adverse decision of the Commissioner, or his authorized representative, in some cases, within 30 days from receipt thereof and there is reason to believe that the assessment is lacking in legal and/or factual basis; or (f) The assessments were issued on or after January 1, 1998, where the demand notice allegedly failed to comply with the formalities prescribed under Sec. 228 of the National Internal Revenue Code of 1997; or (g) Assessments made based on the "Best Evidence Obtainable Rule" and there is reason to believe that the same can be disputed by sufficient and competent evidence; or (h) The assessment was issued within the prescriptive period for assessment as extended by the taxpayer's execution of Waiver of the Statute of Limitations the validity or authenticity of which is being questioned or at issue and there is strong reason to believe and evidence to prove that it is not authentic; or (i) The assessment is based on an issue where a court of competent jurisdiction made an adverse decision against the Bureau, but for which the Supreme Court has not decided upon with finalityY t Likewise, Section 4(2)33 of the same issuance provides that for cases of doubtful validity, the taxpayer should pay a minimum compromise rate of 40% of the basic assessed tax. However, in Section 32 Emphasis in the original text. 33 SEC. 4. PRESCRIBED MINIMUM PERCENTAGES OF COMPROMISE SETTLEMENT. -The compromise settlement of the internal revenue tax liabilities oftaxpayers, reckoned on a per tax type assessment basis, shall be subject to the following minimum rates based on the basic assessed tax: 2. For cases of "doubtful validity" -A minimum compromise rate equivalent to forty percent (40%) of the basic assessed tax.

JUDGMENT BASED ON COMPROMISE AGREEMENT CTA Case No. 10683 Imagenet Philippines, Inc. v. Commissioner of Internal Revenue x-------------------------------------------------x 2 34 thereof, withholding tax cases may not be the subject of compromise unless the taxpayer invokes a provision oflaw that that cast doubt on its obligation to withhold. Consequently, Section 6 ofRR No. 30-2002, as amended by RR No. 9-2013,35 provides the requirement for the approval of the compromise offer, viz- SEC. 6. APPROVAL OF OFFER OF COMPROMISE. - Except for offers of compromise where the approval is delegated to the REB pursuant to the succeeding paragraph, all compromise settlements within the jurisdiction of the National Office (NO) shall be approved by a majority of all the members of the NEB composed of the Commissioner and the four (4) Deputy Commissioners. All decisions of the NEB, granting the request of the taxpayer or favorable to the taxpayer, shall have the concurrence of the Commissioner. XXX XXX XXX The compromise offer shall be paid by the taxpayer upon filing of the application for compromise settlement. No application for compromise settlement shall be processed without the full settlement of the offered amount. In case of disapproval of the application for compromise settlement, the amount paid upon filing of the aforesaid application shall be deducted from the total outstanding tax liabilities.36 Further, Revenue Memorandum Order (RMO) No. 3-201737 t provides that a 'Certifirate ofAvailment' must be issued after approval of the compromise- 34 SEC. 2. CASES WHICH MAY BE COMPROMISED. - The following cases may, upon taxpayer's compliance with the basis set forth under Section 3 of these Regulations, be the subject matter of compromise settlement, viz.: EXCEPTIONS: I. Withholding tax cases, unless the applicant-taxpayer invokes provisions of law that cast doubt on the taxpayer's obligation to withhold[.] 35 Amending Ce1iain Provisions of Revenue Regulations No. 30-2002. 36 Emphasis and underscoring in the original text. 37 Amending Further the Prescribed Fonnat for the Certificate of Availment/Approval and Notice of Denial Relative to Application for Compromise Settlement and/or Abatement of Penalties Pursuant to Section 204 of the Tax Code, as Amended.

JUDGMENT BASED ON COMPROMISE AGREEMENT CTA Case No. 10683 Imagenet Philippines, Inc. v. Commissioner of Internal Revenue X------------------------------------------------- X All approved applications for compromise settlement and/or abatement of penalties shall be issued Certificate of Availment (CA) following the prescribed format as per attached Annexes "A" and "B", while denied applications shall be issued Notice of Denial (NO) following prescribed format as per attached annexes "C" and "0".38 Applying the foregoing law and related issuances, for a compromise to be valid, it must specify the legal basis for the compromise, provide a compromise amount that conforms to the prescribed compromise rate, bear the approval of the majority of the members of the NEB, and establish that the judicial compromise amount has been fully settled. A perusal of the attachments in the parties' Joint Motion shows: 1. The basis for petitioner's offer of compromise and the CIR's acceptance thereto is the doubtful validity of the assessment pursuant to Section 204(A) of the NIRC of 1997, as amended and Section 3.1 of RR No. 30-2002; 2. Apart from the basic tax due of WE and WC and the CP which petitioner fully settled, it paid 40% of the basic tax due of IT, VAT and IE as shown in the table39 below- TAX TYPE BASIC TAX OFFER RATE ASSESSMENT40 Income Tax 7,9'i2,27i.62 40% VAT 19,88o,684.o6 4,890,543�53 40% WE 12,226,358.83 wo% 285,952�73 100% we 285,952�73 7A87.333.o8 40% 7A87,333.o8 wo% IE 173,003-40 CP 432,508.50 35,000.00 t Total 35,000.00 20,824,106.37 40,347,837-20 38 Emphasis supplied. 39 Table is based on the Judicial Compromise, supra at note 7. 40 Except for the compromise penalty, the basic assessed taxes are lifted from the Formal Letter of Demand dated 14 January 2020, BIR Records, pp. 418-420.

JUDGMENT BASED ON COMPROMISE AGREEMENT CTA Case No. 10683 Imagenet Philippines, Inc. v. Commissioner of Internal Revenue Page 14 of16 x-------------------------------------------------x 3� The BIR Forms No. o6os (Payment Form), BIR Email Notifications on eFiling of Tax Return, and Proof of Payments via Metrobank online transfer, for each tax type, sufficiently prove that the judicial compromise amount has been settled on 19 February 2026; and 4� The JCA was duly approved as evidenced by the issuance of the CA and the signatures of the majority of the NEB members, thus satisfying the requirements set forth in RR No. 30-2002 as amended by RR No. 9-2013 and RMO No. 3-2017. In Maria Shiela Almira T. Viesca v. David Gilinsky, 41 the Supreme Court encourages the amicable settlement of disputes - The settlement of disputes brought before the courts is encouraged. In fact, in the Civil Code and in the Revised Rules of Court, courts are directed to persuade the litigants in civil cases to agree upon some fair compromise. Additionally, the case of Felipe 0. Magbanua et al. v. Rizalino Uy42 explains the nature of a compromise agreement and its effect when judicially approved by the court. Quoted below are the pertinent paragraphs of the case: A compromise agreement is a contract whereby the parties make reciprocal concessions in order to resolve their differences and thus avoid or put an end to a lawsuit. They adjust their difficulties in the manner they have agreed upon, disregarding the possible gain in litigation and keeping in mind that such gain is balanced by the danger of losing. Verily, the compromise may be either extrajudicial (to prevent litigation) or judicial (to end a litigation). A compromise must not be contrary to law, morals, good customs and public policy; and must have been freely and intelligently executed by and between the parties. To have the force oflaw between the parties, it must comply with the requisites and principles of contracts. Upon the parties, it has the effect and the authority of res judicata, once entered into. 41 G.R. No. 171698, 04 July 2007. 0 42 G.R. No. 161003, 06 May 2005; Citations omitted and italics in the original text.

JUDGMENT BASED ON COMPROMISE AGREEMENT CTA Case No. 10683 Imagenet Philippines, Inc. v. Commissioner of Internal Revenue x------------------------------------------------- x When a compromise agreement is given judicial approval, it becomes more than a contract binding upon the parties. Having been sanctioned by the court, it is entered as a determination of a controversy and has the force and effect of a judgment. It is immediately executory and not appealable, except for vices of consent or forgery. The nonfulfillment of its terms and conditions justifies the issuance ofa writ ofexecution; in such an instance, execution becomes a ministerial duty of the court. The issue involving the validity of a compromise agreement notwithstanding a final judgment is not novel. ]esalva v. Bautista upheld a compromise agreement that covered cases pending trial, on appeal, and with final judgment. The Court noted that Article 2040 impliedly allowed such agreements; there was no limitation as to when these should be entered into. Palanca v. Court of Industrial Relations sustained a compromise agreement, notwithstanding a final judgment in which only the amount of back wages was left to be determined. The Court found no evidence of fraud or of any showing that the agreement was contrary to law, morals, good customs, public order, or public policy. Gatchalian v. Arlegui upheld the right to compromise prior to the execution of a final judgment. The Court ruled that the final judgment had been novated and superseded by a compromise agreement. Also, Northern Lines, Inc. v. Court of Tax Appeals recognized the right to compromise final and executory judgments, as long as such right was exercised by the proper party litigants. There is no justification to disallow a compromise agreement, solely because it was entered into after final judgment. The validity of the agreement is determined by compliance with the requisites and principles of contracts, not by when it was entered into. As provided by the law on contracts, a valid compromise must have the following elements: (1) the consent of the parties to the compromise, (2) an object certain that is the subject matter of the compromise, and (3) the cause of the obligation that is established. Upon a careful review of the parties' documents submitted in support of the subject JCA, the Court finds the same in order and fully compliant with established laws, rules and regulations. t WHEREFORE, in view of the foregoing, the parties' "Joint Omnibus Motion with Leave of Court (A) To Suspend or Hold in . Abeyance the Proceedings of the Case; and (B) To Approve Judicial

JUDGMENT BASED ON COMPROMISE AGREEMENT CTA Case No. 10683 Imagenet Philippines, Inc. v. Commissioner of Internal Revenue x-------------------------------------------------x Compromise Agreement and To Render Judgment Based Thereon" is hereby GRANTED. Accordingly, the Judicial Compromise Agreement is APPROVED. Having been impressed with judicial imprimatur, the parties are hereby ENJOINED to faithfully comply with all the terms and conditions of the aforesaid Compromise Agreement, which similarly constitutes the Court's judgment in herein case. Consequently, this case is now deemed CLOSED AND TERMINATED. SO ORDERED. ....... I CONCUR: LAN~~ID Associate Justice CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Judgment Based on Compromise Agreement were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. ~-~'- MA. BELEN M. RINGPIS-LIBAN Presiding Justice